Earnings, Business and Money :: Market news

Former pension executive moved 28 billion for coke hookers and other bribes

A FORMER top official at America’s third-largest pension fund and two broker-dealers were charged Wednesday in what a federal prosecutor described as a classic bribery scheme that steered $2.8 billion ($US2 billion) in trades in exchange for drugs, prostitutes, vacations and US Open tennis tickets.

The hard-earned pension savings of New Yorkers should never serve as a vehicle for corrupt, personal enrichment, Manhattan US Attorney Preet Bharara said in a statement, calling the alleged pay-for-play arrangement a classic, quid-pro- quo bribery scheme.

Navnoor Kang, the ex-head of the $254 billion ($US184 billion) New York State Common Retirement Funds fixed income trades, received more than $138,000 ($US100,000) worth of bribes in the form of trips, gifts, luxury hotel stays and other pay-offs from broker-dealers Deborah Kelley and Gregg Schonhorn, prosecutors said.

Kang, 38, was arrested in Portland, Oregon, on securities fraud, honest service wire fraud, conspiracy and obstruction of justice charges.

His lawyer, Lauren DeSantis-Then, said her client denies all the charges. Mr. Kang is not guilty and we look forward to our day in court, she said. Kelley, 58, of Piedmont, California, was expected to surrender, authorities said. Her lawyer didnt immediately return a request for comment. Schonhorn, 45, of Short Hills, New Jersey, has pleaded guilty and is co-operating with federal authorities, court papers show. His lawyer didnt immediately return a request for comment.

Regulators found that Kang steered about $2.8 billion ($US2 billion) in fixed-income trades to firms represented by Kelley and Schonhorn beginning in early 2014, resulting in millions of dollars in commissions, of which the two earned between 35 and 40 per cent, according to an indictment.

In that time, securities investigators found that the firms fixed-income business surged, with one of them increasing its domestic bond transactions from zero at the end of fiscal year 2013 to $3.28 billion ($US2.378 billion) at the end of fiscal year 2016, making it one of the top broker dealers doing state pension fund business, according to the complaint.

Prosecutors said that in exchange, Kang received a $13,800 ($US10,000) all-expenses-paid trip to Montreal, Canada; a ski trip to Park City, Utah; tickets to a Paul McCartney concert in New Orleans; a $24,000 ($US17,420) Panerai wristwatch; dinners at upscale restaurants; nights out at strip clubs; prostitutes; and cocaine. The states pension fund has been the source of scandal before. In 2010, a state comptroller pleaded guilty to charges he steered pension funds to a campaign contributor. Further investigations revealed investors widespread use of so-called placement agents to access pension funds, an arrangement some regulators have likened to pay-to-play.

Kang had been fired in 2012 by a private investment firm for accepting gifts from Schonhorn in exchange for steering fixed-income business, but he lied about his termination when he was hired by the state fund, according to the complaint. Asked whether state officials properly investigated Kang before hiring him, a spokesman for the comptrollers office said only that background checks are a routine part of the hiring process.

Paint by the numbers to create a tax time masterpiece

NOW is the time to get creative with your tax return, as long as you don’t break the law, of course.

Group certificates now called payment summaries should have been sent before last Thursday and the Australian Taxation Office has billions of dollars to hand back to taxpayers, but if you want to improve your refund you will need to think a little creatively.

The ATO is great at detecting when you dont declare wages, bank interest, share dividends and other income, but it has no way of telling you that you have forgotten a deduction for work-related expenses, investment costs or other items.


To maximise your tax refund, think about every dollar you spend thats related to your work and your investments. Almost any expense incurred in earning an income can deliver a tax deduction.

Youll have to do some homework, but the extra cash it creates is worthwhile.

NDA Law managing director Andrea Michaels says the ATO has a lot of free information but many people ignore it.

There are a lot of things you could miss, she says. The ATO has publications for different occupations, highlighting the deductions you can claim.

More than 40 industries are covered, ranging from cleaners and factory workers to teachers and truck drivers.

About three-quarters of Australians get their tax returns prepared by tax agents and accountants, usually costing between a few hundred and several thousand dollars.

However, you cannot expect a tax agent to magically create deductions from thin air.

You need the evidence, otherwise theres a huge audit risk and theyre not going to make stuff up, Michaels says.

A shoebox full of receipts is no longer vital, because most transactions are recorded online these days, so scour your bank statements for potential deductions.

Anyone trying to be too creative should beware. The ATO compares your deductions with people in similar occupations, and will question you if any alarm bells ring.

Theres tax avoidance penalties that are quite high, and interest on unpaid tax, Michaels says. It will come back and bite you.


H & R Block director of tax communications Mark Chapman says many people dont get the refund they deserve because of a mixture of lack of knowledge and a lack of having done the leg work during the year.

Get all your paperwork together before visiting a tax accountant, Chapman says.

Even if you are not sure you can claim a tax deduction, its worth taking it in. Go through your credit card statement to see if anything on there is potentially claimable.

Chapman says it pays to be thorough, so do a quick check in your home. Have you bought anything for a home office, technology used at least partly for work, tools or books for work-related study?

A tax agent can help you find those things you might not have known about otherwise, he says.


Doing it yourself has become easier since the ATO introduced free online system my Tax a couple of years ago. Some taxpayers using my Tax to complete their returns in less than 20 minutes, and early data from the ATO showed that Aussies filing their own returns jumped 60 at the start of July.

While the DIY option can be great for those with simple tax affairs, be aware that you will miss out on money if you forget to claim everything you are entitled to.

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