David Loglisci, a former chief investment officer of New York’s pension fund, was sentenced to a conditional discharge for his role in a kickback scheme that sent former state Comptroller Alan Hevesi to prison.
State Supreme Court Justice Lewis Bart Stone imposed the sentence today in Manhattan, a clerk for the judge said. Loglisci, 42, pleaded guilty in March 2010 to violating the state’s general business law, a felony, and faced as long as four years in prison.
A conditional discharge is a sentence that allows a defendant to be released from jail without Department of Probation supervision and requires compliance with conditions set by the court, according to the website of the New York State Unified Court System.
At his guilty plea, Loglisci said he sometimes ceded his authority to Henry “Hank” Morris, Hevesi’s former top political adviser.
Morris pleaded guilty in November 2010 and was sentenced to prison for as long as four years in February 2011 after admitting that the investment process at the state pension fund was manipulated to benefit him, his associates and contributors to Hevesi’s campaign.
James Freedland, a spokesman for New York Attorney General Eric Schneiderman’s office, declined to comment on the case in an e-mail.
Loglisci didn’t have to pay restitution under an agreement with the attorney general’s office, his attorney, Kevin Keating, said in a telephone interview.
“Distinct from every other defendant in this case, David neither requested nor received a single penny outside of his salary,” Keating said.
Morris corrupted the investment process to favor those who made contributions to Hevesi’s campaign, which he managed, and those who agreed to pay sham placement fees to him or his associates, Loglisci told the court. Morris punished those who refused, Loglisci said.
Hevesi, 72, a Democrat who as comptroller was the sole trustee of the state’s pension fund, pleaded guilty in October 2010 to approving a $250 million pension investment in exchange for a $1 million kickback. He was sentenced to as many as four years in prison in April 2011.
Hevesi resigned in 2006 as part of a separate plea deal struck after he assigned a state employee to be the chauffeur for his ailing wife.
Former Attorney General Andrew Cuomo, now the state’s governor, started to investigate New York’s Common Retirement Fund in 2007. It’s the nation’s third-largest public pension fund, valued at $150.3 billion as of March 31, according to the state comptroller’s office.
Eight people pleaded guilty in connection with the pension probe. In addition to the criminal cases, at least six people and 21 firms settled with Cuomo, paying more than $170 million.
Loglisci and Morris were charged in a 123-count criminal complaint in March 2009 at the same time they were sued by the U.S. Securities and Exchange Commission, which accused Loglisci of arranging for the pension fund to invest $5 billion with private-equity firms and hedge-fund managers that paid finders’ fees to Morris and others.
The former official owed his job as chief investment officer of the retirement fund to his cooperation but otherwise didn’t benefit monetarily, Cuomo said at the time of his plea.
Loglisci allegedly benefited through investments in a 2004 low-budget movie called “Chooch” that was produced by his brother, Steven.
He said on the day of his plea that he was instructed by a “senior” official to get approval from Morris before recommending or declining investment suggestions. Loglisci said he ceded authority over a portfolio of investments including hedge funds, private-equity investments and venture-capital firms, at the direction of senior officials.
Loglisci’s financial career is over “all for a brief chapter in his life when at the direction of supervisors he had to get the approval of Hank Morris on a select number of hundreds of investment decisions,” his lawyer Keating said.
Loglisci pleaded guilty to a single count of the criminal indictment involving the Carlyle/Riverstone Global Energy and Power Fund II. The pension fund made a $150 million commitment to the fund in November 2003, Cuomo said in a statement in June when Riverstone Holdings LLC settled his investigation.
New York-based Riverstone agreed to pay $30 million to end Cuomo’s probe, following the Carlyle Group, which settled for $20 million in May.
Carlyle paid $3 million in fees to Greenwich, Connecticut-based Searle & Co., the broker-dealer Morris was associated with, Cuomo said.
Searle paid $1.4 million to PB Placement LLC, a shell company tied to Morris, and $1.5 million to Barrett Wissman, a Dallas hedge-fund manager Morris split fees with, Cuomo said.
Soon after the $150 million investment, David Leuschen, founder of Riverstone Holdings, put $100,000 into “Chooch,” Cuomo said in a statement when Leuschen agreed to pay $20 million to resolve his role in the investigation.
Loglisci said in court during his plea hearing that he knew Morris split sham placement fees with certain agents and had other financial interests he concealed from the fund. In some instances, Loglisci said, Morris concealed the information from him as well.
Son of Carpenter
Loglisci, the youngest of four sons of a carpenter, was born and raised in Connecticut and attended Georgetown University in Washington, Keating said.
He received a master’s in business administration from the University of Notre Dame in South Bend, Indiana, and previously worked as an investment banker for Citigroup Inc.’s Salomon Smith Barney, Keating said.
Loglisci left New York three years ago “just to get a fresh start” and is managing a car wash business in Oklahoma, Keating said.
The case is People v. Loglisci, 00025-2009 New York State Supreme Court, New York County (Manhattan).