Alan Hevesi: Shakedown at the Pension Fund

The fiscal watchdog's team wrote its own rules

The tough legal theory behind the criminal case against Morris being pushed by Cuomo and his forceful prosecutors, Linda Lacewell and Ellen Biben, is that the consultant became the de facto ruler over pension investments, and thus owed taxpayers the same fiduciary duty as any state official. Morris's able attorney, William Schwartz, quickly seized on that loophole, saying his client is a private citizen who had "lawfully introduced" the fund to investors. Loglisci also did no wrong, said his lawyer, the venerable Irving Seidman.

But for any political reporter who's watched over the past decade as Morris exerted almost Svengali-like control over Hevesi's political behavior, the notion of a Morris takeover isn't such a stretch. It gets even more credible given the indictment's startling assertion that Morris, Hevesi, and Chartier, a/k/a John Doe 2, held regular meetings about pension fund investments at the Madison Avenue offices of Morris's political consulting firm. What? They didn't have conference rooms at the comptroller's Third Avenue headquarters?

Cuomo said that the scandal he found inside Hevesi's office resulted from a "toxic mix" between two viral ingredients: the state's ever-porous campaign fundraising laws, and the comptroller's one-man rule of the pension fund. "You put the two of them together, and it's a deadly cocktail," said the attorney general.

While the fund lasted: Hevesi (left) and adviser Morris
Frances M. Roberts/Newscom
While the fund lasted: Hevesi (left) and adviser Morris

That combustible combination has exploded before. Back in 1988, comptroller Ned Regan kept his own Chartier/Morris figure on the state payroll. The aide, Joe Palumbo, took his own doltish step too far, committing his boss's fundraising strategy to paper: "Those who give will get," he typed. He then left his clever advice lying around. A copy soon reached Jack Newfield and myself.

The memo led to a week-long series in The Daily News, a grand jury probe, and dramatic public hearings by a special State Commission on Government Integrity. The panel was an attempt at political shock therapy, aimed at creating a reform groundswell. In its final report in 1990, Commission chairman John Feerick challenged Governor Mario Cuomo to revamp the campaign laws, terming them "a disgrace and embarrassment." Little changed, leading to this latest scandal, which is as big as any back then. What it does do is give the Cuomo family one more shot at some critical unfinished business.

Correction: In the original version of this story, Tom Robbins erred in describing Levine Leichtman Capital Partners as a "client" of indicted political consultant Hank Morris. Although documents filed in connection with the case give that impression, subsequent information suggests that Levine Leichtman was unaware that legitimate fees it paid to secure pension fund work were allegedly secretly shared with Morris.
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