Henry Morris, the chief political advisor to 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.
Morris pleaded guilty in November to a felony, forfeited $19 million and is permanently banned from the securities industry in New York.
“Today, justice was served on Hank Morris, who will be appropriately punished for his role in one of the largest pay-to-play schemes in New York State history,” said New York Attorney General Eric Schneiderman, in a statement. “[The] decision by the Court sends a strong message to New Yorkers that those who abuse positions of power to line their own pockets will be held accountable by this office.”
Morris worked with Hevesi 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.
Private equity firms were drawn into the scheme, and many of them have paid money to New York to “settle” their cases, including The Carlyle Group and 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.
The scandal led several pension systems around the country to either ban or institute strict rules governing placement agent interaction with pension officials. New York outright banned placement from soliciting the pension on behalf of investment managers.