Former NY Political Leader and Hedge Fund Manager Charged in Pension Fund Kickback Scheme

A former New York state political party leader and a hedge fund manager have been charged by the Securities and Exchange Commission with running a multi-million-dollar kickback scheme centered on the state’s largest pension fund.

Raymond Harding, a former leader of the New York Liberal Party, and Barrett Wissman, a former hedge fund manager, allegedly accepted millions of dollars in kickbacks from investment management firms vying to handle the assets of the New York State Common Retirement Fund. Wissman is accused of arranging payments to other members of the scheme and of receiving at least $12 million himself in fraudulent “finder’s fees.” Harding allegedly was paid about $800,000 in sham fees as part of the scheme.

Two other men, Henry “Hank” Morris and David Loglisci, were previously charged by the SEC with taking part in the same kickback scam.

Defendants Accused of Abusing State Pension Fund

The SEC accused the men of tapping into public pension funds, which are designed to benefit only investors in the funds, to repay political favors and enrich their friends.

According to the SEC complaint, Morris, Wissman, Harding, and others were paid kickbacks from investment managers who were rewarded with lucrative investment management contracts. Investment managers who refused to pay up were denied fund business.

Morris, Wissman, Harding and the others who were paid finder’s fees associated with placing the investment work with money managers did no actual work in locating qualified firms to do the work, according to the SEC.

Business Entities Also Charged

Also charged in the scheme are three entities used by Wissman to carry out the fraud — Flandana Holdings Ltd., Tuscany Enterprises LLC, and W Investment Strategies LLC — and two investment management firms with which he was affiliated at the time, HFV Management L.P. and HFV Asset Management L.P.

To settle some of the SEC allegations, Wissman and Flandana Holdings Ltd. have agreed to accept a partial final judgment that imposes permanent injunctive relief to prevent further abused by the scheme. A ruling on financial penalties and efforts to return funds illegally paid to members of the scheme will be made at a later date.

Also, HFV Management and HFV Asset Management have agreed to pay a $150,000 fine.

SEC charges against Harding are still pending. The former state political party leader is accused of violating securities laws by aiding and abetting the scheme perpetrated by Wissman and Loglisci.

No related posts.