The war pitting New York Attorney General Andrew Cuomo against socialite financier Steven Rattner is heating up. The latest is that Cuomo just won a guilty plea from pension fund "consultant" Henry "Hank" Morris, who admitted he used his position of influence with Alan Hevesi, former New York comptroller, to illegally steer state funds into funds run by some of Wall Street's most prominent firms--including Carlyle Group, HM Capital (formerly known as Hicks Muse Tate & Furst) and Quadrangle Group, which was Rattner's company.

Morris agreed to pay a penalty of $19 million. He also faces up to four years in prison, according to the Financial Times.

Several others have pleaded guilty in the probe, but not Rattner. He was given a chance to pay $26 million and accept a lifetime ban from the securities industry. Rattner, however, wouldn't agree to the terms and now faces a trial.

The big question is whether the Morris settlement calls for him to serve as a witness against Rattner. Few would be surprised. We could see others who have settled with Cuomo also testify, including Hevesi.

The pension probes have come a long way. No one ever thought it would get to this.

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