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Three Degrees Of Separation: Cuomo, Scandal-Tarred FoF Invested In Same Hedge Fund

A hedge fund that managed money for New York Attorney General Andrew Cuomo has been linked to the pay-to-play scandal at an Empire State public pension fund.

Cuomo, a Democrat, has recused himself from any investigation of EnTrust Capital, in which Cuomo had invested both personal and campaign funds. The son of former New York Gov. Mario Cuomo has led the investigation into illegal kickbacks at the New York State Common Retirement Fund, which has ensnared several prominent alternative investments firms and led to four arrests, including two top aides to the state’s former comptroller.

Steven Cohen, Cuomo’s chief of staff, said the attorney general turned over all EnTrust matters to Linda Lacewell, special counsel in Cuomo’s office, when he became attorney general two years ago. There was some confusion, however. Cohen later said the final decision on whether to investigate EnTrust fell to him.

Cuomo has since pulled all of his investments with EnTrust, Cohen said, although he remained an investor until at least last year.

EnTrust has not been named in either the criminal charges filed by Cuomo, nor the civil proceedings launched by the Securities and Exchange Commission. The hedge fund itself apparently did not pay any so-called finder’s fee to Hank Morris, the charged former top consultant to ex-state Comptroller Alan Hevesi. But its Capital Waters Fund received more than $20 million in assets from fund of hedge funds Liberty Oak Capital, whose parent, Consulting Services Group, alleged paid Morris $1 million in kickbacks.

"The New York State Retirement Fund did not allocate any capital to Entrust," EnTrust said in a statement. "New York State did make an investment in Liberty Oak, a fund of funds it established with CSG which invested in dozens of hedge funds including Entrust. Entrust had no role in CSG's manager selections and received less than 3% of the New York State funds allocated to Liberty Oak."



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