Inside Rick Lazio's Biggest Wall Street Deal—The Chummy E-Mails

Diverting nearly a billion in retiree benefits into subprime risk? Oh, just watch him work the e-mail.

Inside Rick Lazio's Biggest Wall Street Deal—The Chummy E-Mails

Within Hours of George Bush's May 3, 2007, announcement that he was naming Charles Millard head of the $64 billion Pension Benefit Guaranty Corporation (PBGC), Rick Lazio got an e-mail about it from a fellow JPMorgan Chase executive.

"Assume you know Charlie Millard," wrote Tom Block, the bank's top in-house lobbyist, attaching the White House press release.

"I do know him well," Lazio replied.

Courtesy Michael Jagendorf

Lazio would boast in subsequent internal Morgan e-mails obtained by the Voice that he was "very friendly with the head of PBGC."

How friendly? Lazio and Millard would soon start down the path of a near-billion-dollar deal that eventually ensnarled both in multiple federal probes that looked into their apparent efforts to game a government bidding process, as well as subsequent attempts by Lazio to get Millard a job.

This is the story of that stunning deal, Lazio's biggest score at Morgan, which earned him a $1.3 million bonus in 2008 and another $300,000 in the first four months of 2009, in addition to a combined $585,000 salary.

These details of Lazio's exercise in insider influence are emerging just as his gubernatorial campaign boasts that he's the man who should be elected to clean up Albany. The key facts about his conduct crawl from his own computer in an e-mail trail that reaches as high as America's number one banker, Morgan CEO Jamie Dimon, who was drawn in as Lazio pushed to win Morgan a lucrative contract that would put retiree benefits into risky investments.

No one will be prosecuted for this chummy dealing, because neither the quid (the allocation of the $900 million Millard awarded Lazio's firm) nor the quo (Lazio's efforts to get Millard a job) came to fruition, nipped in the bud by investigations that began almost as soon as the deal began to come together, leaving prosecutors with nothing more than compelling proof of intent. But a botched scam can be a blessing in disguise, as the electronic fingerprints of these two clumsy conspirators prove beyond a click of a doubt.

Now in their fifties, Lazio and Millard were once the golden boys of New York Republican politics, with curly-haired Lazio toppling a Democratic House incumbent from Long Island in 1992, and chiseled-chinned Millard running for the East Side House seat two years later, losing to Carolyn Maloney. As much as both have tried to prove they're more than just pretty faces, most observers have long viewed them as lightweight bookends.

Now the Republican and Conservative Party designee for governor (though still facing September primaries), Lazio went from law school to a communications job at the Suffolk County District Attorney's office, launching a career that moved him from the Suffolk County legislature to Congress, where he chaired the House housing subcommittee for nearly six years.

The rest of the nation got to know him in 2000 when he lost to Hillary Clinton in the most expensive Senate race in modern history. As competitive as he was then, Lazio's decade-long absence from public life has hardly made our hearts grow fonder, as every poll and fundraising filing confirms. He's made millions at Morgan, taking a leave in May 2009 that continues, oddly, to this day, as if he and Morgan are planning on his returning after a loss this November (or sooner).

Millard, the son of the onetime Coca Cola chairman, came out of the same Manhattan GOP club as Rudy Giuliani, winning a City Council seat in 1990. After the 1994 House defeat, he ran the city's Economic Development Corporation for four Giuliani years. His reputation took a major hit, however, after it was revealed that Giuliani ally and then–Liberal Party chair Ray Harding was lobbying Millard's agency, while at the same time choosing Millard's top staff (Millard had even hired Harding's son, Russell). Both Hardings later pled guilty in separate felony cases unrelated to EDC.

Aided, like Bernie Kerik, by Rudy's pull with the Bush family, Millard took charge of PBGC, which insures the pension benefits of 44 million Americans enrolled in 29,000 "defined benefit plans." Without any pension or insurance background, he was suddenly sitting atop a mountain of assets, as vital to retirees as it was alluring to investment bakers.

Three weeks after Millard's first day at PBGC on May 29, 2007, Lazio e-mailed his assistant asking her to get Millard's contact information. Then, on July 3, he invited Millard to the annual dinner of the State Conservative Party, a Hilton Hotel fundraising event honoring Newt Gingrich, mastermind of the 1994 House campaign that they had both participated in together all those years earlier. Lazio's personal PAC, Rough Riders, paid $5,000 for a table at the dinner; Morgan, $5,000 for a second. Millard, however, declined the invitation and passed along his personal e-mail address. A Lazio aide noted that Millard "wants to speak with you on his new position."

Millard's pass is understandable: His presence might have been awkward at a dinner where Gingrich spent the night bashing his new boss, President Bush. Millard, who moved to Rye after his city political career fizzled, told the Westchester County Business Journal that he was talking with friends in the Bush administration about taking another position when they asked if he'd be interested in the PBGC job. "My first reaction was probably like a lot of people reading this: What's that?"

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