Hevesi Expected To Plead Guilty In Pension Kickback Case

Former State Comptroller Alan Hevesi is in court this morning and is expected to enter a guilty plea on charges stemming from his "oversight" of the state's pension funds, which included kickbacks and favors for access to the state pension funds. This will be the Democrat's second guilty plea stemming from personal misconduct while Comptroller:

Mr. Hevesi has been a subject of a lengthy investigation focusing on allegations that his friends, family and associates sold access to the state’s $125 billion pension fund, one of the world’s largest, to reward allies, pay back political favors and reap millions of dollars for themselves.

Two marshals brought Mr. Hevesi into the courthouse with his hands cuffed in front of him beneath a draped trench coat. Once inside the lobby, he had his hands uncuffed before being taken to the fifth floor for his arraignment. He was to be arraigned at 9:30 a.m. in State Supreme Court in Manhattan, and was expected to enter his plea around 10:45 a.m.

Mr. Hevesi’s plea would make him the highest-ranking state official convicted in the case. In 2006, he pleaded guilty to a separate felony after admitting that he had used state workers to chauffeur his ailing wife, but he avoided jail time in that case after he agreed to resign.

He will plead guilty to a single count of receiving award for official misconduct in the second degree — an E felony — before Justice Lewis Bart Stone, those involved in the case said.

Attorney General Andrew Cuomo's office had been carrying out the long-running investigation.

Hevesi's plea today follows a separate guilty plea on misusing state workers for personal gain (which included caring for his ailing wife).

NYS Pay to Play Update

A hedge fund placement agent secretly entered a guilty plea two months ago in connection with the pay to play deals undertaken by Hank Morris and former New York State Comptroller Alan Hevesi's office. The deal was kept under wraps because Julio Ramirez was cooperating with NY Attorney General Andrew Cuomo's investigation.

A former state pension fund "placement agent" secretly pleaded guilty two months ago to kicking back fees to Hank Morris, former state Comptroller Alan Hevesi's political guru, and is cooperating in the far-reaching probe, it was revealed yesterday.

Attorney General Cuomo said former Wetherly Capital Group agent Julio Ramirez of Los Angeles pleaded guilty on March 5 to one count of misdemeanor securities fraud for secretly giving the already-indicted Morris $250,000, or 40 percent of the fees he earned helping Wetherly place $50 million from the state's Common Retirement Fund with two investment-management firms.

Ramirez admits to receiving kickbacks from Morris between 2003 and 2006 in order to secure a deal between the state and Wetherly.

NYS Pension Pay To Play Ensnares Obama Administration Pick?

Fred Dicker is reporting that one of President Obama's top advisers for the auto-industry rescue was linked to New York state's massive pay-to-play pension scandal.

The Securities and Exchange Commission said an executive, identified by sources as Steven Rattner, used a politically connected middleman to steer a $150 million pension investment to the private equity firm he headed, Quadrangle Group LLC.

The investment deal was wrapped up after Quadrangle put big bucks into a dud movie produced by a brother of the pension-fund manager, according to the complaint.

The middleman, consultant Hank Morris; the pension manager, David Loglisci; and former Liberal Party chief Raymond Harding have all been criminally charged with taking kickbacks to arrange investments in private companies by the massive pension fund.

All three were close associates of disgraced former state Comptroller Alan Hevesi.

The SEC, which is working with New York Attorney General Andrew Cuomo, filed its amended complaint yesterday in Manhattan federal court.

It says "a senior executive of Quadrangle Group LLC" met with Morris in hopes of winning his help in obtaining state pension-fund investments for Quadrangle.

Sources close to the investigation identified that executive as Rattner, a co-founder and one-time managing principal of Quadrangle.

This just keeps getting better and better.

Keep in mind the time frame here as well. The allegations span the period from 2000 through 2005. Eliot Spitzer was the Attorney General of New York during that relevant period (he was AG from 1999 until 2006, when he became Governor). During that time, Spitzer repeatedly attacked Wall Street for graft and pressured Wall Street executives to cut deals with his office. Yet, he never once bothered to look into the actions of those within the NYS government who were trusted with overseeing the $122 billion pension plan and whether any irregularities were involved.

Spitzer became governor on the strength of his assault on Wall Street. He overlooked the corruption within the state government. That's a mistake that Andrew Cuomo is not making.

UPDATE:
Hot Air, Jammie, and the Rhetorican (ed: fixed spelling as that's how Rhetorican spells his blog's name) all note the ongoing failure of the Obama Administration to vet candidates for government positions along with the poor judgment in allowing nominations of people whose legal or tax troubles should have kept them from obtaining the nominations.

UPDATE:
Instapundit links. Thanks!

Anatomy of a New York Pay to Play Scandal

The indictments of Alan Hevesi's political strategist Hank Morris and associate David Loglisci were just the tip of the iceberg. It appears that the pay to play scandal involving the New York State pension fund ($122 billion and managed by the Comptroller's office) extended to a scheme devised by aides to Governor George Pataki (R) and Liberal Party boss Raymond Harding among others to secure a seat for Hevesi's son Andrew in the New York State Assembly. It's also gotten the SEC involved in investigating the shenanigans. It's a bipartisan scandal.

The Post has a handy dandy cheat sheet to keep score. Fred Dicker reports:

Aides to Pataki conspired with Liberal Party boss Raymond Harding to rig up an Assembly seat for Democratic Comptroller Alan Hevesi's son, Andrew, sources said.

One of the Pataki aides is believed to be Adam Barsky, a onetime senior fiscal aide to former Mayor Rudy Giuliani, The Post has learned.

Attorney General Andrew Cuomo's bombshell criminal complaint against Harding says that "official A" -- identified to The Post as Alan Hevesi aide Jack Chartier -- "solicited help from a high-level aide to the New York governor [Pataki] at the time, who agreed to help."

"Shortly thereafter, the 'governor's aide A' told 'official A' that the defendant [Harding] had pledged to introduce [an] assemblyman to a high-level executive at an insurance company," the complaint continued. It was referring to a private-sector job that would be provided to the incumbent assemblyman so he would resign and free the seat for the younger Hevesi.

Former Pataki aides said they believed that the "governor's aide A" was Barsky, a Harding friend who at the time was Pataki's assistant chief of staff.

Barsky denied any involvement, saying that while he may have been in social contact with Harding, he "absolutely did not discuss" an effort to find the then-assemblyman a private-sector job.

Cuomo's complaint also alleged a second Pataki aide later met with Chartier "and requested that the governor certify a special election for the vacant Assembly seat as quickly as possible, which would discourage competition for the seat." It remained unclear last night who the second aide was.

The Boston Globe notes:

Former Liberal Party chairman Raymond Harding and Dallas entrepreneur Barrett Wissman were charged by the Securities and Exchange Commission Wednesday with participating in a scheme to collect kickbacks from financial firms seeking work managing the retirement fund's assets.

Both also face separate criminal charges filed by New York Attorney General Andrew Cuomo, who has been investigating corruption at the $122 billion fund during the tenure of former state Comptroller Alan Hevesi.

Harding was arraigned Wednesday in Manhattan on charges that Hevesi aides rewarded him for a variety of political favors by arranging for him to receive $800,000 in illegal fees from investment firms seeking pension fund business.

Harding and Cuomo have a long history, going back to when Andrew Cuomo's father was running for Governor. That relationship became seriously strained during the 2002 race for governor. The 2002 race for governor was the ultimate downfall for the Liberal Party ticket when the party failed to get 50,000 seats to remain on the ballot. The ticket had long been seen as little more than a patronage mill and used to curry favors. Without a name on the ticket, the party folded.

So far, neither Alan Hevesi nor Andrew Hevesi face charges under the current round of indictments. That may not last.

This Isn't First Time Hank Morris Had Brush With Law

Hank Morris, who is not only closely tied to Alan Hevesi but helped steer Chuck Schumer to his win over Al D'Amato for D'Amato's Senate seat, has had problems with following the law in the past.

Comptroller Alan G. Hevesi struck a compromise yesterday with the Campaign Finance Board, which then released $2.6 million in city matching funds for his mayoral campaign and, perhaps just as important, lifted what had been a cloud over his candidacy.

As part of the deal, Mr. Hevesi offered to pay his chief political consultant, Hank Morris, an extra $240,000 for work leading up to the Democratic primary on Sept. 11. Mr. Hevesi's opponents had charged that he was circumventing the campaign finance spending cap by allowing Mr. Morris, a longtime friend, to work for free or provide his firm's help at a steep discount.

The campaign finance law limits spending to $5.5 million in the primary, so anyone paying less than fair market value for a service would be able to spend that much more on items like television advertisements or campaign mailings.

Last week, the Campaign Finance Board refused to release Mr. Hevesi's share of city matching funds, which are paid to candidates in exchange for honoring spending limits and accepting restrictions on the size of political donations.

The September 11 in question? That would be September 11, 2001. Even back then, Hevesi and his political cronies were busy skirting the rules. Now, we know that they were up to no good for years. The Campaign Finance Board gave them a slap on the wrist - essentially saying that boys will be boys and that politicians will always try to test the boundaries of the law.

Morris profited mightily from his Hevesi connections, through links to other major politicians and most of all from his pension plan connections:

Since Mr. Hevesi took office in 2003, Mr. Morris created or was employed by half a dozen companies whose main purpose was to help hedge funds, private equity firms and others handle some of the investments of New York State’s $154 billion pension fund.

As comptroller, Mr. Hevesi had sole authority over the fund, and Mr. Morris appears to have been paid handsomely for making introductions: state investigators believe that at least $25 million in fees were paid to Mr. Morris’s business interests during Mr. Hevesi’s four-year tenure.

Mr. Morris’s earnings from pension fund work, along with those of other friends and political allies of Mr. Hevesi, a Democrat, are now the focus of criminal investigations by Attorney General Andrew M. Cuomo, also a Democrat, and P. David Soares, the Albany County district attorney.

It's that pension fund work that led to the indictments yesterday.

Former Hevesi Aides Indicted On Pension Scam

Hank Morris, a political consultant to disgraced former New York State Comptroller Alan Hevesi, and David Loglisci, former deputy controller for Pension Investment and Cash Management under Hevesi, were indicted in a pension fund fee scam. Morris also worked for Sen. Chuck Schumer.

The specific charges weren't clear last night. Hevesi will not be charged, the source said.

The News reported in September that Cuomo had convened a grand jury.

Morris pocketed at least $25 million in middleman fees from financial firms that won business with the pension fund during Hevesi's tenure.

Successful companies paid a little-known Connecticut financial firm, Searle & Co. "placement fees," 95% of which are said to have gone to Morris.

The largest chunk was from the Carlyle Group, one of the world's biggest private equity firms in the world.

Carlyle, which invests $1.3 billion for the state pension, paid $12.3 million to Searle from 2003 through 2006.

Morris, Loglisci and their lawyers could not be reached. Searle's lawyer said he was unaware of any charges. Cuomo had no comment.

Morris, a longtime Democratic consultant who also worked for Sen. Chuck Schumer, quietly registered as a financial broker just months after Hevesi took office in 2003.

Few people are said to have known of his involvement with Searle & Co., which is located above a Greenwich, Conn., Christian Science reading room.

Meanwhile, Morris created five firms - four of which shared his East Hampton home address. His name was not listed on the incorporation papers.

At least three of the companies received fees from firms doing business with the fund, documents show. Morris no longer works at Searle.

Hevesi, who quit in 2006 before pleading guilty to an unrelated felony, has denied knowing Morris made money off the pension fund.

While the Daily News doesn't have the specific charges, NY1 does. It's 123 counts of enterprise corruption and other felonies.

Hank Morris and David Loglisci were arrested and arraigned this morning in a Manhattan court on 123 counts of enterprise corruption and other felonies.

Prosecutors allege the two engaged in a three-year criminal enterprise to pocket more than $35 million in middleman fees.

They are the first to be charged in a case that took nearly two years to uncover.

State Attorney General Andrew Cuomo's office investigated whether financial firms were using politically-connected consultants in an effort to get business with the state pension fund.

Morris is a top political consultant to former Comptroller Alan Hevesi and Senator Charles Schumer.

Coming Up Clean

An investigation into whether Gov. Eliot Spitzer's (D-NY) top officials engaged in criminal misconduct has resulted in a clean bill of health for those officials. The investigation launched by Albany County DA Soares was necessitated by shady acts by the Governor's office into investigating Senate Majority Leader Joe Bruno's (R) use of state aircraft.

The investigation found that the governor's office was within its rights in compiling and releasing documents to the media concerning the use of state aircraft.

"To the contrary, we found that the governor, his staff and the New York State Police were acting within their authority in compiling and releasing documents to the media concerning the use of state aircraft," Soares added.

Soares - who closed the investigation after probers interviewed Gov. Spitzer Wednesday - said he will release a detailed report today.

"The governor is gratified by the conclusions reached by [Soares] and looks forward to reading the report," said Spitzer spokeswoman Christine Anderson.

Republicans and other critics of the scandal yesterday questioned how Soares could find no criminal wrongdoing when his investigators did not subpoena records or place anyone interviewed - including the governor - under oath.

That latter point is sure to be a bone of contention, and while Soares has managed to weed out the corrupt Alan Hevesi (D), his office may not have done a sufficient job in dealing with potential malfeasance here.

Hevesi Family Troubles Continue

Alan Hevesi (D-felon) may have thought his troubles were over when he stepped down as New York State Comptroller earlier this year after pleading guilty to a single felony count and ordered to pay a fine of $5,000 and repay more than $200,000.

Hevesi's successor, Thomas DiNapoli (D), has found some serious problems. Numerous records are missing, and claims that there may be criminal wrongdoing as well possibly implicating Hevesi and several other high ranking officials at the Comptrollers Office.

State Comptroller Thomas DiNapoli - charging that his predecessor, Alan Hevesi, and top aides had engaged in "unethical, irresponsible and possibly criminal activity" - yesterday fingered a former senior official as responsible for the disappearance of hundreds of sensitive pension-fund documents.

DiNapoli, who took over in February after Hevesi pleaded guilty to using state workers to help his wife, said he has been cooperating with a new probe of Hevesi and his top deputies being conducted by Albany County District Attorney David Soares.

"It is apparent that former Comptroller Hevesi and others on his staff engaged in unethical, irresponsible and possibly criminal activity," DiNapoli said in a stunning statement last night.

"We will continue to fully cooperate with law-enforcement officials to ensure that any wrongdoing by the Hevesi administration is uncovered and prosecuted to the fullest extent of the law," he said.

DiNapoli said missing records documenting the investment of tens of millions of dollars of pension-fund monies and the fees that were paid for managing the funds - first disclosed in yesterday's Post - disappeared from the desk of Deputy Comptroller for Pension Investment David Loglisci, who resigned from his $201,000-a-year job May 10.

"Shortly after Loglisci's resignation, my staff discovered certain records were missing from Loglisci's desk," DiNapoli said. "We immediately informed District Attorney Soares and began work to recover these documents."

DiNapoli spokesman Dennis Tompkins said Loglisci was "the last one we were aware of who knew where these documents were."

Loglisci, a lawyer and one-time vice president of investment banking at Citigroup's Salomon Smith Barney, was named to his post by Hevesi in 2004.

The Post revealed that officials were attempting to reconstruct the missing documents by obtaining copies from firms that have done business with the state pension fund.

Among the pages of documents are potentially sensitive listings of the names of the persons who received payments for arranging the investment of pension monies with several management companies, sources said.

UPDATE:
Trackposted to Outside the Beltway, Perri Nelson's Website, The Virtuous Republic, DeMediacratic Nation, Right Truth, Adam's Blog, Webloggin, The Amboy Times, Leaning Straight Up, Conservative Cat, third world county, The Crazy Rants of Samantha Burns, Pirate's Cove, Planck's Constant, Dumb Ox Daily News, and Public Eye, thanks to Linkfest Haven Deluxe.

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.

Albany Attitude Adjustment

Gov. Spitzer wanted the Legislature to choose one of three candidates a panel selected to becoming Alan Hevesi's successor as NYS Comptroller. Hevesi was forced to step down as a result of taking state funds and services for private use.

So what did the Legislature do? Assembly Speaker Shelly Silver (D) and Senate Majority Leader Joe Bruno (GOP) turned around and picked one of their own. They chose Assemblyman Thomas DiNapoli to be the comptroller. Spitzer wanted things his way. Silver treated Spitzer to a lesson in how business is done in Albany. It's Silver's way or it's no way.

It fell to lawmakers to choose a new comptroller after Mr. Hevesi, the elected comptroller, agreed late last year to resign after pleading guilty to a felony for using a state worker as a personal assistant for his wife. He had just been re-elected to a four-year term. There is no provision in New York for a special election to replace a comptroller who resigns; state law calls for a replacement to be chosen by a joint session of the Legislature. That gave Assembly Democrats, with by far the largest bloc of votes in the Legislature, control over the choice.

Still, last month the legislative leaders held a news conference with Mr. Spitzer to announce that they had agreed on a public selection process: a trio of former comptrollers would screen applicants, determine who was qualified and forward to lawmakers a list of the top candidates from whom to choose. But when the panel forwarded only three names — and none were those of the five lawmakers, including Mr. DiNapoli, who had sought the post — the Assembly was infuriated.

Assembly Democrats then decided to go back on the deal with Mr. Spitzer and the party’s bosses got involved, prompting the private decision by party members to select Mr. DiNapoli. “I think the members thought he was the most qualified member, and the most qualified candidate, and they chose to nominate him,” Mr. Silver said after the vote.

Mr. Bruno proclaimed his support of Mr. DiNapoli, who won the respect of many Republican senators by working with them several years ago on a legislative package to bail Nassau County out of its fiscal straits.

Spitzer responded with a scathing critique of the Assembly's methods and cronyism to select DiNapoli over better qualified candidates. Those candidates included Martha Stark, the NYC Dept. of Finance Commissioner, Nassau County Comptroller Howard Weitzman or Wall Street financier William Mulrow, who happens to have close ties with Spitzer. DiNapoli has none of the experience that any of those candidates brought to the table except that he was a member of the Assembly, which is what Silver was interested in.

It's about preserving and expanding legislative perogatives. Selecting the comptroller on the basis of merit is a distant second.

Considering that Democrats control the bulk of the seats in the Assembly, they got to choose who becomes comptroller. Silver's word is law and he governs the Assembly's business with an iron fist. If you cross Silver, your career and pet projects are toast. Spitzer just learned that the hard way.

DiNapoli is a nice guy, but has absolutely no experience as a fiscal watchdog. In fact, Callaghan had more experience than this guy.

He's now got to oversee the $145 billion state pension program, a Medicare program rife with fraud and accounting troubles, and try to steward the state's fiscal situation into better health.

Hevesi Resigns

That didn't last very long. For someone who said that they would fight to stay in office, Alan Hevesi took the deal with the Albany County DA and resigned after pleading guilty to a single count of defrauding the government and resigned from office.

Mr. Hevesi, the state’s top fiscal watchdog, told the court in a hoarse voice that one of the state workers he had assigned as a driver for his wife, Carol, had done much more than provide security for her. Prosecutors filed court papers revealing that the worker had also watered her plants, driven her to Bloomingdale’s and dropped off her dry cleaning.

“I apologize to the court, but until this issue became a public matter, I did not plan to reimburse the state for his time,” Mr. Hevesi told the court under oath, in a reversal of the statements he made this fall during his successful re-election campaign.

In a deal with the Albany County district attorney’s office, Mr. Hevesi pleaded guilty to a single felony, agreed to pay a $5,000 fine on top of the more than $206,000 he has already reimbursed the state, and agreed to resign for the rest of his current term and for the term that begins Jan. 1. The agreement will spare him prison time.

His resignation, which took effect immediately, left the comptroller’s office being run by Thomas Sanzillo, the first deputy comptroller. The State Legislature, which will choose Mr. Hevesi’s successor, is unlikely to do so until mid- to late-January at the earliest, officials said. That could lead to a constitutional showdown about the post.

Gov. George E. Pataki said Friday that he was concerned about the long lag time before the Legislature selects Mr. Hevesi’s successor, given that the state comptroller is the sole trustee of the state’s $145.7 billion pension fund and its investments. An aide to the governor said that Mr. Pataki was exploring whether he can appoint an interim comptroller — something Assembly Democrats say he cannot do.

“I’m concerned about, in the interim, what might happen here,” Mr. Pataki said at a news conference in the Capitol. “It’s a more than $100 billion fund that is in trust for the people of this state, particularly the retired employees of this state, and the stock market and the world economy can be very volatile. And I am concerned that if there is another 10-week or longer process, as to how that office will function.”

But Assembly Speaker Sheldon Silver, who has the most influence in picking a new comptroller, said that he was “comfortable” with Mr. Sanzillo serving in the interim, and questioned the governor’s legal authority to fill the post. A spokesman for the State Senate said the Senate was looking into the issue.

Hevesi not only resigned from his current position as Comptroller, but for the position to which he was reelected and which term begins January 1, 2007.

That sets up a showcase showdown between Gov. Pataki (R) and Assembly Speaker Sheldon Silver (D) who will fight to determine who gets the say on who replaces Hevesi. Joe Bruno (R) is essentially on the sidelines in this fight as he's under a cloud of investigations himself.

Hevesi to Avoid Indictment

New York State Comptroller Alan Hevesi will avoid being indicted by the Albany County District Attorney by agreeing to a deal to step down as comptroller.

State Comptroller Alan Hevesi will agree this week to resign to avoid an indictment stemming from an ethics scandal in which he used public employees to chauffeur his wife, according to sources familiar with his decision.

Hevesi, one of the state's highest-ranking elected officials, will step down from the $151,500-a-year post he has held since January 2003, by Friday morning at the latest, as part of a plea deal with Albany County District Attorney David Soares.

The comptroller, a 66-year-old Queens Democrat, will also plead guilty to a criminal charge. It will not be higher than a Class E felony or require him to spend time in jail, according to the sources.

Hevesi spokesman David Neustadt declined to comment, as did Soares spokeswoman Rachel McEneny. Soares released a statement Tuesday that confirmed he was negotiating with Hevesi's attorneys on a deal.

Hevesi's resignation will bring an end to a scandal that has simmered for more than three months and continued even after he reimbursed the state $206,294 and was re-elected with 57 percent of the vote in November.

Thus ends chauffeurgate and eliminates one major headache for incoming governor Eliot Spitzer, who made cleaning up corruption a part of his platform, but would have meant dealing with a mess left by a fellow democrat in Hevesi.

Who will replace Hevesi? Well, that will go to the Legislature (and not the voters who should have tossed Hevesi out for violating state law in the November statewide elections). The Assembly is dominated by the Democrats, while the Senate is headed up by Republican Joe Bruno, who is under federal criminal investigation for shady dealings himself. In other words, it looks like the Democrats in the Legislature will be determining who replaces Hevesi.

Bear Mountain Compact No Longer Operative

There was an old axiom known as the Bear Mountain Compact that that predates the Vegas shtick: What happens in Albany, stays in Albany. It refers to the idea that politicians would be able to get away with all manner of ethical and criminal acts that they wouldn't be able to in their home districts and such acts would not be uttered once the individual crossed through the area of Bear Mountain in Orange County (others refer to it as the Tappan Zee rule).

Well, as much as politicians would love for the Compact to continue in effect, the fact is that the Compact is well and truly dead. Politicians are getting caught up in political scandals left and right and many have fallen in just the past few years, and there are more on the horizon.

Alan Hevesi (D) looks like he's about to make a deal with the Albany District Attorney to resign and pay back the state in exchange for not being indicted.

Meanwhile, Joe Bruno (R-Rensselaer), the last GOPer standing is under federal investigation for potentially steering contracts via member items (aka the legal slush fund) the way of his consulting business. The investigation appears to be focused on business dealings with an associate:

One person familiar with the situation, who would not say whether he has been contacted by federal agents, said the investigation appears to include Bruno and a business partner and friend of the Republican leader -- Jared Abbruzzese.

Bruno, in an abruptly called late afternoon news conference at the Capitol, revealed the probe and said he learned last spring it was going on. He said subpoenas have been issued, and he did not believe he was the target of the inquiry.

"I have nothing to hide," Bruno said. "They are going into background over the past five or six years."

Bruno added that he has hired William Dreyer, an Albany lawyer and former federal prosecutor. The New York State Republican Campaign Committee paid Dreyer's firm about $2,400 between July and November.

Abbruzzese, of Loudonville, could not be reached Tuesday. His attorney, Stephen Coffey, a former Albany County prosecutor, said he is "not aware of Abbruzzese being involved in any federal investigation or prosecution." But told of Bruno's revelations, he said it "makes sense ... they're looking at anybody involved with Senator Bruno."

John Pikus, the FBI's special agent in charge in Albany, declined comment, referring questions to the office of U.S. Attorney Glenn T. Suddaby. Calls to the U.S. attorney's office in Albany and Syracuse were not returned late Tuesday.

Paul Larrabee, a spokesman for Attorney General Eliot Spitzer, said he could not comment on the legality of member-item grants going to for-profit organizations. Asked repeatedly over the past week, Larrabee said he couldn't offer an opinion on the matter because "it's just not a priority at this time."

This appears to be along the lines of State Senator Efrain Gonzalez's (D-Bronx) case. For what it's worth, Gonzales is the seventh member of the NYC delegation in Albany to be indicted in just the past three years.

Hevesi Saga Continues

NYS Comptroller Alan Hevesi has repeatedly said that he would not resign (though there was an indication that he might indeed resign rather than get indicted) but the pressure will be kicked up a notice as the Post is reporting that Spitzer is looking to give Hevesi the boot as an investigation into Hevesi's conduct appears to be far more damaging than Hevesi would ever cop to.

Hevesi was reelected despite admitting that he used a state driver to chauffeur his wife and never repaid the state for the use and he refuses to resign, despite knowing that a report on his conduct would not be good for his future. Voters apparently didn't know or care that they were voting for a candidate whose ethical lapses could affect his job as chief financial officer for the state as the comptroller. The State Comptroller's job is to look for fiscal irregularities and to oversee the state's multi-billion dollar pension fund.

If Hevesi resigns his office, he'll be replaced by a vote of the Assembly and Senate, meeting as one, which would put the Democrats in the majority.

Should he be removed by the Senate before the end of the year, Pataki would pick his successor.

In both types of removals, Hevesi could still seek to regain his position on Jan. 1, when his new term in office would begin.

That could lead the removal process to begin all over again.

This would lead me to suspect that Hevesi will remain on the job until Spitzer takes office, and will then get to pick his replacement.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

Hevesi To Resign Rather Than Face Indictment

Isn't that special. NYS Comptroller Alan Hevesi is going to do the state a favor by choosing to resign rather than be indicted by the Albany County District Attorney.

The truth of the matter is that Hevesi was going to be booted, and he chose to wait until after he was reelected by the state before deciding to resign or getting booted by the legislature or arrested and indicted.

"Hevesi's hope is that Soares will forgo prosecution if he agrees to step down," one of the state's most influential Democrats told The Post.

Soares, who became DA last year pledging to crack down on public corruption, convened a grand jury a month ago to investigate Hevesi's use of a state worker as a chauffeur and companion for his wife over a 31/2-year period.

While Soares has refused to discuss the case, sources close to the investigation say he may soon agree, "in the interest of justice," to drop potential charges if Hevesi steps down.

The state Ethics Commission and an investigator appointed by Gov. Pataki concluded that Hevesi, who easily won re-election last week, repeatedly broke state law - and then lied about it. Gov.-elect Eliot Spitzer has said Hevesi is unfit to continue in office, and if Hevesi seeks to begin a new term in office on Jan. 1, Spitzer could recommend his removal by the state Senate.

Lame duck Pataki has claimed he's considering doing that in the next few weeks, but insiders say he's unlikely to act.

Voters should have given Hevesi the boot, but chose not to. Instead, they're going to have the governor make that determination for them. Depending on the timing, Pataki could appoint someone for the remainder of the term, with Spitzer appointing yet someone else for the duration, or Hevesi would stay on through the end of his current term with Spitzer choosing his replacement. This is a statewide elected official, and yet the voters will not have a say who will represent their fiscal interests for the next four years. Nice.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

Voters Reelect Hevesi

So, what exactly where New York voters thinking in reelecting Alan Hevesi as comptroller despite knowing all that they did about his ethical and potential criminal violations of state law?

Well, they didn't think much of it since they reelected him pretty handily over Callaghan. That doesn't reflect well on New York voters, but when they wonder why state officials treat voters as their own personal piggy bank and don't do a damn thing to lower state spending, start by reexamining who they've elected to office.

Pataki has all but punted the issue to Spitzer, who will now face the first major quandry of his tenure. What will Spitzer do? I know what he should do - get Hevesi booted from office.

The New York Sun outlines some of the leading candidates for the job.

Spitzer should move quickly to deal with this situation.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

Withdrawals

Eliot Spitzer withdrew his support from Alan Hevesi yesterday. That was pretty much expected, as was the fact that Spitzer did not confer his support on his challenger Republican Chris Callaghan, who he believes is not experienced enough for the position of comptroller. All the same, Hevesi has managed to get additional fundraising in the past couple of days, though it raises some new questions.

The Post notes that Spitzer believes that Hevesi should not be comptroller even if he's reelected.

In other words, Hevesi is a dead duck and doesn't quite know it.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

Refusal to Quit

Where is the outrage for an elected official who has violated the trust of the voters? Where are the calls from Democrats to force Alan Hevesi to step down for the good of the people. Thus far, the calls have been muted.

Would they speak with such timid voices if Hevesi were a Republican? I don't think so.

Eliot Spitzer has noted that he'd change the culture in Albany upon becoming governor and that he would clean up the corruption and the economic mess. Now, that's all well and good, but thus far he's remained coy on how to deal with the Hevesi story. He needs to call on Hevesi to step down immediately.

Hevesi continues to argue that his wife needed security as a result of threats and that the driver was there to provide security. The problem with that argument is that the State Ethics Commission dismissed that argument on grounds that there were no threats to Hevesi's wife and the driver had no security training and if he ran into trouble would only call 911.

Hevesi is a flawed candidate and his ethics mess shows that he is not capable of running the state's fiscal affairs.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

Heave Ho, Hevesi's Got To Go

Alan Hevesi's problems are not going to go away. They're only going to get worse as we approach election day. Democrats are shying away from him, or calling on him to step down, and Republicans are not only calling for his resignation, but are throwing support to his challenger Chris Callaghan who broke the drivergate story in the first place.

When you get top Democrats like Spitzer and Clinton putting serious distance between themselves and Hevesi, you know that Hevesi is in trouble. Problem is that Hevesi doesn't think he's in trouble, despite all the warning signs. He's scheduled to appear in a debate with Callahan tonite, and one should expect at least one question on this subject.

Namely - how can someone, who is responsible for the state's fiscal picture and oversight of the dozens of public authorities, engage in unethical and potentially criminal conduct (violation of the Public Officer's Law - and now under investigation by the Albany DA), conduct proper oversight when withholding reimbursement of tens of thousands of dollars in unnecessary costs and an implication that there was no intent to repay? Is this the kind of person who should be entrusted with the responsibilities and authority of comptroller of New York?

I don't think so. He's broken the trust with the people of New York, and needs to step down.

The pressure's rising for him to step down. The Post endorses Callahan because of the drivergate scandal. Thus, despite the 35 years of public service, Hevesi has wiped out all that good work with the unethical and potentially criminal actions.

The NY Sun has much more, and they too have endorsed Callaghan.

The Daily News was none too pleased at being stiffed on a meeting with Hevesi yesterday. Hevesi claims it was a scheduling snafu. And Daily News reporters have uncovered that Hevesi took two pricey trips to Las Vegas and Tel Aviv on taxpayer dime - nearly $30,000. Oh boy.

UPDATE:
The debate went off tonite, and while protestors outside were calling on Hevesi to step down, Hevesi said that he was absolutely not going to resign. Once inside the debate forum, Callaghan unloaded on Hevesi noting that he's lost the authority to call out other state and local officials on their misdeeds - precisely because he's acted inappropriately.

Newsday wonders - from shoo in to has been. Good question. Are voters paying attention?

The Politicker notes that Hevesi could resign, and still win reelection. That's a possibility in a state where Democrats outnumber Republicans by larger than a 2 to 1 margin.

Gothamist has more.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.

NYS Comptroller's Ethics Mess

NYS Comptroller, Democrat Alan Hevesi, is locked in a relatively tough battle with his Republican challenger. It got a whole lot tougher once the challenger, Chris Callaghan, uncovered the fact that Hevesi was using a state-paid chauffeur to ferry around his wife, and never reimbursed the state.

Indeed, the NYS Ethics Commission blasted Hevesi:

The record in this case does not support Mr. Hevesi's assertion that there was a nexus between his role as Comptroller and any threats to Mrs. Hevesi's safety. There were no threats of any kind to Mrs. Hevesi, and any threats to Mr. Hevesi, to the extent they existed, did not warrant special protection for Mrs. Hevesi.

In its Advisory Opinion, the Commission directed Mr. Hevesi to obtain an independent assessment of the threat to Mrs. Hevesi, which he did from the State Police, who determined that the existence of such a threat was "low." Given the clear directive in the Advisory Opinion, Mr. Hevesi was not entitled to substitute his judgment, or that of his staff, for the judgment of independent security personnel.

Moreover, Mr. Hevesi's security claim appears pretextual. Mrs. Hevesi had very real health issues; she did not face any appreciable security risks. Acquafredda had no security background or training and had no significant communication with those assigned to provide security at the OSC. He was simply a driver and companion for Mrs. Hevesi.

From May through August 2003, when the Commission and the State Police were reviewing his request for security for his wife, Mr. Hevesi had already assigned to her a driver. That fact was not disclosed to the Commission. The $6,439 reimbursement that he had made to the City of New York under similar circumstances was also not disclosed. Although Mr. Hevesi takes the position that such information was "not relevant" to the advisory opinion process, the Commission disagrees. In order to render proper service to State employees, the Commission must be informed of all relevant facts bearing on the ethics issue under review.

There is no question that Mrs. Hevesi suffers from debilitating illnesses, and that those closest to her have genuine concerns for her welfare. But State employees may not use public resources to care for their loved ones. Surely, the State's Comptroller may not do so. As the New York State Court of Appeals has noted, the provisions of §74 of the Public Officers Law "are not merely innocuous platitudes or beneficent bromides" (Nicholas v Kahn, 47 NY2d 24, 32 [1979] (citing Public Officers Law §74[4]). The Code of Ethics in Section 74 mandates standards of conduct that all those charged with the public trust must follow.

The Commission concludes that there is reasonable cause to believe that Mr. Hevesi knowingly and intentionally used his position as New York State Comptroller to secure unwarranted privileges for himself and his wife, and in doing so, pursued a course of conduct that raises suspicion among the public that he likely engaged in acts that violated the public trust.

Pursuant to Executive Law §94(12)(b), the Commission hereby sends to the Temporary President of the Senate and the Speaker of the Assembly this Notice of Reasonable Cause alleging that Comptroller Alan G. Hevesi violated Public Officers Law §74(3)(d) and (h).

Hevesi is in real serious trouble, and current Attorney General (and candidate for governor) Eliot Spitzer will open an investigation as well although one can hardly expect any outcome before the election on November 7. The Albany County District Attorney is also opening an investigation.

There is a possibility that Hevesi could be removed under the Public Officer's Law (a Governor's recommendation for removal and followed by 2/3 of the State Senate voting removal).

Hevesi is responsible for the state's fiscal position - oversight of the state's pension plans, and budget oversight. That he acted in such a capricous and egregious manner suggests he is unfit to continue in his current role.

UPDATE:
Daily Kos notes Hevesi's accomplishments in his first term as comptroller, but also points out the seriousness of the allegations and findings by the Ethics Commission. The diarist thinks that Hevesi will be reelected but resign shortly after the election, but wonders if Hevesi should even be reelected at all. I am inclined to agree with the diarist as it would give the new Democratic Governor Eliot Spitzer the ability to fill the slot (quite possibly with NYC Comptroller William Thompson).

Others blogging: Rochester Turning, Buffalo Pundit, and Gothamist.

UPDATE:
CBS 2 is reporting that Hevesi has no plans to resign. He intends to compete and win reelection as Comptroller. However, top Democrats are starting to pull back from Hevesi, including Spitzer. Callahan and Hevesi are going through with the debate tomorrow, and Hevesi claims that a snafu resulted in Hevesi missing a meeting with the New York Daily News editorial board.

The Times is reporting that other Democrats are pushing for Hevesi to step down. Upstate Assemblyman William L. Parment thinks Hevesi should go and the New York City Sergeants Benevolent Association, withdrew its endorsement of Mr. Hevesi.

This situation is going from bad to worse for Hevesi.

Technorati: hevesi, new york, spitzer, ethics, scandal, democrats.