Newsday (New York) October 15, 2010 Friday ALL EDITIONS Paladino issues new ethics plan Carl Paladino's ethics reform platform would seek to forbid new state lawmakers from receiving pensions, make it illegal for legislators to steer discretionary member- item funds to family members and call for a "people's constitutional convention ... free of lobbyists and politicians," according to a Paladino issue brief obtained yesterday by Newsday. The Republican candidate for governor's proposal, which includes eight-year term limits for legislators, aims to decentralize the power of the Assembly speaker and Senate majority leader, who control the flow of legislation in Albany. The brief also repeats his earlier proposals to require lawmakers to disclose outside income and appoint a special prosecutor to investigate conflict-of-interest cases. "Political corruption is a fundamental cause of economic malaise," Paladino said in the issue paper. "Wealth in a modern economy requires rules and certainty." Paladino's Democratic opponent, Attorney General Andrew Cuomo, dismissed the idea of a special prosecutor during an appearance yesterday in Merrick. "His plan is neither viable nor feasible nor legal," Cuomo said. "It's another idea not grounded in reality." Cuomo spokesman Josh Vlasto declined to comment on the new elements in Paladino's proposal. The issue paper takes direct aim at Assembly Speaker Sheldon Silver (D-Manhattan), arguing that his position as a partner at personal-injury law firm Weitz & Luxenberg colors his judgment on legislation. Silver spokesman Bill Wise said the speaker is "not familiar with Mr. Paladino's proposal and he has no comment." The Philadelphia Inquirer October 15, 2010 Friday CITY-C Edition Former aide to Carl Greene says he was forced out for warnings on spending A former aide to fired Philadelphia Housing Authority Executive Director Carl R. Greene alleged in a lawsuit filed Thursday that he was effectively forced out of his job for warning of improper spending on political and lobbying activity. The suit filed in U.S. District Court focuses new attention on two PHA-funded nonprofits already under investigation by the U.S. Attorney's Office. Greene's former executive assistant, Vincent Morris, alleges that his boss reacted with "rage" to his warnings that the spending appeared to violate federal rules and alleges Greene threatened to demote him and cut his pay, which "ultimately forced his resignation." PHA's annual budget of about $347 million comes almost entirely from the Department of Housing and Urban Development, and there are strict rules governing how the money can be used. In his suit, Morris contends that the retaliation for his warnings violated his right to free speech, and that his punishment for bringing wrongdoing to the attention of his superiors was a violation of Pennsylvania's whistleblower protection law. He seeks more than $100,000 in damages from PHA, Greene, and other agency executives. A spokeswoman for PHA, Nichole Tillman, said the agency would not comment until it was formally served with notice of the court action. The lawsuit contends that Greene failed to notify HUD that PHA was using federal money to lobby Congress, "despite the fact" that one nonprofit it gave money to, the Pennsylvania Institute of Affordable Housing Professionals, said in writing that its money was partly for "lobbying and political expenditures." A second nonprofit, Tenant Support Services Inc. (TSSI), paid postage for almost "11,000 letters to the U.S. Senate" and for a bus trip by PHA residents to protest federal budget cuts, the suit said. Greene is on the TSSI board, and the agency receives about $450,000 a year from the authority. "Morris' complaints about these expenditures were met with rage and retaliation" by Greene, the suit alleges. In an interview Thursday, Morris said he started working at PHA in 1999 but quit in April after Greene threatened to slash his pay by a third. "I was being demoted and reduced in salary, and it was going to change my pension," Morris said. His lawyers said his salary of about $100,000 a year would have been reduced by $30,000 if he had not resigned. Morris said his relationship with Greene exploded when he raised concerns about the accuracy of an audit of TSSI's spending. "I was very concerned that there was no way to track money through TSSI," he said. Morris is represented by Michael Pileggi and L. Kenneth Chotiner, two former PHA attorneys who sued the agency after they were fired several years ago. In recent weeks they have filed four lawsuits on behalf of current or former PHA employees. Greene was fired from the agency last month for secretly settling three sexual- harassment complaints against him. A fourth is pending. His attorney, Clifford E. Haines, said in an e-mail that he had not been served with a copy of the lawsuit. "I can't comment on any lawsuit I know nothing about," he wrote. He suggested the PHA board had some responsibility, asking, "Are these issues that were brought to the board's attention?" The affordable housing institute was established in 2006, run by PHA executives, and funded with money from PHA's nonunion employees and private-sector landlords. About $300,000 remains in the nonprofit's account. White-collar professionals at the agency were asked to contribute to the nonprofit $2.10 a week, deducted from their paychecks. Those deductions were halted in August. Employees were told that although their contributions were going to a nonprofit, only half the amount was deductible from federal income taxes because the other 50 percent was "allocated for lobbying expenses and constitute nondeductible contributions for federal income-tax purposes." Kirk Dorn, a former PHA spokesman, has said lobbying money was never spent and remains in a fund at the agency. The deductions were unpopular, and some PHA employees said they felt pushed to contribute despite the supposed voluntary nature of the program. Morris said that during his 11 years with the housing agency, a number of issues concerned him. "Things were unethical and borderline criminal," he alleged. He was the PHA employee assigned to work with TSSI, which was run by public- housing tenant leader and Greene ally Asia Coney, who was paid $102,000 a year. Morris contends Coney required him to serve as treasurer of a political action committee she operated called Equity PAC, which since 2005 has received about $132,000 from a variety of city political candidates. The money was used for get- out-the vote activities on election days, but since 2006 has failed to account for more than $100,000. Morris said that was because he refused to sign the PAC's state-required expenditure reports. "He reviewed its books and records and found discrepancies . . . [and] refused to sign the PAC's state filings that others had prepared for his signature," the lawsuit says. The Inquirer reported on Sunday that since 2005, Equity PAC has received contributions from prominent politicians that were used for "street money" to pay people to get out the vote. The U.S. Attorney's Office has subpoenaed TSSI's records, including all e-mails from Coney, as part of a probe of the authority. It has also sought records of the professional housing institute. Though Equity PAC registered with the state in 2005, it has filed only one report in Harrisburg, accounting for the $22,000 it received in 2005. The registered address of Equity PAC is a PHA building at 1401 W. York St. in North Philadelphia that also houses a tenant organization that Coney leads. Lewiston Morning Tribune (Idaho) October 13, 2010 Wednesday 9th Circuit upholds campaign finance laws OLYMPIA - A federal appeals court upheld Washington state's campaign disclosure laws Tuesday, saying the requirements don't violate the First Amendment rights of a group that didn't want to reveal their donors in a 2008 opposition campaign to an assisted-suicide ballot measure. The three-judge panel of the 9th U.S. Circuit Court of Appeals upheld a lower court ruling that rejected Human Life of Washington's contention that the state's disclosure requirements for political committees, independent expenditures, and political advertising were unconstitutional. The judges wrote that disclosure requirements "have become an important part of our First Amendment tradition. "There is a substantial relationship between Washington State's interest in informing the electorate and the definitions and disclosure requirements it employs to advance that interest," they wrote. Phone and e-mail messages left with Human Life and with James Bopp Jr., a noted campaign-finance attorney who represented Human Life, were not immediately returned Tuesday. Human Life had argued that it shouldn't have to register with the state as a political action committee, because it wanted to sponsor ads about the issue of assisted suicide, not ads explicitly about Initiative 1000, the "Death with Dignity" initiative that was on the November 2008 ballot. I-1000 was passed by nearly 60 percent of voters and took effect in March 2009. It allows terminally ill people to obtain lethal prescription drugs for ending their own lives. The appellate court said that Human Life's challenge to the law wasn't moot even though the law had already passed, because the politically active group would likely face this issue again in future election communications. Six initiatives and one referendum are on the ballot in Washington state this year, and state records show the campaigns have raised a combined $54 million, with about $16 million spent so far. "Access to reliable information becomes even more important as more speakers, more speech and thus more spending enter the marketplace, which is precisely what has occurred in recent years," the three-judge panel wrote. "Like campaigns for elected office, ballot initiatives are the subject of intense debate and, accordingly, greater expenditures to ensure that messages reach voters." Doug Ellis, interim Executive Director of the state Public Disclosure Commission agreed, saying: "The people's right to know who is financing election campaigns is of the highest importance." The ruling comes the same day the U.S. Supreme Court turned down a request to lift Washington state limits on campaign contributions in the final weeks of ballot measure campaigns. The court said Tuesday that it will leave in place a decision from a federal appeals court that keeps a $5,000 limit in effect in the final three weeks of an initiative or referendum campaign. The action comes despite a federal judge's ruling that capping contributions is unconstitutional. The state is appealing the ruling in a lawsuit brought by Family PAC, a political group involved in Washington's 2009 referendum on expanded domestic partnerships for gay couples. Voters enacted the state's public records law with the overwhelming passage of Initiative 276 in 1972. The measure called for disclosure of campaign finances, lobbyist activity, financial affairs of elective officers and candidates, and access to public records. Birmingham News (Alabama) October 12, 2010 Tuesday Bingo probe just another piece in Alabama's checkered past WASHINGTON - The investigation into allegations gambling advocates bought and paid for a bill in Montgomery is not the first time the FBI has secretly wired up someone and sent them to walk the halls of the Alabama Legislature. It's also not the first time state lawmakers have been caught on tape discussing votes and money in the same breath. Alabama has a colorful history of public corruption investigations and convictions - enough to make historians ponder whether it's part of the culture. The list of public officials turned felons is long and includes two governors, an attorney general, a congressman and plenty of lawmakers and Cabinet members. There also are a few whose political careers did not end; they served time, got their rights restored, and ran for office again. The late Rep. Thomas Reed of Tuskegee was re-elected after going to prison for extortion, then later criticized an effort to pardon former Gov. Guy Hunt. Hunt, convicted for pocketing money that was not his, got the pardon and put himself on the ballot again, too. ''Proving once again that ethics laws in Alabama could make political corruption illegal in Alabama but could never make it unpopular,'' wrote Alabama historian Wayne Flynt in his book, ''Alabama in the 20th Century.'' The 11 defendants in the latest scandal, including four state senators, are expected to plead not guilty this week and deny the Justice Department allegations that they swapped votes on a gambling bill for campaign cash and other goodies. Before bingo Twenty-two years ago, the issue was coal. A union official went to the FBI in 1988 claiming state Rep. Patricia Davis of Birmingham promised votes - hers and others' - for cash. The union official recorded conversations, and Davis and two others were charged. Their defense, in part, was that the money was for their campaigns and didn't influence their votes on what was known as the ''Buy Alabama Coal'' bill. Jurors in the first trial heard about 40 recordings of conversations. Davis was convicted and served five years. On one of the tapes, jurors heard Davis talk about how she was able to pay cash for all of the new furniture in her home. Coal also was central in a probe about 10 years earlier. An 18-month federal investigation centered on allegations that coal lobbyists bought votes from lawmakers with prostitutes, drinks, trips and money. Most of the charges against the multiple defendants were dismissed after an 11-week trial in 1980. Former state Sen. Joe Fine, now lobbying partner of one of those arrested last week, eventually pleaded guilty to a misdemeanor, and more serious charges were dropped. In the early 1990s, a conduit for funneling tax dollars into the pet projects of individual legislators was investigated, and its director, state Sen. Ray Campbell, pleaded guilty to charging a state office for work never done by the Alabama Center for Quality and Productivity. The probe also snagged former state Sen. Bill Drinkard and former state Rep. John Tanner, who was legal adviser to former Gov. Jim Folsom Jr. A similar pass-through scheme turned state Sen. E.B. McClain of Birmingham into a felon last year for sending tax dollars through a nonprofit and into his pocket. Nearly every administration has been tainted by scandal. Gov. Don Siegelman is appealing his conviction for appointing HealthSouth founder Richard Scrushy to a health board in exchange for $500,000 in donations to his lottery campaign fund. Folsom's insurance commissioner, Jimmy Dill, was convicted on charges that he still was receiving money from a private insurance company he founded and lying about it to investigators. Gov. Fob James' transportation director, Jimmy Butts, pleaded guilty to bribery in a scheme that funneled cash to help his son's racing career. Going even further back, former U.S. Rep. Frank Boykin of Mobile was convicted in 1963 of conspiracy and conflict of interest. He was pardoned by President Johnson in 1965. Alabama Attorney General Richmond Flowers was convicted in 1969 of extorting payments from life insurance companies and was pardoned by President Carter in 1978. Rule breakers The Alabama Ethics Commission keeps a running tally of some of the public officials who've run afoul of their rules: former state treasurer Melba Till Allen, 1978; former Public Service Commission President Juanita McDaniel, 1980; Alabama State Industrial Relations Director Dottie Cieszynski, 1996; former chairman of the Birmingham Water Board Horace Parker, 1998. Parker was convicted of arranging a water main upgrade to improve the water pressure for the lawn sprinklers at his home. It was not the last time Jefferson County would have a water-related corruption scandal. The investigation into how a sewer project drove the county to the brink of bankruptcy has convicted four county commissioners - Chris McNair, Gary White, Larry Langford and Mary Buckelew - and a slew of county employees and contractors. Ratepayers have seen shocking increases on their bills, and a $3.2 billion debt still looms. Langford was ousted as mayor of Birmingham earlier this year for accepting bribes in exchange for steering some of the sewer financing deals to Montgomery investment banker Bill Blount. Lobbyist Al LaPierre also was caught up in the scandal. The wide-ranging investigation into two-year colleges and the legislators they employed resulted in the convictions of two lawmakers - Bryant Melton and Sue Schmitz - and the chancellor of the two-year college system, Roy Johnson, plus several others. Historians note that the state's current constitution was approved in 1901 with fraudulent votes, a scheme by whites to lock their supremacy over blacks into law. ''You could say the fundamental law of Alabama was born in corruption, so we're continuing on with historic tradition, one we would like to break,'' said retired University of Alabama political scientist William Stewart. The Journal News (Westchester County, New York) October 12, 2010 Tuesday Pension issues bring scrutiny to state comptroller race ALBANY - Rising pension costs, a poor economy and former state Comptroller Alan Hevesi's recent guilty plea to a felony corruption charge. Those three things have heightened the public's focus on the work of the comptroller - who is the state's chief auditor, finance officer and fiscal watchdog, and sole trustee of the $124.8 billion state pension fund. The race for comptroller - between Democratic incumbent Thomas DiNapoli and Republican Harry Wilson - could play a pivotal role in determining how the pension fund is paid out to retirees and in limiting burdens on local governments. The pension fund pays benefits to roughly 350,000 retirees and beneficiaries and has about 650,000 members who are still working. "The economic situation, growing concerns about pensions and other unfunded liabilities and the scandal involving Alan Hevesi have all drawn much more attention to this office and to this campaign," said E.J. McMahon, director of the fiscally conservative Empire Center for New York State Policy. The state Assembly appointed DiNapoli, then a sitting assemblyman from Nassau County, to the $151,500-per-year position in February 2007 after Hevesi resigned in late 2006. Wilson is a former hedge-fund manager who lives in Scarsdale. Wilson has painted DiNapoli as a career politician, saying in a commercial that "Albany insiders have had their turn" to fix Albany. "Now it's our turn." Albany needs a business person as comptroller, said Wilson, who helped restructure General Motors last year as part of the President's Auto Task Force. The comptroller's office needs someone who will "restore trust and credibility," he added, and he has taken jabs at DiNapoli for voting for more than 200 tax increases during his 20 years in the Assembly. "I'm more qualified than my opponent. I have this novel idea that the chief financial officer should have chief financial experience," he said. DiNapoli notes that he has made a number of changes to how the pension fund is run to improve ethics and prevent future scandals. They include banning the participation of placement agents and lobbyists in fund investments, prohibiting pay- to-play political contributions and establishing an inspector general position. DiNapoli describes Wilson as a "Wall Street insider" who, given the financial sector's role in the troubled economy, should not be in charge of the pension fund, which serves more than a million current and former employees. For his part, Wilson said DiNapoli has attacked his experience and credibility without providing any details of what he allegedly did wrong, attempting to prove "guilt by association." A Quinnipiac University poll found that DiNapoli leads Wilson 49 percent to 31 percent, with 20 percent undecided. Ninety percent said they hadn't heard enough about Wilson to form an opinion, compared to 65 percent for DiNapoli. Hevesi resigned after pleading guilty to using state employees to chauffeur his wife. On Thursday, he acknowledged receiving nearly $1 million in benefits for approving a $250 million pension-fund investment to a firm headed by a friend. He faces up to four years in prison. Unlike most other states, New York's comptroller is the sole trustee of the pension fund, and the Hevesi scandal has led some to call for a board to control it. Attorney General Andrew Cuomo's three-year investigation has led to guilty pleas and settlements by other high-level officials, investors and firms that they were involved in kickbacks, bribes and sham fees. Wilson has campaigned on trying to tie DiNapoli to Cuomo's investigation. But after the plea deal with Hevesi was announced, a Cuomo spokesman said the office determined that an investment under Hevesi that was increased under DiNapoli did not warrant action, and DiNapoli is not under investigation. Besides changing how the pension fund is run, Wilson said his priorities would be to reduce spending, protect taxpayers and identify ways to provide relief to local governments from state mandates. Wilson said he would use the office's audit power to look at how every dollar is spent in the state. Doing that at General Motors led to saving $10 billion, he said. In a recent debate, DiNapoli said that's largely what his office does. Under his administration, the agency has highlighted nearly $3 billion in wasted taxpayer money and cost-savings opportunities, he said. DiNapoli said in the debate that he has challenged lawmakers and the governor to do a better job controlling spending and aligning spending with revenues. But much of the campaign has focused on the pension system. Government contributions to pensions continue to rise sharply after being "artificially low" in the 1990s and early 2000s, which discouraged reform and encouraged so- called "pension sweeteners," McMahon said. Annual contributions to the Common Retirement Fund total about $2.5 billion. For the Employee Retirement System, the average 2011-12 contribution rate is climbing from 11.9 percent to 16.3 percent of payroll, and for the Police and Fire Retirement System, the average rate will go from 18.2 percent of payroll to 21.6 percent. Lawmakers adopted a less generous pension tier this year, which is expected to save taxpayers more than $35 billion over the next 30 years. Wilson said the pension fund as it's currently run is unsustainable. The new Tier V, which requires greater employee contributions and has later retirement dates, does not go far enough, he said. Other changes Wilson is proposing include expanding the pay-to-play ban to trial lawyers and reducing risky investments and focusing on fixed-income assets. DiNapoli recently released a report disputing Wilson's claim that fixed-income investments would be a wise way to run the fund. That strategy would have either required $33 billion more in public-employer contributions or led to a $57 billion decrease in the fund's value over the past 20 years, the report said. Thomas DiNapoli · Hometown: Great Neck, Nassau County · Age: 56 · Political affiliation: Democrat · Experience: State comptroller, 2007-present; state Assemblyman, 1986-2007; manager, New York Telephone/AT&T, 1977-1987; aide to U.S. Rep. Robert Mrazek, 1983-1985. Youngest person to hold public office in state when elected to Mineola Board of Education at 18. · Education: Bachelor's degree from Hofstra University, 1976. Master's degree in human resources management from the New School University Graduate School of Management and Urban Professions, 1988. · Family: Unmarried. Harry Wilson · Hometown: Scarsdale · Age: 38 · Political affiliation: Republican · Experience: President's Auto Task Force, March-August 2009; Silver Point Capital, May 2003-August 2008; the Blackstone Group, August 1999-April 2003; Clayton, Dubilier & Rice, May 1995-June 1997; Goldman Sachs, August 1993-April 1995. · Education: Bachelor's degree from Harvard University, 1993. MBA from Harvard Business School, 1999. · Family: Married, four daughters. South Florida Sun-Sentinel (Fort Lauderdale) Distributed by McClatchy-Tribune Business News October 12, 2010 Tuesday Potential loophole exists in new Palm Beach County ethics rules Oct. 12--New ethics rules intended to clean up scandal-plagued Palm Beach County may include a loophole that could let some misuse of power go unpunished. The county's toughened ethics code that kicked in May 1 requires conflicts of interest or other misuse of position to result in financial gain. But money is not always the goal or the result when government officials or employees abuse their power, Ethics Commission Executive Director Alan Johnson said. Johnson is recommending that the county consider changing the ethics code to cover conflicts of interest or misuse of office that don't necessarily result in financial gain. "There's a glaring omission," Johnson said. "If there's not financial gain or loss, the [county code] does not apply." The proposed change would amend the "prohibited conduct" in the county code from just a "financial benefit" to also include securing a "special privilege, benefit or exemption." That change would make the county's rule more in line with state standards, said Johnson, a former state prosecutor. The County Commission can change the ethics code. The proposed revision would first go before the newly created Ethics Commission, a five-member, independently appointed board which could weigh in with a recommendation. Ethics Commissioner Manuel Farach said the ethics code may "need rewriting" to address the prohibited conduct omission. "It concerns me greatly," Farach said. County Attorney Denise Neiman said the proposal, still in its early stages, requires further review. She said the county's code was meant to supplement state law, not create the only standard for local officials and government employees to follow. The passage of a tougher county ethics code, the creation of an Ethics Commission and the hiring of the county's first-ever inspector general were among the reform efforts passed in the wake of corruption scandals that had rocked county government since 2006. Voters on Nov. 2 will be asked to approve a referendum that would embed those reforms in the county's charter and to expand the reach of the new rules, the Ethics Commission and the Inspector General -- a full-time corruption watchdog -- to local cities. Four county commissioners during the past four years resigned to face criminal charges for misuse of office. Three former commissioners -- Tony Masilotti, Warren Newell and Mary McCarty -- went to prison on federal corruption charges for failing to disclose personal gain connected to the use of their public positions. Koons, on the other hand, pleaded guilty to state charges of felony extortion, misdemeanor perjury and violating public-meeting and public-record laws. According to prosecutors, Koons' passion for a West Palm Beach waterfront project, not a bid for financial gain, led him to misuse his public office to put pressure on nearby property owners who opposed the effort. Johnson contends that the Koons' case is an example of conduct that wouldn't necessarily be punishable by the county's new ethics code. "If it's not financial, we right now have no jurisdiction over it," Johnson said. While the issue should be explored, it may not be necessary for the county to try to expand the standard set in the ethics code, said David Baker, of the Palm Beach County Ethics Initiative. The initiative includes business and civic groups that backed the reform measures. The examples of potential abuses of power that Johnson has mentioned already fall under existing state law and the county may not want to try to expand its own jurisdiction of oversight, Baker said. A reported abuse that doesn't violate the county's ethics code can be forwarded to the state attorney's office and federal authorities. A change to the county code would likely have to wait until after next month's referendum, county officials said. If the referendum passes, county and city officials will have a chance to update or change the code as part of the implementation process. "It's certainly worth a conversation," Baker said. "All of this will come again to the floor." The county's new ethics code includes: tougher lobbying registration and reporting requirements; more disclosure of potential conflicts of interest; more ethics training for county employees and officials; and new limits on gifts county employees can receive. Violating the county's ethics code can lead to punishments that range from a reprimand to prosecution by the State Attorney's Office as a first-degree misdemeanor, which can result in one year in jail and a $1,000 fine. Birmingham News (Alabama) October 10, 2010 Sunday Correction Appended Arrests highlight politicians' code The federal indictments issued last week in a probe of corruption in Montgomery shine a light on the murky world of interactions among lobbyists and legislators, a world in which the text of conversations may be pending legislation but the constant subtext is the legislators' thirst for campaign cash. The offers, which go well beyond campaign donations and into the realm of payoffs and million-dollar jobs, surprised legislators and lobbyists. Most say they abide by a code under which campaign contributions and votes on issues are never discussed together. ''I have served in the Legislature 37 years,'' said Sen. Jabo Waggoner, R-Vestavia Hills. ''I have never had made to me an illegal offer in all my 37 years. In my opinion, these types of conversations are rare because it is rare that we have such a controversial type of issue to come before the Legislature.'' Monday's arrests have some legislators secondguessing themselves, worrying something they said in casual conversations with trusted confidants might look crooked when taken out of context. ''I think the whole city has been turned upside down. I think a lot of people are thinking about how they conduct their business,'' said Jim Sumner, director of the Alabama Ethics Commission. The 11 people indicted included four state senators - Larry Means, D-Attalla; Jim Preuitt, R-Talladega; Quinton Ross, D-Montgomery; and Harri Anne Smith, ISlocomb - three lobbyists - Tom Coker, Robert Geddie and Jarrod Massey - and gambling industry figures Milton McGregor, Ronnie Gilley and Jarrell Walker Jr., along with legislative analyst Joseph R. Crosby. Federal prosecutors allege the accused were involved in a wide-ranging scheme to round up support for progambling legislation, with offers of campaign contributions, jobs, fund-raising appearances by country music celebrities, political polls, media buys and payoffs to opponents if they withdrew from races. The participants tried to hide their dealings by using telephones obtained in the names of others, conducting conversations in private face-to-face meetings, falsifying business records and lying to law enforcement officials. State Rep. John Rogers, D-Birmingham, said he has a simple rule and has advised others to follow it. ''Don't talk about bills and campaign money at the same time,'' Rogers said. ''You have to strictly enforce the idea that your vote is not for sale.'' Sumner's advice is much the same. He said the point at which a public official should end the conversation is when a donor starts asking about a specific vote. ''If you are talking about a specific vote on a specific issue in the same sentence or the same paragraph as you are about a campaign contribution, I would caution the public official to step away,'' Sumner said. But Rogers said the quest for campaign cash has become increasingly desperate. Rogers estimated that it costs a candidate $150,000 for an average House race and three times as much for a Senate campaign. ''John Q. Public doesn't know how much money it takes to campaign,'' Rogers said. Years ago, people volunteered for campaigns, he added. ''Now everybody wants to be paid.'' In recent years, fundraising by legislators has been limited to certain periods. That has created a manic race to build up as much cash as possible when the window is open. The stakes are extremely high this year because the party that controls the Legislature in the next term will control how legislative and congressional district lines are drawn, creating the potential to remake the political map. ''It's a life or death struggle,'' Rogers said. Despite the pressure, legislators need to think even more carefully about how they communicate with one another, with lobbyists and with potential contributors. ''You've got to be perfectly and directly clear about what you say and mean,'' Rogers said. ''Sometimes things can be taken out of context.'' Rogers said he thinks the indictments will make people in Montgomery more cautious about what they say and whom they trust. ''It hurts the communication factor,'' he said. ''A lot of legislators feel like they can't communicate with your fellow legislator. There has been a lot of damage done '' 'Fuzziness' A close reading of the indictment shows that conversations started in what seems to be purposely obtuse language but hardened into detailed promises as the deal appeared to be closer to being clinched. Jacksonville State University political science professor Glenn Browder notes that the conversations in the indictments are full of ''ums'' and ''uhs,'' verbal hesitations, as if the speaker is straining to avoid clearly spelling out a trade of campaign cash in exchange for a vote. ''I think that explains a lot of the fuzziness,'' Browder said. ''However, the substance in that indictment shows pretty clearly that they are crossing the lines.'' Browder, who served in the state Legislature and later in Congress, said those conversations are not normal and he was never involved in one. ''That is not the normal way of doing business in Washington or in Montgomery,'' he said. Waggoner said it is unfortunate that people hear about the indictments and assume they represent business-as-usual at the State House. ''The vast majority of the men and women that serve in the Legislature are good, honorable, honest men and women who are there for all the right reasons,'' Waggoner said. Sumner said he hoped that the scandal would finally put ethics and campaign finance reform on the front burner when the new Legislature convenes next year. ''If we needed a catalyst for ethics reform we clearly have it,'' Sumner said. ''I would have thought the two-year college scandal and the Jefferson County sewer system scandal would have been enough, but this is above and beyond.'' EXCERPTS FROM LAST WEEK'S FEDERAL INDICTMENT released last week in a public corruption case involving pro-gambling legislation: CONVERSATIONS WITH SEN. SCOTT BEASON, R-GARDENDALE, who was cooperating with the federal investigation. On or about Feb. 18, Beason met with Jarrod Massey, lobbyist and president of Mantra Governmental; VictoryLand owner Milton McGregor; and Country Crossing owner Ronnie Gilley at Massey's office in Montgomery: ''McGregor then went on to stress the need for (Beason's) favorable vote on the pro- gambling legislation, stating, 'Here's where we are. We need, we need your help. We need your vote and support on the people having the right to vote on this issue.' In response to (Beason's) suggestion that it could cost up to $500,000 to run for state-wide office, McGregor stated that (Beason) 'needed some new friends' and that he and Gilley 'got a bad habit of supporting our friends.' Later in the conversation, Massey focused the discussion on the type of support McGregor and Gilley could provide (Beason): 'You need resources. You need a commitment, um and obviously we've got a very important issue. I'm not going to tell you there's a quid pro quo, but, that being said, um, these guys can talk about what we can do, what we can't do.''' Feb. 19 meeting between Beason and Massey: ''Massey summarized the offer, saying, 'I would suggest that that look something like-and, again, it is up to you for what you would want to use it for-but basically there is a million dollars of business that is going to come through that PR entity, one way or the another, you know, annually.' . . . At the end of the conversation, Massey told (Beason), 'I'm telling ya, it's a good deal . . . I mean, you in the catbird seat.''' ATTEMPTS TO INFLUENCE REP. BARRY MASK, R-WETUMPKA, who was cooperating in the investigation. On or about Feb 14, in a phone call between McGregor and Mask. ''McGregor told (Mask), 'I can get you significant help in your campaign not from me, from people that I have a great working relationship with, business type people. That some of them that you could never get by yourself.' When (Mask) inquired whether the amount of any contributions would be '500 or a couple of thousand,' McGregor responded, 'Oh no, I, I said significant help. . . . I can and will get you significant help from people that fall in this category. That's the commitment I'll make to you right now and it's as good as, as, as, as any commitment you will ever get. I will do it, and I will prove it to you.' After (Mask) mentioned he had a fundraiser that evening, McGregor reiterated that the 'commitment I made to you is as good as gold.''' ATTEMPTS TO INFLUENCE SEN. STEVE MEANS [See Correction], D-ATTALLA, who voted for the gambling legislation and was indicted last week. On or about March 22, in a phone call between McGregor and Means: ''Means referred to the pending pro-gambling legislation and said that there was 'nothing I want to do more than help you.' Means noted he was facing a reelection challenge and said, 'I'm going to probably need a bunch of help now.' McGregor responded, 'Well, you got me . . . and whatever it takes for Larry Means to come back, that's what we gonna do. That's the bottom line.''' On or about March 24, in phone call between Massey and Gilley. ''Massey told Gilley that 'I need to get your okay on something . . . we're getting a shakedown going on us up here to some degree . . . with regards to Means. . . . He's asking for $100,000 if he votes for this bill.' . . . Gilley told Massey that 'he can one-hundred percent count on our support.' Gilley continued, 'We're gonna support who supports democracy. And the . . . who doesn't support democracy get ready to get their . . busted.''' ATTEMPTS TO INFLUENCE SEN. JIM PREUITT, R-TALLADEGA, who voted in favor of the gambling legislation and was indicted last week. On or about March 21, in a conversation between Walker and Gilley: ''Gilley told (Country Crossing spokesman Jarrell) Walker to promise Preuitt that 'we'll have our celebrities come in here and support you and we'll blow the competition away. We will, we'll wax their . . ., but you Preuitt got to vote for us on this.' Gilley also told Walker, 'You can buy a . . . fleet of vehicles from him Preuitt if you have to while you're there.''' On or about March 23, 2010, in a conversation between lobbyist Tom Coker and McGregor: ''Coker told McGregor about a lunch conversation he had with Preuitt and Means, stating, 'I think, uh, uh, Gilley's call and conversation with him Preuitt, uh, helps him a great deal . . . that little added layer of, of what they offered in terms of, uh, entertainers and things like that during his campaign I think that meant a lot to him cause I'd already told him what we would do. . . . If, uh, Gilley calls, give them credit for putting a little icing on the cake for it.''' EFFORTS TO SECURE THE VOTE OF SEN. HARRI ANNE SMITH, I-SLOCOMB, who was indicted last week. On or about March 24, conversation between Smith and Gilley: ''Smith asked Gilley about his promised campaign contributions, and Gilley assured her that he would 'get those checks busted up, the way they need to be.' As the conversation ended, Gilley instructed Smith to put pressure on other legislators to vote in favor of the pro-gambling bill: 'Stay tough on 'em now. . . . We gotta have 'em right now . . . . Lean on everyone of 'em you can.' Smith reassured Gilley: 'I will.''' Evansville Courier & Press (Indiana) October 10, 2010 Sunday ETHICS REFORM; THE ISSUE: LEGISLATURE HAS MORE TO DO.; OUR VIEW: LIMIT LOBBYING BY EX-OFFICIALS. Indiana lawmakers, newspapers and reformers joined hands earlier this year to see passed into law a nice list of ethics reform measures intended to lessen the influence of lobbyists and to make state government more transparent. It wasn't a finished product -- much more remains to be done - but it brought the state well along in an effort to make Indiana a more citizen-friendly state. Among the features approved, it decreases from $100 to $50 the value of gifts to legislators that lobbyists must report, bans lawmakers from fund-raising during the legislature session, restricts what travel bills lobbyists can cover for lawmakers, and requires that university lobbyists abide by the same regulations as other lobbyists. Some language problems with the bill were discovered some months after the session ended, and will have to be corrected during the next session, if the reform features are to be effective. It is a must-do step if the legislature is to maintain credibility for this year's earlier reform approval. It strikes us that if the legislature takes up the filling of the unintended loopholes, then that would present an opportunity to address other needed restrictions. Even if legislators did not think during the past session that something needed to be done about the relationship between lobbyists and appointed state officials before, they should now. Recall that in the ethics reform package that was approved, another feature requires that legislators must wait for one year after leaving the legislature before they can go to work as lobbyists. Now, House Speaker Patrick Bauer, D-South Bend, wants to see that restriction extended to all branches of state government, requiring officials in the governor's administration to wait a year before accepting employment in the private areas they regulate. We've heard Bauer say this before, but the events of the last two weeks make it an even more relevant issue. To review, Gov. Mitch Daniels has fired the chairman of the Indiana Utility Regulatory Commission after learning that the agency's general counsel and administrative law judge Scott Storms had left the position in order to go to work for Duke Energy, a utility he had helped regulate for the state. Indeed, at the same time Storms was presiding over hearings concerning Duke, he was communicating with the company about coming to work for it. That is according to Daniels' general counsel, David Pippen. Daniels fired board Chairman David Lott Hardy after learning that Hardy knew that Storms was in discussions with Duke about a job, but did not remove him, according to a memo from Pippen. That was in a report by Eric Bradner of the Courier & Press Capital Bureau. Of course, Duke Energy is building a $2.9 billion coal gasification plant near Edwardsport, Ind. The project has seen construction costs nearly double, a bad omen for Duke's Indiana customers. In addition to Daniels' action, Duke has placed Storms and Duke Indiana President Mike Reed on leave pending a review. Incidentally, Reed, too, was formerly with the regulatory commission. Daniels and Duke are reacting to these discoveries with all due indignation, for which they should be commended. However, given that such relationships appear to be obvious conflicts that should never be allowed, does it not follow then that they should be banned, as has been proposed by Bauer? To that extent, this scandal appears to present a golden opportunity for the legislature in 2011 to build on the 2010 reforms by limiting the lobbying activities for one year of former state personnel. The Miami Herald October 10, 2010 Sunday Wave of public corruption scandals spurs ethics push in Broward Government is a trust, until it isn't. This is where Broward's political world finds itself today: One year after the biggest public corruption bust in county history, elected officials are still getting hauled away in handcuffs for selling their offices. Former Broward School Board member Stephanie Kraft, arrested Monday on bribery and official misconduct charges, makes the sixth local politician charged or convicted for corruption since September 2009. In all likelihood, more arrests are coming -- as prosecutors follow the trail of bribes spread across Broward government by a crooked father-son developer team now cooperating with a state investigation. Sworn statements to prosecutors allege a level of public corruption so pervasive and unabashed that it reads like political satire: Tamarac commissioners screaming at each other after a visit from state investigators; a developer yelling at a lobbyist to get her ``fat ass'' in to fix a vote; and a city commissioner browbeating a banquet hall manager to discount her election night party tab. Court records show investigators are asking questions about more Broward politicians, including county commissioners Ilene Lieberman and Stacy Ritter, though neither has been charged with a crime. To be sure, honest politicians outnumber the bad in Broward, say the top state and federal law enforcement officers for the county. ``Most public servants . . . are honest, hard-working men and women,'' said State Attorney Michael Satz. ``Our job is to make sure that those few who do abuse the public's trust are called on it,'' said Wifredo Ferrer, U.S. attorney for the Southern District of Florida. Yet the rash of high-profile arrests over the last year suggests there are more corrupt politicians, or at least more people trying to catch them. Neither is necessarily true. Because it can take years to develop a public corruption case, all of the charges brought forth during the past year have been for alleged acts in the middle of the decade. But each arrest raises awareness of political corruption, and increases the likelihood that someone will report it, said Howard Finkelstein, Broward's public defender and a longtime observer of local politics. ``Things are fairly straight today because the elected politicians know that the media and the public are watching,'' he said. Though some Broward politicians argue that they shouldn't all be judged by the illicit actions of a corrupt few, they realize there is much closer scrutiny now. ``People of Broward County are clamoring for transparency,'' said Broward Mayor Ken Keechl. ``The public wants to know what's going on and who is having an influence and they're not going to give the benefit of the doubt to politicians anymore.'' MORE TRANSPARENCY Public confidence in the Broward County Commission has taken a big hit in the past year, following the arrest and conviction of former Commissioner Josephus Eggelletion for money laundering, bribery and filing a false tax return; and the unrelated arrest in July of former Commissioner Diana Wasserman-Rubin, who has been charged with seven counts of self dealing for repeatedly voting to approve county-funded grant applications authored by her husband. The wave of scandals prompted a renewed push for ethics reform throughout the county. After years of ignoring the topic -- and months of sometimes-bitter debate -- Broward county commissioners approved ethics reform proposed by an appointed panel this summer. NEW DIRECTION Among the new rules: a ban on commissioners accepting gifts from lobbyists, and commissioners and their spouses can no longer lobby government entities within the county. Commissioners now must disclose their contacts with lobbyists, and the county opened databases online showing ethics disclosures, and which lobbyists have met with commissioners. Broward also plans to hire an inspector general to investigate allegations of wrongdoing by commissioners. The first meeting of the selection committee to hire an IG is later this month. ``Nothing is ever going to go back to the way it was,'' said Broward County Commissioner Kristin Jacobs. ``All the ethics rules and the way we do business has changed.'' That's true for the county -- not so in Broward's 31 cities. As local newspapers have reduced their ranks, that means fewer watchdogs in City Halls, though in some cities citizen bloggers have uncovered wrongdoing. Still, some elected officials have resisted ethics reform. Hollywood commissioners tabled the issue this week, complaining that an ethics code was impractical. Mayor Peter Bober said he couldn't support the effort because it potentially would create restrictions that could not be enforced. ``When it comes down to it,'' he said, ``you either have ethics or you don't.'' Past Hollywood commissioners clearly have not. The city began to consider ethics reform after the 2007 conviction of former commissioner Keith Wasserstrom on felony charges of falsifying official forms for his personal financial benefit. In Miramar, city leaders did not consider adopting an ethics code after last year's arrest and subsequent conviction of former commissioner Fitzroy Salesman, who in April was sentenced to four years in prison after a jury in Broward federal court found him guilty of bribery and extortion. Miramar Mayor Lori Moseley said the city has since added internal controls for awarding government contracts and established new safeguards to prevent commissioners from influencing staff. ``Some of the things to me that need changing are standard operating procedures,'' Moseley said. ``It should be about a [more transparent] way of doing business.'' SCHOOL BOARD Since last year's arrest of former Broward School Board member Beverly Gallagher on federal corruption charges, school district officials also have changed the way they do business. Among the biggest changes: The district prohibits board members from sitting on selection committees for vendors. ``To me that's been the only significant change we've seen,'' said Broward Teachers Union president Pat Santeramo. That change was triggered after an FBI undercover sting netted Gallagher, who pleaded guilty to accepting $12,500 in bribes from agents and was sentenced in June to three years in prison. The arrests this week of Kraft and her husband, attorney Mitch Kraft, for bribery and misconduct stem from an unrelated state probe. They are accused of helping a father-son developer team get a $500,000 break in 2007 on fees owed to the school district. In exchange for the Krafts' help, Bruce and Shawn Chait of Prestige Homes told state prosecutors they paid Mitch Kraft $10,000. GETTING TOUGHER Though Broward School Superintendent Jim Notter said the district has taken steps over the last several years to strengthen ethics policies and procedures, the Krafts' alleged crimes would not have been prevented by the recent procurement changes. ``I wish I could say it's like a faucet that you just turn off,'' Notter said of official misconduct. ``But nothing is foolproof.'' Other recent policy changes include adopting district-wide internal controls to prevent theft, and weekly briefings on projects going out to bid -- to prevent school board members and staff from speaking to lobbyists and contractors. Lobbyists also must now register with the school district each year. Still, comprehensive ethics reform remains in the early and uncertain stages. A three-member panel appointed by the School board this year has presented 14 suggestions, including term limits and stronger rules against nepotism. The panel also suggested the district draft an ethics code by January, but it remains unknown whether the School Board will meet that deadline. ``You don't just rip a quality ethics code out of a newspaper,'' Notter said. Satz, who has been Broward's state attorney since 1976, said he applauds efforts to increase accountability and transparency, particularly the county's creation of an independent Office of Inspector General. ``A similar position should be created for the School Board,'' he said. CULTURE TARGETED Even as Broward politicians move to increase public confidence in government, the county clearly fostered a culture of corruption that has been documented by the FBI and the state attorney's office in separate investigations. FBI Special Agent John Osa, who went undercover as a bribe-paying money manager during a two-year federal investigation into Broward corruption, described at Salesman's trial in April how investigators broke into the county's political underworld simply by mimicking the locals. Undercover agents saw ``lobbyists and contractors getting together with politicians to schmooze them and wine and dine them in order to get favorable treatment,'' Osa testified at Salesman's trial. Observers say that culture persists among some local elected officials. Finkelstein, the public defender, blames the lobbyists who shower them with campaign donations, expensive meals, travel and other gifts -- creating in politicians a sense of entitlement. Indeed, several of the elected officials who have fallen from grace entered politics as champions of reform -- only to be changed by a pervasive culture. ``It's not unlike a cancer,'' Finkelstein said, ``and it begins with a thought and one action, and then over time it becomes wider and deeper, and then over even more time the sense of entitlement is, `I am a master of the universe. I am entitled to eat at the best restaurants, to the best tickets to the theater . . . because, after all, nothing happens in this county without me voting on it.' '' Given the high-profile arrests of the past year -- and the Florida Supreme Court's impaneling the 19th Statewide Grand Jury, based in Broward and explicitly charged with investigating public corruption -- local politicians appear to be changing, Finkelstein said, if only because of a deterrent effect. What will happen when attention once again turns away from public corruption? Old-fashioned as it may sound, the best way for Broward residents to keep government honest is to stay informed about their elected leaders, Satz said. That's easier said than done, said Gail Choate, a mother of four who heads the School Advisory Forum, a parents group at Plantation Senior High. The spate of public corruption arrests and convictions hasn't escaped the attention of students or parents, she said. But they have fostered a sense of lowered expectations about public officials. ``It's gotten to the point that people really aren't surprised anymore,'' she said. ``And that's what's most upsetting.'' South Florida Sun-Sentinel (Fort Lauderdale) Distributed by McClatchy-Tribune Business News October 10, 2010 Sunday Ethics code makes the 'favor bank' public Oct. 10--When Broward County Commissioner Lois Wexler wanted to raise money for a favorite charity, she turned to a small group of people known for philanthropy: the lobbyists in county hall. Thanks to a new Broward Code of Ethics, the public knows about it for the first time. Wexler's not alone in asking county lobbyists and contractors to give to a cause she personally favors -- a charity called "Project Stable" in this case. But hers was the first disclosure under the ethics code adopted in August. It pulled the curtain back on the seldom-exposed world of political favor-asking. Seen in the best light, politicians are using their power and connections to help good causes. Seen at its worst, critics say, it's a process too easily prone to corruption. "This 'favor bank' thing, it's truly disgusting," said Broward Public Defender Howard Finkelstein, an elected official and ethics reform advocate. "Everyone is in bed with everybody, and if there was such a thing as a political venereal disease, every politician would be on antibiotics in Broward County." In Broward, commissioner charities have gotten renewed attention lately. Federal agents investigating the now-imprisoned former County Commissioner Joe Eggelletion started by giving $6,000 to his charity. Shawn and Bruce Chait, the father-son developer team at the center of a public corruption probe, gave $25,000 to a liver transplant charity County Commissioner Ilene Lieberman volunteers for as a board member, the Sun Sentinel reported in August. The charity's records were subpoenaed, the Sun Sentinel also reported. Lieberman could not be reached to comment. She has not been accused of wrongdoing. The new ethics code sought to strip county government of corruption and the undue influence of lobbyists. Ethics commission board members debated what to do about the nettlesome area of politicians and charities and opted to allow commissioners to continue using their title to solicit charitable donations. But it must be disclosed, and county staff and resources cannot be used. In Wexler's case, she sent a "hope you can come" invitation a week and a half ago to 12 lobbyists, including Ron Book, Bernie Friedman and Judy Stern. Wexler said she's a "stickler" about the rules and checked with County Attorney Jeff Newton about her note. Lobbyist George Platt, a former county commissioner, said leaders "participate in our community," and that includes helping charities raise money. Politicians do it, and so do business leaders, he said. "I do it from my perch. [Mayor] Ken Keechl does it from his perch. There's never a quid pro quo, and if there were it would be wrong and it would be immoral," Platt said. The annual Mayor's Gala last weekend was again attended and sponsored by a roster of lobbyists and companies seeking county business or working under county contracts, documents associated with the United Way event show. Keechl, locked in a tight three-way election race for his commission seat, was honored and praised in advertisements in the gala booklet, paid for by companies seeking his votes. He could not be reached to comment despite two calls and an e- mail. SunShine Cleaning Systems gave $10,000 and touted itself in an ad in the gala booklet as the "official cleaning contractor of Fort Lauderdale/Hollywood International Airport." "Congratulations Mayor Ken Keechl," the ad reads. "Thanks for all you do for Broward County." Three days later, the company had a contract on the County Commission agenda. Platt was in commissioner offices lobbying beforehand. At the gala, Friedman roamed the ballroom, chatting with Wexler while his lobbyist partner Neil Schiller talked to Commissioner Sue Gunzburger and then Keechl. Friedman could not be reached to comment. Stiles Corp., which is seeking to build the county's courthouse parking garage, gave $5,000 to the fundraiser. So did government construction contractors Balfour Beatty Construction and James A. Cummings Inc. Money came from airport vendors Sheltair and GO Airport Shuttle/Yellow Cab, and Delaware North Companies. The list was long. Book was also on it. He said his statewide firm is "inundated" with politicians' invitations to give to charities. "The only thing that's wrong with it is when you reach a point where you think you're somehow buying some level of influence," Book said. The practice is prevalent, and largely legal, from South Florida to Washington, D.C., but much controversy has surrounded it. Some governments, like Fort Lauderdale's, have outlawed the practice of politicians using their official position to raise money for charities. The city passed the law after then-Commissioner Carlton Moore asked two men to contribute to a kids' Halloween party, before a vote on their insurance contracts. Finkelstein said politicians steer the money to charities, then boast like "peacocks" about their good deeds. He said it alters decision-making to interject something other than who's offering taxpayers the best deal. "It is done in order to curry favor with the elected officials," he said. " ...If people don't think that puts a pressure on a commissioner to vote a certain way, they're being foolish." County Commissioner John Rodstrom told the county's ethics commission that politicians have a "power over lobbyists because we can ask them for things that we can't ask of other people. If I know you have a vote coming before me," he said, "I can say, 'Look, I need $10,000 for this charitable event that they've asked me to chair, or $25,000 for the mayor's ball." Rodstrom said commissioners shouldn't be allowed to vote on a contract for a lobbyist or vendor who just gave a contribution. "The question is, once you've hit that lobbyist up for that $25,000 or $10,000, [or] $5,000 contribution," Rodstrom asked, "how long is your vote tainted?" Albuquerque Journal (New Mexico) October 8, 2010 Friday More N.M. Links to N.Y. Scandal; Pension Fund Scheme Called A 'Matrix of Corruption' The former head of the New York state pension fund pleaded guilty Thursday to a corruption charge in an investment scandal that reaches from Albany to Santa Fe. Alan G. Hevesi, who served as New York State comptroller from January 2003 through December 2006, admitted directing $250 million in state investments to Markstone Capital Partners, a private equity fund managed by Elliot Broidy, and receiving nearly $1 million in gifts, campaign contributions and a phony consulting contract for a close associate. Both Broidy and Hevesi's son, Dan Hevesi, did business with the New Mexico State Investment Council. In 2004, the SIC in New Mexico committed to invest $20 million in Broidy's Markstone equity fund. In 2006, Dan Hevesi was paid a $250,000 placement fee for an SIC investment in another equity fund. Broidy was charged and pleaded guilty in the New York investigation last year to a felony charge of rewarding official misconduct. On Thursday, the elder Hevesi also admitted to trying to help Broidy by encouraging other pension funds to invest in Markstone. The 3-year-old New York investigation has targeted Hevesi's paid political adviser and strategist Henry "Hank" Morris, who faces an indictment charging more than 90 counts of corrupting state pension fund investments. Morris has pleaded not guilty. On Thursday, Hevesi admitted that he was aware Morris arranged for Broidy to enter a $380,000 sham consulting agreement with a lobbyist friend of Morris's who was also a political supporter of Hevesi's. While the New York investigation focuses on the state pension fund, a federal investigation in New Mexico has focused on the State Investment Council and Educational Retirement Board. There is overlap between the scandals in the two states, and New York Attorney General Andrew Cuomo has referred to the use of placement agents as having a major role in a national "matrix of corruption." In legal documents, Cuomo's office has claimed state pension and investment funds are easy targets to manipulate for politically connected placement agents, who were paid something akin to finder's fees for helping companies land state investment business. One of the junctions of that matrix is the now-defunct Aldus Equity Partners of Dallas, which advised the New York pension fund and both the Educational Retirement Board and the State Investment Council in New Mexico. In New York, Aldus Equity was paying Morris 35 percent of its fees for managing a fund on behalf of the New York pension fund. Morris was listed as a placement agent on at least two State Investment Council investments recommended by Aldus in New Mexico. Aldus Equity was fired from its New Mexico advisory positions - for which it was paid $1.5 million a year - more than 18 months ago when the scandal's New Mexico connections became public. The company's founding partner, Saul Meyer, has pleaded guilty to a felony charge in the New York scandal and said during his plea that his company made recommendations on New Mexico investments "that were pushed on me by politically connected individuals in New Mexico." He also said he knew these "politically connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico." Bloomberg Financial News reported that a record obtained from Cuomo's office showed that Dan Hevesi thanked Meyer "for NM." According to his plea, Meyer is cooperating with the investigations in New York and New Mexico. A few weeks after Meyer's guilty plea, New Mexico State Investment Off icer Gary Bland resigned when an SIC subcommittee sought a vote of no confidence against him - although he left with the public support of the governor, who thanked him for his service. The federal investigation in New Mexico has focused on the role of former Santa Fe broker Marc Correra as a placement agent who shared in $22 million in fees paid by financial firms receiving state investments. Correra is the son of Anthony Correra, a close friend and political adviser to Gov. Bill Richardson, who chairs the State Investment Council. In Journal interviews, staff members at the ERB and SIC said they were not aware of Marc Correra's role as a placement agent. Bland, however, confirmed in an interview that he was aware Correra was in the placement agent business. Bland and Anthony Correra were close - Bland said they talked almost daily about the markets - and Anthony Correra was on the Richardson transition team that recommended Bland's hiring. For a time, he had a desk in the State Investment Council offices. In more recent developments, ERB Chairman Bruce Malott resigned in September just hours after he confirmed to the Journal that he had borrowed $350,000 from Anthony Correra in 2006. Malott said that he never told Richardson about the loan. He also said he didn't know the younger Correra was getting fees for state investments, including those made by the teachers pension fund. The Times-Union (Albany, NY) October 8, 2010 Friday Final Edition EDITION HEVESI ADMITS $1M HIGH LIFE NEW YORK -- Former state Comptroller Alan Hevesi traded access to New York's $124 billion public employee pension fund for $1 million in benefits -- including campaign contributions and luxury trips to Israel and Italy. On Thursday, Hevesi's fall from top financial watchdog to convicted felon brought him to a Manhattan courtroom, where he pleaded guilty to a felony corruption charge: receiving reward for official misconduct. The appearance was a climax of sorts -- though not the end -- to an ongoing pay-to-play scandal that has enveloped the pension fund and exposed a seamy system in which gifts and campaign funds were exchanged for vast investments of public money. Hevesi, a Democrat with 30 years of public service, was forced out as comptroller just weeks after being re-elected in 2006. He turned himself in to authorities Thursday morning and entered his plea in Manhattan Supreme Court before Justice Bart Stone. Hevesi was released on his own recognizance and has surrendered his passport and agreed to travel restrictions, according to sources close to the case. Hevesi faces up to four years in prison, but has agreed to cooperate in the ongoing investigation. Sentencing is scheduled for Dec. 16. The plea has ramifications in this political season: It gives Attorney General Andrew Cuomo, whose office has conducted the investigation, a major win as his gubernatorial campaign seeks to burnish his bona fides as a crusader against entrenched corruption. Hevesi, 70, is a former Assembly member who once cultivated his image of a good- government policymaker. His guilty plea joins those of the pension fund's former chief investment officer, David Loglisci, and former Liberal Party leader Ray Harding. Hevesi's longtime confidant and campaign consultant Henry "Hank" Morris is accused of collecting millions in "placement fees" for steering pension fund business to investment firms. His trial is slated for next year. All told, there have been seven guilty pleas so far and $138 million in recoveries for the state through agreements with 15 firms and two individuals, Cuomo said. In his court statement, Hevesi admitted accepting the $1 million in benefits and trips, including several campaign fundraising swings through California, in exchange for approving a $250 million pension fund investment in Markstone Capital, the investment fund that had been run by California money manager Elliot Broidy. Last December, Broidy pleaded guilty and agreed to cooperate in the probe. Some of the trips also included Hevesi's adult children, three of whom were either elected as state lawmakers or served the Legislature. The trips included first-class airfare, luxury hotel suites, a car and driver, a helicopter tour and security detail. The cost of the trips totaled $75,000 in travel expenses. Additionally, Hevesi's pay- to-play corruption led to $380,000 in sham consulting fees for a lobbyist friend of the comptroller, and more than $500,000 in campaign contributions controlled by Hevesi. Hevesi knew Broidy concealed his payment of some travel costs through charitable groups and false invoices submitted to the comptroller's office, Cuomo said. Cuomo also stated the current comptroller, Democrat Tom DiNapoli, is not under investigation in this or any other matter. Cuomo noted his office had investigated but found no cause for action regarding the fund's investment in a company called Intermedia that was started by Hevesi and increased under DiNapoli. The probe's unfinished business includes examining the actions of the unnamed "friendly lobbyist" who Cuomo said received $380,000 as part of Hevesi's corrupt conspiracy. His office would not name the lobbyist, who was part of the Markstone activities. A law firm representing Markstone was unaware of the matter. The Albany-based firm Patricia Lynch Associates was paid $130,000 from 2007 to 2008 by Markstone to handle pension issues. A spokesman for the firm, Darren Dopp, said the Lynch firm was not the one referred to in the attorney general's news release -- a contention backed up by a source close to the investigation. The same source said Frank Sanzillo is the "friendly lobbyist" referred to in the attorney general's news release. Sanzillo was known in the lobbying industry to represent investment firms in Albany, according to officials with three other firms. Sanzillo's brother, Thomas Sanzillo, was Hevesi's first deputy but abruptly resigned in September 2007 -- a few months after DiNapoli took office amid the pension fraud investigation. Neither of the Sanzillo brothers returned calls on Thursday. Cuomo's probe also must resolve what if any role prominent Democrat Steve Rattner, an Obama administration official, took in the scandal. Published reports identified Rattner as helping to arrange more than $1 million in placement fees to a middleman working for an investment firm. The firm he led at the time, Quadrangle Capital Partners, received a $100 million investment to handle. Cuomo charged it paid Hevesi's associate Morris $1.1 million in fees. Rattner was identified as helping to arrange a business deal on a movie developed by Steve Loglisci, the brother of Hevesi's former chief investment officer, who pleaded guilty and cooperated with the probe. Morris, who allegedly pocketed millions of dollars as a placement agent, is fighting the charges against him, saying placement agent work was not illegal. Quadrangle settled the investigation by paying $12 million in fines and rebuking the actions of Rattner. Rattner's lawyer did not return a call on Thursday, but has previously said accusations of misdeeds against him are baseless. Thursday marked Hevesi's second guilty plea since 2006 when he pleaded guilty in a case involving misuse of state resources brought by Albany County District Attorney David Soares. In that case, he acknowledged that he had concealed using a state employee as a chauffeur and servant for his wife. Hevesi admitted in court that he hadn't intended to fully reimburse the state for those services. That affair was initially brought to light by Hevesi's 2006 opponent, Republican Chris Callaghan of Waterford. At the time, the Callaghan campaign had raised questions about some of Hevesi's pension fund investments -- including its dealings with Markstone. And while the "chaueffeur-gate" incident prompted Hevesi's resignation, the pension probe took off once he was gone. That, Callaghan believes, was a testament to how well Hevesi was able to fool so many people for so long, and how he promoted his image of competence and probity. "People kept their mouth shut while the trough was still open," Callaghan said. Hevesi "was amazingly effective at keeping the thing together," he added. "His veneer was spotless, but once he could no longer hold all the pieces in place it fell apart."