The New York Post in an editorial questioned Hevesi's use of financial advisers as campaign contributors (Alan Hevesi's advisers, November 11, 1996). As City Comptroller he got to choose the city bond underwriters. According to a New York Post editorial, Hevesi hired a female minority owned firm, Philadelphia based P.G. Corbin & Co. Hevesi used discretionary funds in the amount of $1.58 million. Back in 1995, Hevesi's office suspended Corbin for failing to pay $5,900 in city corporate taxes.
A Hevesi favored firm, San Francisco-based Grigsby Brandford & Co, was involved in a bribery scandal in 1995. New York City used Barnes, McGhee, Segue & Harper as bond underwriters. A problem emerged, when it was disclosed that Joseph N. Barnes, a managing partner failed to file his federal income tax returns in 1987, 1988 and 1991. What made it more troubling was that it was a minority owned firm. Since 1991, the firm was co-counsel that provided legal advice and tax opinions on city debt. Hevesi seen as a champion of minority causes now found himself in a difficult position. He had no comment.
Bayside, New York, activist Joyce Shepard of the Citizens Action Committee for Change tried to highlight the issue of abused women. She contacted Hevesi's office to investigate. Hevesi issued a critical report on the Giuliani administration. On April 17, 1997, she was at New York City Hall with both Giuliani and Hevesi side by side. They promised more space for victims of domestic abuse. Despite all the promises nothing happened. She went undercover to expose the shortcomings of the shelter system. She criticized both Hevesi and Giuliani. After she was quoted by the Village Voice Hevesi reportedly phoned her and told her: "Don't you ever call my office about anything again!". The comptroller's office didn't deny the call took place. But a spokesman stated the office is open to anyone who thinks something is going on we should know about (Mission Unfullfilled, New York Newsday, Janison, D. July 20, 1997).
As state comptroller, Hevesi faced a conflict of interest allegation in relation to a private capital fund "Markstone". According to the New York Sun (Hevesi's Advice Stirs Questions On the Coast, Gerstein, J., May 11, 2006). The opening paragraph stated, The New York State comptroller, Alan Hevesi, encouraged California pension managers to invest in a private capital fund founded by a man whose wife has been a generous donor to his political campaigns. The story originally appeared in the Los Angeles Times. Hevesi met with his California counterpart, comptroller Steve Westly and Elliot Broidy. Elliot Broidy of Markstone Capital Group. They met on May 19, 2003, in order to "pitch" the California Public Employees' Retirement System (CalPERS) to invest in Markstone. Markstone was a fund that invested in Israeli companies. The Sun reported that in June 2003, Mr. Hevesi invested $200 million in Markstone. Mr. Broidy is a major Republican political contributor. Mr. Broidy did not directly contribute to Hevesi's political campaigns, but his wife did. His wife, Robin Rosenzweig, gave $80,000 since 2002. Before the May 2003 meeting she gave $30,000 and $50,000 afterwards. She also contributed to Andrew Hevesi's state assembly race.
As of July 2007, Hevesi is under investigation by the New York State Attorney General's office for allegedly mishandling money from the New York State Pension Fund. Criminal defense attorney, Bradley Simon, is representing him in this matter.
At a commencement address he delivered at Queens College on June 1, 2006, Hevesi told his audience that Senator Charles Schumer was so tough he would "put a bullet between the President's eyes if he could get away with it." Several hours after his remarks, Hevesi apologized for his comments, calling them "beyond dumb," "remarkably stupid," and "incredibly moronic."
While attending the New York State Association of Counties conference on September 28, 2006, Hevesi had one of his state employed press aides tape record the speech of his opponent, Christopher Callaghan.
On October 2, 2006, allegations arose that Hevesi fired receptionist Alexander McHugh, who filed a charge of sexual harassment. Hevesi's office stated that the receptionist did not cooperate with their investigation into the matter and that "...found no evidence of sexual harassment." McHugh filed a complaint with the federal Equal Employment Opportunity Commission.
Controversy regarding a chauffeur for Hevesi's wife
On September 21, 2006, Alan Hevesi admitted that he used Nicholas Acquafredda as a state employee to drive and aid his ailing wife. In 2003, Hevesi claims that the State Ethics Commission decided that he would pay back the entire cost of driving around his wife unless it is for specific safety purposes. A spokesperson from the State Ethics Commission denies such a decision was made.
On September 26, 2006, Hevesi said he will pay the state more than $82,000 for having a public employee chauffeur his wife, after his Republican challenger, Christopher Callaghan, asked the Albany County District Attorney's office to investigate. Callaghan first phoned in the complaint to the State Comptroller's own State funds-abuse/fraud hotline. Hevesi had admitted the previous week that he had not reimbursed the state. Callaghan and the Republican gubernatorial nominee, John Faso, also called for Hevesi's resignation. The Attorney General (and at that time Democratic gubernatorial nominee), Eliot Spitzer, withdrew his endorsement of Hevesi.
The controversy stimulated interest in the candidacies of Callaghan and minor party candidates Julia Willebrand of the Green Party and John Cain of the Libertarian Party. Hevesi claimed that the drivers were needed to provide security detail to his wife, though a bipartisan ethics panel concluded that the state police found no threat that justified such an arrangement. The panel also concluded that Hevesi had no intention of repaying the state for the driver services until Callaghan publicly filed a complaint.
On October 12, 2006, Albany County District Attorney David Soares' office acknowledged that it was officially investigating actions by Hevesi regarding the public employee hired to chauffeur his wife. On October 23, 2006, the Ethics Commission deemed that Hevesi's actions involving the chauffeur may have violated state law.
On November 3, 2006, Hevesi was ordered by the office of state Attorney General Eliot Spitzer to pay the state $90,000 - in addition to the $83,000 he has already paid - in compensation for what has been deemed an improper use of a state employee. Hevesi said was just a mistake and apologized in a new TV ad, in which he says, “I'm asking you to weigh my mistake against my 35 years of public service, I’m human...I'm a good comptroller who did a dumb thing."
On December 12, 2006, Hevesi agreed to a deal that calls for the $90,000 in escrow money to be turned over to the state and for him to pay an additional $33,605 within 10 days, making his payback total $206,000. It was revealed that Hevesi had actually hired four, not the two employees initially thought for his wife's 'security detail' and said employees were running personal errands according to the report from the Attorney General Office.
On December 13, 2006, a poll conducted between December 5 and December 11 by Quinnipiac showed that 45% of people in New York felt that Hevesi should resign and 43% felt he had paid his debt to the state. 1,144 registered voters in New York were polled with a margin of error of +/- 2.9 percent.
On December 14, 2006, the Albany County District Attorney acknowledged that he had a strong enough case to indict Hevesi (see beginning of page for judicial resolution).
The scandal came to a close in February, 2007 when, after pleading guilty in December 2006 to a charge of defrauding the government, Hevesi was sentenced by Judge Stephen Herrick in Albany County Court to a $5,000 fine and barred permanently from elected office. As part of the plea deal, he was given no jail time, and received no probation. Prior to sentencing, Hevesi paid the state more that $200,000 in restitution. Hevesi expressed remorse for his actions and told the judge: "I'm culpable, I'm responsible and I apologize."