(Bloomberg) -- A former Sterne Agee & Leach managingdirector pleaded guilty to lavishing a portfolio manager at New York state’spension fund with trips to luxury vacation destinations inexchange for steering hundreds of millions in trading business her way.

Deborah Kelley, 59, a resident of Piedmont, California, wasaccused of spending tens of thousands of dollars to pay for tripsfor Navnoor Kang and his girlfriend to New Orleans and ParkCity, Utah, and VIP tickets to a Paul McCartney concert. Sheexpensed the costs to Sterne Agee, while omitting that the moneywas spent entertaining Kang, prosecutors said.

Kelley pleaded guilty to conspiracy to commit securities fraudand honest services fraud, and she could face five years in prisonwhen she is sentenced September 15.

Kang was also charged with fraud and has pleaded not guilty.

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

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

Courtroom delay

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

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

Kang, a onetime director of fixed income and head of portfoliostrategy at the New York State Common Retirement Fund, took atleast $180,000 in bribes in exchange for sending business tocertain brokerages from 2014 to 2016, according to prosecutors.Another broker, Gregg Schonhorn, pleaded guilty and agreed tocooperate with authorities. He was accused of plying Kang withcocaine, 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 theNew York pension fund, according to prosecutors.

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

Kelley was fired by Sterne Agee after the expenses werescrutinized amid inquiries by the U.S. Securities and ExchangeCommission and Financial Industry Regulatory Authority, an industryregulator. Sterne Agee has since sold the unit.