ATTORNEY GENERAL: New York State Officials Took Payoffs from Equity Fund
AG probes state comptroller's office, as Markstone Capital head pleads guilty.
Dec. 3, 2009 — -- Elliott Broidy, Chairman of Markstone Capital Partners, pleaded guilty in a Manhattan court today to a million dollar pay-to-play scheme involving New York State's pension fund.
"This is an old-fashioned payoff of state officials case," said New York Attorney General Andrew Cuomo.
Between 2002 and 2006, "Mr. Broidy, the head of the Markstone Group paid nearly a million dollars to get a quarter-billion dollar investment from the state pension fund," Cuomo announced. That $250 million was then invested with Broidy's private equity fund, Markstone Capital Partners.
The bribes totaled up to nearly $1 million in "various favors and payments through family members, through girlfriends, trips, gifts – payoffs," Cuomo said.
Broidy allegedly bribed four senior level officials in the State Comptroller's office including David Loglisci. Loglisci was indicted on separate corruption charges in March and has pleaded not guilty. The other three officials who allegedly accepted money illegally as part of the scheme have not been named because they have not been charged. Cuomo said the investigation is ongoing.
As part of the pay-to-play arraignment, Broidy allegedly bankrolled $300,000 to fund the 2003 movie "Chooch." The movie was produced by family members of David Loglisci, who at the time was in charge of investments for New York's pension fund.
Additionally, "there were payments for rent and living expenses and hospital bills for the girlfriend of a senior state official totaling approximately $90,000," Cuomo said.
As part of his felony plea, Broidy faces up to four years in prison and will pay back $18 million, the fees his company received for managing the state's pension fund.
Broidy was released on his own recognizance and is cooperating with the Attorney General's ongoing investigation into wrongdoing under former New York State Comptroller Alan Hevesi. Hevesi resigned from office in 2006 after pleading guilty to fraud.
In a teleconference with reporters, Attorney General Cuomo described "a culture of corruption" in the state comptroller's office where the bribery took place. Some of Broidy's payments were initiated by state officials, and others he offered himself.
Markstone Capital Partners is an $800 million private-equity fund based in Los Angeles, California. Cuomo's investigation was coordinated with the California Attorney General's office.
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