The criminal charges against three top executives at construction company LPCiminelli have already created at least one backlash against the firm, which was fired as construction manager late last week by the developer of a Staten Island outlet-mall.
However, at least so far, LPCiminelli’s local clients and supporters in Western New York are sticking by it.
BFC Partners, the Brooklyn-based firm that is leading the development of the Empire Outlets complex, confirmed Monday that it abruptly sent a termination notice to LPCiminelli, ending a relationship that began more than a year ago. Crews had just finished a large concrete pour as one of the project’s milestones.
BFC did not give a reason for the firing, and a spokesman declined to comment. But the Buffalo contractor was dismissed just a day after three top executives – including Chairman and CEO Louis P. Ciminelli – were arrested by federal agents on criminal bribery and bid-rigging charges stemming from the Buffalo Billion initiative and the company’s state contract to build the SolarCity plant in South Buffalo.
The LPCiminelli executives – Ciminelli, along with Senior Vice President Kevin Schuler and financing head Michael W. Laipple – are accused of participating in a pay-to-play corruption scandal, in which the developers allegedly bribed and conspired with state officials to secure lucrative government work on major construction projects. The charges are contained in a criminal complaint filed Thursday by U.S. Attorney Preet Bharara of Manhattan, following a probe that also targeted two former Cuomo administration officials, SUNY Poly President Alain Kaloyeros, and contractors in other parts of the state.
All three Ciminelli executives deny the charges, and were released following court appearances. Trial dates have not been set.
“We are confident that all company officials acted appropriately and legally,” LPCiminelli President Frank L. Ciminelli II said in an emailed statement last week. “When given the opportunity to fully respond to these charges, we are confident everyone will be vindicated.”
The family-owned LPCiminelli, whose roots date back 55 years to a predecessor firm, is one of the largest general contractors in Western New York, with a long track record of successful public- and private-sector projects across the region. It’s also prominent within the nonprofit, cultural and charitable community, where Louis Ciminelli has carved a leading role at institutions such as the Buffalo Philharmonic Orchestra and the Albright-Knox Art Gallery.
“They’ve got an incredible reputation in the industry and it’s a very strong one,” said James Swiezy, founder and president of Greenleaf Development. “I don’t know anybody that would rate another contracting company above Ciminelli as far as performance. And look what they’ve contributed to the community.”
But the early morning arrests and charges left the company reeling and put it squarely on the defensive, including with its clients.
For the next few years, LPCiminelli may have to spend considerable dollars defending its executives against Bharara in court. Facing potential prison terms if convicted, it’s be understandable if Louis Ciminelli and the two other executives are preoccupied with their own futures instead of the company’s.
It’s not clear yet if winning new business could be harder for LPCiminelli in the future. That’s especially true for government contracts, although private-sector work might not be as impaired, observers say.
The firing by BFC only adds to the company’s public image and financial woes.
“LPCiminelli is meeting with BFC early this week to discuss its concerns,” Frank Ciminelli said Monday. “The company was not charged and continues business as usual. After reviewing the U.S. Attorney’s complaint, we look forward to refuting these one-sided suppositions with facts. Our 250 employees are on the job, working hard every day for our clients with the same excellence and pride as always.”
Indeed, so far, the Empire Outlets project – one of a handful of out-of-town projects in which LPCiminelli has been engaged – appears to be the only major collateral damage suffered by the firm on current work.
LPCiminelli had been construction manager on the $1.2 billion project since June 2015. The 1.1-million-square-foot project, located next to the St. George Ferry Terminal, includes 340,000 square feet of retail space with 100 designer outlet retailers and a 1,250-space underground parking ramp. Future plans also include a 200-room hotel and a 40,000-square-foot food and beverage deck with views of Manhattan. The project is expected to create 1,200 construction jobs and 1,100 permanent jobs when it’s completed in November 2017.
But while LPCiminelli is no longer involved in Empire Outlets, other projects continue unaffected. The $750 million state contract to build the 1.2-million-square-foot SolarCity manufacturing plant at Riverbend – the focus of Bharara’s attention – was one of LPCiminelli’s largest and most visible construction jobs. So was the Buffalo Public Schools’ 10-year, $1 billion reconstruction and renovation effort, which is the target of a pending lawsuit. However, both jobs are now essentially complete for LPCiminelli, with the focus at Riverbend now shifting to the installation of equipment so that SolarCity can begin production next spring.
In the meantime, representatives of several other major clients locally – including University at Buffalo and Chautauqua Institution – say they have no intention of dropping the firm.
LPCiminelli is the general contractor on UB’s new $375 million Jacobs School of Medicine and Biomedical Sciences, now under construction on the Buffalo Niagara Medical Campus.
The firm is also the construction manager for Chautauqua Institution’s new amphitheater. Construction has not begun on that. "We are confident with the process we went through in selecting LPCiminelli and have no concerns,” said Institution spokesman George Murphy.
And LPCiminelli is the construction contractor for Greenleaf’s Campus Walk, a two-building student-housing project for Buffalo State College on the West Side. Work on the $25 million project began over the summer, and it’s slated for completion by July 2017, in time to lease the 318 beds to students for the 2017-2018 academic year.
“They’re doing a fabulous job over there. I haven’t seen any disruption in the schedule or cost overuns, so I think they’re right on their game,” Swiezy said. “I don’t think there’s many contractors that could accomplish what they’re accomplishing.”
Of course, Swiezy noted that it’s a lot harder to change contractors midway through a project anyway, especially with financing commitments and rigid schedules. It’s not clear yet if winning new business could be harder in the future, though. That’s especially true for government contracts, although private-sector work might not be as impaired, observers say.