In a new settlement announced today, New York Attorney General Andrew Cuomo recouped nearly $12 million for the Empire State from four firms and one individual connected to illegal investment actions of the New York State Common Retirement Fund (CRF).
Collectively, New York- and Hong Kong-based Quadrangle Group will pay $7 million, California-based GKM Newport Generation Capital Services (GKM) will pay $1.6 million, New York consulting firm Global Strategy Group and its CEO, Jon Silvan, will fork over $2 million and Sacramento lobbying firm Platinum Advisors will pay $500,000. Additionally, unlicensed placement agent Kevin McCabe will pay $715,000, Cuomo's announcement said today.
The two investment firms and three unlicensed brokers will also adhere to Cuomo's Public Pension Reform Code of Conduct, which calls for increased "rigor, integrity, and transparency of the investment process" by eliminating campaign contributions and banning the use of intermediaries, the press release aid.
Today's announcement bolsters Cuomo's ongoing investigation into the questionable actions of former state Comptroller Alan Hevesi's office and the alleged kick-back schemes related to investment contracts. Previously, Cuomo stated that both Quadrangle and GKM paid fees to Henry Morris, Hevesi's paid political advisor, in order to be awarded additional investment mandates.
Cuomo said that Quadrangle retained Morris "to increase [its investments] from $25 million to $100 million." In addition to its paid fees for the service, the firm also assisted in a DVD-distribution deal for a movie produced for former CIO David Loglisci. Loglisci previously agreed to a settlement.
In a prepared statement, Quadrangle "diavow(ed)" the conduct of its former chief, Steve Rattner, calling his conduct in assisting Morris "inappropriate, wrong and unethical."
Additionally, Quadrangle agreed to pay the Securities and Exchange Commission $5 million in connection with the regulator's probe of actions in the New York fund. The private-equity firm added in its statement that it does not admit or deny the allegations, but does support the efforts of both to "ensure that the manager selection process is based solely on merit."
Separately, in returning back to Cuomo's settlement, his office said Global Strategy Group grew its CRF commitments by $1.3 million as a result of its alleged improprieties. In a prepared statement, the firm said it was pleased for the agreement and "fully support" the attorney general. However, it noted that there was "no finding that we violated any law."
Furthermore, Cuomo stated that Platinum Advisors received fees from Ares Management totaling $337,000 for its services in securing contracts for the firm. At the time, it was not licensed to do so, the release said.
In a phone conversation today, Platinum spokesperson Dan Newman said the firm is "pleased that an agreement has been reached."
And lastly, through Purpose LLC, the attorney general said that both McCabe and Morris allegedly brokered deals for GKM's "captive fund of funds." McCabe was paid nearly a half million dollars for his assistance in setting up "$800 million in capital commitments" for the firm, Cuomo said.
As of press time, Cuomo's pension fund reform pool contained 15 firms, 13 of which have agreed to replete more than $100 million to the CRF. In total, $130 million has been put back into the $129 billion pension plan.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access