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NY's attorney hits auto bailout architect with lawsuits

NY's attorney hits auto bailout architect with lawsuits

The New York Attorney General, Andrew Cuomo, has hit the man in charge of helping craft Obama’s bailout of carmakers General Motors and Chrysler with two lawsuits.

THE New York Attorney General, Andrew Cuomo, has hit the man in charge of helping craft Obama’s bailout of carmakers General Motors and Chrysler with two lawsuits.

Cuomo alleges that Steve Rattner, appointed head of President Obama’s Auto Task Force in February 2009, paid kickbacks to win $150 million in businesses from New York’s pension fund for Rattner’s private equity firm, Quadrangle.

Rattner, meanwhile, has agreed to a $6.2 million settlement with the Securities Exchange Commission over similar allegations of widespread fraud at Quadrangle.

The Washington Post reports that Rattner faces two suits seeking at least $26 million in penalties and an immediate lifetime ban from the securities industry in New York.

This comes as Rattner was poised for victory last week as General Motors returned to the stock market in a “remarkable turnaround”.

Cuomo said in a statement: “Steve Rattner was willing to do whatever it took to get his hands on pension fund money, including paying kickbacks, orchestrating a movie deal and funnelling campaign contributions,” Cuomo said in a statement.

“Through these lawsuits, we will recover his ill-gotten gains and hold Rattner accountable.”

Cuomo claims that Rattner tried to influence officials at the Office of the State Comptroller with a series of kickbacks. These included “sham replacement fees” of more than $1 million, paid to Henry Morris a political adviser to the state comptroller at the time, Alan Hevesi.

According to the summons: “Rattner, while a principal of Quadrangle, caused Quadrangle to pay Morris, then-
Comptroller Alan Hevesi’s paid political advisor and campaign manager, sham placement fees to
influence investment decisions by Hevesi and then-Chief Investment Officer David Loglisci (“Loglisci”) with respect to a private equity fund managed by Quadrangle.”

According to Cuomo, Rattner also set up a DVD distribution deal for a movie called “Chooch” that was produced by the state retirement fund’s chief investment officer and his brothers.

The summons from Cuomo claims: “As a result of Rattner’s fraud and his aiding and abetting of Hevesi’s and
Loglisci’s violations of their fiduciary duties, the CRF's investment process was corrupted, Quadrangle has received over $13 million in management fees from the CRF, and Rattner has
personally profited and will continue to profit from the scheme.”

The full summons and complaint can be found here. http://www.scribd.com/full/43148511?access_key=key-5pge4lysvbdqyboaf0g



Like this story? Read more:

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NY's attorney hits auto bailout architect with lawsuits
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