Hevesi graft an open secret

By Howard Koplowitz

Long before disgraced former state Comptroller Alan Hevesi was charged in October for his role in a pay-to-play scandal involving the state pension fund under his watch, a little-known treasurer of Saratoga County, J. Christopher Callaghan, knew something was up — and it was in plain sight.

Callaghan, who ran on the Republican line against Hevesi in 2006, said a New York Sun editorial from May of that year pointed out how Hevesi had large contributions donated to him through the wife of Elliott Broidy, the head of the California-based Markstone Capital Partners, and Hevesi invested $250 million of the state’s pension funds into the hedge fund.

The Sun editorial credited the Los Angeles Times with first running a story about Hevesi’s connection to Broidy.

In a phone interview Monday, more than a week after Hevesi was sentenced to one to four years in prison on corruption charges, Callaghan said he pounced on the revelation but nobody noticed.

“To me, that’s one of the great ironies here,” Callaghan said. “This particular incident … was in print as early as early 2006. It just didn’t seem to be of interest. We released press releases. It’s not like we had any secret information. Everything we knew about Markstone had been published in the newspaper.”

Hevesi’s jail term was preceded by his admission that he took roughly $1 million in gifts, including trips to Israel and Italy.

“I don’t think there was any question about the underlying facts,” Callaghan said. “He did go to Italy and Israel with Elliott Broidy.”

During a July 13, 2006, interview at TimesLedger Newspapers’ Bayside offices, Callaghan criticized Hevesi for investing with Markstone, which specialized in Israeli investments, against the backdrop of the Israel-Lebanon conflict.

“He has essentially invested in a war zone,” Callaghan said at the time while also pointing out that Broidy’s wife, Robin Rosenzweig, donated $30,000 to Hevesi’s 2002 comptroller campaign and $50,000 to his 2006 re-election effort.

“At that time, it seemed like it was more of a political statement on his part,” Callaghan said Monday. Hevesi is Jewish.

Callaghan, who now works for a political consulting firm in Waterford, N.Y., also noted that Rosenzweig gave $3,400 to the campaign of Hevesi’s son, state Assemblyman Andrew Hevesi (D-Forest Hills).

In the Monday interview, Callaghan said he was particularly incensed that Hevesi went to California to promote Markstone to encourage the state’s pension fund to do business with the company, but the idea did not resonate with voters.

“I don’t think a great mass of people understood what was going on with it,” he said.

Callaghan called Hevesi’s sentence “appropriate.

“I don’t think New York state can call itself serious about ethics reform if Alan Hevesi, who pretty much ran a criminal enterprise, doesn’t do time. How can you call yourself serious about ethics?”

Even armed with the public information, then-state Attorney General Eliot Spitzer’s office did not investigate Hevesi, who Spitzer called an “exemplary public servant” up until an ethics commission issued its report on so-called “Chauffeurgate ” in which Hevesi was irresponsibly found to have had a state employee drive his ailing wife.

Hevesi had claimed his wife’s security was threatened as the rationale for her needing a chauffeur, but the commission found there were no security risks.

Callaghan, who said he had been tipped off to Chauffeurgate through a source in the comptroller’s office, called Hevesi’s then-newly formed hot line to report fraud, waste and abuse to chastise Hevesi over his transgression.

“We used it to be cute,” Callaghan said. “In the midst of a political campaign, we wanted it to be as big a story as we could.”

Although the scandal was widely known by the time the general election was held, Hevesi still prevailed over Callaghan by a vote of about 60 percent to 40 percent.

Callaghan said he figured the state, dominated by Democrats, knew Hevesi would have to give up his post and voted for him knowing a Democratic replacement, which was up to the state Legislature to decide, would be picked.

“The state of affairs on Election Day was Markstone had been revealed and ignored,” Callaghan said. “The people of the state of New York decided for some reason that Alan Hevesi would not remain as comptroller and they didn’t want this upstate rube handling the pension money and they would take what’s behind Curtain No. 3, who was [then-Assemblyman] Tom DiNapoli.”

Reach reporter Howard Koplowitz by e-mail at hkoplowitz@cnglocal.com or by phone at 718-260-4573.