Cuomo Moves Quickly to Fill Spitzer's Role
Wednesday, April 18, 2007
In the past two weeks, New York Attorney General Andrew M. Cuomo (D) has roiled the $85 billion student loan industry with a sweeping conflict-of-interest probe, extracted settlements from major financial institutions, and set the agenda for lawmakers and regulators in Washington.
It is a bold -- and, some analysts say, unexpected -- approach to a politician's first 100 days in office as he strives to fill the shadow of predecessor Eliot L. Spitzer (D), who defined the role of activist attorney general by investigating tainted Wall Street research, improper insurance practices and excessive consumer fees.
Cuomo, 49, who was secretary of the Department of Housing and Urban Development in the Clinton administration, took office in January with public corruption, gun control and health-care fraud atop his agenda.
So far, the attorney general is keeping an uncharacteristically low profile with the media, countering the publicity-hungry image he developed as HUD secretary and in a failed bid to succeed his father, Mario M. Cuomo, as governor.
In his new position, Cuomo has a more targeted ambition: to fill gaps in federal oversight of industry. He has assembled an elite, bipartisan group of former prosecutors who, he said, "know how to bring and win the biggest cases that will have an impact across the nation." Many of his key staff members abandoned prestigious government posts or lucrative law firm partnerships to oversee state investigations.
"It certainly rivals the team that Eliot put together and speaks volumes about the new attorney general's commitment to effective law enforcement," said Paul Shechtman, a defense lawyer in New York, who served as chief of the criminal division in the U.S. attorney's office and as director of criminal justice for the state of New York.
· Chief of staff Steven M. Cohen, a former organized-crime prosecutor, went on to defend the finance chief at Safety-Kleen and ImClone founder Sam Waksal's bookkeeper in accounting and insider-trading cases. He also acted as an independent monitor in Spitzer's research settlement with Deutsche Bank. Former colleagues praised Cohen's intellect and sense of humor.
· Deputy counselor and special assistant Benjamin M. Lawsky, a former prosecutor in Manhattan who handled terrorism cases and secured guilty pleas that cracked an international insider-trading ring last year, is spearheading the student loan probe. He is no stranger to Washington, having served as chief counsel to Sen. Charles E. Schumer (D-N.Y.) on judicial nominations, bankruptcy and criminal law issues from 1999 to 2001.
· Chief trial counsel Benjamin E. Rosenberg shares day-to-day oversight of the student loan investigation with Lawsky. But his greatest visibility may come later this year when he tries a case against former New York Stock Exchange chairman Dick Grasso over a pay package. Rosenberg once represented the former finance chief at Columbia's U.S. Foodservice.
· Deputy attorney general for economic justice Eric O. Corngold had been the second-highest-ranking prosecutor in Brooklyn before joining Cuomo's group. Cuomo also persuaded Barbara D. Underwood, acting solicitor general of the United States in 2001, to become the state's top appellate lawyer.
"It is a very good sign that he has begun his tenure by surrounding himself with people based purely on exceptional merit, not on cronyism or ideology," said Andrew Weissmann, former chief of the criminal division in the Brooklyn U.S. attorney's office.
Following Spitzer, who propelled himself into the governor's mansion by reining in Wall Street, is no easy task. But by choosing student lending as his first big target, Cuomo exposed pervasive conflicts of interest that have built momentum for reform. This month, revelations from his probe have resulted in the suspension of financial aid directors at six universities, three top executives at a student loan company and a senior Education Department official who oversaw the industry.
The most significant result of his investigation has been persuading three lenders, including Citibank and Reston-based Sallie Mae, to alter their business practices by signing a code of conduct that bars student loan companies from offering perks to university financial aid officials, sending company staff to work for free in financial aid offices or paying schools to steer students to their loans.
But some consumer advocates criticized the code for not going far enough and for letting giant lending companies resolve their role in the investigation with a $2 million settlement.
"For a behemoth like Sallie Mae, paying a $2 million settlement is not even a slap on the back of the hand," said Barmak Nassirian, associate executive director at the American Association of Collegiate Registrars and Admissions Officers.
Still, Cuomo has effectively created new national guidelines aimed at eliminating the often-hidden financial relationships between loan companies, universities and government officials. Cuomo and senior New York lawmakers unveiled a bill this week that would make the code law, which would make New York the first state to outlaw such practices.
Cuomo's initiative has attracted congressional support for passing similar federal legislation. He is to address the issue at a hearing of the House Education and Labor Committee next week. Committee Chairman George Miller (D-Calif.) said Congress "must extend these protections to students across the country, so they can be assured that their college financial aid officers are acting in their best interests."
Cuomo's investigation has prompted other states to consider similar probes. He led a conference call yesterday with officials from 40 states and jurisdictions, including Maryland, Virginia and the District, to discuss ways they could collaborate.
Michael Dannenberg, director of education policy at the New America Foundation, said, "There is no question that Cuomo deserves credit for helping to energize calls for student loan reform in Washington and elsewhere in the country."