New Charges Filed in New York Kickback Scheme

There are new charges this morning in the New York pension kickback case, but not against any of the private equity firms that paid (perhaps unwittingly) for access. Instead, state Attorney General Andrew Cuomo filed a criminal complaint against Raymond Harding, former chair of New York’s Liberal Party, for partering on the scheme with already-indicted David Loglisci and Hank Morris.

According to a statement from Cuomo’s office, Harding allegedly:

“obtained over $800,000 in illegal fees on State pension fund investments as a reward for opening up a State Assembly seat for then Comptroller Alan Hevesi’s son and for over 30 years of prior political endorsements…

In May 2004, the State pension fund made a $20 million investment in Paladin Homeland Security Fund (NY), a private equity fund focusing on homeland security investments. Paladin is a politically-connected firm, including founding partner Michael Steed, a former Executive Director of the Democratic National Committee, and Managing Director William Mulrow, who ran in the primary for New York State Comptroller against Hevesi in 2002. Harding is charged with receiving $300,000 in sham placement fees on this transaction. In October 2005 and June 2006, the State pension fund invested $100 million in Pequot Diversified Offshore Fund, plus an indirect $10 million investment in Pequot Private Equity Fund IV through a fund of funds.  Harding is charged with receiving over $500,000 in sham placement fees from a person affiliated with Pequots placement agent, Shelbourne Securities LLC.”

Harding is charged with multiple violations of the Martin Act. 

Cuomo also announced that Barrett Wissman, a former manager of hedge fund Hunt Financial Ventures, has pled guilty to his participation in the scam. As part of his plea, Wissman has agreed to repay $12 million to the state. It’s possible that Wissman’s confessions could prove problematic for The Carlyle Group and Riverstone Holdings, since Wissman reportedly was paid $5 million for helping to steer NY Common money to an energy PE fund co-managed by Carlyle and Riverstone.

Here is a copy of the complaint:

Harding Complaint – FINAL

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