Groups call for investigation into NY state pension funds over possible ties to ‘predatory’ legal lenders

New York’s pension funds should be investigated to probe whether the massive accounts are supporting the shady world of third-party legal lending, a newly united coalition of critics said.

The wide-ranging group – representing business, labor and government – called on state Comptroller Tom DiNapoli and city Comptroller Brad Lander to dig into how their pension funds may be investing in hedge funds that profit off of legal lending.

“This industry’s pernicious business model employs usurious interest rates to prey on injured New Yorkers – and our cities and towns, schools and hospitals, and other public entities are footing the bill,” the groups wrote in a letter obtained by The Post.

“We recommend a thorough examination of New York’s pension exposure to these predatory practices, followed by appropriate fiduciary actions related to this exposure, potentially including a full divestment of the pension funds from TPLF funders,” the letter continued.

The letter was signed by groups including the Associated Builders and Contractors of New York State, the Business Council of New York State, Lawsuit Reform Alliance of New York, Medical Professional Liability Association and New York Conference of Mayors.

They criticize third party litigation funding as a wildly unchecked sector that encourages individuals to push oftentimes frivolous lawsuits against employers and governments by providing plaintiffs with loans at exorbitantly high rates.

It’s unclear exactly how much of the billions of dollars of pension fund assets from the state and city may be invested in the sector.

The city pension funds have over a quarter of a billion dollars invested in Fortress Investment Group – a fund that has expanded into the litigation financing sector in recent years.

Neither state Comptroller Tom DiNapoli nor New York City Comptroller Brad Lander responded to requests for comment.

“I think that the time has come that we have to look at finding ways to make sure that there are some guardrails around third party litigation financing.” Paul Zuber, executive vice president of the Business Council, said.

“I think the comptrollers, both the city and the state, have to start looking at the integrity of their own pension funds based on some of these things,” he continued.

“If you’re investing in these schemes, those schemes are charging 100 to 200% interest on those loans and that doesn’t seem like that’s something that the pension funds should be supporting,” said Brian Sampson, president of the Associated Builders and Contractors of New York State.

“They should be looking to invest their dollars in things that are actually helping the general public and, in particular the pensioners, not potentially investing in something that ultimately hurts them,” he added.

The same groups have spent years pushing Albany to implement legislation putting regulations on litigation funding.

A spokesperson for Fortress didn’t respond to a request for comment.