Quadrangle Cofounder and CalPERS Partner Steven Rattner Settles NY Pension Fund Corruption Probe for $10M

Quadrangle investment group founding partner Steven Rattner has settled for $10 million allegations that he bribed officials to obtain a substantial investment from New York State’s pension fund. The financier, who is a California Public Employees’ Retirement System (CalPERS) outside investment partner and previously served as President Barack Obama’s “car czar,” is accused of being involved in a “pay-to-play” scam involving Quadrangle. Pension officials were allegedly given kickbacks for directing state pension money to the fund.

It was just last April that Quadrangle settled charges over the pension fund scheme with then-New York Attorney General Andrew Cuomo and the US Securities and Exchange Commission. Rattner, who is no longer with Quadrangle, was not part of that agreement. He had left the investment group to help President Obama restructure the auto industry. Rattner was forced to step down last summer because of the allegations related to the pension scam.

The probe has resulted in eight guilty pleas. Cuomo, who was just sworn in as New York’s governor, has called the state pension fund a “valuable asset held in trust for retirees.”

The NY pension fund case is not related to Rattner’s work with the $218.8 billion CalPERS, which is also dealing with its own bribery scandal. The allegations involve Alfred Villalobos, a businessman who made millions from representing firms that wanted investment money from the California pension fund. Governor Jerry Brown, who was at the time the state’s attorney general, sued ex- CalPERS Chief Executive Fred Buenrostro and Villalobos last May. The $95 million securities complaint accused Villalobos of bribing Buenrostro and two others. Villalobos, who has denied any wrongdoing, has since filed for bankruptcy. An independent examiner has recommended that stricter ethics rules for CalPERS managers be put in place.

Related Web Resources:
Former auto czar pays $10 million fine, CNN.com, December 30, 2010

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