Two Former Brokers Barred For Their Alleged Roles in Pension Fund Scandal, Top Official Navnoor Kang Charged with Fraud
Former brokers Deborah Kelley and Gregg Z. Schonhorn were recently charged by the SEC and barred for their alleged roles in a "pay-to-play" pension fund scandal involving the NY State Common Retirement Fund that brought millions in trading commissions to the representatives. Navnoor Kang, a former top official of the nation's third-largest pension fund, also faces charges.
Former broker Gregg Z. Schonhorn worked for FTN Securities through December of 2016. When FTN learned that he had pleaded guilty to charges of fraud in connection with his role in the "pay-to-play" arrangement involving NYSCRF pension fund, Schonhorn resigned.
Former Broker Deborah Kelley was employed by Seaport Global Securities until March of 2017 when FINRA barred her from working in the securities industry. She was charged with and pled guilty to conspiracy to commit securities fraud.
According to the SEC, Navnoor Kang was hired by NYSCRF in 2014 and given investment responsibility for approximately $50 billion in fund assets. He allegedly began immediately soliciting and receiving valuable items from Schonhorn to divert billions of dollars in fixed-income trades to firms represented by Schonhorn and Kelley. Over the course of his two-year employment, he received $160,000 or more in expensive trips, dinners, gifts, cocaine and services of prostitutes to steer a significant portion of the fund's trading volume to Schonhorn.
By April 2015, Schonhorn had executed approximately $1.5 billion in fixed-income trades, and by the end of March 2016, that number had grown to about $2.38 billion. The scheme resulted in sizeable payouts to Schonhorn, with him sometimes wracking in hundreds of thousands of dollars per month in commissions.
Kelley allegedly executed approximately $1 billion in fixed-income trades on behalf of the fund, also bringing in sizeable commissions as she allegedly made gifts of about $20,000 in concert tickets, meals, and hotel stays to Kang.
Manhattan U.S. Attorney Preet Bharara reportedly said in a statement that,
"The hard-earned pension savings of New Yorkers should never serve as a vehicle for corrupt, personal enrichment."
If you suspect that your investments have been affected by fraud, call the investment fraud attorneys at Meyer Wilson at (888) 390-6491 to discuss your legal options.