Steve Rattner, the former car czar and founder of Quadrangle Group, just got run over by his former firm.
After settling this morning with Andrew Cuomo and the SEC., Quadrangle issued a statement saying “we wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. That conduct was inappropriate, wrong, and unethical.” Damn that's harsh.
The firm agreed to pay $7 million to the Attorney General and $5 million to the SEC. Mr. Rattner was not part of the settlement, but he sure is part of the case. Referring to him as a “former Quadrangle executive,” the SEC says in its complaint that Rattner secured a $100 million investment from the New York State Common Retirement Fund by agreeing to help distribute a low-budget straight-to-DVD movie called “Chooch,” produced by former deputy comptroller David Loglisci and his brothers. Rattner also agreed to pay $1 million in “sham” finder fees to Morris, the top political adviser and chief fundraiser for former New York comptroller Alan Hevesi, according to the allegations.
On March 19, 2009, Morris and Loglisci were charged with 123 counts of bribery, grand larceny, money laundering and fraud for taking kickbacks from investment firms for access to the pension fund. Carlyle Group and other firms have already reached settlements regarding their participation in the scheme. Loglisci has pleaded guilty and is cooperating with the investigation. Hevesi has not been charged with anything yet, but sources said he expects to be indicted “any day now.”
It’s unclear what, if anything, will happen to Rattner. Dan Primack of PEHub.com live-blogged Cuomo’s press conference. Rattner has, ironically, been working out of the General Motors building in Manhattan, where he has an office within the office of Thomas H. Lee Capital. He is currently working on a book called “Overhaul” about his time as car czar.
Update: A lawyer for Rattner tells the New York Times:
“Mr. Rattner does not agree with the characterization of events released today, including those contained in Quadrangle’s statement,” Mr. Gorelick said in his statement. “Mr. Rattner shares with the New York attorney general the goal of eliminating public pension fund practices that are not in the public interest. He looks forward to the full resolution of this matter.”