The private equity firm founded by President Barack Obama’s car czar finds itself at the center of a second probe into its use of so-called placement agents to win business from public pension funds.
New York City Comptroller William Thompson said his office conducted an internal investigation to determine whether Quadrangle Group “intentionally misled or deceived” the New York City Pension Funds. The firm has already been identified by the Securities and Exchange Commission and New York State attorney general as having paid “finder’s fees” to a top adviser to the state’s former comptroller, who has been charged with running a kickback scheme.
Thompson, who plans to challenge New York Mayor Michael Bloomberg’s bid for a third term, said he looked into whether Quadrangle failed to disclose its payments to Searle & Co., the former employer of the since-indicted Hank Morris. Quadrangle paid the firm for its help in securing an $85 million allocation from the city pension, Searle said. Quadrangle instead reported using two other placement agents, according to Thompson.
Thompson has since turned the investigation over the New York State Attorney General Andrew Cuomo, who is running the state probe.
"We will be investigating whether improper or illegal action was taken by placement agents in connection with investments in the City pension system," Cuomo said in a statement.
Quadrangle said it was surprised by Thompson’s move.
Rattner left Quadrangle earlier this year to lead President Obama’s auto bailout program. Neither he nor the firm has been accused of wrongdoing in the criminal probe, and the president has expressed his support.
According to The Wall Street Journal, Rattner is the unidentified “senior executive” at Quadrangle mentioned in the Securities and Exchange Commission complaint against a pair of former advisers to ex-New York Comptroller Alan Hevesi. According to the SEC, Quadrangle won a $100 million allocation from the New York State Common Retirement Fund three weeks after a Quadrangle-owned DVD distribution company distributed an independent movie, “Chooch,” produced by the brother of one of the alleged architects of a kickback scheme at the pension. Quadrangle also allegedly paid a finder’s fee to a firm involved with another person charged in the scandal.