PURCHASE, N.Y. (Legal Newsline) - New York Attorney General Andrew Cuomo is expanding his efforts to root out fraud and abuse in the New York state pension system.
For the past three years, Cuomo has spearheaded efforts to investigate and reform the state pension system and the New York State Comptroller's Office.
In expanding the investigation into "pension padding" and "pension spiking," which is the process of manipulating salary and overtime payments to acquire inflated pensions, Cuomo sent 11 local government employers and authorities with some of the highest salary or pension payments in the state letters. The letters seek payroll data and related data for pension recipients.
"In the midst of this financial crisis, as we are all trying to do more with less, it is essential that every system in New York operates as efficiently and effectively as possible," Cuomo said.
"My office continues to support the pension system and values the hard work that public employees do on behalf of the state. If any abuse exists in the pension system, however, it is important that it is purged and that taxpayer dollars are protected."
The New York State Common Retirement Fund, which funds the Employees Retirement System, has more than $129 billion and covers over one million members and retirees from more than 3,000 government employers. The CRF is primarily funded by taxpayers with an estimated $2.5 billion per year.
Eleven investment firms have agreed to sign Cuomo's Public Pension Fund Reform Code of Conduct, which resolves their roles in the investigation into pay-to-play practices with the CRF involving political advisors, a former CRF Chief Investment Officer and other investment officers.
The 11 firms include The Carlyle Group; Riverstone Holdings LLC; Pacific Corporate Group Holdings LLC; HM Capital Partners I; Levine Leichtman Capital Partners; Access Capital Partners; Falconhead Capital; Markstone Capital Group LLC; Wetherly Capital Group; Freeman Spogli & Co.; and Ares Management LLC.
More than $90 million will be returned to the CRF as a result of the 11 firms signing the reform code, bringing the total returned to more than $120 million.
Subpoenaes were also issued in May 2009 to investment firms and their agents following an investigation that found 40 to 50 percent of agents had obtained investments from New York pension funds were unregistered.
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