Former New York pensions CIO pleads guilty to fund asset corruption

Decisions were driven by politics and greed, says NY state Attorney General.

David Loglisci, former chief investment officer for the New York State Comptroller’s office, has pleaded guilty to charges that he helped steer investments of the $129.4bn New York State Common Retirement Fund, Albany, to politically connected firms. Loglisci, who was indicted last year, will cooperate in the continuing investigation, according to Andrew M. Cuomo, New York State Attorney General. Loglisci faces up to four years in prison and is scheduled to be sentenced on June 17. “With today’s plea, a former top official overseeing the state’s single largest asset admitted that decisions were driven by politics and greed — not the best interests of the fund or its beneficiaries,” said Cuomo in a news release.
The plea agreement with Loglisci is part of an investigation spanning two years into corruption involving the comptroller’s office under Alan G. Hevesi and the pension plan. Hevesi has not been charged. Hevesi resigned as comptroller in December 2006, one month after winning re-election to a four-year term. He pleaded guilty to a single count of defrauding the government related to charges that he used state employees as chauffeurs and aides to his wife. InFebruary 2007, a joint session of the New York Legislature voted for Thomas P. DiNapoli to succeed Mr. Hevesi. As part of his plea, Mr. Loglisci admitted fiduciary missteps while CIO from January 2003 through May 2007. Mr. Loglisci acknowledged “breaching his duties and intentionally engaging in fraud, deception and concealment in connection with numerous investment transactions,” the news release said. It added that Mr. Loglisci “acknowledged abdicating his authority to Henry ‘Hank’ Morris, the top political adviser” to Mr. Hevesi, “in order to help steer hundreds of millions of dollars worth of investment deals to Morris and to politically favored firms.”
Mr. Loglisci admitted in his plea that he understood but kept silent about the fact that Mr. Morris played three conflicting roles at the state pension plan: he was the paid outside political consultant to Mr. Hevesi; he had a financial interest in multiple proposed alternative investments; and he made investment decisions on deals in which he had a financial interest. Mr. Morris was indicted last year along with Mr. Loglisci. Mr. Morris has pleaded not guilty and a court is expected to set a trial date for him in June.
Robert Steyer is a reporter at Pensions & Investments