New York AG Could Seek Settlement With White House Car Czar, Source Says

The White House auto czar, who abruptly announced this week that he was leaving the administration, could face legal action in New York over his former company's dealings with the state pension fund.

The Associated Press reported late Tuesday that New York Attorney General Andrew Cuomo could press for a legal settlement with Steven Rattner regarding potential civil charges in a wide-ranging pay-to-play investigation.

It was unclear whether the investigation was connected to Rattner's decision to leave Washington.

The Treasury Department said Rattner was leaving to return to his family and private life upon the emergence of Chrysler and General Motors from bankruptcy.

A Treasury official told FOXNews.com in an e-mail that Rattner's decision to leave Washington was all his own, and that the department had intended to reduce the size of the auto task force after Chrysler and GM emerged from bankruptcy.

But Rattner, during his tenure with the task force, had been connected with the ongoing probe in New York.

Cuomo and the Securities and Exchange Commission have in the course of the investigation charged a state official and a political consultant with extracting millions of dollars in kickbacks from investment firms trying to raise money from the state's big public pension fund.

The Quadrangle Group, the private equity firm Rattner led before joining the Obama administration, paid more than $1 million to one of the people indicted in the case, New York political consultant Hank Morris.

A person familiar with the investigation said that criminal charges were unlikely but that Rattner or Quadrangle could reach civil settlements like those Cuomo has reached recently with other companies that made similar payments. The person wasn't authorized to publicly discuss the pending investigation and spoke to the AP on condition of anonymity.

One source familiar with the investigation confirmed to FOXNews.com that Cuomo had sought documents from Quadrangle Group, though it's unclear when the most recent requests were made.

"Obviously he's been a player" in the probe, the source said of Rattner.

Brian Kolb, Republican leader in the New York State Assembly, said rumors are swirling in Albany that Rattner's departure is somehow linked to the investigation. He said he thought it is strange for Rattner to leave Washington so soon after taking the position.

"It's pretty fair to assume that that's not going to be a three-month job," he said of Rattner's charge to revive the auto industry. "I would ... have one eyebrow raised as to what's really going on here."

Rattner also has been scrutinized over a business deal that appeared to have been designed to curry favor with pension fund officials.

In early 2005, a film company owned by Quadrangle agreed to distribute a low-budget movie called "Chooch," produced by the brother of the pension fund's chief investment officer. Shortly after the film deal was inked, the pension fund agreed to invest $100 million with Quadrangle, according to an April SEC complaint.

Two weeks ago, the Pacific Corporate Group agreed to pay $2 million to resolve its role in the probe. Riverstone Holdings said it would pay $30 million. The Carlyle Group, one of the nation's largest private equity funds, agreed to pay $20 million in May.

Each of those companies also agreed to implement reforms aimed at reducing the potential for influence peddling, including adopting rules banning campaign contributions to elected officials with roles in deciding how public pension funds invest their money.

Morris was indicted in March. He denied any wrongdoing and pleaded not guilty.

The Associated Press contributed to this report.