A coalition of critics, comprising representatives from business, labor, and government sectors, is calling for an investigation into New York state pension funds over potential connections to third-party legal lending. The coalition has urged state Comptroller Tom DiNapoli and city Comptroller Brad Lander to delve into whether their pension funds are inadvertently supporting what they describe as the “shady world” of legal lending.

In a letter obtained by The Post, the group highlights concerns regarding the practices of third-party litigation funding, which they deem as pernicious due to its use of usurious interest rates to prey on injured individuals. These critics argue that such lending encourages frivolous lawsuits against employers and governments by providing plaintiffs with loans at exorbitant rates.

The extent of investment in the litigation financing sector by New York’s pension funds remains uncertain, but the city pension funds alone have over a quarter of a billion dollars invested in Fortress Investment Group, which has ventured into litigation financing in recent years.

Calls for investigation stem from worries about the integrity of pension funds and their alignment with public interest. Critics argue that investing in schemes charging interest rates as high as 100 to 200% contradicts the mission of pension funds, which should prioritize investments benefiting pensioners and the general public.

Paul Zuber, executive vice president of the Business Council, emphasizes the need for regulatory guardrails around third-party litigation financing, while Brian Sampson, president of the Associated Builders and Contractors of New York State, stresses the importance of pension funds investing in ventures that support rather than harm pensioners.

The coalition has long advocated for legislative measures to regulate litigation funding, urging Albany to implement safeguards against potential abuses in the sector.

As scrutiny intensifies, a spokesperson for Fortress Investment Group declined to comment on the matter.

The call for investigation underscores growing concerns about the ethical implications of pension fund investments and their potential impact on stakeholders. With pressure mounting, stakeholders await responses from state and city comptrollers regarding the oversight of pension fund investments in the legal lending sector.