UPDATE 1-Advisor to ex-NY comptroller gets prison sentence

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NEW YORK Feb 17 (Reuters) - Henry "Hank" Morris, the chief political advisor to New York state's former comptroller, has been sentenced to one-and-a-third to four years in prison for "orchestrating" a pension kickback scheme, New York Attorney General Eric Schneiderman said on Thursday.

This is the maximum sentence under the law, Schneiderman said of the wide-ranging corruption probe into how Morris exploited his ties to Democratic Comptroller Alan Hevesi to reap millions of dollars in fees paid by firms seeking to invest the state's $132.8 billion pension fund.

"Today's sentencing decision by the Court sends a strong message to New Yorkers that those who abuse positions of power to line their own pockets will be held accountable by this office, Schneiderman, who inherited the probe when he took up his current post in January, said in a statement.

Last November, Morris plead guilty to a felony, forfeited $19 million of the fees he was paid by investment firms and money managers, and was permanently banned from New York's securities industry. This is the first sentencing decision resulting from the investigation.

Andrew Cuomo, a Democrat who was the attorney general before he became governor in January, led the probe and netted eight guilty pleas. Hevesi, who in October pleaded guilty to a felony corruption charge, is scheduled to be sentenced on March 10. The list of high-profile figures swept up in the investigation includes Steven Rattner, former Obama administration auto czar, who agreed to pay $10 million to resolve his role.

Cuomo's probe, which prompted a number of states in addition to New York to crack down on placement agents -- politically connected middlemen like Morris -- also brushed prominent firms. The Carlyle Group [CYL.UL], for example, entered a settlement agreement with Cuomo. The investigation even involved a corrupt distribution deal for a low-budget film called "Chooch."

Hevesi's former chief political advisor also lost his license to practice law in New York. "Through this scheme, Morris and his political allies and friends reaped tens of millions of dollars in kickbacks, bribes, and sham consulting and finder fees connected to pension fund investments," Schneiderman said.

In December, Cuomo said he had recovered more than $170 million in settlement payments.

On Thursday, Cuomo in a statement said: "The pay-to-play special interest culture is always unethical and often illegal." He continued: "Morris claimed that his actions were business as usual in Albany. Let that serve as a warning." (Reporting by Joan Gralla; Editing by James Dalgleish)