Peggy Lipton, The Girlfriend Who Sparked the Pension Scandal

How a Queens schlub went head over heels for Peggy Lipton and brought down the system

One way to get a handle on the massive pension fund scandal unearthed by Attorney General Andrew Cuomo and his diligent team is to consider this: It all starts with a girlfriend. Long before the political titans were paraded in handcuffs and the financial wizards publicly shamed, there was this simple scenario: a portly, middle-aged government official thoroughly smitten with an aging blonde actress.

It is a direct result of Jack Chartier, loyal lieutenant to former comptroller Alan Hevesi, having completely lost his head over Peggy Lipton, whose blue-jeaned curves and sultry stares so enhanced the old TV series The Mod Squad, that top political careers are now in jeopardy and major investment firms are scrambling for higher ground.

Chartier, 64, is a veteran political aide from Forest Hills. Before meeting Lipton, 61, in 2004, his most exciting evenings were the annual dinner dances of the Queens County Democratic Organization. Suddenly, after a lifetime spent sitting next to clubhouse lawyers, Chartier found himself escorting a bona fide celebrity to balls and parties, where he mingled with the likes of Shirley MacLaine and Warren Beatty.

It's not every day that a schlepper from Queens gains access to this glittering crowd. But according to several people with knowledge of the matter, Chartier owed his great good fortune at meeting the lovely Lipton to her former beau, Andrew Stein, the ex–City Council president with the handsome salt-and-pepper rug and a long list of glamorous conquests.

Stein quit politics in 1993. Since then, his name is found mainly on the Post's Page Six, which dutifully chronicles his star-studded dinners at Le Cirque, attended by the likes of Harrison Ford, Al Pacino, and Meg Ryan. Right until early 2004, when she started seeing Chartier, Lipton's name nestled snugly next to Stein's in a half-dozen Page Six items as the couple made the rounds with Jon Bon Jovi, Barbara Walters, and the rest of the boldface crowd.

The gossip mentions lift the profile of an otherwise dimly remembered ex–city politician. They also don't hurt Stein's workaday job as a broker seeking to introduce big investment firms to big pension funds. There, the former pol worked just as hard to know the right people. He was a major backer of Carl McCall, Hevesi's predecessor as comptroller. McCall said last week that he remembers Stein bringing in the Carlyle Group, then headed by former Reagan defense secretary Frank Carlucci, to see him about an investment: "He was pushing something that was military-related, and we weren't interested," said McCall.

Stein was also an influential booster when Hevesi ran and won in 2002. This was partly due to his longtime friendship with Hank Morris, the sweater-wearing political guru who guided Hevesi to victory and who now stands accused of having raked in millions in pension fund plunder.

Records show that around the time that Chartier and Lipton began hitting it off, Stein also hit it big in Hevesi's office. In March 2004, the comptroller agreed to invest the first of what would become $133 million in pension money with a European fund assembled by Carlyle. According to those familiar with the deal, Stein's Arapaho Partners scored a sweet $1.5 million broker's fee.

Chartier was in his own paradise. By all accounts, the married bureaucrat was so enthralled with his new relationship that he put all duties aside so as to tend to Lipton's needs. The state employee assigned as Chartier's chauffeur said that, beginning in the spring of 2004, he regularly ferried Lipton and Chartier about town. David Burke told the Albany District Attorney's office, which later investigated the matter, that he would wait at the comptroller's midtown offices for a couple of hours each morning for Chartier to emerge: "Then he'd say, 'We're going to pick up Peggy,' " he told investigators.

Off they'd go in a state auto to fetch Lipton at her apartment on East 74th Street. They took her on errands to the hairdresser, the nail salon, the grocer, and the acupuncturist. There were also more sobering trips: Lipton was undergoing chemotherapy, and Chartier would accompany her in the state car to Memorial Sloan-Kettering, just a few blocks away. He'd wait with her during the two-hour treatments and then escort her home.

There was night duty as well. Lipton was writing a book about her life, and Chartier told Burke he was helping with the project. "Jack would go to her house after working hours, about 7 p.m.," Burke said. The chauffeur would wait and drive his boss home to Queens sometime after 10 p.m.

Lipton's memoir, Breathing Out, was published in 2005. Chartier isn't mentioned by name, but in a chapter about coping with her cancer she writes of "a close friend" who was "there for me for every test, picking me up and taking me to each appointment, checking on me several times a day." The unnamed friend "put his job on hold, telling the people in his office something important had come up that he needed to take care of," she wrote. "He became my strong and gentle warrior. I began to rely on his strength and generosity."

The book's acknowledgments page includes a discreet reference to "Jack C." It comes right after her publisher and before her doctors.

Chartier's own exciting chapter closed out at the end of 2004 when Lipton returned to California. The thrill was long gone two years later when Albany D.A. David Soares launched a probe into Hevesi's own misuse of state drivers who had been assigned to handle personal chores for the comptroller's ailing wife, a petty scandal that forced Hevesi from office as he pled guilty to abusing state property.

News also surfaced of Chartier's liaison in the back seat of a state automobile. The comptroller's former top aide ducked reporters' queries—then as now. But faced with prosecution for his own indiscretions, at some point Chartier saw the light and began talking to investigators. These now included dogged representatives of Cuomo, the newly elected attorney general. Chartier, it quickly emerged, had a lot more to tell than just using a state car and driver for personal affairs.

For starters, there was a tangle of multimillion-dollar pension investment schemes allegedly cooked up by Morris and the fund's chief investment officer. There was also a $100,000 loan for Lipton that Chartier and Morris allegedly coaxed out of a California-based investment firm, the Markstone Capital Group, which was seeking to land a $250 million deal with the pension office. There were cash payments allegedly provided by Morris for Lipton's luxury East Side rent, in exchange for Chartier's assistance with his burgeoning securities business. Someone helped Lipton's daughter get a job.

And then, as Chartier had complained to friends at the time, there was the story of what a bad sport Stein had been after Morris began elbowing Stein aside and taking over his pension fund customers. After the man-about-town's own deals failed to get done at the pension fund, he allegedly barraged both Chartier and Lipton with angry phone calls.

Stein declined to discuss these matters. "I'm on a conference call," he said Friday. "Call me back in 20 minutes." But callbacks reached only an answering machine. In fairness, the entire subject may be a sore spot. Despite all the Page Six mentions, and the helpful friend to whom he introduced her, there is not an Andrew nor an Andy singled out for thanks on the acknowledgments page of Lipton's memoir.

trobbins@villagevoice.com

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