(October 9, 2012) – A New York State Supreme Court judge has sentenced David Loglisci, the former chief investment officer (CIO) of the state’s $150.6 billion employee pension system, to a conditional discharge for allowing a “culture of corruption” at the fund, according to Reuters.
Loglisci and seven others pleaded guilty in a “pay-to-play” probe of the Common Retirement Fund (CRF) by former Attorney General Andrew Cuomo. The investigation turned up “unlicensed placement agents, secret fees,” and favorable treatment of certain money managers who were major campaign contributors, according to a 2010 release from the attorney general’s office.
The New York county grand jury’s 2009 indictment of Loglisci and Henry ‘Hank’ Morris, formerly a chief political consultant to the comptroller, alleges that Morris and other power brokers arranged Loglisci’s appointment to CIO to facilitate “corruption of the alternative asset investment process.” In 2004, according to the indictment, these senior officials “determined that the original Chief Investment Officer of the CRF was not sufficiently accommodating” to Morris and his associates. Morris “participated in the decision to remove the original Chief Investment Officer and promote defendant Loglisci to that position.”
With Loglisci at the fund’s helm, the documents assert he and Morris together made decisions about alternatives allocations and manager selection. They collaborated despite Morris’ role as a paid political consultant and financial interest in the securities transactions through certain placement agents. These roles, in the grand jury’s opinion “generated conflicts of interest” about which Loglisci “knew and failed to disclose.” As CIO, he “ceded decision-making authority to Morris regarding particular investments and investment strategies to be pursued and approved by the CRF.”
Unlike the other defendants named in the investigation, however, there is no evidence Loglisci received any money from the “pay-to-play” scheme.
Morris went to prison for his interactions with the pension fund. According to Reuters, Loglisci is managing a startup car wash business in Oklahoma.
“He’s done in the financial sector,” Loglisci’s attorney reportedly told the sentencing judge.