US News

CITY LINK IN STATE $CANDAL

Indicted political consultant Hank Morris pocketed a placement fee on an $85 million deal between the city’s largest employee pension fund and an investment firm headed by an appointee of President Obama, The Post has learned.

It’s the first link between the accused pay-to-play power broker — charged with taking kickbacks from firms looking to do business with the state’s retirement fund — and the New York City Employees Retirement System, which has an estimated worth of $30.4 billion.

City Comptroller William Thompson, who was in charge of the NYCERS fund at the time of the deal, “has no record of Hank Morris or [his firm] Searle being an intermediary in any deal involving NYCERS and Quadrangle,” said Thompson’s spokesman, Jeff Simmons.

In a story in yesterday’s Post, Thompson, a mayoral wannabe, indicated he was considering a ban on businesses that pay middlemen to land contracts with the city’s pension funds.

In 2006, NYCERS invested $85 million in the Quadrangle Group, a private equity firm founded by Steven Rattner, now the head of the president’s auto task force, a lawyer with Searle told The Post.

Rattner has not been charged with any wrongdoing in the case.

In return for the NYCERS deal, Quadrangle paid a placement fee to Searle & Co., a small Connecticut financial firm through which Morris brokered his deals, a Searle lawyer said.

“[Morris’ fee] was related to an $85 million investment that NYCERS made in early 2006 in Quadrangle,” said the lawyer, Peter Anderson.

He did not know the amount that Morris received, or his exact role in the deal.

Whatever fee Searle did receive from Quadrangle, Morris would have taken his customary 95 percent cut, said Anderson.

Last month, Morris was charged with pocketing millions of dollars in “pay to play” fees from financial firms that wanted investments from the New York State Common Retirement Fund, which controls the $150 billion pension plans for state employees.

Ex-Liberal Party leader Ray Harding and state pension fund manager David Loglisci have also been charged in the alleged state scheme.

All three were close with disgraced former state Comptroller Alan Hevesi.

Word of Morris’ link to the city pension system comes as new details emerged about other government funds with which he did business. Quadrangle used Morris only four times — with New York state and city funds, as well as pension funds in LA and New Mexico, a source said.

jennifer.fermino@nypost.com