Ex-N.Y. Comptroller Pleads Guilty In Pay-To-Pay Scandal

Oct 8 2010 | 11:43am ET

It was a tale of two comptollers yesterday in New York, with the state's former comptroller pleading guilty in the state pension's pay-to-play scandal and his successor being cleared of wrongdoing in the same.

Alan Hevesi, who resigned four years ago following an unrelated scandal, pleaded guilty to felony corruption in New York state court yesterday. Hevesi admitted that trips to Italy and Israel were paid for by a California venture capitalist who pleaded guilty to bribing four of Hevesi's top lieutenants.

"I deeply regret my conduct and sincerely and deeply apologize to the people of New York," Hevesi, a former New York City comptroller, said. He faces up to four years in prison on the receiving a reward for official misconduct charge.

Meanwhile, the man the State Legislature picked to replace Hevesi almost four years ago, Thomas DiNapoli, was cleared by Attorney General Andrew Cuomo. Cuomo's office said its investigation ends with Hevesi.

"Mr. DiNapoli is not involved in any investigation or matter in this office," Cuomo spokesman Richard Bamberger said.

DiNapoli is making his first run for the office this year, challenged by former hedge fund manager Harry Wilson. Cuomo himself is running for governor.

Several former Hevesi aides, including his closest political adviser, have already been charged in the pay-to-play scandal, which also ensnared several high-profile alternative investment firms. Earlier this year, the former chief investment officer of the New York State Common Retirement System, David Loglisci, pleaded guilty to charges stemming from the case. Loglisci, who is cooperating with investigators, implicated Henry Morris, Hevesi’s top political adviser, saying that he controlled which alternative investment firms would receive allocations from the pension. In one case, the New York fund invested $150 million in a Carlyle Group and Riverstone Holdings fund after Riverstone founder David Leuschen invested $100,000 in a movie produced by Loglisci.

Morris has denied any wrongdoing, saying, “there was no crime here.”

All told, six people have pleaded guilty in the case, including Barrett Wissman, formerly of hedge fund HFV Asset Management. Earlier this year, private equity firm Quadrangle Group settled charges that that it paid about $1.1 million in bogus finder fees to Morris in exchange for a $100 million allocation

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