July 12, 2018 / 9:42 PM / 8 months ago

UPDATE 1-Ex-NY state pension fund manager gets 21 months prison for bribe taking

(Adds comment from Kang’s lawyer)

By Brendan Pierson

NEW YORK, July 12 (Reuters) - A former portfolio manager at New York state’s retirement fund was sentenced to 21 months in prison on Thursday for engaging in a scheme to steer trades to two brokerages in exchange for bribes that included vacations, cocaine and prostitutes.

Navnoor Kang, 39, former director of fixed income and head of portfolio strategy at the New York State Common Retirement Fund, was sentenced by U.S. District Judge Paul Oetken in Manhattan. Kang pleaded guilty to two counts of conspiracy in November.

In addition to the prison sentence, which was much lighter than the 10 years sought by prosecutors, Kang was ordered to forfeit $78,716 in criminal proceeds and pay $242,724 in restitution to the retirement fund.

Mark Geragos, a lawyer for Kang, said he was “gratified” by the sentence.

“I think the judge did a compassionate thing,” he said.

The Common Retirement Fund is the investment arm of the New York State and Local Employees’ Retirement System and the New York State and Local Police and Fire Retirement System. It currently manages an estimated $206.9 billion in assets.

Kang worked at the fund from January 2014 to February 2016 and was responsible for investing $53 billion in fixed income assets, according to prosecutors.

During that time, prosecutors said, Kang took bribes from Deborah Kelley, a former managing director at broker-dealer Sterne Agee, and Gregg Schonhorn, a former vice president at broker-dealer FTN Financial Securities Corp.

The bribes amounted to more than $100,000 worth of gifts including travel, meals, prostitutes, sports tickets, drugs and cash, prosecutors said. In return, prosecutors said, Kang steered state pension business to the two firms.

The business yielded millions of dollars in commissions for the two broker-dealer firms, of which Kelley and Schonhorn personally took a 35 to 40 percent share, prosecutors said.

Both Kelley and Schonhorn have pleaded guilty. Kelley was sentenced to 1,000 hours of community service in September, while Schonhorn has not yet been sentenced, according to court records. (Reporting by Brendan Pierson in New York Editing by Leslie Adler)

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