NYC Probes Rattner's Firm in Pension Scandal

Quadrangle paid finders fees to indicted adviser's company

By Jason Farago,  Newser Staff

Posted Apr 22, 2009 9:49 AM CDT

(Newser) – New York City authorities are investigating whether Quadrangle Group, formerly led by Obama car czar Steven Rattner, deceived managers of the city's pension funds, the Wall Street Journal reports. Rattner's firm, Quadrangle, paid finders fees to Searle & Co., which had been headed by now-indicted political adviser Hank Morris, for $85 million in city employee pension investments. Morris is accused of taking kickbacks in exchange for access to the pension funds. The SEC is already investigating.

Although no charges have been filed against Rattner, the allegations have imperiled the future of his small investment firm. With Rattner in Washington, investors may pull out of Quadrangle and could cost the firm $16 million in annual fees. New York's is not the only pension fund with which Quadrangle had dealings; Morris helped Quadrangle secure $20 million from New Mexico's fund, and the son of Sen. Jeff Bingaman, with whom Rattner is said to have developed ties, worked at the firm for years.

Hank Morris faces 123 charges, including enterprise corruption, securities fraud, grand larceny, bribery and money laundering.
Hank Morris faces 123 charges, including enterprise corruption, securities fraud, grand larceny, bribery and money laundering.   (AP Photo/ Louis Lanzano)
Steven Rattner, seen with scholar Henry Louis Gates, Jr. Before becoming Barack Obama's car czar, Rattner ran an investment firm implicated in a major New York kickback scandal.
Steven Rattner, seen with scholar Henry Louis Gates, Jr. Before becoming Barack Obama's car czar, Rattner ran an investment firm implicated in a major New York kickback scandal.   (Getty Images)
Hank Morris, right, former top political adviser of New York Comptroller Alan Hevesi, is escorted in handcuffs  into Manhattan criminal court, Thursday, March 19, 2009, in New York.
Hank Morris, right, former top political adviser of New York Comptroller Alan Hevesi, is escorted in handcuffs into Manhattan criminal court, Thursday, March 19, 2009, in New York.   (AP Photo/ Louis Lanzano)
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