Accused Pay-To-Play Ringleader Sees ‘No Crime’

Mar 23 2010 | 3:27am ET

The man at the center of the pay-to-play scandal at New York’s public pension fund acknowledges that his practices may have been unsavory, but were not illegal.

Henry Morris’ attorneys filed a 153-page response to their client’s indictment last year on charges of pension fraud. New York State Attorney General Andrew Cuomo charges that Morris, a top political aide to former state Comptroller Alan Hevesi, whose office oversaw the New York State Common Retirement Fund, demanded kickbacks and political contributions from money managers in exchange for awarding mandates from the pension.

The scandal has ensnared some of the biggest names in the alternative investments industry, including the Carlyle Group and Quadrangle Group. The only problem, according to Morris’ lawyers, is that none of it was illegal.

“The simple fact is that no matter how much the Attorney General disapproves as a matter of policy or ethics of the web of relationships that provided access and influence in the investment process, there was no crime here,” they wrote.

“In keeping with age-old traditions and longstanding practice in New York and nationwide, private equity and hedge funds frequently hire politically-connected attorneys, consultants, placement agents, finders or third-party marketers to facilitate introductions or access to staff, or to heighten their credibility when they are pitching the merits of their services. The private equity and hedge fund managers also, at times, make political contributions.”

Morris’ response comes just a week after David Loglisci, former chief investment officer of the CRF, pleaded guilty to violating the state’s general business law. He is cooperating with authorities.

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