Andrew Cuomo is suing Rattner, right, for a "pay-to-play" scheme managing investments for a New York State pension Fund.
As General Motors stock successfully returned to public trading yesterday, Steven Rattner, 58, the Obama Administrations’ former “car czar,” was sued by New York’s Attorney General for using bribes to secure $150 million in investments for his former firm, the Quadrangle Group.
Rattner, and his team at the U.S. Treasury Department, is a man who in the eyes of many saved the American auto industry by forcing restructurings at GM and Chrysler along with their finance arms as they were on the verge of being liquidated. It looked to be the successful beginnings of a political career for the multi-millionaire financier – one now in doubt.
Part of the reason – but not all – for the imminent collapse of U.S. automakers and their suppliers and dealers was the direct result of the chaos in world’s financial markets in the fall of 2008, after the U.S. Federal government under President Bush and Treasury Secretary Paulson foolishly for ideological reasons let Lehman Brothers fail – bringing the U.S. and world economies to the brink of another Great Depression. Acting through the new Treasury Secretary Geithner, the Obama Administration saved millions of U.S. auto jobs, including those at Ford and the transplants. Geithner was key to the bailouts.
Andrew Cuomo, a Democratic governor-elect (who replaces a corrupt Democrat who replaced another corrupt governor) wants to ban Rattner from the New York securities industry and to recover $26million.The New York Attorney General’s maneuvering room in this case was limited by a previous plea deal in the investigation of Quadrangle that gave Rattner immunity from prosecution for cooperation that included turning over e-mails.
Quadrangle Group settled separately with Cuomo last April, and distanced itself from its departed founder and partner.
At the same time yesterday, the U.S. Securities and Exchange Commission reaffirmed its previous parallel charges that Rattner participated in a widespread kickback scheme to obtain investments from New York’s largest pension fund while he was at Quadrangle.
The SEC alleged that Rattner got investments for Quadrangle from the New York State Common Retirement Fund after he arranged for a firm affiliate to distribute the DVD of a low-budget film produced by the Retirement Fund’s chief investment officer and his brothers. Rattner then caused Quadrangle to retain Henry Morris – the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi – as a “placement agent” and pay him more than $1 million in “sham fees” even though Rattner was already dealing directly with then-New York State Deputy Comptroller David Loglisci and did not need an introduction to the Retirement Fund.
The SEC alleges that after receiving pressure from Morris, Rattner also arranged a $50,000 contribution to Hevesi’s re-election campaign. One month later, Loglisci increased the Retirement Fund’s investment with Quadrangle from $100 million to $150 million. As a result of the $150 million investment with Quadrangle, the Retirement Fund paid management fees to a Quadrangle subsidiary. By way of his partnership interest in Quadrangle and its affiliates, Rattner’s share of these fees totaled approximately $3 million, according to the SEC.
However, the SEC cut a deal with Rattner, who agreed to settle the SEC’s charges by paying $6.2 million and consenting to a two-year bar from associating with any investment adviser or broker-dealer. This deal, subject to court approval, apparently will allow Rattner to remain as the personal investor adviser to New York City Mayor Michael Bloomberg.
Both Rattner and Bloomberg are potential and/or real political rivals to Cuomo – to state the obvious in the rough and tumble New York money and power world. And Rattner immediately vowed to fight Cuomo.
“Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal, and funneling campaign contributions,”said Attorney General Cuomo.“Through these lawsuits, we will recover his ill gotten gains and hold Rattner accountable.”
