New York state pension fund trustee pleads guilty to taking bribes

A former New York state official, who served as sole trustee to a $125-billion public pension fund, pleaded guilty Thursday to charges he took nearly $1 million in bribes from Los Angeles venture capitalist and philanthropist Elliott Broidy.

In exchange for the bribes, Alan Hevesi, the elected New York comptroller from 2003 until his forced resignation in 2006, approved the fund’s $250-million investment in Broidy’s Markstone Capital Partners, a private-equity fund that invests in Israeli companies.

Last December, Broidy resigned from Markstone and pleaded guilty to what New York Atty. Gen. Andrew Cuomo characterized as “an old-fashioned payoff of state officials,” part of an extensive “pay-to-play” scandal involving state pension fund investments.

Broidy, who agreed to cooperate with Cuomo’s investigation, has not been sentenced but faces as many as four years in prison.

In a related civil settlement, Markstone’s new management, based in Tel Aviv, agreed to return $18 million to New York. Markstone was not accused and did not admit any wrongdoing in connection with the settlement.

Broidy also has been a target of related investigations in California into pension fund investments and the activities of sales intermediaries known as placement agents.

The Securities and Exchange Commission, the California Public Employees’ Retirement System and California Atty. Gen. Jerry Brown are looking into some of the same types of investments that Cuomo investigated.

Broidy, after securing his New York pension fund investment, won a similar deal for $50 million with CalPERS. Hevesi helped him with the pitch by flying to California to meet with then-state Treasurer Phil Angelides, a member of the CalPERS board, according to CalPERS documents.

Broidy also cultivated a relationship with another board member, then-state Controller Steve Westly, whose name he invoked in letters to other CalPERS board members touting Markstone, according to public documents.

CalPERS’ continuing relationship with Markstone is under review, pension fund spokesman Brad Pacheco said.

Hevesi pleaded guilty to one felony corruption charge of receiving reward for official misconduct and faces as many as four years in prison. He has agreed to cooperate with the New York investigators, who already have netted seven earlier guilty pleas from state officials, investment managers and sales intermediaries.

So far, Cuomo has recovered $138 million for the state public pension fund and treasury from 15 investment firms and two individuals.

“Allan Hevesi presided over a culture of corruption and violated his oath as a public servant,” Cuomo said. “He was solely charged with protecting our pension fund, but he exploited it for his personal benefit instead.”

According to the attorney general’s office, Broidy lavished Hevesi, other state officials and their families with gifts, including $75,000 in travel expenses, $380,000 in sham consulting fees and $500,000 in political campaign contributions that were directed by Hevesi.

The consulting fees were paid to a lobbyist who was a friend of Henry “Hank” Morris, Hevesi’s paid political advisor and campaign manager. Morris has pleaded not guilty to political corruption charges.

During Hevesi’s tenure, Broidy paid for at least five trips to Israel, one to Italy and several fundraising jaunts to California, the attorney general’s office said. All the trips featured first-class air travel, chauffeured cars, top-flight hotel suites and full security details.

Broidy concealed his payments for some of the expenses by channeling them through charitable organizations and submitting false invoices to the state, the attorney general’s office said.

Broidy also bankrolled the production of a low-budget movie for the brothers of a former top lieutenant to Hevesi, David Loglisci, Cuomo said.

marc.lifsher@latimes.com