Quadrangle Group has accused its departed co-founder, Steve Rattner, of behaving in an “inappropriate, wrong and unethical” manner when he hired political fixer Hank Morris to solicit the New York Common Retirement Fund for a commitment.
Quadrangle agreed Thursday to pay New York Attorney General Andrew Cuomo $7 million to settle its role in a massive pension pay-to-play investigation. Morris and former New York Common chief investment officer David Loglisci are the alleged ringleaders in the scheme.
Also Thursday, Quadrangle agreed to pay the US Securities and Exchange Commission $5 million to settle its case with the federal agency. The SEC has accused Quadrangle of participating in the scheme.
Cuomo’s agreement with Quadrangle “expressly does not cover” Rattner, Cuomo said in a statement.
“We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund,” Quadrangle said in a statement.
Rattner, through his attorney Jamie Gorelick, has denied the accusations. “Mr. Rattner does not agree with the characterization of events released today, including those contained in Quadrangle’s statement,” Gorelick said in a statement. “Mr. Rattner shares with the New York attorney general the goal of eliminating public pension fund practices that are not in the public interest. He looks forward to the full resolution of this matter.”
Quadrangle hired Morris to increase the commitment from New York Common from $25 million to $100 million. In the middle of the commitment negotiations, Quadrangle also arranged a DVD distribution deal for a movie produced by the brother of Loglisci. It’s not clear what the timeframe on this situation was, and the attorney general’s office did not respond to questions as of press time.
Quadrangle has also been investigated by the New York City pension system, which is trying to determine if the firm “intentionally misled or deceived” the pension by not disclosing payments to an investment firm affiliated with Morris. The city pension system committed $85 million to Quadrangle in 2005, and $40 million in 2006.
Along with Quadrangle, Cuomo also received agreement from GKM Newport Generation Capital Services, which will pay $1.6 million; Jon Silvan, the chief executive officer of political consulting firm Global Strategy Group, will pay $2 million; California lobbyist Platinum Advisors, which will pay $500,000 and unlicensed placement agent Kevin McCabe, who will pay $715,000.
Cuomo has so far reached agreement with 13 investment firms, including The Carlyle Group, Riverstone, Pacific Corporate Group and Levine Leichtman Capital Partners, which have agreed to pay more than $100 million to settle their cases with Cuomo in the investigation. Cuomo has also reached agreements with several individuals, bringing total payments to more than $130 million.
Six people so far have been charged in the case, including Morris, Loglisci, Ray Harding, former head of the New York Liberal Party, investment advisor Saul Meyer and hedge fund manager Barrett Wissman.