Pension Manager Navnoor Kang fell prey to temptation. He is accused of accepting hookers, cocaine, and a $17,000 watch in $2 billion scam.
NEW YORK – Pension Manager Navnoor Kang fell prey to temptation. He is accused of accepting hookers, cocaine, and a $17,000 watch in $2 billion scam.
If a person becomes a portfolio manager at a pension fund and is tasked with investing in excess of $50 billion in fixed-income assets, that person has two choices: (1) direct funds to investors on the “approved“ list to do business with and not receive bribes in exchange or (2) funnel the money to whoever is going to say thank you in the form of, among other things, prostitutes, cocaine, and weekend getaways to Canada. Kang allegedly chose option two, and that’s why he was arrested last week.
U.S. prosecutors accused the former portfolio manager at New York State’s retirement fund, the third largest in the United States, of steering $2 billion in trades to at least two brokerage firms in exchange for gifts such as cash, drugs, and prostitutes . . .
Kang, the former director of fixed income at the New York State Common Retirement Fund, was charged in federal court in Manhattan along with Deborah Kelley, a former Sterne Agee Group Inc managing director. Kang was arrested on last week Wednesday morning at his home in Portland, Oregon, and Kelley surrendered to authorities in San Francisco.
Gregg Schonhorn, a broker-dealer at FTN Financial Securities Corp, secretly pleaded guilty to paying bribes on Dec. 15, authorities said. FTN fired him on Wednesday when the firm learned of the allegations, a spokeswoman said.
Kang, who previously worked at Guggenheim Partners, PIMCO, and Goldman Sachs, allegedly follows in a grand tradition of Common Retirement Fund officials taking part in pay-to-play schemes.
Ten years ago, New York State comptroller Alan Hevesi pleaded guilty to accepting over $1 million in “benefits for his family, friends, and political allies in exchange for improperly approving a $250 million investment in Markstone Capital Partners.“ Some of those benefits included $75,000 in travel expenses for the Hevesi family, and over $500,000 in campaign contributions.” In Kang’s case, the gifts allegedly involved:
“Weekend trips to Montreal, which would include prostitutes, nightclub bottle service, and narcotics,” as well as a ski-trip to Park City, Utah
$50,000 at restaurants and bars
A $17,420 Panerai watch
An $8,000 Rolex
A $4,200 Hermes bracelet (for Kang’s girlfriend, who presumably didn’t know about the prostitutes)
V.I.P. tickets to a Paul McCartney concert at a cost of $6,000
In addition to charges from the U.S. Attorney’s Office for the Southern District of New York, the trio was also sued by the Securities and Exchange Commission. It may be an unexpectedly rough holiday season for Kelley, Schonhorn, and Kang.
