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Pension Fund Bribes Included Cocaine, Hookers, Says Bharara

Image: Pension Fund Bribes Included Cocaine, Hookers, Says Bharara

United States District Attorney Preet Bharara announces charges, Wednesday, Dec. 21, 2016 in New York, against Navnoor Kang, a former portfolio manager at the New York State Common Retirement Fund, and two broker-dealers, Deborah Kelley and Gregg Schonhorn, for participating in a "pay-for-play" scheme. (Mark Lennihan/AP Photo)

By    |   Thursday, 22 Dec 2016 12:19 PM

Pension fund bribes to illegally guide $2 billion in trade allegedly included cocaine and hookers among other things, U.S. attorney Preet Bharara said Wednesday as indictments in the New York incident were unsealed.

Prosecutors charged that Navnoor Kang, 38, started accepting bribes soon after becoming director of fixed income and head of portfolio strategy for the New York State Common Retirement Fund in Albany in 2014, the New York Daily News reported.

The newspaper said the firm is the third largest pension fund in the United States, with about $184 billion in assets connected with more than 1 million retirees and other beneficiaries.

Kang is accused of taking more than $100,000 in bribes in the form of trips, gifts, luxury hotel stays, and other payoffs from broker-dealers Deborah Kelley, 58, and Gregg Schonhorn, 45, for the billions in business, prosecutors said, according to The Associated Press.

Kelley and Schonhorn earned between 35 and 40 percent of the millions of dollars in commissions generated by the $2 billion in fixed-income trades steered to firms represented by them, the AP said.

Kang and Kelley were charged with conspiracy to commit securities fraud, securities fraud, conspiracy to commit honest services wire fraud, honest service wire fraud, and conspiracy to obstruct justice in a Security and Exchange Commission investigation, according to a statement from the U.S. attorney's office.

Kang was also charged with obstruction of justice in a grand jury investigation, according to the statement.

The statement added that on Dec. 15, Schonhorn, 45, pleaded guilty in Manhattan federal court before U.S. District Judge Paul G. Gardephe to six counts: conspiracy to commit securities fraud; securities fraud; conspiracy to commit honest services wire fraud; honest services wire fraud; bank fraud; and conspiracy to obstruct justice in the SEC investigation.

"Today, we allege a classic, quid-pro-quo bribery scheme at the New York State Common Retirement Fund, the third-largest pension fund in the country," Bharara said in the U.S. attorney's office statement. "Navnoor Kang, a former portfolio manager at the fund, allegedly steered billions of dollars of business to broker-dealers who bribed him with luxury vacations, high-priced watches, drugs, cash, and more.

"The hard-earned pension savings of New Yorkers should never serve as a vehicle for corrupt, personal enrichment. The intersection of public corruption and securities fraud appears to be a busy one, but it's one that we are committed to policing," he added.

The SEC opened an investigation in 2015, but prosecutors charged that Kelley and Kang agreed to falsely testify and Kang instructed Schonhorn to lie to the grand jury, according to the U.S. attorney's statement.

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Pension fund bribes to illegally guide $2 billion in trade allegedly included cocaine and hookers among other things, U.S. attorney Preet Bharara said Wednesday as indictments in the New York incident were unsealed.
pension, fund, bribes, cocaine, hookers
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2016-19-22
Thursday, 22 Dec 2016 12:19 PM
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