Former NY pension fund officer sentenced over corruption

* David Loglisci pleaded guilty in 2010

* Case involved "pay to play" at NY pension fund

* Eight people convicted, more than 20 firms settled

* Loglisci took no money, got conditional discharge

By Karen Freifeld

NEW YORK, Oct 9 (Reuters) - David Loglisci, former chiefinvestment officer at the New York state pension fund, wassentenced to a conditional discharge Tuesday for allowing a"culture of corruption" at the fund.

Loglisci is among eight people who pleaded guilty in a probeof "pay-to-play" at the New York state Common Retirement Fundunder Alan Hevesi, the comptroller from 2003 to 2006, whose jobit was to manage the fund. Hevesi, who admitted to abusing hisposition, is serving up to four years in prison.

The investigation by former New York Attorney General AndrewCuomo, now the state's governor, revealed how politics andplacement fees resulted in favored treatment for certain moneymanagers.

More than $5 billion in alternative investments at the NewYork pension fund were tainted by kickbacks, the office said.

The probe also revealed similar problems at public pensionfunds across the country.

Loglisci, 42, who earned a law degree and MBA from theUniversity of Notre Dame, was a vice president of investmentbanking at Salomon Smith Barney before he began working for theNew York State Common Retirement Fund in 2002. He took a 70percent paycut by going into public service, he said.

"I entered an environment where political considerationswere a customary part of the decision-making process," Logliscitold the judge Tuesday in New York state Supreme Court in lowerManhattan. "And to my failure, I went along with it."

Unlike the other defendants, there's no evidence Logliscireceived any money from the "pay-to-play" scheme, prosecutorssaid in court papers.

During the investigation, Cuomo said a low-budget film,"Chooch," produced by Loglisci's brother, had investments frommoney managers who also did business with the fund.

Loglisci, who now lives in Oklahoma, has already paid a"dear price" for going along, his attorney, Kevin Keating, toldNew York state Supreme Court Justice Lewis Bart Stone.

He now manages a startup car wash business in Oklahoma,Keating said. "He's done in the financial sector."

Stone said a good argument had been made to sentenceLoglisci to a conditional discharge, meaning the case is closedso long as he doesn't commit other crimes.

In 2010, Loglisci had pleaded guilty to a violation of thestate's business law, a felony.

"You sold out and you didn't get any money for it, whichshows how naive you were," Stone said.

Loglisci ceded his authority at the pension fund toHevesi's political consultant Hank Morris, who got $19 millionin fees. Morris, who also pleaded guilty, went to prison for hisrole.

Loglisci's cooperation was "a seminal factor leading to theguilty pleas of Hevesi and Morris," Eric Schneiderman, now NewYork's attorney general, said in court papers.

Loglisci said he is also cooperating with the U.S.Securities and Exchange Commission.

With the felony conviction, Loglisci will automatically losehis license to practice law.

During his tenure, the New York state pension fund grew from$95 billion in 2003 to over $190 billion in 2007, Loglisci said,adjusting for member contributions and payments.

The case is People v. Morris, 0025/2009, New York StateSupreme Court, New York County (Manhattan).

(Reporting By Karen Freifeld; Editing by Bernard Orr)