- The Washington Times - Saturday, May 2, 2009

ALBANY, N.Y. | New York Attorney General Andrew Cuomo is trying to develop a nationwide investigation to root out what he calls corruption and abuse of public workers’ pension funds, a state official said.

Mr. Cuomo is seeking to create a process to investigate well-paid, sometimes politically connected, often unregistered agents who secure investments for pension funds. He calls them “middlemen” and says they sometimes secure investments for their companies that might not have been in the best interest of a fund or its retirees.

Mr. Cuomo said he has issued subpoenas to more than 100 investment firms and their “middlemen” as part of his probe of an influence-peddling scandal affecting some of the nation’s biggest public pension funds.

Five people have been charged in a two-year probe led by Mr. Cuomo into allegations that investment companies paid millions of dollars in kickbacks to political figures to get pension fund business.

A New York official familiar with the attorney general’s call to 100 government officials in 35 states said Friday that Mr. Cuomo told his colleagues that if it’s happening in New York, it is probably happening in other states because there is too much money to be had in the scheme.

He is also talking with law enforcement authorities from states including California, New Jersey, New Mexico, North Carolina and Illinois, said the official, who spoke on the condition of anonymity because he wasn’t authorized to speak for Mr. Cuomo.

Mr. Cuomo, a Democrat, pledged to soon turn over the details of his investigation to the other states. Although no firm commitments were made, there was strong interest, the official said.

“You can’t put a price tag on a breach of public integrity,” Mr. Cuomo told reporters before the meeting with other states’ officials. “That’s when people lose faith; that’s when people become skeptical and cynical about their government, and government without trust is powerless.”

He said as many as half of the agents trying to land investments for public pension funds weren’t federally registered. The registration offers levels of accountability and transparency that could have disclosed - and perhaps prevented - the dealings Mr. Cuomo said might have illicitly raised investment costs or reduced returns for public worker pension funds and taxpayers.

State Comptroller Thomas DiNapoli last week banned “middlemen” - both registered and unregistered. His office had been including the intermediaries’ activity in monthly reports on investments from the state fund, which stood at almost $154 billion on March 31. The office had also examined the middlemen and their roles in previous deals, said DiNapoli spokesman Dennis Tompkins.

New York City Comptroller William Thompson also agreed to ban placement agents from soliciting business for the city’s public pension funds, which, as of late December, controlled about $82 billion in assets. The office has also disclosed its list of placement agents.

Mr. Cuomo said those disclosures alone will help ensure that pension investments are made on the merits of a deal, not on influence peddled to public officials.

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