NEW YORK (Reuters) – A firm affiliated with Henry Morris, the former New York state comptroller’s top fundraiser, was involved with helping investment firms procure pension fund business in New Mexico as well as New York, a source and one of the firms said on Sunday.
Last month, Morris and David Loglisci, New York State’s pension investment chief, were charged with taking millions of dollars in kickbacks from money manager firms.
Morris, who was associated with Connecticut-based advisory firm Searle, made over $15 million in purported placement and finder fees between January 2003 and December 2006, a U.S. Securities and Exchange Commission complaint said in March.
The scheme is alleged to have centered around the New York pension fund, but Searle was also used to procure investments in New Mexico, one firm and a source said on Sunday.
The Carlyle Group, one of the world’s biggest private equity firms, used Searle in New Mexico a couple of years ago, a spokesman for Carlyle confirmed. Carlyle has not been accused of any wrongdoing in connection with the probe.
“We used Searle to obtain an investment from the New Mexico State Investment Council and disclosed it to them at the time,” the spokesman said. He added Carlyle only used Searle to obtain investments from the New York and New Mexico investment funds.
Private equity firm Quadrangle Group also hired Searle seeking an investment from the New Mexico fund, a source close to Quadrangle said. However, although Quadrangle did receive an investment from the fund, it did not pay Searle a fee, said the source, who did not want to be identified because the matter had not been made public.
Quadrangle, which has also not been accused of any wrongdoing, was co-founded by Steven Rattner, the leader of the Obama administration’s auto task force.
The Wall Street Journal cited a spokesman for the New Mexico fund saying that Quadrangle and Carlyle used Searle & Co, to get investments from the government-run fund in New Mexico. The New Mexico fund was not immediately available for comment.
Separately, Morris or one of his associates placed or tried to place other investment firms with government-run funds in California, New Jersey, Connecticut and New York City, the Wall Street Journal reported, citing person familiar with the matter.
The first criminal charges related to the scheme were brought last month by New York state attorney general Andrew Cuomo, who accused Morris and Loglisci with taking million-dollar kickbacks. The two men, whose lawyers say they are innocent, also face civil charges from the SEC.
More than 20 investment deals made by the state’s pension fund were “tainted” by the kickbacks, Cuomo said at the time.
(Reporting by Megan Davies and Jui Chakravorty Das; Editing by Lincoln Feast)