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Follow the Pension Money

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The direct approach worked fine, but Morris extended his reach in a multitude of creative ways. Through the Carlyle deals, investigators say, Morris came into contact with Barrett Wissman, a family friend of David Loglisci’s and a hedge-fund manager based in Dallas. Wissman brought a raft of his own connections, and in April, pleaded guilty to paying Morris hidden fees in exchange for facilitating state-pension-fund investments. Morris pushed westward into California’s pension system in 2005 and 2006, through Wetherly Capital, a firm run by longtime Democratic fund-raiser Daniel Weinstein. Morris’s political-strategy firm had worked for Los Angeles mayor James Hahn’s 2005 reelection bid and Phil Angelides’s campaign for governor in 2006; Weinstein was a prominent moneyman for both. Weinstein hasn’t been charged, but in March a former Wetherly employee, Julio Ramirez Jr., pleaded guilty to secretly sharing placement-agent fees with Morris.

Ramirez connected Morris with Aldus Equity, a Texas firm that worked as a consultant to New Mexico’s state pension fund. Aldus eventually received $375 million in New York pension money, with Morris collecting a fee; Aldus also recommended New Mexico deals that netted fees for Morris as well as Daniel Hevesi, the older son of New York’s comptroller. Morris, Cuomo says, wasn’t above using strong-arm tactics to keep the money rolling in. When Saul Meyer, Aldus’s principal, tried to sever the arrangement in 2006, the attorney general says that Morris passed word: “Tell that little peanut of a man that I can take the business away as easily as I provided it.”

But as Morris’s business multiplied, so did the number of people who wanted to wet their beaks. A complex—and often comic—network of payments of questionable legality often ensued: Former New Jersey senator Robert Torricelli just happened to become affiliated with Searle, with his ex-wife receiving part of an $800,000 placement-agent fee when the pension fund delivered a $40 million investment. An affiliate of the Quadrangle Group, an investment firm founded by Democratic insider Steven Rattner and the keeper of Mayor Michael Bloomberg’s personal fortune, was suddenly helping to distribute a low-budget movie called Chooch, produced by David Loglisci’s brother, as Quadrangle sought (and received) a $100 million investment from the state pension fund.

Chooch is the scandal’s artistic low point. (“Hank made me go to a screening,” a Morris friend says. “It was the worst movie ever. Ever.”) Its most poignant chapter involves Ray Harding, the longtime head of New York’s Liberal Party. In a political wit’s famous phrase, the Liberal Party was neither liberal nor a party: Harding was its only meaningful member, and he bartered the party’s valuable ballot line and endorsement for patronage jobs. Harding lost control of the party in the eighties during a bitter fight with Mario and Andrew Cuomo; he eventually made peace with the governor and his son and returned to power. In 2002, however, the Libs lost their state-ballot line when their candidate for governor abruptly pulled out of the race. That candidate? Andrew Cuomo.

Harding’s family fell on hard times. His son, Russell, had been president of the city’s Housing Development Corporation during Rudy Giuliani’s second term as mayor (coincidentally, Morris’s printing company had an HDC contract while Russell Harding was in charge). In 2005, however, the younger Harding went to prison after pleading guilty to embezzlement and child-pornography charges. Ray was struggling to pay the legal bills. Morris got Harding into the placement-agent game, and Harding allegedly collected $800,000 in fees. “If Ray Harding took $8,000, would anyone give a shit?” a New York political strategist says. “No. The biggest mistake was probably that they all took too much.”

Harding, Loglisci, and Morris—through their lawyers—vigorously deny they’ve done anything illegal. They’ve pleaded not guilty to all charges. “Hank Morris is innocent,” his attorney says, “and we will defeat these charges at trial.”

The most damaging sideshow, at least for Morris, may turn out to be a romance gone wrong. Peggy Lipton played the hippie-chick cop on the late-sixties TV show The Mod Squad. At the start of this decade, she and Andrew Stein were a frequent “Page Six” item. But in 2004, not long after Stein was frozen out of the comptroller’s office, Lipton took up with Jack Chartier, Hevesi’s longtime deputy—who happened to be married. Nevertheless, in 2004 Chartier was commandeering state cars and drivers to have Lipton shuttled to doctor appointments where she was treated for cancer, as well as less noble destinations like nail salons and grocery stores. Markstone Capital, a California-based investment firm that was chasing $250 million in New York pension money, allegedly tossed $100,000 to Lipton in order to curry favor with Chartier and Morris.

Chartier’s limo adventures were exposed in 2006, when Hevesi got into his own chauffeur scandal. Hevesi’s use of state cars to transport his ailing wife seemed like a big deal at the time, because it led to Hevesi pleading guilty to fraud and resigning from the comptroller’s office in December 2006. But Chartier’s problems, and the spurned Stein, would eventually come back to haunt Morris. Chartier and Stein haven’t been charged in the scandal. Possibly because they’ve also been talking to investigators.


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