A US pension fund manager has been charged by the Securities and Exchange Commission for a pay-to-play scheme.
In exchange for $2.5bn (£2bn) of business with two separate broker-dealers, Navnoor Kang allegedly received luxury gifts, lavish vacations and tens of thousands of dollars spent on cocaine and prostitutes.
Kang, who previously worked at Pimco and Goldman Sachs, was a director of the $50bn fixed income portfolio for the New York State Common Retirement fund.
The SEC accuses him of directing business to Gregg Schonhorn and Deborah Kelley, who took steps to keep the gifts a secret despite Kang’s fiduciary duty to disclose full details.
Andrew J Ceresney, director of the SEC enforcement division, says more than one million public servants and beneficiaries, including police and fire personnel, count on the fund to take care of themselves and their families.
He says: “This action demonstrates that the SEC will not tolerate public officials who abuse public pension funds to satisfy their own greedy and wanton desires.”
The SEC is seeking to permanently ban Kang from investment activities for public pensions as a trustee, officer, employee, or agent.
Among the gifts Kang allegedly received from Schonhorn and Kelley were:
- More than $50,000 spent on hotel rooms in New York City, Montreal, Atlantic City, and Cleveland.
- Approximately $50,000 spent at restaurants, bars, lounges, and on bottle service.
- $17,400 on a luxury watch for Kang.
- $4,200 on a Hermes bracelet for Kang’s girlfriend, at Kang’s request.
- $6,000 on four VIP tickets to a Paul McCartney concert in New Orleans.
- An extravagant ski vacation in Park City, Utah, including a $1,000 per night guest suite.