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Virginia Politics
Posted at 05:29 PM ET, 08/12/2011

Bank that has state pension fund donates to Cantor after wife named chair of pension system

Each year, the Virginia Retirement System pays Bank of New York Mellon $4.5 million to hold and protect its pension.

Records show the bank — sued by the state late Thursday for allegedly defrauding state and local pension funds out of $40 million — began donating the maximum amount under federal law to House Majority Leader Eric Cantor’s PAC and reelection campaign beginning in May 2010. Cantor’s wife, Diana, joined the VRS board in April of that year, and was appointed board chairwoman June 2010.

The bank’s political action committee donated $5,000 to Cantor’s Every Republican is Crucial PAC Feb. 11, 2011. It sent Cantor’s reelection campaign $5,000 on May 21, 2010, and again June 22, 2010, and $5,000 to Eric PAC on May 21, 2010.

Attorney General Ken Cuccinelli II (R) sued the Bank of New York Mellon, claiming that the financial institution defrauded the VRS and the pension funds in Arlington and Fairfax counties 73,000 times.

Bank of New York Mellon spokesman Kevin Heine declined to comment. A spokeswoman for Cantor did not immediately respond to a message.

Cuccinelli is seeking $120 million plus interest in damages and $811 million in civil penalties for what he alleges is $40 million in fraud.

Cuccinelli accuses currency traders for the bank of skimming profits of transactions conducted for six state and local public pension funds by falsely reporting the rate at which currency was exchanged.

The bank is disputing the claims and will fight them in court.

Gov. Bob McDonnell (R) appointed Diana F. Cantor, founding executive director of the Virginia College Savings Plan and former vice president at Goldman, Sachs & Co., to the VRS in April 2010.

The bank made smaller donations before 2010 — $1,500 to Eric PAC in 2009 and $1,000 to Cantor’s reelection campaign in 2008.

In addition to the funds it holds for Virginia’s pension fund, the Bank of New York Mellon is also paid $400,000 a year to serve in the same role for the $4.9 billion Fairfax retirement system and receives almost $136,000 annually from Arlington to serve as custodian of the county’s $1.27 billion pension.

The bank manages $55.1 billion in state and local government retirement funds.

By  |  05:29 PM ET, 08/12/2011

 
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