Obama auto adviser linked to NY pension probe

An investment company run by the head of the Obama administration's auto task force has been accused of paying more than $1 million to an aide to New York's former comptroller in a bid to win a lucrative deal with the state pension fund.

Steven Rattner was an executive at the Quadrangle Group, a private equity firm, until he left this year to lead President Barack Obama's efforts to fix the U.S. auto industry. The Wall Street Journal and The New York Times reported that Rattner met with two now-indicted men to try to win state pension fund business.

Quadrangle, while under Rattner's watch, paid huge fees to Hank Morris, a political aide to former comptroller Alan Hevesi, the Securities and Exchange Commission said in court papers filed Wednesday.

Morris and the retirement fund's former chief investment officer, David Loglisci, were indicted in March on corruption and bribery charges. New York's attorney general and the SEC have said the payments Morris collected from Quadrangle and other firms interested in landing pension fund business amounted to kickbacks.

Rattner has not been charged with any wrongdoing. A spokesman for Quadrangle declined to comment Thursday when asked about the company's role.

Quadrangle's link to the investigation has been public for some time, but an SEC complaint filed this week in connection with a new round of indictments provided new details.

The complaint said that a Quadrangle "senior executive" met first with Loglisci and then with Morris in 2004 to try and persuade the state fund to invest in Quadrangle. The two newspapers, each citing a person with knowledge of the case, reported that the "senior executive" was Rattner.

Quadrangle ultimately agreed to pay Morris's firm, Searle & Co., a "finder fee" of 1.1% of any money it received from the fund. A Quadrangle affiliate that specializes in distributing low-budget films, GT Brands, also acquired the DVD distribution rights to a film called "Chooch" that had been produced by Loglisci's brother.

Weeks after that film deal was signed, Loglisci told Quadrangle it would get $100 million in pension fund business.

A Treasury Department spokeswoman said Rattner had "made us aware of the pending investigation" during the transition.

An SEC spokesman declined to comment.

Rattner's link to the investigation was first reported in February.

Hevesi has not been charged and has denied any wrongdoing.

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