Saturday, May 23, 2009

Is NY AG Andrew Cumo's Personal Money Manager IMPLICATED in New York Pension Scandal?

I don't know anything about this, but it is VERY well written. A+, wouldn't YOU say?
From LA Daily Blog reader:

Is Andrew Cuomo's Personal Money Manager, Gregg Hymowitz of EnTrust Capital, is Implicated in New York Pension Scandal
New York based Entrust Capital co-founded by Gregg S. Hymowitz (a former vice-president at Goldman, Sachs & Co. and previously an attorney with Skadden Arps) is implicated in the widening New York Pension corruption scandal. As directed by Hank Morris and Alan Hevesi, EnTrust Capital received an investment from New York State Common Retirement Fund through the investment vehicle managed by Consulting Services Group ("CSG") called Liberty Oak. Liberty Oak is a hedge fund of funds that exclusively invests New York State Pension money directly into funds like EnTrust. CSG and Liberty Oak are featured prominently in the NY AG and SEC criminal indictments and have made millions of dollars in payments to Hank Morris. At the same time, Andrew Cuomo has received millions of dollars in income as an investor in EnTrust. However, Gregg Hymowitz and EnTrust are not featured in the NY AG and SEC criminal indictments. Why not?

Hank Morris was a good friend, neighbor and like Cuomo an investor into Gregg Hymowitz's fund EnTrust. The three partners of EnTrust (Gregg Hymowitz, Mark Fife and Michael Horowitz) have been major contributors and bundlers of Alan Hevesi from October 2004 through June 2005.

During the same time period these political donations were being made in 2004 and 2005, Alan Hevesi, Hank Morris and Gregg Hymowitz had numerous conversations regarding how EnTrust could obtain an investment from the NYS Pension Fund (emails and phone records will confirm this). At the request of Hevesi and Morris, the three EnTrust partners contributed additional monies in June 2005. Shortly thereafter, in the middle of 2005, Morris signed a contract with Liberty Oak to be its placement agent for NYS pension investments. This contract is referenced in the SEC complaint. Pursuant to the contract between Morris and Liberty Oak:, the more money Liberty Oak invested into funds like EnTrust the more money Morris received as a placement agent.

At the end of 2005, Hevesi and Morris introduced EnTrust to the investment staff of the NYS Pension Fund. Hevesi and Morris lobbied on numerous occasions for Liberty Oak to make an investment into EnTrust. Hevesi, Morris and Hymowitz all clearly understood that if Liberty Oak received a commitment from the NYS Pension Fund then EnTrust would receive a commitment from Liberty Oak and Morris would receive his fee. This is in fact what happened.

In July 2006, Hevesi signed a memo (which is in the NYS Pension Fund files) that directs the Pension Fund to wire funds in the amount of $200 million to Liberty Oak. Concurrently, Liberty Oak wired an investment of $15 million into EnTrust on behalf of the NYS Pension Fund account. It is clear that this investment was directed by Hevesi and Morris. It is also clear that Hymowitz conspired in and was an active participant in the plan to exert influence by Morris and Hevesi. In fact, Hymowitz continued to lobby Hevesi and Morris rather than the NYS Pension staff because he wanted more than just $15 million. Phone records will confirm the numerous conversations between Morris, Hymowitz, and Hevesi during this period. Emails between Morris and Hymowitz also exist.

The NY Times has quoted Hymowitz as stating that he is a "close and personal friend of Andrew Cuomo." Hymowitz, his wife and his business partners have donated and bundled millions of dollars for Cuomo campaigns. In Andrew Cuomo's 2002 failed gubernatorial campaign, Hymowitz, his wife and his partner donated $175,000 and bundled multiples of that amount. Gregg Hymowitz also served as Cuomo's finance chair for that race. Recent political filings indicate that Hymowitz continues to donate and bundle for Cuomo. This includes a $20,000 contribution that Hymowitz made to Cuomo in January of this year just as the AG's investigation involving Hank Morris was accelerating. Is the timing the Hymowitz political contribution to Cuomo a Coincidence, or is it another example of a quid-pro-quo involving a prominent NY politician that warrants further investigation?

At the same time that Hymowitz was donating and bundling money for Andrew Cuomo, Cuomo personally invested almost all of his liquid net worth of more that $1 million into EnTrust.

Hymowitz manages a trust for Andrew Cuomo (at what fee, if any? Are these standard terms?). In addition to investing personally, Cuomo's gubernatorial campaign invested $750,000 into EnTrust. EnTrust granted special consideration to Andrew Cuomo's campaign by: (1) giving it one of the 35 slots in EnTrust that Federal Regulations allow for investors below minimum asset requirements; and (2) EnTrust waived the minimum investment requirement of $l million. The campaign subsequently received $150,000 profit. Almost 20% return-from its investment into EnTrust over an extremely short period of time. Did the campaign receive a discounted fee? Did the other investors receive the same return?

Since 2004, Andrew Cuomo has personally received over $1 million from Gregg Hymowitz and EnTrust. In 2008 alone, Andrew Cuomo's tax returns show he received at least $200,000 from his investment in EnTrust. This return was during a time that the public markets were in steep decline and hedge fund indexes suffered substantial losses. This is astonishing. How did the other EnTrust investors do? Ironically, Cuomo's investment in EnTrust spans almost identically the time period Cuomo is investigating Allan Hevesi as NYS Comptroller.

What would happen if it becomes public that EnTrust was implicated in the NYS Pension scandal?

In short, investors in EnTrust would redeem their investments. This "run on the EnTrust bank" would severely damage the value of EnTrust's investment portfolio-especially any illiquid assets that would have to be sold quickly. This would have catastrophic consequences for investors like Andrew Cuomo if they were not the first ones out the door.

Gregg Hymowitz and EnTrust continue to receive special treatment. Besides the payment Hank Morris received, who can find out about the conversations between Morris, Hevesi and Hymowitz regarding promises for political contributions in exchange for the EnTrust investment? In exchange for influencing the NYS Pension Fund investment, did Morris also receive a management fee discount on his personal investment in EnTrust?

How can Andrew Cuomo even ask these questions without being conflicted or tainting the entire Hevesi investigation? Is AG Cuomo's close personal, business and political relationship with Hymowitz preventing him from doing his sworn duty? Will this relationship survive the same scrutiny Cuomo is exercising on others?

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