Hank Morris, Political Consultant, Sentenced For Pension Fund Scheme
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NEW YORK — A former top political consultant to New York's disgraced ex-comptroller was led off to prison Thursday after being sentenced to at least a year and four months behind bars for his pivotal role in an influence-peddling scandal involving the state pension fund.
Henry "Hank" Morris, who rose to political prominence in the state as a campaign manager for Democrats, apologized to the people of the state for compromising their faith in government before a Manhattan judge handed down the punishment.
"Words cannot express the depth of my remorse," he said, his voice and hands shaking as he read a prepared statement.
Supreme Court Justice Lewis Bart Stone was unmoved. He sentenced Morris to the maximum allowed under the law, then denied him time to put his affairs in order before going to prison.
"No. It's time to go," the judge said.
Morris, 57, pleaded guilty in November to securities fraud. He admitted using his connections to former state Comptroller Alan Hevesi and other officials who oversaw New York's massive pension fund to extract kickbacks from investment firms hoping to manage some of the funds' assets. New York's $125 billion retirement pool is one of the world's largest government pension funds and richest sources of potential investment dollars.
Over just a few years, Morris made $19 million in fees from companies awarded state business by Hevesi's office. Prosecutors with the state attorney general's office and the Securities and Exchange Commission said firms that refused to play ball had a harder time getting their foot in the door.
The scandal enveloped a number of state officials and money managers, including Steven Rattner, the Wall Street financier who helped lead the Obama administration bailout and restructuring of Chrysler and General Motors.
Morris has agreed to forfeit his millions of dollars in fees and has already repaid the retirement fund about $18 million, officials said.
But "it is not sufficient that a thief restore stolen property so as to avoid jail time," the judge wrote in explaining his sentencing decision.
Morris will be eligible for parole after 16 months and would serve no more than four years behind bars.
"Throughout my life, I have believed in the potential for government to be a force for good in the lives of people. In fact, I devoted the bulk of my professional life to achieving that goal," Morris told the court before he was sentenced. "To recognize that my actions undermined those efforts has been very painful."
"Simply put, my actions undermined the integrity of New York State's government, and, most importantly, have led ordinary people to question their faith in the political system."
As he was led away in handcuffs, he told relatives and friends in the courtroom: "I love you. I love everybody. Thank you."
The pension fund investigation was initiated and led for several years by former State Attorney General Andrew Cuomo, a Democrat who is now the governor. He called Morris' sentence "a strong signal that it's time to clean up Albany and the culture of corruption must and will end."
The pension fund probe became a political issue during Cuomo's run for governor last year. His Republican opponent, Buffalo businessman Carl Paladino, argued that Democrats were going easy on Democrats in the case. Paladino continued his criticism Thursday, saying Morris emerged with too light a conviction and adding, "These people should pay for their indiscretions."
Eight people pleaded guilty to criminal charges in the case, including Hevesi, who admitted taking campaign contributions and luxury vacations from one money manager seeking pension fund business, and David Loglisci, the pension fund's chief investment officer.
Several financial firms also paid more than $170 million in civil penalties for their actions, including well-known, politically connected firms like the Carlyle Group.
Rattner, who was accused of arranging for his investment company to pay Morris $1 million to better the firm's chances of landing an investment deal with the pension fund, ultimately paid $16.2 million to settle civil lawsuits filed against him by Cuomo's office and the SEC.
Attorney General Eric Schneiderman, a Democrat who inherited the case from Cuomo, said Morris' sentence showed "that those who abuse positions of power to line their own pockets will be held accountable by this office."
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Associated Press writer Michael Gormley in Albany contributed to this report.
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JENNIFER PELTZ 02/17/11 05:37 PM ET Associated Press