Hevesi's Friends in Need

Political pals cashed in on pension fund business

Also suddenly eager to break into the investment business after Hevesi became the sole trustee of the state's pension fund was a former top City Council aide from Queens named Kevin McCabe. Referred to as "Individual B" by the SEC, and as another unnamed "political crony" by the Attorney General, McCabe was chief of staff in the '90s to former City Council Speaker Peter Vallone Sr. A close ally of late Queens Democratic Party leader and congressman Tom Manton, McCabe later went into business building schools and amphitheaters.

He said he got the investment itch after learning that a small, minority-owned firm from California was trying to land a meeting with Hevesi's staff. Unlike others cited by the authorities, McCabe spoke openly to the Voice. "I thought putting a black-owned firm into state pension fund investments was a good idea," he said.

For starters, McCabe contacted Hevesi's then right-hand man, Jack Chartier, who set up a meeting with pension fund officials. At the time, McCabe's client, GKM Ventures, had just $13 million under management. After several months and a series of meetings with Loglisci and other pension fund staff, business was booming: By 2007, the state's pension fund had invested $800 million with the company.

Perp walk: Former top Hevesi adviser Hank Morris (right) being led into criminal court in handcuffs last month
AP Photo/Louis Lanzano
Perp walk: Former top Hevesi adviser Hank Morris (right) being led into criminal court in handcuffs last month

According to authorities, McCabe's ticket to success came when he and Morris agreed to set up a jointly owned company in 2003 called Purpose LLC, which received all of the fees generated by the GKM deals with New York's pension fund. By July 2007, more than $658,000 had been deposited in the corporation's account, with $477,000 forwarded to McCabe's own company.

McCabe says it wasn't until after GKM asked him to line up other, out-of-state, accounts that he first hooked up with Morris. "I figured Hank Morris has done campaigns all around the country, he knows who to reach out to," said McCabe. He said that he kept control of the remaining $181,000 in the account as payment for Morris once they landed other business.

McCabe said he was stunned to learn later that Morris was separately doing his own brokerage business with New York's fund, collecting millions in fees from other investment firms doing pension fund work. "I had no idea Morris was hanging out his own shingle," he said. "I would never have gotten involved with him."


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