The battle to rid New York State pension and retirement funds of pay-to-play and placement agent “kick-backs” crept steadily forward today after Elliot Broidy, founder and chairman of Markstone Capital Group, plead guilty to offering millions of dollars in bribes for investment contracts.
According to state Attorney General Andrew Cuomo, Brody plead guilty in state Supreme Court before Justice Bart Stone in New York City. Cuomo said Broidy acknowledged paying nearly $1 million in gifts to the Office of New York State Comptroller (OSC) officials in order to obtain $250 million in investments from the $116.5 billion New York State Common Retirement Fund (CRF).
“For Broidy, this was a small price to pay. For New York taxpayers, the harm is incalculable,” Cuomo said in a release today. “Corruption corrodes the integrity of the pension system and the public’s trust in government. That is too high a price to bear.”
Cuomo said the gifts included payments to an OSC official’s friends, a sham consulting contract, luxury travel expenses in Israel for officials and their families, and a concealed payment to former state Comptroller CIO David Loglisci’s brothers’ movie “Chooch.”
Broidy faces up to four years in prison for the charge of rewarding official misconduct, Cuomo said. Additionally, as a result of his transgressions, Broidy will also forfeit $18 million in connection with the plea, the release said.
Los Angeles-based Markstone Capital Group is a private equity firm with offices in California and Israel. Brody resigned from his management role at the beginning of the month. He was also resigned from his trustee duties with the Los Angeles Fire and Police Pension Fund in May, the release said.
Christopher Clark, of Dewey & LeBoeuf, issued a statement today on behalf of Broidy.
“Mr. Broidy regrets the actions that brought about this course of events, but is pleased to have resolved this matter with the [New York Attorney General’s Office] and will be cooperating in the ongoing investigation. Mr. Broidy…has resigned from all operational, supervisory, and other roles at Markstone in order to focus his attention on legal matters,” the statement said.
Fightin’ The Good Fight
Previously, Cuomo’s CRF corruption investigation has led to more than five criminal charges. He has also subpoenaed more than 100 investment firms and their unregistered agents.
Furthermore, Cuomo established his Public Pension Reform Code of Conduct in October. The modifications are meant to eliminate pay-to-play activity in state public pension funds.
“For decades, the State pension fund has been weakened and corrupted by the sole trustee model,” Cuomo said in an October statement. “The model has allowed pay-to-play to flourish in a system meant to protect the retirement accounts of thousands of hard-working public employees. To put it simply--the model doesn't work.”