Kelley said she first got to know Kang when he worked at a prior employer and invited him on the ski trip to Utah after he joined the New York pension fund. She said she knew he wasn’t allowed to accept such gifts and understood that he didn’t intend to disclose them.

The guilty plea proceeding was temporarily thrown into disarray when Kelley, in response to a question from U.S. District Judge J. Paul Oetken in Manhattan, said she didn’t know at the time that what she was doing is illegal.

Courtroom delay

Under certain circumstances, such an admission could be cause for a judge to reject a guilty plea. But after a delay in the proceedings, Kelley told the judge she knew what she was doing was wrong and that Kang’s acceptance of her largesse violated his obligations to his fund. Oetken then accepted the plea.

A lawyer for Kelley, Robert Gage, declined to comment after the hearing.

Kang, a onetime director of fixed income and head of portfolio strategy at the New York State Common Retirement Fund, took at least $180,000 in bribes in exchange for sending business to certain brokerages from 2014 to 2016, according to prosecutors. Another broker, Gregg Schonhorn, pleaded guilty and agreed to cooperate with authorities. He was accused of plying Kang with cocaine, prostitutes, luxury travel and a $17,000 watch.

Before Schonhorn and Kelley started plying Kang with the gifts, neither of their brokerages was approved to do business with the New York pension fund, according to prosecutors.

Kang got them on the approved list of broker-dealers, after which the value of transactions from New York pension business soared to more than $150 million a year at Sterne Agee, and $2.3 billion at Schonhorn’s firm, FTN Financial Securities Corp., prosecutors said. The trades resulted in millions of dollars in commission payments to the two firms, of which Kelley and Schonhorn earned 35 to 40 percent, prosecutors said.

Kelley was fired by Sterne Agee after the expenses were scrutinized amid inquiries by the U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority, an industry regulator. Sterne Agee has since sold the unit.