Pension probe snares ex−Liberal boss

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State Attorney General Andrew Cuomo filed charges last week against the former head of the state Liberal Party, claiming he received illegal fees tied to state pension fund investments in exchange for political favors, including opening up a Queens state Assembly seat for former state Comptroller and Forest Hills resident Alan Hevesi’s son, Andrew Hevesi.

Raymond Harding, the former state Liberal Party chairman, allegedly helped Assemblyman Andrew Hevesi’s (D−Forest Hills) predecessor, Michael Cohen, get a six−figure job at a health insurance company in early 2005, paving the way for the Assembly seat to be vacant for Andrew Hevesi, according to the charges filed by Cuomo’s office.

Cuomo said the charges do not claim Andrew Hevesi was aware of the maneuvers made on his behalf.

Andrew Hevesi could not be reached for comment.

Cohen, who is running for the City Council seat now held by City Councilwoman Melinda Katz (D−Forest Hills), released a statement saying he did not trade his Assembly seat for the health care job.

“My family, friends and neighbors are very familiar with the reasons why I left Albany in 2005, after just over six years as a state assemblyman, to be closer to home. I’m not in the habit of discussing such personal matters, but needless to say it was an exceedingly difficult time,” he said. “At no time when I was thinking about leaving the State Assembly did I seek to trade upon my office. Among those to whom I expressed an interest in employment closer to home was one now the subject of investigat­ions.”

An unnamed, high−ranking official in Alan Hevesi’s office allegedly helped Andrew Hevesi gain the backing of the Queens Democratic Party and then asked an aide to then−Gov. George Pataki to quickly call a special election for the Assembly seat, Cuomo said.

Andrew Hevesi was elected to the seat in May 2005.

When Cohen decided not to seek re−election, he told the TimesLedger he was stepping down because he wanted to be closer to his family and accepted a job with the Health Insurance Plan of New York. Cohen’s wife had a serious illness.

Former City Councilman Anthony Como, who ran against Andrew Hevesi in the special election, said he did not have any suspicions of impropriety surrounding the election.

“I didn’t feel any type of misconduct from (Cohen’s) stepping down,” he said. “No one questioned it because we knew (his wife) was ill.”

The attorney general claimed Harding received $800,000 in illegal fees on state pension fund investments, while Alan Hevesi controlled the fund as comptroller.

Harding allegedly received the fees for opening the seat for Andrew Hevesi and for securing political endorsements for Alan Hevesi, according to the charges.

Under Hevesi’s control, the pension fund “was used as a piggy bank for the comptroller’s chief political aide [Hank Morris] and a favor bank for political allies and other friends,” Cuomo said.

“This case strikes at the heart of public integrity and accountability and transparency the people of New York deserve from their government,” the attorney general said. “The state pension fund should not be used as a political tool — it is held in trust for over 1 million state employees and their families. Our investigation will continue until we have unearthed all aspects of this scheme and restored the public trust.”

Alan Hevesi has not been charged in the pension fund investigation Cuomo began two years ago, but Morris, Hevesi’s former political adviser, and David Loglisci, the chief investment officer of the fund under Alan Hevesi, were indicted last month.

Alan Hevesi, who was state comptroller from 2003−07, resigned in February 2007 after it was revealed he used a state driver to act as a chauffeur or his ailing wife, claiming there were threats to her security. But the State Police found there were no threats against Hevesi’s wife that warranted the state driver.

Hevesi, an assemblyman and city comptroller before being elected state comptroller, paid a $5,000 fine related to the driving scandal, but did not receive jail time.

Harding allegedly took part in a scheme devised by Morris and Loglisci to invest pension funds in companies that favored political allies, friends and family, Cuomo said.

In May 2004, the pension fund invested $20 million in Paladin Homeland Security Fund, a private equity fund that focuses on homeland security investments, which Cuomo maintained was “politically connected.”

Cuomo said the fund’s founding partner, Michael Steed, was a former executive director of the Democratic National Committee, and its managing director, William Mulrow, ran in the 2002 state comptroller Democratic primary against Hevesi.

The attorney general claimed Harding received $300,000 in sham placement fees for steering pension funds to Paladin and another $500,000 for directing business to Pequot Diversified Offshore Fund, where $100 million in state pension funds was invested.

Reach reporter Howard Koplowitz by e−mail at hkoplowitz@cnglocal.com or by phone at 718−229−0300, Ext. 173.

Updated 6:35 pm, October 10, 2011
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