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Top Political Consultant Pleads Guilty to Pay-to-Play Scheme

Former Car Czar Continues to Maintain Innocence

Tuesday, November 23, 2010

Hank Morris, once one of New York's most powerful political consultants, pled guilty to a felony in connection with New York State pension fund scandal. Morris, the top political advisor to former State Comptroller Alan Hevesi, admitted in court that he "intentionally engaged in fraud and deception" when he helped shape the scheme to sell access to the state's multi-billion dollar public pension fund. 

As part of his plea deal, Morris will forfeit $19 million — the sum prosecutors say he pocketed from promoting $5 billion dollars in state pension investments. Morris could face four years in jail and will be sentenced on February 1. Had he gone to trial on the multiple criminal counts he faced initially, he could have been sentenced to up to 25 years.

In 1998, Morris was the mastermind behind then-Congressman Charles Schumer's upset win over Senator Al D'amato. The plea deal covers Morris' actions from January 2003 through December 2006.

During his appearance in court, Morris layed out how he brought in Ray Harding, the former leader of the Liberal Party, to pockets fees from a pair of pension fund investments. Morris also admitted soliciting campaign cash for Hevesi's reelection bid from people who then got access to investment funds from the multi-billion dollar public employee pension fund.

Initially, Morris had vowed to fight the charges and some legal observers thought he could prevail.

Morris' guilty plea brings the number of convictions in the scandal to eight. So far, Attorney General Andrew Cuomo has collected close to $160 million in fines for the state pension fund. Last year, Cuomo rolled out his Public Pension Fund Reform Code of Conduct that was endorsed by investment firms like The Carlyle Group that were caught up in the scandal.

Last week, Cuomo sued former auto czar Steven Rattner for $26 million for his alleged involvement in the scheme. Cuomo is seeking to ban Rattner for life from New York state's securities industry. On the same day Cuomo filed his suit, Rattner settled with the Securities and Exchange Commission without admitting any wrongdoing. That settlement required Rattner pay more than $6 million and submit to a two year ban from the securities business. At the end of that suspension, he will have to reapply to the SEC.

On Tuesday, Rattner attacked Cuomo on MSNBC for pursuing a "political" prosecution of him. “Andrew Cuomo seized on this as a political issue during he campaign, and before his campaign," charged Rattner. "He has taken it to great extremes.”

Rattner complained that he felt "bullied," and if "forced to fight," he would take Cuomo on. Rattner has consistently said that he is innocent of the charges drawn up by Cuomo. Rattner, a former New York Times reporter, is also a major Democratic fundraiser.

Last year, Rattner's old firm Quadrangle, which was also charged in the probe, settled with Cuomo for $12 million and issued a public letter highly critical of what it said was Rattner's role in the pay to play scheme. (Rattner is now suing Quadrangle.)

In more halycon times, Mayor Michael Bloomberg selected Rattner and Quadrangle to manage his personal fortune. Bloomberg has consistently stood by his wealth manager, defending his innocence from the first day Rattner's name surfaced after leaks to the Wall Street Journal and The New York Times identified him as the Quadrangle official at the center of the alleged wheeling and dealing to get ahold of $150 million of public pension money to invest.

For months, Rattner has traveled the country on a high profile book tour touting his brief stint of high profile public service. Often interviewers make no reference to Rattner's proximity to the pay-to-play pension scandal. In his book, Overhaul, he does address the scandal and says that before he did any business with Hank Morris, he touched based with Senator Charles Schumer to vouch for Morris's character.

Rattner, who started his day on Monday on Morning Joe before dawn, also showed up on Charlie Rose. Rose, who was well-acquainted with the ins and outs of the pay to play pension scandal, put Rattner through the most rigorous questioning yet on the scandal.

Rattner continued to defend himself as the victim of an overzealous prosecutor in Attorney General Cuomo who he says has resorted to "near extortion" tactics to get Rattner to settle.

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