Pay-to-play pension scam
Attorney general’s investigation properly leads to criminal charges
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Attorney General Andrew M. Cuomo’s probe into corruption within the state public pension fund is a stealth operation, almost noiselessly creeping into investment firms and up the political ladder. It’s not over yet.
The facts are shameful, and have thus far led to two criminal charges, two indictments and two guilty pleas. More are likely to come.
The pension fund is managed by the New York State comptroller. Two aides to former Comptroller Alan Hevesi have been indicted on charges that they schemed to extract millions of dollars in payments from companies seeking investments from the pension fund, which is worth $150 billion.
Some of the money was used to reward Hevesi’s political allies, investigators say, including the former head of New York’s defunct Liberal Party, Raymond Harding. Harding has been charged with taking more than $800,000 in kickbacks for favors, including helping Hevesi’s son, Andrew, win a seat in the State Assembly. Cuomo says the younger Hevesi was unaware of the maneuvering.
The investigation, which began shortly after Cuomo took office in 2006, has produced guilty pleas from a former agent for the Wetherly Capital Group and a classical music entrepreneur. It has uncovered what Cuomo called “a matrix of corruption.”
Hevesi, who pleaded guilty in 2006 to using state workers to chauffeur his wife, has not been charged in the probe, although Cuomo has not taken the step—as he has with other people—of specifically saying that he is not a target.
Cuomo is pursuing this matter in a way that has become customary for him: creating a code of conduct that he asks involved entities to agree to. He did that with his investigation into corruption within the student loan system and he is doing it again with the pension fund. Earlier this month, for example, the Carlyle Group agreed to the code to resolve its role in the investigation.
With $150 billion at play, the potential for unethical and illegal exploitation is obvious. In that regard, it’s startling this problem hasn’t cropped up before, but the revelations in this case make it obvious that closer regulation is required. We would like to see elements of Cuomo’s code of conduct codified into law—a ban on contributions from fund managers to anyone connected with administration of a public pension fund, for example.
Cuomo and other prosecutors need to follow this matter to its end, but lawmakers in Albany and Washington also need to take notice. New laws won’t eradicate the weed of avarice, but they will cause some potential crooks to think twice before leaping, and also make it easier to nail those whose second thoughts aren’t enough to dissuade them.
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