- The Washington Times - Wednesday, April 15, 2009

NEW YORK (AP) - A political powerbroker and a hedge fund manager who owns a prominent talent agency for classical musicians have become the latest people ensnared in a “pay-to-play” scandal at the huge state pension fund.

Former Liberal Party chairman Raymond Harding and Dallas entrepreneur Barrett Wissman were charged by the Securities and Exchange Commission Wednesday with participating in a scheme to collect kickbacks from financial firms seeking work managing the retirement fund’s assets.

Both also face separate criminal charges filed by New York Attorney General Andrew Cuomo, who has been investigating corruption at the $122 billion fund during the tenure of former state Comptroller Alan Hevesi.

Harding was arraigned Wednesday in Manhattan on charges that Hevesi aides rewarded him for a variety of political favors by arranging for him to receive $800,000 in illegal fees from investment firms seeking pension fund business.

Among those favors: Cuomo said Harding helped pave the way for Hevesi’s son, Andrew Hevesi, to run for a seat in the state Assembly by arranging for the previous holder of the post to get a well-paid private sector job.

The attorney general also announced Wednesday that Wissman, the chairman of the performing arts management company IMG Artists, had secretly pleaded guilty to securities fraud charges Feb. 3.

Prosecutors said that besides presiding over IMG, whose clients include violinist Itzhak Perlman and cellist Julian Lloyd Webber, Wissman was a key middleman who helped two Hevesi aides sell access to one of the richest sources of investment dollars in the country.

Those aides, former New York Deputy Comptroller David Loglisci and political adviser Hank Morris, have pleaded not guilty to a long list of criminal charges. A complaint previously filed by the SEC accused them of using “classic pay-to-play tactics” to extract payments from financial firms.

Prosecutors said Wissman acted as an intermediary, taking hefty fees as a “placement agent,” while passing along a cut to Morris and Loglisci.

It can be legal for firms to pay such fees, but not as a condition of doing business with the state, Cuomo said.

“If it’s a vehicle for bribes, it’s not OK,” he said.

Harding was released on $100,000 bond Wednesday following his arraignment. One of his lawyers, Gary Naftalis, acknowledged that his client had been paid by investment firms but said there was nothing illegal about the arrangement.

“Ray Harding is innocent of these charges,” he said. “Ray has had a long and honorable career in both private and public life, and his work as a placement agent on behalf of highly respected firms was entirely honorable and lawful.”

Harding led the Liberal Party for many years. The group, now defunct, had long been criticized as a patronage mill, with little actual grass roots support. In recent years, its relevance had been due to a quirk in New York elections law that allowed politicians receiving its endorsement to have their names appear at least twice on election ballots.

Over the years, the party had thrown its support behind politicians as diverse as New York Mayor Rudy Giuliani and Andrew Cuomo himself during his failed bid for governor in 2002.

Wissman’s lawyer, William Brewer, acknowledged that his client had acted as a “finder” for firms seeking pension fund investment dollars. Unlike Harding, however, Wissman pleaded guilty and is cooperating with investigators.

“He takes full responsibility for his conduct,” Brewer said.

Cuomo said Wissman also agreed to pay $12 million in restitution.

Hevesi, who resigned from office in 2006 after pleading guilty in an unrelated case involving his use of state employees as personal assistants, has not faced charges in the pay-to-play scandal.

Asked whether there was evidence that Hevesi was involved in illegal acts, Cuomo declined to comment.

“This is an ongoing investigation,” he said.

Hevesi’s lawyer, Bradley D. Simon, said the former comptroller continues to “vehemently deny any wrongdoing.”

Cuomo said the probe had found no evidence suggesting that illegal conduct had continued into the tenure of Hevesi’s successor, Thomas P. DiNapoli.

He also said his staff had uncovered no evidence suggesting that Andrew Hevesi, who won election to the Assembly representing a district in Queens in 2005, “had anything to do with this scheme” or even knew about it.

Hevesi won a special election for the seat after its former holder, Michael Cohen, quit to be close to his ailing wife _ now deceased _ and to take a job with the Health Insurance Plan of New York, one of the state’s largest health maintenance organizations.

Prosecutors said in court papers that Cohen got the job after being introduced to executives at the HMO by Harding.

A spokeswoman for the insurer’s parent company, EmblemHealth, confirmed Cohen still works there in the sales and marketing department. She said the job was a legitimate one, not a no-show position created as a political favor.

Cohen is running for a seat on New York’s City Council.

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