New York Attorney General Andrew M. Cuomo, who's moving to the governor's mansion next month, is leaving behind an agenda of unfinished business for his successor, Eric Schneiderman, including a "major accounting fraud" lawsuit filed this week.
In the suit against Ernst & Young, Cuomo claims the accounting firm helped investment bank Lehman Brothers Holdings deceive the public about the firm's finances before it collapsed in 2008 and filed for bankruptcy protection.
Attorney General-elect Schneiderman will also have to pursue a lawsuit against Steven Rattner, co-founder of Quadrangle Group, over his alleged "pay-to-play" conduct at the New York State pension fund; a fraud case against former Bank of America Corp. Chief Executive Officer Kenneth D. Lewis over the acquisition of Merrill Lynch and Co.; and a case against Charles Schwab Corp. over allegedly deceiving customers about the risks of auction-rate securities.
"I'm a little surprised with the clock ticking he's still filing affirmative cases," said former New York Attorney General Dennis Vacco, who held the office immediately before Cuomo's predecessor, Eliot Spitzer. "The incoming attorney general might want to place his priorities in some other area."
The cases and when they are brought are based solely on evidence and the law, said Richard Bamberger, a spokesman for Cuomo. Many of the lawyers involved in the pending cases will remain at the Attorney General's Office, he said.
Vacco, who left office in 1998, said he wasn't sure if the Ernst & Young suit was the type of case Schneiderman would bring on his own.
Such an unsolicited filing may create tension for Schneiderman as he becomes Cuomo's official lawyer.
"The attorney general is the lawyer for the state, including the governor," Vacco said. "I felt I had an obligation to the governor and the governor's policies."
Bennett Gershman, an authority on prosecutorial misconduct and a professor at Pace Law School in White Plains, said it was "highly unusual" for a top state prosecutor to bring a high-profile case such as that against Ernst & Young a few days before leaving office.
"Is Cuomo doing it to get glory and headlines and fanfare?" Gershman asked in an interview. "Why move ahead when you're leaving office in a matter of weeks? Why not let your successor look at these cases afresh with an independent eye, make an objective impartial determination as to whether to proceed or not? Otherwise you're saddling Schneiderman with potential problem cases he might not want to pursue but might feel certain pressure to."
Charles Perkins, a spokesman for Ernst & Young, declined to comment.
Gershman raised the same questions about the Rattner case that Cuomo filed last month.
Schneiderman declined in an interview earlier this month to comment on pending cases. He said he viewed his role as the next "Sheriff of Wall Street," a title bestowed on both Cuomo and Spitzer by backers and critics, as different from that of his immediate predecessors.
"The goal is not to find a high-profile conflict of interest and hang someone out to dry," Schneiderman said. "I'm much more concerned about the fragility of the economic recovery, and sending a message Wall Street is a good place to do business."
Schneiderman, 55, a Democratic state senator since 1998 who also spent 15 years as a corporate lawyer, said he would weed out those suspected of crime or misconduct. Still, his priorities would be to restore confidence in public and private institutions in light of the billions of dollars investors withdrew from the stock market after the financial crisis.
Cuomo's cases and probes -- which Bamberger said include an ongoing investigation into the transactions that formed the basis for the Ernst & Young suit -- may keep Schneiderman from achieving that goal for at least his first few months.
Cuomo's probe of corruption in the New York State pension fund may be nearing its end, though it isn't finished. Twenty- one firms have signed agreements with Cuomo to resolve allegations against them. At least four individuals have settled, and eight men have pleaded guilty in connection with the corruption. None has been sentenced, including Alan Hevesi, the state's former comptroller, who oversaw the fund.
Rattner, one of the few targets of that probe to fight back rather than pay fines and promise reforms, was sued by Cuomo last month. The attorney general seeks $26 million from Rattner and a lifetime ban from the securities industry in New York. Rattner, who is no longer with Quadrangle, caused the New York-based private equity firm to pay kickbacks to obtain $150 million in investments from the New York State pension fund, according to Cuomo's civil securities-fraud suit.
Rattner settled a parallel probe with the Securities and Exchange Commission for $6.2 million and agreed to a two- year ban on associating with broker-dealers or investment advisers. In a television interview with Charlie Rose on Nov. 22, Rattner said Cuomo threatened him "all along the way that if I don't do what he wants me to do, he will prosecute me to the ends of the earth."