NEW YORK (AP) -- Former Obama car czar Steven Rattner has agreed to pay $6.2 million to settle federal charges over his role in a "pay-to-play" scandal, but says he won't be "bullied" into accepting a harsher penalty from New York's attorney general.
The Securities and Exchange Commission announced Thursday that Rattner had accepted the fine and a two year ban from the securities industry to resolve allegations that he paid illegal kickbacks to help his private equity firm land a lucrative investment from a state pension fund.
Similar settlement talks with state officials collapsed, however, and on Thursday New York Attorney General Andrew Cuomo filed two lawsuits seeking a much tougher punishment: at least $26 million and a lifetime ban from the securities business.
Rattner expressed outrage over that demand in a statement e-mailed to reporters.
"While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General's office prefers political considerations instead of a reasoned assessment of the facts," he said.
He said he did not violate the state securities law that gave Cuomo the authority to intervene in the case.
"This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity -- and I certainly did not violate the Martin Act," he said. "That's why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit."
Both federal and state investigators have accused Rattner of greasing the palms of state officials and their associates in order to help his private equity firm, the Quadrangle Group, land about $150 million in pension fund investments.
In its complaint, the SEC said Rattner arranged for a film distribution company owned by Quadrangle to distribute a low-budget movie produced by the pension fund's chief investment officer and his brothers. He hired the top political consultant to then-state Comptroller Alan Hevesi as a "placement agent" on the investment deal.
The SEC said the arrangement resulted in the consultant, Henry Morris, being paid more than $1 million in "sham fees."
Rattner, a major fundraiser for Democrats, also arranged to have an associate make $50,000 in contributions to Hevesi's re-election campaign, according to the federal and state complaints.
"Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal, and funneling campaign contributions," Cuomo said in a statement. "Through these lawsuits, we will recover his ill gotten gains and hold Rattner accountable."
Hevesi, who was driven from office in 2006 after admitting to a felony in an unrelated scandal, pleaded guilty last month to accepting free travel and campaign contributions intended to sway pension fund investment decisions. None of those gifts and favors involved Rattner.
Morris, who was described by prosecutors as the driving force behind a scheme to shake down a long list of investment executives for millions of dollars in kickbacks, informed a judge earlier this month through his lawyers that he intends to plead guilty.
A number of securities executives and firms, including Quadrangle, have paid many millions of dollars in penalties. Some have pleaded guilty to crimes. The retirement fund's former chief investment officer, David Loglisci, also pleaded guilty.
Rattner was one of the few executives involved in the probe who had balked at a quick settlement.
A former New York Times reporter who went to Wall Street, earned a fortune, and then became a policy advisor and major fundraiser for Democrats, Rattner left Quadrangle last year to become co-leader of the White House task force that restructured General Motors and Chrysler.
He was appointed just as the pension fund scandal, which had been simmering since at least 2007, was coming to a head.
At the time, the White House said it was made aware of the investigation before making the appointment and concluded that Rattner was not likely to face any criminal or civil charges.
In July, Rattner left government and has been promoting his new book on the auto industry. He is also part of a team of investment advisers that has been managing the personal fortune of New York City Mayor Michael Bloomberg, one of the world's richest men.
The money Rattner is paying to settle the charges represents a fraction of his own wealth. He reported net worth last year of between $188 million and $608 million. But banning him from the industry, even a temporarily, could greatly limit his earning potential.
AP Business Writer Marcy Gordon contributed to this report from Washington.
