The investigation against former New York State Comptroller Alan Hevesi, who also served as chairman of the New York State and Local Employees’ Retirement System, has reached Markstone Capital Partners Group LLC and its chairman Elliot Broidy.
Over several years, Hevesi allegedly had state workers act as the personal chauffers and aides for his wife, a scandal that ultimately forced him to resign in December 2006. The affair has since spread. Investigators for New York State and the Albany County District Attorney are now investigating whether Hevesi’s sons and senior aides illegally received benefits when Hevesi was in office and controlled, almost without supervision, the $154 billion in assets of one of the world’s largest pension funds.
Investigators are examining links between Hevesi’s aides and a number of major financial companies, including Markstone. Hevesi committed to invest more than $200 million in Markstone. The investigators want to know whether the companies in which the New York State pension plans invested in were selected solely on the basis of professional considerations, or if some of the companies paid ostensible broker fees. In an investigate report in July, “The New York Times” called these contracts for Hevesi’s aides and political allies.
Reports in various media in the US state that, since January, the decision-making procedure at the New York State Comptroller's Office has been under investigation following charges that Hevesi’s chief of staff Jack Chartier obtained a loan for his girlfriend, movie and television actress Peggy Lipton, from a Markstone manager. The New York State and Local Employees’ Retirement System is the largest investor in Markstone.
In an article in May, “The New York Daily News” quoted sources familiar with District Attorney David Soares' probe as saying that it focuses on whether people seeking to do business with the $150 billion state pension fund showered Lipton with gifts in hopes of currying favor with Chartier.
A Markstone spokesman told “Globes”, “We are not a subject of the investigation, and we are fully cooperating with the New York State Attorney General’s Office.”
Other funds investigated include The Carlyle Group, one of the world’s largest private equity funds, and Third Point Capital, a hedge fund.
“The New York Daily News” wrote in the May article, “People of interest in the case include Hevesi's longtime political consultant, Hank Morris, who has earned hundreds of thousands of dollars off Hevesi's career in public office, and Elliot Broidy, a California-based venture capitalist and major Republican fund-raiser.”
That article said, “Six months after taking office in 2003, Hevesi committed to placing $250 million in Markstone Capital Group, a private equity fund co-founded by Broidy that makes investments in Israel. Prior to making this deal, Hevesi flew to Israel with Broidy to meet with government officials and business leaders. According to the most recent numbers available, as of last November the state had paid Markstone $4 million in fees but had not yet earned any money from its investment.”
The Ministry of Finance is worried that the investigation might besmirch Israel’s reputation in the US business community. An Israeli official told “Globes” yesterday, “Hevesi was, and I am sure still is, a great friend of Israel, but Israel should keep its distance as far as possible from any corruption scandal.”
Published by Globes [online], Israel business news - www.globes.co.il - on September 17, 2007
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