The former chief investment officer for New York State's comptroller on Wednesday pleaded guilty to helping favored firms gain access to the state's $129 billion pension fund.
David Loglisci, who reported directly to onetime Democratic Comptroller Alan Hevesi, admitted to violating the state's Martin Act and will cooperate in the pay-to-play investigation into the New York State Common Retirement Fund.
Loglisci is the sixth person to plead guilty in the probe. He could face up to four years in prison.
The case symbolizes the corruption that has gone on for decades in Albany, Attorney General Andrew Cuomo said on Wednesday on a conference call with reporters. The comptroller's office, I think, is symbolic of the depth, the virulence of it.
Loglisci and Henry Hank Morris, a former political adviser and fundraiser for Hevesi, were charged last March in a 123-count indictment over the alleged steering hundreds of millions of dollars of investments in exchange for kickbacks.
IMPOSSIBLE SITUATION, LAWYER SAYS
Cuomo said Loglisci had authority to recommend how to invest pension money but violated the public trust by making decisions based on the political benefit for the comptroller rather than for fund's best interest.
The attorney general said Loglisci's actions helped turn the fund into a piggy bank for Morris and his allies.
He nevertheless said that while Loglisci's powerful position made his job a career-maker, there were no signs he was taking kickbacks.
David Loglisci found himself in a nearly impossible situation, his lawyer, Kevin Keating, said on Wednesday. The facts are now clear. While those around him made millions, Loglisci never asked for a single cent from anyone.
The probe has also caught up prominent financial firms, including private equity firms Quadrangle Group and The Carlyle Group
It was not immediately clear how Loglisci's cooperation might affect Morris or Hevesi, who resigned as comptroller in December 2006. He later pleaded guilty to an unrelated charge.
Hevesi has not been charged in the pension fund probe. A lawyer for Hevesi previously has said his client is innocent. That lawyer did not immediately return a call for comment on Wednesday.
Morris has also maintained his innocence, and a lawyer representing him was not immediately available to comment.
The U.S. Securities and Exchange Commission is conducting its own civil probe into the matter. The investigation has swept into other states, including California and New Mexico.
The investigation pushed New York and other states to clamp down on the use of so-called placement agents, who often are politically connected individuals, like Morris, who can place business with state pension funds.
Cuomo said the pension fund probe has resulted in the return of more than $120 million, most of which goes to the Common Retirement Fund, with the rest to the state treasury.
The Democratic attorney general is widely expected to run for governor this year. He used much of the conference call to demand changes to help protect the Common Fund.
This situation will not be fully remedied until we change the rules, and we change the laws, Cuomo said. The same scam could happen today.
Loglisci entered his plea and was released, subject to travel restrictions. He could be sentenced in mid-June.
The case is New York v. Morris et al, New York State Supreme Court, New York County, No. 000025/2009.
(Editing by Jan Paschal and Padraic Cassidy)