Quadrangle's co-founder and Obama's car czar just settled with the SEC over the pay-to-play pension fund scandal. Now, Andrew Cuomo wants a piece of him
When you were last here, you came to talk about your auto industry book, Overhaul. Let's start with what's happened since then.
Since that conversation, I was able to reach a settlement with the SEC which, while tough, was acceptable to me in the spirit of getting on with my life. Andrew Cuomo, who is looking at exactly the same set of facts...chose not to settle and to sue me for, in my view, a ridiculous recompense and other damages.
It is said to be for $26 million, plus a lifetime securities industry ban.
So it is said. We tried our hardest to reach an acceptable resolution. I have no interest in being in litigation with anybody, let alone the attorney general or the incoming governor of New York. But there are rights and wrongs in this situation, and I'm not going to agree to settle for something that is just not fair.
What are the facts that got you and Quadrangle Group, your former firm, in this mess in the first place?
We, along with a dozen or more other firms, made a decision to hire as a placement agent to raise money for us a man called Hank Morris, who I actually knew pretty well through politics, who I believed to be honest, who came to us highly recommended by people whose judgment I trusted, who, unlike many people who raise money for funds like ours, was registered...with the SEC. He presented himself as someone who was building a business, raising money for funds like ours, which was a legal business then, and it's a legal business today.
So then what happened?
I awakened in February of this year to find that Mr. Morris and one of his colleagues...had been indicted on something like 123 counts...that they had done a number of things that were potentially illegal, none of which we were aware of but involving, potentially, kickbacks and fee-sharing and influence peddling. They were in a lot of hot water.
You settled with the SEC, negotiated with the attorney general but didn't settle. What's the difference here?
The difference is that Andrew Cuomo decided that for whatever set of reasons—the politics of this, the press, his own emotions, his people's emotions—that he would prefer to sue than settle. I don't really get it. I don't think it serves the people of New York well. I was perfectly prepared to reach a reasonable settlement as I did with the SEC. But I'm not going to be bullied by Andrew Cuomo.
Does this have to do with e-mails that later surfaced? [Cuomo had previously granted Rattner immunity, then took it away after seeing the new evidence.]
It would seem to me that the prosecutor should recognize that I'm not in charge of figuring out which e-mails to turn over. My instructions to our lawyers are very clear: Be fully cooperative.
Cuomo said on the radio that you took the Fifth Amendment 68 times.
That shouldn't be so surprising because over the past 15 months I have been subjected to every kind of threat of prosecution and punishment known to man, practically. My lawyers' advice to me...was that I would be well advised to take the Fifth Amendment, and so I did.
People say to me, "This will be settled in the end. That's how it works."
I would settle it today. I would settle it tomorrow. I would settle it in six months on terms that make sense. If not, then we'll continue to litigate.
You've paid $6 million to the SEC.
I've already settled in monetary terms through the SEC, and that money probably comes back to New York State. I've already settled in exactly the same fashion every one of these dozen other firms have settled in. And so everything else is just frankly close to extortion.
What the attorney general has done is close to extortion?
I believe so.
Here's what your partners at Quadrangle, who settled, said: "Mr. Rattner's actions were inappropriate, wrong, and unethical."
That was one of the most hurtful things that's ever happened to me. I worked with these people for most of my career...and I could not believe that they would throw me overboard to try to save the firm and themselves.
Now you have filed suit against them.
I [did that] because they have damaged my reputation substantially by comments like that....Plus they withheld very substantial sums of money that I'm owed. Look, I hate litigation. I don't think I've ever been involved in...litigation before in my life, but I am going to see this one through.
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