New York attorney general and soon-to-be governor, Andrew M. Cuomo, announced today a settlement with Steven L. Rattner, the Obama administrations former car-czar, over an investigation and charges that he engaged in a kickback scheme involving the New York Common Retirement Fund.
Rattner will pay a fine of $10 million fine and will be barred from doing business with any New York pension fund for five years. Sources said that Cuomo was previously seeking a $26 million penalty.
Rattner was accused of paying Hank Morris, an aide to former state comptroller Alan G. Hevesi, for his help in securing business from the $135 billion fund. Morris pleaded guilty earlier this month to providing illegal access to the fund.
Officials said that Morris also arranged for Rattner to funnel $50,000 in campaign contributions to Hevesi’s reelection campaign for state comptroller through third parties, to conceal the true identity of the donor. After making the illegal donations, Quadrangle’s state pension monies under management increased from $100 million to $150 million.
Cuomo also charged Rattner with providing special favors to the brother of a senior pension fund official. The brother, a Hollywood producer, was helped by Rattner in securing distribution of a low-budget film called Chooch, through a DVD company owned by Quadrangle. Rattner also helped the brother secure a deal with IFC, a cable outlet partly owned by Quadrangle. Rattner was also a member of IFC’s board of directors.
“I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation,” Cuomo said in a statement. “The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund.”
Rattner, who had been openly critical of Cuomo over the charges, said “I am pleased to have reached a settlement with the New York attorney general’s office, which allows me to put this matter behind me. I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult. I respect the work of the attorney general and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers.”
Before founding Quadrangle, Rattner was a reporter for The New York Times and an investment banker for Lazard in New York. When he was appointed to the auto czar post in February 2009, he listed his net worth on federal disclosure firms as between $188 million and $608 million.