NEW YORK—A top political consultant to the former New York state comptroller pleaded guilty to a felony Monday in connection with allegations that he rigged investments by the state's public pension fund in exchange for money and political contributions.
Henry "Hank" Morris, who pleaded guilty to a violation of New York state's Martin Act, will be required to pay $19 million and could receive up to four years in prison when he is sentenced early next year. Under his plea agreement, Mr. Morris also will be permanently banned from the securities industry in New York.
Mr. Morris, who pleaded guilty before State Supreme Court Justice Lewis Bart Stone, becomes the eight person convicted in the long-running probe by New York Attorney General Andrew Cuomo, the state's Democratic governor-elect.
Mr. Morris's former employer, ex-New York Comptroller Alan Hevesi, pleaded guilty last month in the same investigation.
Mr. Morris, characterized by the attorney general's office as the key figure in the alleged kickback scheme, was accused in an indictment by Mr. Cuomo of accepting sham "placement" fees as a broker for New York's $125 billion Common Retirement Fund, one of the country's largest pension funds. Rather than earning the fees, Mr. Morris simply directed the investments to people who hired him and assisted Mr. Hevesi politically, Mr. Cuomo said.
"Hank is relieved to be able to start to put this behind him," said Morris's lawyer, William J. Schwartz.
"I intentionally engaged in fraud, deception … and made material false representations and statements with intent to deceive and defraud," Mr. Morris said in a prepared statement to the court.
Still in the balance is the fate of Steven Rattner, the financier, Democratic Party fund-raiser and former "car czar" for President Obama who Mr. Cuomo has said is under investigation in connection with a pension fund investment given to Quadrangle Group LLC, the private-equity firm Mr. Rattner once ran.
Last week Mr. Cuomo filed two lawsuits against Mr. Rattner seeking to collect $26 million from him and seeking to ban him from the securities industry in New York for the rest of his life. The suits alleged that Mr. Rattner used special favors to win a $150 million investment from the state pension fund.
Mr. Rattner has denied the allegations and said he would fight the lawsuits.
Around the time Mr. Cuomo's office announced the suits, the Securities and Exchange Commission announced a less-severe settlement with Mr. Rattner over the pay-to-play allegations. Mr. Rattner has agreed to pay $6.2 million in his SEC settlement and receive and a two-year ban from associating with any investment adviser or broker dealer. Mr. Rattner settled with the SEC without admitting nor denying wrongdoing.
Mr. Cuomo's investigation prompted other probes at pension funds across the country and changes in the way officials grant access to the huge pots of retirement money they manage for public employees.
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