PHOENIX - Navnoor Kang, the former director of fixed income for the New York State Common Retirement Fund, pleaded guilty to criminal charges that he conspired to defraud the public in what prosecutors described as a massive pay-to-play scheme.
Kang, 37, changed his plea to guilty last month after initially denying the charges and planning to go to trial.
The government charged that from 2014 to 2016 Kang accepted bribes from two brokers in exchange for the reward of fixed-income business from the NYSCRF. Charged with six counts in the indictment, Kang pled to two of them: conspiracy to commit securities fraud and conspiracy to commit honest services wire fraud. He faces a maximum of 25 years in prison, though will likely serve less, and is scheduled to be sentenced Feb. 23, 2018.
“As an investment professional with New York State Common Retirement Fund, Navnoor Kang owed a duty to the public employees whose pension money he oversaw, acting Manhattan U.S. attorney Joon H. Kim said in a statement. “But in this case of public corruption meets securities fraud, Kang sold himself and his duty to safeguard public retirement money for luxury vacations, jewelry, cash and even drugs. He has now admitted to his crimes and is a convicted felon. ”
Under the terms of the plea agreement, and in addition to further penalties to be imposed at sentencing, Kang agreed to forfeit $78,716 and two luxury wristwatches that the government said were traceable to his misconduct.
Under the sentencing guidelines submitted by the Justice Department, Kang could face between 210 and 262 months in prison, and a fine between $40,000 and $400,000, though the decision is ultimately up to the judge.
Kang’s alleged co-conspirators, Deborah Kelley and Gregg Schonhorn, were also charged. Financial Industry Regulatory Authority documents show that Kelley worked at Birmingham, Ala.-based Sterne, Agee & Leach Inc., and St. Louis-based Stifel Nicolaus & Co. during the period covered by the complaint, and Schonhorn worked for Memphis-based FTN Financial Securities Corp.
Kelley and Schonhorn each pleaded guilty for participating in the scheme, and Kelley has already been sentenced to three years of probation with six months of house arrest.
Anthony Sabino, a white collar criminal defense attorney and law professor at St. John’s University who reviewed the plea agreement, said the government clearly wants to send a stern message because Kang’s conduct is at heart a public corruption case.
“He’s betraying an element of public trust,” Sabino said. “You don’t want to be too lenient with this guy.”
But Sabino said the sentencing guidelines calling for 17-plus years in jail struck him as very high, particularly in light of Kelley’s much lighter sentence. Sabino said the judge would likely be cognizant of that when sentencing Kang and that Kang would probably receive either a longer term of probation or a relatively short jail sentence.
The Securities and Exchange Commission’s parallel civil case against Kang remains pending, having been put on hold to allow the criminal proceeding to move forward.