SEC, NY AG Sue Former Car Czar Steve Rattner

The Securities and Exchange Commission and New York Attorney General (and governor-elect) Andrew Cuomo announced today that they are suing Steve Rattner for kickbacks he allegedly paid in exchange for investments in his equity firm from New York state’s pension fund.

Rattner, who helped the Obama administration orchestrate the auto industry bailout, has already agreed to settle the SEC suit by paying $6.2 million and agreeing to stay away from investment advisers and broker-dealers for two years.Cuomo filed two suits, adding Rattner to an existing one aimed at two of his associates and filing a new one against Rattner specifically. Cuomo wants Rattner to pay $26 million in restitution and more in “future fees and profits,” and be barred forever from working in the securities business in New York.

Rattner is accused of paying kickbacks to get his private equity firm, Quadrangle, millions in business from the New York state pension fund. According to the SEC and Cuomo, the kickbacks include $1 million in sham fees to an aide for former New York State Comptroller Alan Hevesi and $50,000 in campaign donations to Hevesi. He also allegedly arranged for a distribution deal for a movie, called “Chooch,” made by the brother of the head of the pension fund. For his trouble, the pension fund allegedly upped its investment in Quadrangle from $100 million to $150 million, an increase which benefited Rattner personally to the tune of $3 million.

“Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal, and funneling campaign contributions,” Cuomo said in a statement. “Through these lawsuits, we will recover his ill gotten gains and hold Rattner accountable.”

Rattner, in his own statement, defended himself and accused Cuomo of using the suit for a political attack.

“While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General’s office prefers political considerations instead of a reasoned assessment of the facts,” Rattner said. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity — and I certainly did not violate the Martin Act. That’s why I intend to clear my name by defending myself vigorously against this politically-motivated lawsuit.”

Rattner was appointed to oversee Obama’s auto bailouts as investigations into pension fund drew closer to Rattner and his firm.