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More States Start Pension Inquiries - New York Times - 5/7/2009

What started as an investigation by the New York attorney general, Andrew M. Cuomo, into the state comptroller’s office — where Mr. Cuomo says favors were being exchanged for contracts to invest pension money — has mushroomed into a broad look at more than 100 firms by attorneys general in at least 30 other states.

A survey of practices across the country portrays a far-reaching web of friends and favored associates: political contributors, campaign strategists, lobbyists, relatives, brokers and others, capitalizing on relationships and paying favors. These influential figures can determine how pension funds are invested, as well as state university endowments, municipal bond proceeds, tobacco settlement funds, hurricane insurance pools, prepaid tuition programs and other giant blocks of public money.


Consider DV Urban Realty Partners, which won $68 million from five public pension funds in Chicago. The firm was founded by a nephew of Mayor Richard M. Daley and proposed using the money to improve neglected neighborhoods that were central to the city’s 2016 Olympics bid.

So far, the investments have lost money. Now the city inspector general is investigating whether the mayor’s nephew exerted improper influence, but is having trouble because some of the pension funds have declined to respond to subpoenas. Robert G. Vanecko, the mayor’s nephew, has said he did not trade on his family connections.

Read the story in the New York Times...