Pension-Fund Manager Pleads Not Guilty to Bribery

MANHATTAN (CN) — An ex-portfolio manager pleaded not guilty on Wednesday to charges that he steered billions from the third-largest pension in the United States in exchange for cocaine, prostitutes, gifts, travel and cash.

Prosecutors say the scheme occurred between January 2014 and February 2016 when Navnoor Kang, 38, managed the massive assets of the New York State Common Retirement Fund.

Deborah Kelley, 58, had been working during that same period for Sterne, Agee & Leach, a broker-dealer eyeing business with the powerful New York pension.

The pair found themselves in handcuffs on Dec. 21, with U.S. Attorney Preet Bharara unsealing lurid bribery charges.

In the latest of Bharara’s well-publicized clampdown on political corruption, prosecutors accuse Kelley of footing the bill for a ski trip Kang and his girlfriend took to Park City, Utah. A trip to New Orleans meanwhile included a ticket to a Paul McCartney concert, tours, meals and other expenses.

Gregg Schonhorn, a former MF Global employee with whom the pair allegedly co-conspired, pleaded guilty already to related chargers. Schonhorn says he spent thousands of dollars on Kang at strip clubs, restaurants, hotels, nightclubs, concerts, U.S. Open events and Broadway shows.

He also claims to have bought Kang prostitutes and crack cocaine.

Kang pleaded not guilty to the charges Wednesday morning, and he is being released on a $750,000 bail with travel restrictions and GPS monitoring.

Kelley’s bail has been set at $500,000.

Assistant U.S. Attorney Edward Imperatore said the FBI is examining four laptop computers and three cellphones, and that imaging the devices will take two weeks.

Prosecutors say that Kang tried to hide his chatter about bribe payments from the authorities by using WhatsApp, an encrypted chat application now owned by Facebook.

When Kang used the application in 2014, WhatsApp had not yet introduced end-to-end encryption. Bharara declined to comment at a press conference last month whether Facebook assisted with the investigation.

Kang’s attorney Tina Glandian, from the Los Angeles-based firm Geragos & Geragos, declined to comment on the case except to emphasize the “innocence” of her client.

The next hearing has been set for Feb. 17.

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