Ex-official pleads guilty in NY pay-to-play pension probe, admits politics guided investments

Ex-official admits guilt in NY pension probe

NEW YORK — A former top investment officer for New York’s state pension fund admitted Wednesday that he helped channel hundreds of millions of dollars in public retirement money to investment firms that paid kickbacks to other officials to get the business.

David Loglisci pleaded guilty Wednesday to a securities fraud charge, becoming the highest-ranking member of former state Comptroller Alan Hevesi’s administration to admit a role in the “pay-to-play” scheme.

“Investment decisions were made in part according to political benefit for the comptroller, rather than exclusively in the best interests of the people,” Loglisci, 38, said in a statement read in court. “The political motivations for investment selection were chronic and institutionalized throughout the office, creating a culture of corruption at the highest levels.”

It’s unclear exactly how high those levels may go. State Attorney General Andrew Cuomo, who is conducting the continuing investigation, declined to say whether he believed Hevesi was aware of the pension fund scheme.

The investigation — which tangentially involves a low-budget movie and a 1960s actress — has spurred changes in state pension investment procedures.

Hevesi oversaw the roughly $150 billion pension pool from 2002 until late 2006, when he resigned after pleading guilty in an unrelated case involving the misuse of a state driver. He has not been charged in the pension probe and has denied any wrongdoing.

Loglisci (pronounced loh-GLEE’-see) had authority to decide how to invest the fund. It holds the retirement assets of more than 1 million state and local government employees and retirees.

Loglisci said he got and kept the high-profile job by letting Hevesi political adviser Hank Morris take control of many investment decisions and use them as political plums.

Morris gave the investment business to firms that contributed to Hevesi’s campaign and paid hefty “placement fees” to Morris, his friends and other “senior officials,” Loglisci said. The attorney general’s office declined to identify the officials.

Morris has pleaded not guilty to racketeering, securities fraud and other charges in the pension probe. His lawyer didn’t immediately return a call Wednesday.

A lawyer for Hevesi said the former comptroller never told Loglisci to let Morris hold sway over the investment choices. “Any implication or suggestion to the contrary is patently false,” said the attorney, Bradley Simon.

Loglisci’s lawyer, Kevin J. Keating, said his client “found himself in a nearly impossible situation” working with the pension fund.

“David Loglisci never asked anyone for a single cent,” Keating added.

A number of investment advisers who were seeking a piece of the pension-fund business did, however, finance a 2003 film produced by Loglisci’s brother, Steven Loglisci. Called “Chooch,” the comedy caper was set in Queens and Mexico.

Keating said David Loglisci had no financial interest in the film and didn’t solicit investments for it.

“Chooch” wasn’t the only cinematic connection to the retirement fund probe. A venture capitalist pleaded guilty in December to wooing pension fund business by giving illegal gifts to state officials — including about $90,000 for an official’s girlfriend, who has been identified as actress Peggy Lipton. Lipton, famous for starring in the 1960s TV show “The Mod Squad,” hasn’t been accused of any wrongdoing.

Loglisci faces up to four years in prison at his sentencing, set for June 17. He is free on bail in the meantime. He left the comptroller’s office in 2007.

Five other people have pleaded guilty in the pension probe, including investment advisers and Raymond Harding, the former chairman of the state’s now-defunct Liberal Party. Harding admitted he got more than $800,000 in placement fees as a reward for his political support for Hevesi.

Loglisci’s plea “raises the level of what we’ve done to new heights” because of Loglisci’s key position, Cuomo said.

Cuomo, who is widely expected to run for governor this year, has called for putting the pension fund under the control of a board of trustees, instead of the comptroller. Meanwhile, Hevesi successor Thomas DiNapoli has banned the use of agents and lobbyists in making investments, among other changes designed to curb influence-peddling.