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Hevesi pleads guilty in pay-to-play

NEW YORK CITY — Former New York state Comptroller Alan Hevesi pleaded guilty to a felony corruption charge Thursday for accepting free travel and campaign contributions from a financier who wanted the state’s multibillion-dollar pension fund to invest in his company.

Appearing in a Manhattan courtroom, Hevesi said he was sorry for his role in the pay-to-play scandal that has wracked one of the world’s largest government pension funds.

“I deeply regret my conduct and sincerely and deeply apologize to the people of the state of New York, to the court, and to my family,” he said.

Hevesi admitted that he allowed a California venture capitalist to pay for him and his family to take five trips to Israel and one to Italy, at a total cost of about $75,000. The businessman, Elliott Broidy, also arranged for $500,000 in campaign contributions.

Around the same time, Hevesi authorized the pension fund to invest $250 million in Broidy’s company, Markstone Capital Partners.

The plea is the culmination of a yearslong probe of a scandal in which Hevesi aides and associates were accused of extracting millions of dollars in kickbacks from money management firms that had been awarded lucrative state investment contracts.

Hevesi could get anywhere from no jail time to a range of 1 1/3 to 4 years in prison. His sentencing hearing was scheduled for Dec. 16.

He was released without having to post bail and brushed off questions from reporters as he left the courthouse.

Hevesi has already given up his office. He resigned in 2006 after pleading guilty to a felony in an unrelated case for using state workers to chauffeur his wife.

Investigators in the office of Attorney General Andrew Cuomo have spent years probing allegations that top Hevesi aides exploited their positions for personal profit. More than 15 companies accused of making questionable payments were swept up in the investigation, including some big players on Wall Street and in Washington, D.C.

The case led to spinoff investigations of similar pay-to-play allegations in California and New Mexico, and prompted the Securities and Exchange Commission to propose new rules restricting political donations by money managers seeking state business.

In New York, Cuomo accused Hevesi’s longtime political consultant, Hank Morris, and the retirement system’s chief investment officer, David Loglisci, of cashing in on the $125 billion pension fund’s investments in private equity.

Prosecutors said the pair told money managers that if they wanted to do business with the state, they could sweeten their chances by paying hefty “placement” fees to the right people.

Many embraced the idea.

The Carlyle Group, one of the world’s largest private equity firms, paid $13 million to Morris for his help in landing $730 million in state investments.

The Quadrangle Group, then run by former Obama auto industry czar Steven Rattner, secured a $100 million pension fund deal after agreeing to pay Morris placement fees worth $1 million.

Rattner also arranged for a film distribution company owned by Quadrangle to release a DVD of a low-budget movie produced by Loglisci’s brother. Several other money managers doing business with the pension fund, including Broidy, also invested in the movie, a screwball comedy called “Chooch.”

Morris has pleaded not guilty to a number of criminal charges in connection with the alleged scheme. He and his lawyers have argued in court papers that, since he wasn’t a state official, there was nothing illegal about him using political connections to help clients get state money.

Loglisci pleaded guilty in March to a securities fraud charge.

Broidy pleaded guilty in December to a felony charge of rewarding official misconduct. In court, he admitted subsidizing the luxury travel of a high-ranking official in the comptroller’s office, revealed Thursday to be Hevesi himself.

The trips involved first-class airfare for Hevesi and his family, luxury hotel suites, a helicopter tour, a car with a driver and a security detail. He also arranged to have a lobbyist friend of Morris’ paid $380,000 in consulting fees.

A string of other investment advisers, lobbyists and minor political figures have also pleaded guilty to charges, most carrying a low risk of jail time.

Raymond Harding, the former head of New York’s defunct Liberal Party and a longtime ally of Hevesi, pleaded guilty a year ago to securities fraud. He acknowledged receiving a kickback as a reward for doing a political favor for Hevesi.

The former head of the Intrepid Sea, Air and Space Museum in New York City, Bill White, agreed last month to forfeit $1 million in placement fees he received in connection with pension fund deals. White had also raised money for Hevesi’s campaign.