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Hevesi pleads guilty to fraud

Most elected officials in Queens remained silent after former state Comptroller Alan Hevesi pleaded guilty last Thursday to receiving $1 million in gifts in exchange for state pension business, but one councilman said he was not surprised that the once-powerful Forest Hills resident finally acknowledged that he was corrupt.

The plea arrangement came as part of a yearlong probe into corruption in the state comptroller’s office conducted by state Attorney General Andrew Cuomo.

During his arraignment in Manhattan Supreme Court, Hevesi, a former state assemblyman and city comptroller, admitted he directed $250 million in pension funds to be invested with the private equity firm Markstone Capital Partners in exchange for $1 million in gifts, including $500,000 in campaign contributions and $75,000 for five paid trips to Italy and Israel, Cuomo said.

Hevesi, who faces up to four years in prison plus fines for securities fraud, was released on his own recognizance after turning in his passport earlier in the day.

City Councilwoman Karen Koslowitz (D-Forest Hills) and Assemblyman Rory Lancman (D-Fresh Meadows) refused to comment on the Hevesi plea, U.S. Rep. Anthony Weiner (D-Forest Hills) did not return phone calls and city Comptroller John Liu was traveling on a plane.

“This is not unexpected to those of us who were involved in the 2001 mayoral campaign,” said City Councilman Peter Vallone Jr. (D-Astoria). His father, Peter Vallone Sr., then the Council speaker, ran against Hevesi in a four-way race for the Democratic nomination for mayor. Hevesi finished last and the nod ultimately went to Mark Green.

“Alan Hevesi presided over a culture of corruption and violated his oath as a public servant,” Cuomo said in a statement. “He was solely charged with protecting our pension fund, but he exploited it for his personal benefit instead. With his guilty plea, we can now focus on the process of restoring public trust in government.”

The attorney general said Hevesi’s sons, Assemblyman Andrew Hevesi (D-Forest Hills) and former state Sen. Daniel Hevesi, as well as officials in the former comptroller’s office, accompanied Hevesi on the trips abroad.

Andrew Hevesi did not return a request for comment.

Hevesi admitted that Elliot Broidy, who managed Markstone, was “a friend of mine and political fund-raiser for my campaign” and that he “sought to help Broidy in his efforts to market Markstone by encouraging other public pension funds to invest in Markstone.”

Hevesi also admitted that his political adviser and campaign manager, Hank Morris, arranged for Broidy “to enter into a sham consulting agreement with a lobbyist friend of Morris who was a political supporter of mine, pursuant to which Broidy paid or caused to be paid in excess of $380,000 to the lobbyist over a period of more than two years.”

Looking back at the 2001 Democratic primary, Peter Vallone Jr. said: “If you remember at the time, Hank Morris wanted to provide the services to Alan Hevesi for free, which would have given him an advantage over other candidates.”

The city Campaign Finance Board ruled that Morris could not work for Hevesi for free.

“We were all pretty sure Hank Morris wasn’t doing this out of the goodness of his heart,” the younger Vallone said.

Hevesi said in his plea that from June 2003 to August 2006, Broidy “made or arranged in excess of $500,000 in campaign contributions as directed by me or my campaign staff.”

Campaign finance records showed Broidy contributed $3,400 to Andrew Hevesi’s Assembly campaign in April 2005.

In a strange twist, Broidy also gave $15,000 to Cuomo’s campaign account in 2001 and 2002 when he ran unsuccessfully for the Democratic nomination for governor of New York before the Hevesi investigation began.

Broidy’s wife, Robin Rosenzweig, gave $50,000 to Alan Hevesi — $25,000 in each in 2003 and 2004. She also contributed $3,400 to Andrew Hevesi in 2005.

The former comptroller also acknowledged the corruption began in January 2003, when he took office, until December 2006, when he resigned his post after he was found to have misused a state driver to chauffeur his ailing wife.

Cuomo began issuing subpoenas in May 2009 to investment firms and their placement agents in connection with pension investments after he discovered that up to half of the agents were unlicensed to secure investments with state and city pension funds.

Hevesi is scheduled to be sentenced Dec. 16.

His successor, state Comptroller Thomas DiNapoli, distanced himself from Hevesi.

“My predecessor, Alan Hevesi, is the latest in a line of corruption that keeps getting longer,” DiNapoli said. “When public officials break the law while performing their public duty, they should forfeit their public pension, plain and simple.”

Reach reporter Howard Koplowitz by e-mail at hkoplowitz@cnglocal.com or by phone at 718-260-4573.

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