Steven Rattner is a prominent Democratic fundraiser, a former banker at Lazard and a reporter for the liberal New York Times. During the nationalization of General Motors by the Obama administration in 2009, Rattner served as auto czar, providing sweet deals for the UAW, an unsecured creditor, at the expense of priority bondholders in the bankrupted corporation.
On Thursday December 30, 2010, Rattner settled civil charges brought by New York Attorney General, Andrew Cuomo, by apologizing for bad behavior, while ponying up $10 million, and agreeing not to do business with any public pension fund in New York for five years. By settling out of court, Rattner avoids a $26 million penalty sought by Cuomo together with a lifetime ban on working on Wall Street, a sweet outcome indeed for such a shady customer who has become a multi-millionaire by Wall Street wheeling and dealing. In November 2010, Rattner reached a similar sweet deal with the Securities and Exchange Commission, agreeing to pay $6.2 million and not to work on Wall Street for just two years.
These settlements wrap up a broad investigation into corruption at the $135 million state pension fund of New York. Steven Rattner’s greedy fingers have been caught in that lucrative cookie jar. The vehicle that he utilized to exploit the pension fund was the private-equity firm Quadrangle Group, LLC that he had founded.
While at Quadrangle, Rattner allegedly arranged to pay kickbacks to gain investment business from the pension fund. Quadrangle settled charges earlier in 2010 and disavowed Rattner’s personal conduct. As a result of such kickbacks, the pension fund increased its investments with Quadrangle in 2005 and 2006 from $100 million to $150 million, paying the firm bigger fees for managing more money. Rattner personally netted $3 million in profit, according to the lawsuits targeted against him.
The corruption charges against Rattner include the payment of in excess of $1 million in fees to Henry Morris, a political adviser to the then-state Comptroller, Alan Hevisi. At Morris’s request, Rattner orchestrated a DVD distribution deal for ‘Chooch‘, a low-grade movie produced by the brother of the pension fund’s chief investment officer, David Loglisci. In addition, Rattner arranged for $50,000 in contributions to Hevesi’s reelection campaign.
With such a spectacular fraud record, Steven Rattner naturally polled high within the Obama administration for the role of an auto czar willing and able to defraud secured creditors on behalf of the UAW. Fortunately, he has met his match in Andrew Cuomo who, no doubt will take a special interest in Rattner’s future Wall Street and New York pension funds’ dealings from the Governor’s residence in Albany.