Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, October 7, 2010

Former NY Comptroller Hevesi Pleads Guilty for Involvement in Pay-to-Play Kickback Scheme

Former Comptroller of the State of New York Alan Hevesi pleaded guity to a felony charge for his involvement in a pay-to-play kickback scheme at the Office of the New York State Comptroller.  Hevesi acknowledged receiving nearly $1 million in gifts in exchange for improperly favoring and approving a $250 million investment in Markstone Capital Partners, L.P. from the New York State Common Retirement Fund.  The gifts consisted of $75,000 in travel expenses for Hevesi and his family, $380,000 in sham consulting fees for a lobbyist friend, and over $500,000 in campaign contributions as directed by Hevesi.  Hevesi also acknowledged that while he served as Comptroller he was aware that Henry “Hank” Morris – his paid political adviser and campaign manager – was using the pension fund for a pay-to-play scheme in which Morris personally received fees from pension deals and steered investments to friends and political associates.

Hevesi pleaded guilty to a felony charge of receiving reward for official misconduct and faces up to four years in prison.  He has also agreed to fully cooperate with Cuomo’s investigation.

Today’s announcement is the latest development in Cuomo’s three-year, ongoing investigation into corruption involving the Office of the New York State Comptroller and the pension fund.  The charges to date allege a complex criminal scheme involving numerous individuals operating at the highest political and governmental levels under former Comptroller Alan Hevesi.  Through this scheme, Hevesi, his chief political aide, and many of their political allies and friends reaped tens of millions of dollars in kickbacks, bribes, and sham consulting and finder fees connected to pension fund investments.

Court documents are available at:the AG's website.

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