NEW YORK, NY (November 18, 2010) - Attorney General Andrew M.

Cuomo today filed two lawsuits against Steven L. Rattner, former founding
principal of private equity firm Quadrangle Group, LLC (“Quadrangle”), in
the New York State Supreme Court, New York County, alleging he paid
kickbacks in order to obtain $150 million in investments in Quadrangle from
the New York State Common Retirement Fund (“CRF”).

The two lawsuits seek at least $26 million from Rattner and his immediate
lifetime ban from the securities industry in New York.

In the first action, Cuomo added Rattner as a defendant to a forfeiture

action pending in New York State Supreme Court, New York County,
against Henry “Hank” Morris and David Loglisci, and seeks to recover $13
million obtained by Rattner, and millions in future fees and profits.

In the second action, Cuomo filed a lawsuit against Rattner under the
Martin Act and the Executive Law, including the Tweed Law, in New
York State Supreme Court, New York County, seeking over $13 million in
civil recoveries, millions in future fees and profits, as well as additional
remedies including injunctive relief.

In a third action, as part of the Martin Act lawsuit, Cuomo filed an

application to permanently ban Rattner from engaging in the securities
business in the State of New York. The application for an immediate
securities ban is based on the fact that Rattner engaged in fraud and
refused to answer 68 questions based on his fifth amendment privilege.
“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,” said Attorney General
Cuomo. “Through these lawsuits, we will recover his ill gotten gains and
hold Rattner accountable.”

Cuomo filed the two lawsuits today after a long-running investigation

into corruption at the CRF under former Comptroller Alan Hevesi. The
investigation showed and the lawsuits allege that Rattner arranged for a
series of kickbacks aimed at influencing Office of the State Comptroller
(“OSC”) officials so that they would recommend and approve the CRF
investment in Quadrangle in violation of their fiduciary duties. These
kickbacks included more than one million dollars in sham placement
fees paid to Henry “Hank” Morris, the political adviser to then-State
Comptroller Alan Hevesi. At Morris’s request, Rattner also arranged for a
DVD distribution deal for “Chooch,” a movie produced by the brother of
then-CRF Chief Investment Officer David Loglisci as well as $50,000 in
contributions to Hevesi’s re-election campaign.

In the Martin Act lawsuit filed today, the Attorney General asserts three
claims of securities fraud in violation of the Martin Act, one claim of
engaging in persistent fraud or illegality in violation of the Executive Law,
and two claims of aiding and abetting breaches of fiduciary duty under the
Tweed Law. The complaint seeks comprehensive remedies, including the
following:
● Disgorgement of gains, and payment of restitution and damages

caused directly or indirectly by the alleged conduct;

● An injunction against committing further acts of fraud;
● An injunction against Rattner from providing any service as

an investment manager or advisor, holding any position at an

investment fund, or otherwise managing the investments of others;
● An injunction against Rattner from entering into any contractual

relationship with any governmental subdivision of the State of New

York;
● A court-appointed receiver to take control of all future fees, profits or

other compensation Rattner stands to receive as a result of the CRF’s

investment in the Quadrangle investment vehicle.
As a part of that lawsuit, the Attorney General filed an application today
seeking to permanently ban Rattner from selling, offering for sale or
providing investment advice with respect to any securities within New York
State.

Today, the U.S. Securities and Exchange Commission announced a related

civil settlement with Rattner.

In April of this year, Quadrangle entered a settlement with the Attorney

General’s Office whereby it agreed to pay a total of $7 million, comply with
the Attorney General’s Public Pension Fund Reform Code of Conduct, and
cooperate with the investigation as to Rattner. Quadrangle has disavowed
Rattner’s conduct.

Today's announcement arises from a three-year, ongoing investigation

into corruption involving the OSC and the CRF. The charges to date allege
a complex criminal scheme involving numerous individuals operating at
the highest political and governmental levels under former Comptroller
Alan Hevesi. Through this scheme, Hevesi, his chief political aide Morris,
and various political allies and friends reaped tens of millions of dollars in
kickbacks, bribes and sham consulting and finder fees connected to CRF
investments.

To date, Cuomo’s long-running investigation into this criminal scheme has

now resulted in seven guilty pleas and has garnered over $139 million in
recoveries for the state through agreements with sixteen firms and three
individuals.

DETAILS OF THE RATTNER KICKBACKS

The series of kickbacks paid or arranged by Rattner include the
following:
● Rattner paid over $1 million in sham placement fees to

Henry “Hank” Morris, then-Comptroller Alan Hevesi’s paid

political adviser and campaign manager.
● Though Morris provided no legitimate placement services,

Rattner paid these fees in order to influence Hevesi’s and

 then-Chief Investment Officer David Loglisci’s decision
to make investments totaling $150 million in Quadrangle
Capital Partners II (“QCPII”), a private equity fund.
● At Morris’s request, Rattner arranged a DVD distribution
deal for a movie, “Chooch,” produced by Loglisci’s brother,
through a Quadrangle portfolio company. Though it was
not originally interested in “Chooch,” the portfolio company
eventually entered into a distribution deal with Loglisci’s
brother, after Rattner had instructed the company’s CEO to
reconsider the film, because David Loglisci was important to
Quadrangle.
● Rattner also connected Loglisci’s brother to various people
at a film channel company, IFC, in which Quadrangle was an
investor and on whose board Rattner sat at the time.
● At Morris’s request and in order to influence Hevesi, Rattner
arranged for third-party contributions totaling $50,000 to
Hevesi’s re-election campaign. Shortly thereafter, the CRF
increased its total investment in QCPII from $100 million to
$150 million. Rattner ensured that the contributions were
made through third-parties in order to conceal his role and to
ensure his name did not appear on public donor records.

BACKGROUND INFORMATION

Attorney General Cuomo’s investigation into corruption at the pension

fund has led to a number of criminal charges and seven guilty pleas to
date, including guilty pleas by the following individuals: former New York
State Comptroller Alan Hevesi; former Chief Investment Officer at the
Office of the State Comptroller David Loglisci; former Liberal Party Chair
Ray Harding; investment advisor Saul Meyer; hedge fund manager Barrett
Wissman; unlicensed placement agent Julio Ramirez; and venture fund
manager Elliott Broidy. An indictment against Morris is pending and Morris
is presumed innocent unless and until proven guilty in court.
In May 2009, the Attorney General’s office subpoenaed investment
firms and their agents in connection with New York public pension fund
investments after determining that 40 to 50 percent of agents acting to
secure investments from the state and city pension funds were unlicensed.

Last year, Cuomo announced his Public Pension Fund Reform Code
of Conduct, which, among other things, bans investment firms from
compensating intermediaries for introductions to public pension funds. To
date, sixteen firms have endorsed the Code: investment firms The Carlyle
Group, Riverstone Holdings, LLC, Pacific Corporate Group Holdings, LLC,
HM Capital Partners I, Levine Leichtman Capital Partners, Access Capital
Partners, Falconhead Capital, Markstone Capital Group, Ares, Freeman
Spogli, Quadrangle, and GKM; placement agent Wetherly Capital Group;
political consulting firm Global Strategy Group; lobbying firm Platinum
Advisors, and law firm Manatt Phelps & Phillips, LLP. Three individuals have
also agreed to pay money to the CRF or the State and abide by the Code
of Conduct: unlicensed placement agents Kevin McCabe and William (“Bill”)
White, and founder of Riverstone Holdings, LLC, David Leuschen.
These firms collectively have agreed to return more than $100 million
associated with pension fund investments; these funds will principally
be provided to the pension fund for the benefit of the pension holders.
Payments from individuals, including criminal defendants, bring that total
to over $139 million for the pension fund and the State.

This investigation was conducted by Deputy Chief of the Public Integrity

Bureau Stacy Aronowitz, Assistant Attorneys General Emily Bradford,
Rachel Doft, Noah Falk, and Amy Tully, and Legal Aide Michael Ellis, under
the supervision of Special Deputy Attorney General for Public Integrity
Ellen Nachtigall Biben and Special Counsel to the Attorney General Linda A.
Lacewell.