Details about allegations against Steven Rattner, a co-founder of the Quadrangle Group, emerged in Quadrangle settlements of the complaint filed by the Securities and Exchange Commission, and of a parallel probe by New York Attorney General Andrew Cuomo. The actions target alleged private investment firm payoffs for public pension fund investments.
COMPLAINT: SEC vs. Quadrangle Group
Disavowing Rattner as it paid a $12 million SEC settlement, Quadrangle termed his conduct in the New York pension fund deal "inappropriate, wrong and unethical."
Rattner is a prominent Democratic fundraiser who oversaw the federal bailouts of Chrysler and General Motors before leaving the White House post and Quadrangle last year. Criminal and civil authorities have not accused him of wrongdoing. But the settlements, which don't cover Rattner, appear to raise the possibility he could face charges.
"Mr. Rattner does not agree with the characterization of events released today, including those contained in Quadrangle's statement," one of his lawyers, Jamie Gorelick, said in a statement.
Rattner allegedly prodded a Quadrangle-controlled DVD distribution firm to distribute Chooch, a low-budget film produced by the brother of David Loglisci, the pension fund's chief investment officer, according to the Securities and Exchange Commission's court complaint.
The alleged episode played out in 2004, at the same time that Rattner pitched Loglisci to approve the pension fund agreement with Quadrangle.
Within days of speaking to Loglisci's brother, Rattner told Loglisci about his "intention to help secure a DVD distribution deal for Chooch," the SEC alleged. A snag developed when the distribution firm's executives initially opted to "take a pass" on the film, the SEC charged.
But Rattner e-mailed instructions to "dance along" while he determined whether Quadrangle "needed" to arrange the DVD deal in exchange for a pension fund award, the SEC complaint alleged.
He also allegedly negotiated Quadrangle's secret hiring of Hank Morris, the chief political aide of then-New York comptroller Alan Hevesi— the pension fund's sole trustee.
After the alleged quid pro quos were finalized, the pension fund approved the investment with Quadrangle, which collected $5 million in fees. The alleged secret deals were not disclosed to the fund's advisory board.
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