Lobbyist settles in Cuomo's pension fund probe

By Jessica M. Karmasek | Dec 8, 2010


ALBANY, N.Y. (Legal Newsline) - New York Attorney General Andrew Cuomo on Wednesday announced agreements with Albany-based lobbyist Patricia Lynch Associates, Inc., and with pension fund advisor Aldus Equity in his office's public pension fund investigation.

According to the agreement, PLA will pay $500,000 to the state of New York. PLA founder Lynch also will be banned from appearing in any capacity before the New York State Comptroller's Office for any purpose for five years.

Cuomo's office claims that Lynch sought "to curry favor" at the OSC by arranging contributions for former state Comptroller Alan Hevesi's campaign, a consulting contract for the daughter of the chief of staff's girlfriend, and gifts "worth thousands of dollars" for the daughter. The contract for the daughter was with a PLA client then lobbying the OSC, the AG's office said.

In addition, Lynch improperly obtained $52,000 in placement fees from a New York City pension fund investment without having the necessary securities license and made repeated efforts to persuade the New York State Common Retirement Fund to approve investments proposed by her lobbying clients, the attorney general said.

Top staff at the CRF entertained these proposals at meetings with Lynch, where she had preferred access, but then ultimately declined to make the investments because they were unsuitable for CRF, Cuomo's office said.

"Gifts, favors and campaign contributions are not a legitimate basis for government contracts or special treatment," Cuomo said in a statement.

"Lobbyists whose stock-in-trade is pay-to-play have no business appearing before government agencies that safeguard taxpayer dollars. Those who market investments must follow the rules, and lobbyists are no exception."

Meanwhile, the Aldus agreement concerns the firm's responsibility for securities fraud engaged in by former Aldus principal Saul Meyer, who pleaded guilty in October 2009 to a Martin Act securities fraud felony charge for his conduct. At the time, Aldus was a leading outside advisor to numerous public pension funds, including the CRF and New York City pension funds.

Meyer is scheduled to be sentenced in the criminal case on Dec. 16, Cuomo's office said.

Under the terms of the agreement, Aldus and its current and former partners will pay restitution to the CRF for fees that Aldus received in connection with pension fund investments.

According to Cuomo, the deal provides for restitution through the payment of $1 million in cash, forfeiture of certain fees owed to Aldus, and forfeiture of interest in the Aldus/NY Emerging Fund, the fund Aldus had been managing on behalf of the CRF, worth millions of dollars.

Cuomo said both PLA and Aldus will cooperate in its investigation and comply with the office's Public Pension Fund Reform Code of Conduct, which, among other things, bans the use of placement agents to solicit investments from public pension funds.

With Wednesday's agreements, Cuomo's investigation has secured agreements with 18 firms and three individuals, garnering more than $160 million for New York and the pension fund.

The investigation also has led to eight guilty pleas, including pleas by Hevesi, his chief political consultant and his Chief Investment Officer.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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