After a lengthy trial, Navnoor Kang — the former head of fixed income and portfolio strategy at the New York State Common Retirement Fund — has been sentenced to 21 months in prison for accepting gifts from brokerage firms in exchange for trading business.
On July 12, a judge in the Southern District of New York handed down the sentence, which was shorter than prosecutors expected, Kang’s lawyer Tina Glandian confirmed Friday by phone.
According to court documents, Kang began accepting bribes in 2014. These came from Deborah Kelley — a former Sterne Agee & Leach managing director who was already sentenced — and Gregory Schonhorn, an ex-FTN Financial vice president of fixed income sales, who settled with the Securities and Exchange Commission in March.
The bribes included a luxe ski trip to Utah, hotel reservations, dinners at upscale restaurants, bottle service, tickets to the U.S. Open, cocaine, a fancy watch, and cash to use for prostitutes and strippers, according to prosecuters.
In exchange for these gifts, Kang changed the retirement fund’s approval process for fixed income investments. Instead of having another person sign off on trades, Kang completed them himself.
“Kang’s trades resulted in the payment of millions of dollars in total commissions to Sterne Agee and FTN, of which Schonhorn and Kelley personally earned approximately 35 to 40 percent,” according to court documents.
But these gifts did not fly completely under the radar. In 2015, Sterne Agee’s new owner began investigating Kelley’s gift-giving activity, which prompted her to encourage Kang to join her in lying about the trip to Utah, among other things. He went along with it.
However, things took a turn when the Securities and Exchange Commission began investigating the matter that year. Kelley and Kang attempted to again lie about what happened. However, they were found out. The two were not only were charged with engaging in bribery, but also with witness tampering as a result, court documents show.
Kang, who was indicted in December 2016, claimed that he engaged in the schemes because he was struggling to support his parents, who lived solely on his income. Prior to joining the pension fund, Kang had worked for Guggenheim Partners and Goldman Sachs, where he grew accustomed to the trappings of a certain Wall Street lifestyle: long hours, drugs, booze, and the finer things in life, according to court documents.
Kang had been something of a prodigy before his downfall. In his late twenties, he joined PIMCO, and was promoted three times in less than two years.
He eventually moved to Guggenheim as a managing director, but was subsequently fired in 2013. Kang claims he was dismissed for rejecting the sexual advances of a male superior at work, according to court documents filed by the defense. Guggenheim claims that it was for failing to comply with the company’s gift reporting process after receiving an $8,000 wristwatch from an investor and failing to disclose it.
Given that his pay at New York’s pension fund did not enable him to keep up with the lifestyle and continue to support his family, Kang quickly turned to taking bribes, prosecutors asserted.
His salary at the $207 billion public fund was $135,689 in 2014 and $164,083 in 2015, according to public records. He would have made $166,464 in 2016.