Another One Settles

With a $30 million check, private equity group Riverstone has become the second firm to settle in Attorney General Andrew Cuomo's probe into alleged kickbacks at the state pension fund. Carlyle settled last month, for $20 million. The two firms were joint venture partners in seeking investments from the fund, with the help of the political hand/placement agent Hank Morris:

Prior to retaining Searle [Morris' firm], the companies had experienced limited success in obtaining investments from CRF [the Common Retirement Fund]. However, after retaining Searle, they obtained approximately $530,000,000 in total investment commitments from CRF in Carlyle/Riverstone funds. In exchange, Carlyle paid Searle over $10,600,000.

Apparently Riverstone felt the need to add a sweetener:

soon after the CRF’s $150,000,000 investment in Carlyle/Riverstone Global Energy & Power Fund II, a principal of Riverstone made an “investment” of $100,000 in Chooch, a film produced by the brother of then Chief Investment Officer to Comptroller Hevesi, David Loglisci...Riverstone employees also made approximately $40,000 in campaign contributions to Comptroller Hevesi’s campaign in 2004.

Asked by a reporter whether Riverstone's co-founder and Chooch supporter David Leuschen is still under investigation and could face charges, Cuomo said this: "Mr. Leuschen is not included in this resolution so it is still an open matter."

Cuomo is also heavily touting a "code of conduct" to cut placement agents out of the business. So far, only Carlyle and Riverstone have signed on. It'll be interesting to see how the half dozen or so other firms involved will handle this predicament. Make a cash settlement and hopefully avoid charges, or follow Aldus Equity into a thicket of lawsuits.

By the way, the $50m obtained so far from settlements will go directly into the pension fund. Which could use every penny.