Hevesi gets jail time in NY pay-to-play scandal

Former New York state comptroller Alan Hevesi was sentenced to up to four years in prison for his involvement in New York’s massive pension pay-to-play scandal that rocked the private equity world and tarnished the image of placement agents

Former New York state comptroller Alan Hevesi was sentenced last week to one to four years in prison for his role in New York’s massive pay-to-play scandal.

Hevesi, who pleaded guilty in October to a felony corruption charge, admitted to receiving campaign contributions and free trips in exchange for helping a money manager getting a $250 million pension fund commitment. He resigned in 2006.

Hevesi worked with his chief political advisor Henry Morris to facilitate the approval of certain proposed alternative investments to generate fees for Morris or individuals chosen by Morris. Through this scheme, Morris promoted more than $5 billion worth of public pension fund securities that brought him $19 million in fees.

Morris was sentenced in February to 16 months to four years after pleading guilty in November to a felony. Morris forfeited $19 million and is permanently banned from the securities industry in New York.

Private equity firms were drawn into the scheme, and many of them have paid money to New York to “settle” their cases, including The Quadrangle Group. Quadrangle co-founder Steve Rattner waged a months-long public battle with former New York Attorney General Andrew Cuomo, now the state’s governor, over his role in the scheme.

Rattner eventually settled, agreeing to pay $10 million and be banned from appearing “in any capacity” before public pension funds in New York State for five years.