Name That Party: New York Edition

Alan Hevesi is a name familiar to my readers, as he was the corrupt comptroller of the State of New York. He was responsible for nearly $150 billion in investments for the State's pension funds and oversight of the state's fiscal situation. He pleaded guilty to a single count of defrauding the government to avoid a trial. Hevesi acknowledged that he used state workers to provide all manner of services for his wife, and was forced to resign his job. He had taken more than $200,000 in services from the State, and was forced to repay the entire amount and pay a fine of $5,000.

Well, his sons are now being investigated for fraud and corruption in their own right.

State and Albany County investigators are examining whether the sons and top aides of former State Comptroller Alan G. Hevesi improperly reaped benefits from his control of the state’s $154 billion pension fund, according to people involved in the investigation.

The inquiry comes amid growing questions about whether New York State’s pension fund, the second largest in the nation, should continue to be overseen almost single-handedly by the comptroller.

Mr. Hevesi, who pleaded guilty in December to defrauding the government by having state workers act as chauffeurs for his ailing wife, oversaw the fund for four years and had broad discretion in the selection of money managers and investments. Investigators want to know if financial services companies provided favors to those close to him in exchange for pension business.

They are scrutinizing the relationship between Mr. Hevesi’s office and several companies, including Third Point Capital, a hedge fund. In 2005, the comptroller’s office decided to invest a portion of the pension’s money in a fund that invests in hedge funds, including Third Point. Several months later, Third Point hired Mr. Hevesi’s elder son, Daniel.

It is not clear what role, if any, the elder Mr. Hevesi played in the Third Point investment.

Daniel Hevesi markets Third Point to institutional investors, according to securities filings. He also owns a brokerage firm, Praetorian Securities, that does business out of Third Point’s office. It is not clear who Praetorian’s clients are or if Daniel Hevesi profited from any relationship with the pension fund. A person with knowledge of the investigations said a top official within the comptroller’s office knew about the relationship between Third Point and Daniel Hevesi and circumvented internal guidelines requiring that it be disclosed.

Investigators are also examining the relationship between the elder Mr. Hevesi’s office when he was comptroller and eSpeed, a Manhattan-based company that has processed trades for the pension fund. Mr. Hevesi’s longtime political consultant, Hank Morris, has served on the board of the company and collected millions of dollars in connection with his role there, a person involved in the investigation said. The payments were said to be “placement fees,” but it was not clear what services Mr. Morris had provided to earn them. Such fees are usually paid to marketing advisers who help investors win blocks of pension money to manage.

Mr. Morris could not be reached for comment, and a spokesman for Third Point Capital declined to comment.

In addition, investigators are reviewing records of political contributions from investment firms and their executives to Mr. Hevesi’s younger son, Assemblyman Andrew Hevesi, a Queens Democrat. It is legal in New York State for investment managers to contribute to comptrollers (or any elected official), and they have long done so. Money managers vie aggressively for the job of investing blocks of public pension money, and New York State’s fund is so large that even a tiny piece could generate substantial management fees. It would be illegal for companies to make contributions with the understanding they would receive business or favorable treatment, but such a case would probably be difficult for investigators to prove.

It takes nine paragraphs before we learn that all the Hevesis suspected of wrong doing are Democrats.