Cuomo Intrepid Settlement
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ATTORNEY GENERAL CUOMO ANNOUNCES AGREEMENT WITH HEVESI FUNDRAISER IN ONGOING INVESTIGATION INTO STATE PENSION FUND William “Bill” White Will Pay $1 Million to New York State and Comply with the Attorney General’s Public Pension Fund Reform Code of Conduct Cuomo’s Ongoing Investigation Has Secured $138 Million for the Common Retirement Fund and NYS NEW YORK, NY (September 16, 2010) - Attorney General Andrew M. Cuomo today announced an agreement with former Alan Hevesi fundraiser and unlicensed placement agent William “Bill” White in his ongoing public pension fund investigation. Under the agreement, White will pay $1 million to New York State and will comply with the Attorney General’s Public Pension Fund Reform Code of Conduct, which bans the use of placement agents and campaign contributions related to public pension fund business. White will cooperate with the Attorney General’s investigation. To date, Cuomo’s long-running investigation has garnered $138 million in recoveries for the state through agreements with fifteen firms and two individuals, as well as six guilty pleas. White brokered investments worth several hundred million dollars from the New York State Common Retirement Fund (“CRF”) on behalf of firms that paid him hundreds of thousands of dollars in fees. White did not have the required license to broker the deals. After obtaining one of these deals, White personally contributed and bundled contributions to Comptroller Hevesi’s campaign from the principals of one of the firms. The CRF is the biggest pool of money in the state and the third largest pension fund in the country, most recently valued at approximately $124.8 billion. “The state pension fund, which should be safeguarded for taxpayers, was instead served up to fixers, finders, and fundraisers like Bill White, who used his access to fill his pockets,” said Attorney General Cuomo. “Unlicensed placement agents, secret fees, and even the appearance of pay-to-play erode taxpayers’ trust and pose an intolerable risk to our pensioners’ retirement funds. New York’s pension system is fraught with systemic problems that we can no longer afford to ignore.” The investigation by the Attorney General’s office found as follows: ● White brokered deals involving several New York public pension
fund investments without having a securities license as required by state and federal law. ● White brokered several deals totaling $500 million in investments by the CRF in the Guggenheim Partners Select State Fund, L.P., for which White secretly received in excess of $570,000 in fees. ● Guggenheim hired broker-dealers Ariane Capital and Pali Capital to obtain an investment from CRF. However, Guggenheim refused to do business with White, who was affiliated with Ariane, because he lacked a securities license. Pali Capital filed a disclosure letter with the CRF which did not include White’s role. ● In the fall of 2006, White gave $10,000 himself and bundled $50,000 in campaign contributions from two Guggenheim principals to then-New York State Comptroller Alan Hevesi’s reelection campaign, after the initial investments had been made. ● White received other fees in connection with New York public pension fund investments in the Cypress Grove International Fund and Palladium Equity Partners III, L.P. These fees were received at various times, both before and after White obtained a securities license. ● White also received consulting fees in connection with a pension fund investment in a Fisher Brothers fund - the City Investment Fund, L.P. - but he did not broker that investment. White has agreed to comply with Attorney General Cuomo’s Public Pension Fund Reform Code of Conduct. Among other things, the Code of Conduct bans the use of placement agents to solicit investments from public pension funds and prohibits investments within two years of any campaign contribution from the investment firm to the Comptroller or other elected trustee. Under state and federal law, people engaged in the business of effecting transactions in securities are required to be licensed and registered with a broker-dealer. To determine whether a securities broker is licensed and registered, visit www.finra.org/investors/toolscalculators/brokercheck/index.htm. To view the agreement related to today’s announcement, please visit www.ag.ny.gov.
BACKGROUND INFORMATION In May 2009, the Attorney General’s office subpoenaed investment firms and their agents in connection with New York public pension fund investments after determining that 40 to 50 percent of agents acting to secure investments from the state and city pension funds were
unlicensed. Last year, Cuomo announced his Public Pension Fund Reform Code of Conduct, which, among other things, bans investment firms from compensating intermediaries for introductions to public pension funds. To date, fifteen firms have endorsed the Code: investment firms The Carlyle Group, Riverstone Holdings LLC, Pacific Corporate Group Holdings, LLC, HM Capital Partners I, Levine Leichtman Capital Partners, Access Capital Partners, Falconhead Capital, Markstone Capital Group, Ares, Freeman Spogli, Quadrangle, and GKM; placement agent Wetherly Capital Group; political consulting firm Global Strategy Group; and lobbying firm Platinum Advisors. Two individuals have also agreed to abide by the Code of Conduct: unlicensed placement agents Kevin McCabe and Bill White. These firms collectively have agreed to return more than $100 million associated with CRF investments; these funds will principally be provided to the CRF for the benefit of the pension holders. Payments from individuals, including criminal defendants, bring that total to $138 million for the CRF and the State. Attorney General Cuomo’s investigation into corruption at the CRF has led to a number of criminal charges and six guilty pleas to date, including guilty pleas by the following individuals: former Chief Investment Officer at the Office of the State Comptroller David Loglisci; former Liberal Party Chair Ray Harding; investment advisor Saul Meyer; hedge fund manager Barrett Wissman; Julio Ramirez, an unlicensed placement agent; and venture fund manager Elliott Broidy. An indictment against former Comptroller Alan Hevesi’s paid political adviser, Henry “Hank” Morris, is pending and Morris is presumed innocent unless and until proven guilty in court. This investigation was conducted by Deputy Chief of the Public Integrity Bureau Stacy Aronowitz, Assistant Attorneys General Emily Bradford, Rachel Doft, Noah Falk, and Amy Tully, and Legal Aide Michael Ellis, under the supervision of Special Deputy Attorney General for Public Integrity Ellen Nachtigall Biben and Special Counsel to the Attorney General Linda A. Lacewell.
fund investments without having a securities license as required by state and federal law. ● White brokered several deals totaling $500 million in investments by the CRF in the Guggenheim Partners Select State Fund, L.P., for which White secretly received in excess of $570,000 in fees. ● Guggenheim hired broker-dealers Ariane Capital and Pali Capital to obtain an investment from CRF. However, Guggenheim refused to do business with White, who was affiliated with Ariane, because he lacked a securities license. Pali Capital filed a disclosure letter with the CRF which did not include White’s role. ● In the fall of 2006, White gave $10,000 himself and bundled $50,000 in campaign contributions from two Guggenheim principals to then-New York State Comptroller Alan Hevesi’s reelection campaign, after the initial investments had been made. ● White received other fees in connection with New York public pension fund investments in the Cypress Grove International Fund and Palladium Equity Partners III, L.P. These fees were received at various times, both before and after White obtained a securities license. ● White also received consulting fees in connection with a pension fund investment in a Fisher Brothers fund - the City Investment Fund, L.P. - but he did not broker that investment. White has agreed to comply with Attorney General Cuomo’s Public Pension Fund Reform Code of Conduct. Among other things, the Code of Conduct bans the use of placement agents to solicit investments from public pension funds and prohibits investments within two years of any campaign contribution from the investment firm to the Comptroller or other elected trustee. Under state and federal law, people engaged in the business of effecting transactions in securities are required to be licensed and registered with a broker-dealer. To determine whether a securities broker is licensed and registered, visit www.finra.org/investors/toolscalculators/brokercheck/index.htm. To view the agreement related to today’s announcement, please visit www.ag.ny.gov.
BACKGROUND INFORMATION In May 2009, the Attorney General’s office subpoenaed investment firms and their agents in connection with New York public pension fund investments after determining that 40 to 50 percent of agents acting to secure investments from the state and city pension funds were
unlicensed. Last year, Cuomo announced his Public Pension Fund Reform Code of Conduct, which, among other things, bans investment firms from compensating intermediaries for introductions to public pension funds. To date, fifteen firms have endorsed the Code: investment firms The Carlyle Group, Riverstone Holdings LLC, Pacific Corporate Group Holdings, LLC, HM Capital Partners I, Levine Leichtman Capital Partners, Access Capital Partners, Falconhead Capital, Markstone Capital Group, Ares, Freeman Spogli, Quadrangle, and GKM; placement agent Wetherly Capital Group; political consulting firm Global Strategy Group; and lobbying firm Platinum Advisors. Two individuals have also agreed to abide by the Code of Conduct: unlicensed placement agents Kevin McCabe and Bill White. These firms collectively have agreed to return more than $100 million associated with CRF investments; these funds will principally be provided to the CRF for the benefit of the pension holders. Payments from individuals, including criminal defendants, bring that total to $138 million for the CRF and the State. Attorney General Cuomo’s investigation into corruption at the CRF has led to a number of criminal charges and six guilty pleas to date, including guilty pleas by the following individuals: former Chief Investment Officer at the Office of the State Comptroller David Loglisci; former Liberal Party Chair Ray Harding; investment advisor Saul Meyer; hedge fund manager Barrett Wissman; Julio Ramirez, an unlicensed placement agent; and venture fund manager Elliott Broidy. An indictment against former Comptroller Alan Hevesi’s paid political adviser, Henry “Hank” Morris, is pending and Morris is presumed innocent unless and until proven guilty in court. This investigation was conducted by Deputy Chief of the Public Integrity Bureau Stacy Aronowitz, Assistant Attorneys General Emily Bradford, Rachel Doft, Noah Falk, and Amy Tully, and Legal Aide Michael Ellis, under the supervision of Special Deputy Attorney General for Public Integrity Ellen Nachtigall Biben and Special Counsel to the Attorney General Linda A. Lacewell.
