Hevesi Judge Rejects Claim of Conflict, Says He'll Move Sentencing Anyway

The judge who accepted the guilty plea of former New York Comptroller Alan G. Hevesi will transfer the pension-fund corruption case to another judge for sentencing, after refusing to withdraw because of an alleged conflict of interest.

State Supreme Court Justice Lewis Bart Stone, who was scheduled to sentence Hevesi today, denied a motion requesting his withdrawal over the accusation of a conflict involving a relationship with the parents of Hevesi’s lawyer. He said instead he would turn the case over to an administrative judge for sentencing or reassignment with a new court date of April 4.

“The publicity over this court’s relationship with Hevesi’s lawyer’s parents, while meritless, dims the clarity of this sentencing,” Stone said.

The “counterstory” took away from “the real story here: that of Mr. Hevesi’s felony conviction based upon his confession of his central role in the corruption of the investment process of the New York state Common Retirement Fund,” the judge said.

Hevesi in October admitted approving $250 million in pension investments in exchange for almost $1 million in gifts. He is the highest ranking official to plead guilty in a probe of corruption at the state pension fund conducted by former New York attorney general Andrew Cuomo, now the state’s governor.

Hevesi from 2003 through 2006 was comptroller and trustee of the retirement fund, recently valued at $140.2 billion. He may be sentenced to as little as no time in prison or to a range of one year and four months to four years.

Hevesi Hospitalized

Hevesi didn’t appear in court today. He was hospitalized for tests, his lawyer Bradley Simon told the judge. In an interview after the hearing, Simon said Hevesi had internal bleeding.

Earlier this month, Simon filed a motion asking Stone to recuse himself in connection with his role as trustee and executor of the estate of the lawyer’s parents.

Stone disclosed the relationship in court March 1 and in court papers. The judge told Simon then that his estranged father had disinherited him.

“Faced with a clear conflict of interest, Judge Stone intentionally hid the conflict, rather than disclose it, in order to preside over this high-profile matter,” Simon wrote in court papers.

State Attorney General Eric Schneiderman said there was no legal reason for Stone to step down.

The relationship “does not constitute an apparent conflict of interest, and therefore does not call into question Judge Stone’s impartiality,” the attorney general’s office wrote.

Favored Treatment

He admitted giving preferential treatment to Markstone Capital Partners, approving $250 million in pension fund investments in exchange for $75,000 in travel expenses, $380,000 in sham consulting fees for a lobbyist and more than $500,000 in campaign contributions.

Hevesi should receive the maximum sentence for his “monumental betrayal of the public trust,” Schneiderman said in court papers made public today.

Hevesi is among about eight people who pleaded guilty in criminal cases stemming from the investigation, including Markstone founder Elliott Broidy. At least six people and 21 firms also settled with Cuomo, paying about $170 million to the state and the pension fund.

About $5 billion of the fund’s $9.5 billion in alternative investments made in from 2003 to 2007 were tainted by kickbacks, according to the U.S. Securities and Exchange Commission, which also investigated. New York’s Common Retirement Fund is the third-largest public pension fund in the U.S.

‘Bombshell’ Disclosure

The recusal issue delayed Hevesi’s sentencing earlier this month. At his plea hearing in October, Stone said that he had made a sealed record in which he determined he had no conflicts in the case, according to a transcript of the hearing. Simon said in a court filing that he was surprised the judge didn’t disclose his close personal relationship with the lawyer’s father. Stone unsealed the record this month.

Simon described the statement that he had been disinherited by his father as a “bombshell.”

“It was a very unsettling feeling hearing the judge blurt out, while I was representing a client in court, that I had been disinherited,” Simon said.

“I knew that my father harbors extreme ill-will toward me and I began to worry about what my father might be saying about me to Judge Stone and how that animus might infect his decision concerning my client,” Simon said in the filing.

Stone said today that Simon knew since 2003 that he had fiduciary ties to the family.

Bruce A. Green, a Fordham University law professor, wrote to the court in support of Simon’s motion that the circumstances call into question the judge’s impartiality.

“Having agreed professionally to take a role in the senior Mr. Simon’s punishment of his son by disinheriting him, will the court also punish the son’s client?” Green wrote.

The case is People v. Hevesi, 4632/2010, New York Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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