By Karen Freifeld
NEW YORK, Feb 26 (Reuters) - The U.S. Securities and
Exchange Commission is in settlement discussions with four
people who pleaded guilty to criminal charges in New York for
their roles in a "pay to play" scheme involving the state
pension fund, according to a court filing.
The settlement discussions stem from a probe by the SEC and
former New York attorney general Andrew Cuomo, now the state's
governor, of money managers and placement agents in connection
with access to the New York state Common Retirement Fund.
The investigation revealed how politics and placement fees
resulted in favored treatment by public pension funds
In a letter filed Feb. 25 in federal court in Manhattan, the
SEC said it had "made progress" toward a resolution of claims
with Henry "Hank" Morris, the former political consultant at the
heart of the New York scheme; David Loglisci, the former chief
investment officer at the pension fund; Julio Ramirez, a former
Los Angeles placement agent; and Saul Meyer, the founder of the
Dallas-based pension consultant Aldus Equity.
The SEC's letter was sent to U.S. District Court Judge Paul
Oetken to notify him that all the defendants had been sentenced
in connection with their parallel criminal case. Meyer was the
last to be sentenced, in December 2012.
The four in settlement talks are among eight people who
pleaded guilty in New York state court for their roles in the
scheme. Another six, including Steve Rattner, co-founder of
private equity firm Quadrangle Group LLC, and over 20 firms
agreed to civil settlements and paid more than $170 million.
Former New York state comptroller Alan Hevesi, who ran the
pension fund from 2003 to 2006, during the period the corruption
occurred, went to prison. He pleaded guilty to illegally
receiving $1 million in gifts and campaign donations. He was
freed in December.
Morris, who pleaded guilty to securities fraud, is still
incarcerated. As part of his guilty plea, he agreed to forfeit
$19 million in fees that he received through 23 investments for
which he acted as an undisclosed placement agent, according to
'CULTURE OF CORRUPTION' ALLOWED
Loglisci, who also pleaded guilty, received a conditional
discharge in October for allowing a "culture of corruption" at
Meyer also received a no-jail sentence. He pleaded guilty to
fraud charges for paying Morris $300,000 in return for getting
money from the pension fund to invest. As part of his
conviction, he paid $1 million in restitution.
Ramirez pleaded guilty in 2009 to a misdemeanor violation of
a state securities fraud statute. He was sentenced in January
2012 to a conditional discharge, provided he forfeited $289,000
in the criminal case.
Ray Harding, former chair of New York's Liberal Party,
admitted in the criminal case in 2009 that he wrongly took
$800,000 in fees from transactions with the pension fund. He has
In its letter, the SEC said it had already entered a partial
final consent judgment as to Barrett Wissman, former managing
director of Dallas-based hedge fund HGV Management. The letter
said the SEC deferred disposition of monetary relief pending a
consensual resolution or court decision.
Wissman gave $600,000 in kickbacks to a political consultant
between 2004 and 2007 in exchange for a $100 million investment
by the New York pension fund in an HFV fund, according to
Wissman was allowed to withdraw his 2009 felony plea in the
case in September. He paid $12 million as part of a plea
agreement with the New York attorney general. He pleaded guilty
to a misdemeanor and received no jail time and a conditional
William Schwartz, who represents Morris, declined to comment
on the SEC's letter.
Paul Shechtman, who represents Meyer, also declined to
Loglisci was not required to make any payments as part of
the resolution of the criminal case, according to his lawyer.
"We are hopeful this will resolve shortly and Mr. Loglisci
can move on with his life," Loglisci's lawyer, Kevin Keating,
Michael Gardner, who represents Wissman, had no immediate
A lawyer for Ramirez could not immediately be reached for
The case is SEC v. Henry Morris, 09-02518, U.S. District
Court, Southern District of New York.
For SEC: Dominick Barbieri.
For Morris: William Schwartz of Cooley.
For Meyer: Paul Shechtman of Zuckerman Spaeder.
For Loglisci: Kevin Keating of the Law Office of Kevin
For Wissman: Michael Gardner of Bickel & Brewer.
For Ramirez: Not immediately available.
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