WASHINGTON — A federal judge has ordered seven defendants to disgorge millions of dollars of ill-gotten gains and imposed other penalties stemming from a pay-to-play lawsuit filed by the Securities and Exchange Commission in 2009 involving the New York State Common Retirement Fund.
Henry Morris, David Loglisci, Julio Ramirez, Nosemote LLC, Pantigo Emerging LLC, Tuscany Enterprises LLC and W Investment Strategies LLC were all penalized for their roles in a scheme in which firms entered into undisclosed quid pro quo arrangements with Morris, the top political adviser and fundraiser for former New York Comptroller Alan Hevesi, and Loglisci, the state's former deputy comptroller, to secure investment management rights from the retirement fund. Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York in Manhattan entered final judgments against the defendants on March 3.
Morris, who previously pled guilty to parallel criminal charges and was sentenced to a multi-year prison term and ordered to forfeit $19 million in fees, agreed to be barred from the securities industry and to cease and desist violations of federal securities laws. Loglisci agreed to a cease and desist order and also previously pled guilty to criminal charges, though he did not get jail time due to his cooperation with law enforcement. Ramirez, a former broker who facilitated certain of the payments made to Morris, agreed to a ban from the securities industry for at least three years as well as a cease and desist. Like Loglisci, he did not face jail time from his earlier criminal plea.
Nosemote and Pantigo, two shell companies through which payments to Morris were funneled, consented to a cease and desist order. Tuscany Enterprises and W Investment Strategies were ordered to disgorge $3,083,500 in ill-gotten gains and pay $321,272 in prejudgment interest. Both companies were previously associated with another of the 17 defendants charged in the SEC complaint: Barrett Wissman, who previously agreed to a cease and desist order.
The case grew out of a 2007 investigation spearheaded by then-New York Attorney General Andrew Cuomo which led to more intense scrutiny of pay-to-play schemes nationwide. In a previous settlement agreement Quadrangle Group, a New York City-based private investment management and advisory firm specializing in investing in media and communications companies, and Quadrangle GP Investors II LP, a private-equity fund in which the Common Retirement Fund invested $100 million in 2005, agreed to pay millions of disgorgement as well. Hevesi was sentenced to four years in prison for his role.
The commission's claims against another defendant, Saul Meyer, remain pending. Meyer, who founded a Texas-based pension consulting firm pled guilty in 2009 to paying kickbacks to Morris, but also avoided prison time because of his cooperation with authorities. On March 10, his attorneys submitted a letter asking the court to grant them more time to respond to the SEC's third amended allegations against him. His filing is due March 31 in the same district court in New York.
