Wednesday, 31 August 2016
Last updated 1 hour ago
Nov 18 2010 | 12:17pm ET
Quadrangle Group founder Steven Rattner has settled Securities and Exchange Commission charges stemming from the pay-to-play scandal at New York's largest public pension fund, but the former private equity honcho's legal troubles are far from over.
Even as the SEC finalized its long-awaited settlement with Rattner—who served as President Barack Obama's auto industry restructuring czar—New York Attorney General Andrew Cuomo filed a lawsuit of his own seeking four times as much as the SEC got in its settlement and a lifetime ban from the securities industry for Rattner.
The SEC said Rattner would pay $3.2 million in disgorgement and a $3 million fine for allegedly paying $1.1 million in finder fees to Henry Morris, the chief political consultant to former New York Comptroller Alan Hevesi. Hevesi's office oversaw the New York State Common Retirement Fund, which invested $150 million in a Quadrangle private equity fund, earning the firm $7 million.
Rattner is also accused of getting a DVD distribution deal for "Chooch," a movie produced by the brother of David Loglisci, who served as chief investment officer of the pension fund.
Morris, Hevesi and Loglisci have all pleaded guilty to criminal charges stemming from the pay-to-play scandal. Morris struck a deal with Cuomo two weeks ago, agreeing to plead guilty to "a minor charge" that carries no more than 4 years in prison and for "certain restitution." That deal is still pending; New York State Supreme Court Justice Lewis Stone, who called the case "one of the most important cases relating to corruption in government in the state of New York and perhaps one of the almost seminal cases involving that in the country," said he wanted more time to consider the plea deal.
Cuomo, whose tenure as attorney general is set to end in seven weeks, when he is sworn in as the Empire State's new governor, appears uninterested in striking a similar deal with Rattner. A spokesman for Cuomo said his office is not pursuing a settlement with Rattner.
Instead, Cuomo wants him to cough up at least $26 million. He also wants him banned from the New York securities industry for life.
"The application for an immediate securities ban is based on the fact that Rattner engaged in fraud and refused to answer 68 question based on his Fifth Amendment privilege," Cuomo said. "Rattner was willing to do whatever it took to get his hands on pension fund money, including paying kickbacks, orchestrating a movie deal and funneling campaign contributions."
Rattner dismissed Cuomo's lawsuit as "politically motivated."
"While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the attorney general's office prefers political considerations instead of a reasoned assessment of facts," Rattner said in a statement. "This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity."