Attorney General Cuomo Announces Agreement With Hevesi Fundraiser In Ongoing Investigation Into State Pension Fund

NEW YORK, NY (September 16, 2010) - Attorney General Andrew M. Cuomo today announced an agreement with former Alan Hevesi fundraiser and unlicensed placement agent William “Bill” White in his ongoing public pension fund investigation.

Under the agreement, White will pay $1 million to New York State and will comply with the Attorney General’s Public Pension Fund Reform Code of Conduct, which bans the use of placement agents and campaign contributions related to public pension fund business.  White will cooperate with the Attorney General’s investigation.  To date, Cuomo’s long-running investigation has garnered $138 million in recoveries for the state through agreements with fifteen firms and two individuals, as well as six guilty pleas.

White brokered investments worth several hundred million dollars from the New York State Common Retirement Fund (“CRF”) on behalf of firms that paid him hundreds of thousands of dollars in fees.  White did not have the required license to broker the deals.  After obtaining one of these deals, White personally contributed and bundled contributions to Comptroller Hevesi’s campaign from the principals of one of the firms.  The CRF is the biggest pool of money in the state and the third largest pension fund in the country, most recently valued at approximately $124.8 billion.

“The state pension fund, which should be safeguarded for taxpayers, was instead served up to fixers, finders, and fundraisers like Bill White, who used his access to fill his pockets,” said Attorney General Cuomo.  “Unlicensed placement agents, secret fees, and even the appearance of pay-to-play erode taxpayers’ trust and pose an intolerable risk to our pensioners’ retirement funds.  New York’s pension system is fraught with systemic problems that we can no longer afford to ignore.”

The investigation by the Attorney General’s office found as follows:

• White brokered deals involving several New York public pension fund investments without having a securities license as required by state and federal law.  
• White brokered several deals totaling $500 million in investments by the CRF in the Guggenheim Partners Select State Fund, L.P., for which White secretly received in excess of $570,000 in fees.
• Guggenheim hired broker-dealers Ariane Capital and Pali Capital to obtain an investment from CRF.  However, Guggenheim refused to do business with White, who was affiliated with Ariane, because he lacked a securities license.  Pali Capital filed a disclosure letter with the CRF which did not include White’s role.
• In the fall of 2006, White gave $10,000 himself and bundled $50,000 in campaign contributions from two Guggenheim principals to then-New York State Comptroller Alan Hevesi’s reelection campaign, after the initial investments had been made.  
• White received other fees in connection with New York public pension fund investments in the Cypress Grove International Fund and Palladium Equity Partners III, L.P.  These fees were received at various times, both before and after White obtained a securities license.
• White also received consulting fees in connection with a pension fund investment in a Fisher Brothers fund - the City Investment Fund, L.P. - but he did not broker that investment.

White has agreed to comply with Attorney General Cuomo’s Public Pension Fund Reform Code of Conduct.  Among other things, the Code of Conduct bans the use of placement agents to solicit investments from public pension funds and prohibits investments within two years of any campaign contribution from the investment firm to the Comptroller or other elected trustee.