May 8, 2007
Cuomo Announces Inquiry Into Conflicts Under Hevesi
By NICHOLAS CONFESSORE

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ALBANY, May 7 — Attorney General Andrew M. Cuomo said on Monday that his office was investigating “very troubling, serious, systemic conflicts of interest” in the way the comptroller’s office has managed the state’s $145 billion pension fund.

Mr. Cuomo said that since January, his office’s public integrity unit, in conjunction with the Albany County district attorney, P. David Soares, had been investigating management of the pension fund. He emphasized that the investigation predated the Legislature’s selection of Thomas P. DiNapoli as state comptroller in February and that Mr. DiNapoli was cooperating with it.

He would not say whether his investigators had spoken with Alan G. Hevesi, who resigned last December after admitting that he had used state employees as chauffeurs for his wife and pleading guilty to a felony count.

New York state’s pension funds are unusual among large funds in that they are managed by a sole trustee — the elected state comptroller — instead of a board of trustees, giving the comptroller tremendous latitude in choosing investments and awarding millions of dollars in management fees. Several past comptrollers were criticized for awarding such work to campaign contributors.

Mr. Cuomo would not divulge details of the investigation. Under state law, the attorney general has civil jurisdiction in many public corruption cases, while the Albany district attorney has criminal jurisdiction. Mr. Cuomo and Mr. Soares pledged shortly after Mr. Cuomo took office this year to pool resources on investigations and act more aggressively to prosecute fraud and conflicts of interest.

“Suffice it to say, in this case I believe there is potential for both criminal and civil exposure,” Mr. Cuomo said at a news conference.

A spokeswoman for Mr. Soares said he could not comment on investigations under way.

The Daily News reported on Monday that Jack Chartier, who was chief of staff in Mr. Hevesi’s office, was one subject of the investigation. According to the article, investigators were looking into whether companies seeking to do business with the pension fund had made gifts to the actress Peggy Lipton, a close friend of Mr. Chartier.

The investigation also includes Mr. Hevesi’s longtime political consultant, Hank Morris, and Elliott Broidy, a California financier and Republican fund-raiser, according to The News. Both men may have benefited from pension fund investments made during Mr. Hevesi’s tenure. The fund at various times invested in a company called eSpeed, on whose board Mr. Morris served, and committed $250 million to a private equity firm of which Mr. Broidy is chairman.

The latter investment is still active. A spokesman for Mr. DiNapoli said the pension fund formerly owned shares in eSpeed, through several different companies, known as discretionary account managers, that invest on behalf of the fund, but had not owned any eSpeed shares since last November.

On Monday, Mr. Cuomo described questions about Mr. Chartier as “the tip of the iceberg in some ways.”

Separately, Mr. DiNapoli said on Monday that he would make several changes to prevent future wrongdoing in the comptroller’s office. They included setting up a hot line for anonymous tips, and appointing an inspector general who would be obligated to report to law enforcement authorities any legal or ethical violations by employees of the comptroller’s office.

“We can’t change what happened during the prior administration,” Mr. DiNapoli said in a news release, “but I can change what will happen during my administration.”