ALBANY – A massive pay-to-play scheme involving alleged bid rigging of state contracts involving hundreds of millions of dollars in taxpayer money was outlined by federal prosecutors Thursday in a case that targets longtime advisers and major donors of Gov. Andrew M. Cuomo.
Manhattan-based U.S. Attorney Preet Bharara’s case alleges bribery, extortion and tax evasion. It also muddies a picture of ethical cleanliness that Cuomo has sought to portray of his administration since taking office in 2011.
Bharara, the prosecutor who has brought high-profile and successful cases against a lineup of state legislators, said Albany’s plague of corruption has now touched the executive branch of government.
“I really do hope that there’s a trial in this case so all New Yorkers can see in gory detail what their state government has been up to,” Bharara said in unveiling the Justice Department’s case against nine people, including Cuomo advisers Joseph Percoco and Todd R. Howe, and Alain E. Kaloyeros, president of SUNY Polytechnic Institute.
[David Robinson: What the corruption charges will mean for the Buffalo Billion]
Louis P. Ciminelli, the Buffalo developer who is chairman and CEO of LPCiminelli, also is accused in the pay-to-play scheme. But allegations stretch across the state:
• In Buffalo, Bharara says the state’s bidding process for the factory being built for SolarCity at RiverBend in South Buffalo turned into a “criminal” enterprise that favored LPCiminelli, where company executives were given inside information about how the deal was to be awarded. Three LPCiminelli executives, including Louis Ciminelli, were charged Thursday with various felonies.
• In Syracuse, COR Development was aided in what Bharara called a similar bid-rigging scheme and, in addition, funneled bribe money to Percoco, who has served Cuomo in capacities ranging from senior government advisor to campaign manager. Two COR executives were arrested Thursday for what prosecutors said was a deal to trade payments to Percoco for help with various business dealings before the Cuomo administration;
• Downstate, an energy company funneled more than $287,000 in cash, plus gifts such as expensive meals and a saltwater fishing trip off the Hamptons on Long Island, to Percoco or his wife in exchange for Percoco’s “official assistance … on an as-needed basis.”
• In Albany, a separate case brought Thursday by Attorney General Eric T. Schneiderman alleges that Kaloyeros personally enriched himself through dealings with a major area developer, Columbia Development, and an architectural firm. The bid-rigging case against Kaloyeros and Columbia Development, including a dormitory project, led to state charges against Kaloyeros and the president of the development firm, Joseph R. Nicolla.
All but one of the defendants, through their lawyers, denied the charges and pleaded not guilty in court appearances in Buffalo, Syracuse and Manhattan.
“We are confident everyone will be vindicated,” LPCiminelli said in a statement about the charges against its executives.
The Buffalo Billion program has been one of Cuomo’s signature upstate job-creation plans since he announced it in 2012. On Thursday, Bharara had a longer name for the program: “The Buffalo Billion Fraud and Bribery Scheme.”
Charges were lodged against Ciminelli and two employees from his firm: Kevin C. Schuler and Michael W. Laipple. The three were accused of paying bribes and conspiring with Howe and Kaloyeros beginning in 2013 in “a scheme to defraud” Fort Schuyler Management Corp., a state university-created entity that helps run the Buffalo Billion and other upstate projects that Cuomo touted as his signature economic-development efforts. Fort Schuyler ran the Buffalo Billion bidding process that led to RiverBend.
The federal complaint accuses LPCiminelli executives of paying bribes to Howe in the form of consulting fees. Howe worked for LPCiminelli in addition for Kaloyeros’ college and the SUNY Research Foundation. Howe was fired earlier this year from his Albany-based lobbying firm, Whiteman, Osterman & Hanna. In exchange for those payments, the complaint alleges, Howe worked with Kaloyeros to “secretly” rig the bidding process to favor LPCiminelli for the Buffalo deal and COR Development for a separate project in Central New York. Prosecutors say Kaloyeros and Howe “designed the requirements” for the Buffalo bidding process that misled the Fort Schuyler board into thinking the process was fair.
Kaloyeros told Howe that he wanted to hire him to help his Albany-based college “in its relationship” with Cuomo’s office. Prosecutors say Howe was paid $25,000 per month to serve as a consultant to Kaloyeros’ college and the Fort Schuyler entity.
LPCiminelli also paid Howe through 2013 and 2014, even while “knowing he was acting as an agent and representative” for Kaloyeros’ college, the complaint states. It alleges that LPCiminelli’s intent in hiring Howe was to use his “official position for their benefit.”
The federal complaint also states that about January 2013, as LPCiminelli was seeking contracts through Cuomo’s Buffalo Billion program, the construction company also signed a deal on behalf with Howe’s lobbying firm to provide “strategic advice and counsel” regarding business initiatives across the state. LPCiminelli paid $100,000 a year for Howe’s work.
The complaint states that LPCiminelli hired Howe while knowing of his “substantial influence” with Kaloyeros, as well as others connected with the Fort Schuyler group. Howe directly told Ciminelli that he “was acting on behalf of the office of the governor” and Kaloyeros’ college, then known as College of Nanoscale Science and Engineering – which at the time were both looking to do big economic-development projects in Buffalo.
The complaint states that Howe illustrated his connected ways by providing emails to LPCiminelli executives about the timing and method of the announcement for the bidding process of the Buffalo Billion projects. Executives with LPCiminelli, including Ciminelli, along with the Syracuse development firm, “had become significant contributors to the governor’s election campaigns,” the complaint notes.
The complaint cites such evidence as Percoco making “specific requests” that LPCiminelli make donations to Cuomo’s campaign. Percoco went so far as to email Howe that Ciminelli’s commitment to raise $175,000 at a Buffalo fundraiser “does not work” because Ciminelli previously promised to bring in more donations. Ultimately, the Ciminelli-hosted fundraiser, held Nov. 19, 2013, raised $250,000, the complaint alleges. The Buffalo News previously reported on that fundraiser, which Cuomo attended at the Hyatt Regency Buffalo, along with a smaller gathering of high-roller donors at Bacchus Wine Bar & Restaurant.
Two days later, Cuomo returned to Buffalo to announce an initial proposed project for RiverBend.
The subheadline in one section of the federal complaint states that Fort Schuyler was “defrauded into awarding state development contracts” for both the Buffalo Billion deal and a Syracuse project.
The complaint alleges that LPCiminelli and COR Development were tapped after “each made sizeable contributions” to Cuomo and had begun paying Howe for his “access to the governor and for Howe’s influence.”
The complaint noted that Cuomo’s RiverBend announcement in November 2013 was more than three months after Howe had forwarded inside information to Laipple. This information about the project were not shared with other developers.
Kaloyeros, meanwhile, was going right to the top at LPCimninelli. On September 9, 2013, he sent an email to Ciminelli that was a “draft of the relevant sections” of the upcoming request for proposal that Fort Schuyler intended to issue.
“Hopefully this should give you a sense of where we’re going with this. … Thoughts?” Kaloyeros wrote to Ciminelli.
This draft contained information about wanting only developers with a certain number of years of experience. Critics later said that this language prevented competitors from bidding on the project.
Schuyler sent Kaloyeros an email at about the same time, noting the 50 years’ of experience by Ciminelli’s firm. Prosecutors said the original request for proposals, or RFP, which demanded the 50 years of experience, was meant to “further tailor” the bid in LPCiminelli’s behalf.
“Grrrrr,” one LPCiminelli executive wrote to Ciminelli and Schuler about the 50-year demand.
“50 was a bit obnoxious,” Schuler wrote back. He later wrote, following the change to 15 years, that the revision “is still pretty good.”
Bharara said the contract process was not just obnoxious, but criminal.
Percoco has been among Cuomo’s closest and most loyal aides over the years. “One of the most powerful people in all of New York was on the take,” Bharara said of Percoco.
The bribes included money that Percoco received while he left his state job to serve as Cuomo’s 2014 re-election campaign manager, Bharara alleges.
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- Albany corruption: Major misdeeds by New York State officials
- GALLERY: Feds charge Ciminelli and executives
- FBI agent: Email evidence built the Buffalo Billion case
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- Key excerpts from the criminal complaint against Ciminelli, Percoco, Kaloyeros
- Erie County executive bristles at ‘bribe’ charge over road project
- A guide to political corruption probes in New York State
- Why RiverBend required a company with 50 years experience — and then retracted it
- Complaint: Cuomo aide pressures company for $7,500-a-month no-show job for his wife
- The $279 lunch, the private jet and the fishing trip that lured the governor's aide
- Frank Ciminelli II on pay-to-play charges: "We are confident everyone will be vindicated"
- Cuomo on corruption charges: "I am saddened and profoundly disappointed"
- Watch: Bob McCarthy and Dan Herbeck discuss Albany corruption charges
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- UB: Ciminelli charges won't affect Jacobs School medical campus project
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- Here's what we know about the corruption charges involving the Buffalo Billion
- AG: Kaloyeros charged for "brazen bid-rigging using taxpayer dollars"
- From the archives: A look at the people accused of criminal corruption