Steven Rattner, Ex-'Car Czar,' To Pay $10 Million To Resolve Pension Lawsuits
NEW YORK — The investment banker who helped lead the Obama administration's auto industry overhaul has agreed to pay $10 million to settle influence-peddling allegations in New York.
Former "car czar" Steven Rattner admitted no wrongdoing as part of the deal, which was announced by state Attorney General Andrew Cuomo on Thursday.
Cuomo's office had filed civil lawsuits against Rattner in November, accusing him of paying kickbacks to help his company land $150 million in state pension fund investments in 2004 and 2005. He denied the charges.
The attorney general had initially sought $26 million in fines and penalties and a lifetime ban from the securities industry. The settlement announced Thursday only bars Rattner from doing further business with any public pension fund in the state for five years.
Rattner, who just weeks ago called Cuomo a bully and claimed his demand of a steep fine was politically motivated, released a conciliatory statement saying he was pleased to put the matter behind him.
"I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult," he said. "I respect the work of the attorney general and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers."
Cuomo, who will become New York's governor on Jan. 1, said the settlement "resolves the last major action" of a lengthy investigation into corruption among officials overseeing the pension fund.
Eight people have pleaded guilty to criminal charges as a result of the case, including former state Comptroller Alan Hevesi, who admitted taking campaign contributions and luxury vacations from a financier seeking a multimillion-dollar pension fund investment deal.
A long list of financial firms and money managers, including Rattner, have agreed to collectively pay $170 million in civil penalties in connection with the investigation.
Cuomo's office and the Securities and Exchange Commission claimed that those bankers and brokers essentially had paid kickbacks to influence the officials overseeing the pension fund's giant investment portfolio, now valued at about $132.8 billion.
Rattner was never accused of criminal wrongdoing, but the SEC and Cuomo said he tried to help his investment firm, the Quadrangle Group, land deals with the state by paying $1 million in unnecessary finders fees to Hevesi's top political consultant.
They said he also helped the brother of the pension fund's chief investment officer get a DVD distribution deal for his stalled film project, a low-budget comedy called "Chooch."
Rattner has previously agreed to pay $6.2 million to settle an SEC lawsuit over his conduct. That deal includes a two-year ban from the securities industry.
Rattner, a former New York Times reporter who made millions on Wall Street and became a highly respected policy adviser and campaign fundraiser for Democrats, left the Quadrangle Group to help lead President Barack Obama's auto industry task force in 2009.
He left government after the efforts to restructure General Motors and Chrysler were completed in the summer of 2009.
Since then, he has been writing and promoting a book on his work on the auto industry and working as an unpaid financial adviser managing the personal fortunes of New York City Mayor Michael Bloomberg, one of the world's richest men.
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DAVID B. CARUSO 12/30/10 02:10 PM ET Associated Press