ETF News

LA money manager gets no jail in NY corruption case

* Judge allows Elliott Broidy to withdraw felony plea

* Broidy pleaded guilty in 2009 in “pay to play” scheme

NEW YORK, Nov 26 (Reuters) - Los Angeles money manager Elliott Broidy was spared jail time and a felony conviction on Monday for his role in a “pay to play” scheme at the New York state pension fund.

Justice Lewis Bart Stone reduced Broidy’s felony to a misdemeanor and sentenced him to a conditional discharge.

Broidy, 55, admitted making nearly $1 million in gifts for New York state pension fund officials, including $75,000 in travel expenses for luxury trips to Israel and Italy. In exchange, Markstone Capital Partners, a private equity firm founded by Broidy, received $250 million of pension fund money to manage.

Broidy had faced up to four years in prison after pleading guilty in 2009 to rewarding official misconduct, a felony. On Monday, the judge allowed him to plead guilty instead to attempting to reward official conduct, a misdemeanor.

Broidy, who cooperated with prosecutors, became “the final nail in the coffin on those who tried to rip off the system,” the judge said.

Former state Comptroller Alan Hevesi, a Democrat, pleaded guilty in 2010 to the corruption. The comptroller ran the pension fund.

Broidy received letters of support from Kenneth Langone, co-founder of Home Depot, and former New York Governor George Pataki.

A Republican fundraiser, Broidy was appointed in 2005 to the U.S. Homeland Security Advisory Council, and President George W. Bush named him to the board of the John F. Kennedy Center for the Performing Arts.

As part of his original guilty plea, Broidy paid $18 million to the state in restitution, the management fees his fund charged the pension fund. He also resigned from Markstone Partners.

The probe was conducted by former Attorney General Andrew Cuomo, now the state’s governor. Current Attorney General Eric Schneiderman did not object to the lesser conviction, assistant attorney general Rachel Doft said.

Hevesi, 72, was the highest-ranking official convicted in the case. Seven others, including Broidy, pleaded guilty and 21 firms settled probes, paying the state more than $170 million.

Earlier this month, Hevesi was granted parole after serving 19 months behind bars. He had been sentenced to as many as four years. He is scheduled to be released by Dec. 19.