Cuomo Cites ‘Culture Of Corruption’ In New York’s Pension Fund As Former Chief Investment Officer Pleads Guilty

David Loglisci, the former Chief Investment Officer at the Office of the New York State Comptroller (“OSC”), who was indicted last year along with co-defendant Henry “Hank” Morris, has pleaded guilty to a felony for his role in what N.Y. State Attorney General Andrew Cuomo call a “culture of corruption” that permeated the New York State pension fund.  

According to prosecutors:  From January 2003 through May 2007, Loglisci’s position at the OSC granted him the authority to recommend investments for the fund, an authority he was required to exercise in the best interests of the fund’s members and beneficiaries. Loglisci abdicated his authority to Henry “Hank” Morris, the top political advisor to former New York State Comptroller Alan Hevesi, to help steer hundreds of millions of dollars worth of investment deals to Morris and to politically favored firms.
 
According to prosecutors: As part of his plea, Loglisci acknowledged breaching his fiduciary duties and violating the public trust by making investment decisions according to political benefit for the Comptroller, rather than in the best interests of the fund’s members and beneficiaries. Loglisci admitted that he understood, but did not disclose, that Morris played three conflicting roles at the fund: He was the paid outside political consultant to the sole trustee; he had a financial interest in multiple proposed alternative investments; and he made investment decisions, including with respect to deals in which he had a financial interest.
 
In addition, prosecutors explain that: Loglisci further admitted that he had been instructed by senior OSC officials to obtain Morris’s approval prior to recommending or declining investment proposals and further admitted to ceding his authority over the fund’s alternative investment portfolio to Morris. Morris used this authority to corrupt the investment process at the fund to favor those who either made contributions to the Comptroller’s campaign, which he managed, or agreed to pay placement or other fees to Morris or his associates, and to punish those who would not. Morris further used this authority, as well as his position as chief political consultant and campaign fundraiser for the Comptroller, to extract campaign contributions from those doing and seeking to do business with the fund, and to reward campaign contributors with investments, which he did.
 
According to prosecutors: Loglisci acknowledged breaching his duties and intentionally engaging in fraud, deception and concealment in connection with numerous investment transactions. With respect to some of these transactions, Loglisci was aware that Morris was a secret partner of individuals with whom Morris split sham placement fees or had other financial interests which Morris concealed from the fund.