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Morris’s defenders argue that he filed all the paperwork required in his business dealings and that trading on your friendships is hardly illegal. “Maybe, for the civic good, we’d rather not see our political system work this way, and our comptroller’s office work this way, and politically connected people make money through their political connections,” a Morris associate says. “But that doesn’t make it criminal.” A public official who had known Morris for decades puts it more colorfully: “I mean, people send chocolates all the time. What Hank did smells, but a lot of stuff in Albany smells.” Shouldn’t the politically savvy Rattner and Berger, whose images suggest they’re above this sort of thing, have known better? A New York Democrat who has also been a financial-industry player shrugs. “You do what you need to do to get the business,” he says.

Some of Morris’s longtime friends are saddened and disbelieving that the man they know could be a criminal mastermind. “Hank is clearly not somebody who would take ethical risks,” one of his political partners says. “In the campaign context, he’d often be somebody who’d caution people, ‘Don’t do that; it’s just not worth the risk.’ ”

The case, if it ever makes it to court, will turn on whether Morris was selling an ability to open doors—or an ability to keep doors locked. He can make a pretty good argument for having functioned as a traditional lobbyist or broker in many of the deals; other episodes, where the SEC and Cuomo allege that Morris had to be paid in order for the comptroller to do business with a money manager, may be more problematic. One example: The comptroller’s office, according to the SEC’s complaint, had a prior relationship with a Memphis firm called CSG. In 2005 CSG approached Loglisci about managing some of the pension plan’s hedge-fund investments and was told the discussion couldn’t move forward unless Morris was hired. After CSG signed up with Searle, the firm received $765 million in New York pension money; Morris pocketed about $1 million in fees as a result, investigators claim. CSG disputes the narrative. “Loglisci told the firm that Hevesi was the final decision maker when it came to selecting asset managers for the [fund], and Loglisci said that Morris … might be helpful on the subject,” a spokeswoman says. “CSG was never told that it ‘had’ to hire Morris or to pay him a fee if CSG wanted the [state’s] business … Paying fees to placement agents … has been standard practice in the public pension-fund industry, and was appropriate so long as those fees were disclosed to the fund, as they were in this case… CSG was aware of nothing that indicated that Morris, Hevesi, and Loglisci were engaged in any conduct that was illegal or improper in any way.”

So far Cuomo has racked up popularity points and headlines for pursuing corruption, and he’s brought badly needed reforms to the pension-fund system. But he has yet to charge or settle with some of the best-connected players, including Rattner. After more than two years of investigation, the attorney general and the SEC still haven’t clarified what role, if any, Alan Hevesi played in the scandal, and there’s still no hint of a trial date. Is Cuomo, as he gets closer to a 2010 run for governor, willing to push the probe into more uncomfortable territory?

Morris hasn’t spoken publicly since 2001. That was the tumultuous year Hevesi was trounced in the mayor’s race and Morris fought with the campaign-finance board; he also got married and bought a $4.1 million house in East Hampton. He’s been mostly holed up there with his wife, an attorney turned New Age minister, poring over law books in hopes of assisting his attorney, Bill Schwartz, a Columbia Law School classmate way back when. “When this first started happening, Hank went into an avoidance mentality,” a friend says. “He stopped reading the newspapers.” There’s a pause. “I worry about Hank now. If he will harm himself. He’s not made for this.”

Another close friend says his sympathy for Morris is outweighed by a different emotion: disgust. Whether or not Morris is legally guilty, he abused a lifetime of relationships. Why? “This wasn’t about Hank being greedy. It was about him trying to outsmart everyone again.” The friend sighs. “Well, he didn’t.”


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