Another Pay-to-Play Resolution Falls Short

When does a $20 million fine not suffice as punishment for bad deeds? When you can: (a) Afford it; (b) It preempts you from facing criminal charges of bribing public pension officials; (c) That lack of charges lets you keep a high-paying job that may replenish your platinum coffers; and (d) You don’t have to admit to actually having committed any bad deeds.

Such is the situation in New York, where Riverstone Holdings co-founder David Leuschen agreed to pay $20 million “in restitution” for the benefit of the New York State Common Retirement Fund. This follows an earlier agreement whereby Riverstone agreed to pay $30 million.

What did Leuschen do wrong? Officially nothing. Sure he “invested” $100k into a straight-to-vid flick produced by the brother of NYCRF’s chief investment officer. And that chief investment officer did direct hundreds of millions of dollars in Riverstone funds (not to mention the whole Hank Morris placement agent and Alan Hevesi contribution angles). But so long as the check is big enough, Leuschen gets to avoid the prospect of a felony conviction that would allow – almost require – Riverstone LPs to remove Leuschen from the general partnership.

Just once, I’d like Andrew Cuomo to indict a major private equity firm or executive as part of this disgraceful mess (Saul Meyer was nice, but he was more of a service provider). And if Cuomo doesn’t have the evidence to convict, then don’t strong-arm folks into shelling out millions via the threat of prosecution.

Again, Cuomo’s intent is good. It’s his execution that bothers me.