December 9, 2009
Broidy Pleads Guilty to Felony Charges
Elliott Broidy, a leading investor in the Israeli economy and major donor and activist in the Los Angeles Jewish community, pleaded guilty on Dec. 3 to the felony charge of rewarding official misconduct, according to New York Attorney General Andrew Cuomo.
Last week, Broidy admitted that he made nearly $1 million in payoffs to four senior New York state officials while pursuing an investment from the state public pension fund, the Wall Street Journal Web site quoted New York Attorney General Andrew Cuomo as stating.
The development is part of Cuomo’s wide-ranging pay-to-play probe on whether decisions about how to invest retirees’ money in the giant pension fund were wrongly influenced by money and politics.
In Broidy’s case, Cuomo said, “It was an old-fashioned case of payoffs to state officials. This case is effectively bribery of state officials.”
Broidy has agreed to forfeit $18 million in management fees and a judge may impose a sentence of up to four years in prison following Broidy’s guilty plea, the Wall Street Journal reported.
According to a report Monday on the Israeli business news Web site Globes [online], Broidy remains under further investigation by the U.S Securities and Exchange Commission in relation to ties to former California Public Employees’ Retirement System (CalPERS) CEO Fred Buenrostro and former CalPERS board member Alfred Villalobos, among others. In June 2004, CalPERS pledged to invest $50 million in Broidy’s Markstone Capital Group, according to the report, and while there is currently no evidence that the decision to invest was illegal, CalPERS is now investigating whether any bribes were made in relation to the deal, the article states.
The Israeli media has in the past labeled Broidy as a “mystery man” for his public reticence, but he spoke at length with The Jewish Journal about his business and personal lives in 2006.
By raising $800 million, Broidy made his Markstone Capital Group the largest private equity fund in Israel, at a time when the intifada was at its height and most investors shunned the Jewish state.
In Los Angeles, Broidy has been a major donor to the United Jewish Fund and Friends of the Israel Defense Forces; he’s been a trustee of USC and of USC Hillel; and has served on the Hebrew Union College-Jewish Institute of Religion board of governors and as a former trustee of Wilshire Boulevard Temple.
He is credited with revitalizing the dormant California-Israel Chamber of Commerce in the mid-’90s, together with Stanley Gold and Stanley Chais. Gold is president and CEO of Shamrock Holdings and outgoing board chair of The Jewish Federation of Greater Los Angeles.
Chais, a large contributor to Israeli and Jewish causes, faces three legal actions as an alleged “middleman” for Bernard Madoff.
At the time of the 2006 article, Broidy was highly lauded for his financial acumen and civic involvement by local rabbinical and business leaders.
Broidy has also been a heavy hitter among Republican supporters, serving as finance chairman of the Republican National Committee and among the top fundraisers for President George W. Bush in his 2004 campaign and for Sen. John McCain in his 2008 presidential race.
Gold told The Journal that he has known Broidy for some 20 years and worked with him on behalf of The Jewish Federation and Wilshire Boulevard Temple, in addition to the California-Israel Chamber of Commerce.
“Elliott has given freely of his time and energy to the community, of which he has been an outstanding member,” Gold said. “Our hearts go out to him and his family at this difficult time.”
Gold added, “Elliott is a decent and good man. It is not my style to desert a friend in his hour of need.”
Broidy’s New York attorney Christopher Clark sent a statement to The Journal on behalf of his client, in which he confirmed Broidy’s guilty plea.
He added, “Mr. Broidy regrets the actions that brought about this course of events, but is pleased to have resolved this matter with the New York Attorney General and will be cooperating in the ongoing investigation.”
Clark noted that “Mr. Broidy has resigned from all operational, supervisory and other roles at ... Markstone ... in order to focus his attention on legal matters.”