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Prosecutor: Percoco was ‘struggling to pay his bills’

It was pitched as the “perfect family home,” with an open floor plan, gated entry and landscaped grounds in one of the nation’s wealthiest counties, Westchester. The house cost Joseph Percoco and his wife more than $800,000 in 2012.

As federal prosecutors describe it, the house and its huge price tag soon became a sort of trap door for Percoco, Gov. Andrew M. Cuomo’s longtime aide and confidante.

So to stop his rapid fall into worsening money trouble, Percoco used his inner-circle juice to do favors for businessmen who could rescue him, prosecutors say.

“Percoco was facing significant financial difficulties and was struggling to pay his bills,” according to a criminal complaint signed by an investigator with the U.S. Attorney’s Office in Manhattan, Deleassa Penland. Over its 79 pages, the document details why prosecutors lodged charges against Percoco and seven others, including Buffalo construction titan Louis P. Ciminelli. The feds allege all participated in schemes involving contracts and deals with state government. All have pleaded not guilty.

A second document explains the charges against another former insider, lobbyist Todd Howe. But Howe is cooperating with prosecutors. They turned to him for information to make their cases, especially the one against his friend, Percoco.

Just months after Percoco and his wife, Lisa Toscano Percoco, moved from a home on Staten Island to the country colonial in Westchester County – where the governor resides – she left her job as a public school teacher in New York City, Penland wrote in the criminal complaint.

While Joseph Percoco’s pay as a high-level aide to the governor was on its way up, his approximately $150,000 salary in 2012 wasn’t enough to support them.

The Percocos, according to the federal prosecutors, were living over their heads. With Lisa Percoco out of a job, the couple’s monthly income after taxes fell from about $12,700 to $8,600, yet monthly expenses hovered at around $20,000, Penland wrote in the complaint.

Joseph Percoco tried – but failed – to find his wife a substitute teaching job close to their new home. Meanwhile, the two plundered their savings, which the prosecution team says were “close to being depleted.”

Trusted insider

Percoco came to know the Cuomo family when he served the first Gov. Cuomo.

As a 19-year-old intern and later as a recent graduate of St. John’s University Law School, Percoco went to work for Mario M. Cuomo, another St. John’s Law School graduate and New York’s chief executive from 1983-94. Andrew Cuomo would describe Percoco as his father’s third son, suggesting they were like brothers and that Percoco was woven into the Cuomo clan.

Indeed, Percoco was there to take trusted, high-level positions during Andrew Cuomo’s stints as secretary of the U.S. Department of Housing and Urban Development, as New York attorney general and finally as governor. After 2011, Percoco’s status as Andrew Cuomo’s “executive deputy secretary” was unquestioned. A state assemblyman once observed that “when you are getting close to the top of an issue, it’s Joe Percoco you are dealing with.”

Howe, too, had served the first Gov. Cuomo. Howe hired Percoco as an intern.

The criminal complaint quotes liberally from emails between the two.

They come off as two men in a mutually beneficial friendship, with state government making their benefits possible.

The ‘energy company’

In 2012, Percoco needed money and was anxious to find a job for his wife, according to the federal complaint.

His connection with Howe could make it happen.

Howe needed help from Percoco, too.

One of Howe’s lobbying clients was Competitive Power Ventures, an energy company that had proposed a $900 million gas-fired power plant in Orange County and needed other considerations from state bureaucrats. Among them: Competitive Power wanted the Department of Environmental Conservation’s OK to let it purchase emission credits in New York for a plant it was building in New Jersey – a “reciprocity agreement.”

Howe’s contact at Competitive Power Ventures was Peter Galbraith Kelly Jr. of Connecticut, the senior vice president for external affairs. In their emails, Howe and Percoco would refer to him as “Braith” or “Fat Man.”

For his apparent willingness to reward Percoco in exchange for his influence, Kelly, too, is charged in the federal probe.

‘Do the right thing’

Percoco, Howe and Kelly began to socialize in the summer of 2010. Andrew Cuomo was not yet governor, but it was widely believed he would easily defeat Buffalo businessman Carl P. Paladino in that year’s election.

In August 2010, according to the federal prosecutors, Kelly and Howe took Percoco on a fishing trip to Montauk. In October, Kelly let Cuomo and the campaign staff use the company jet to reach campaign events. In December, days before the governor-elect took office, Kelly treated Howe and Percoco to a $279 lunch at a Manhattan steak house.

Once they seized emails, investigators learned that in the spring and summer of 2011, Kelly and lobbyist Howe were arranging meetings with important state officials and expecting Percoco, newly installed in his important executive-chamber post, to do some post-meeting assistance on their behalf.

Investigators also learned that Howe and his friend Percoco would refer to each other as “Herb.”

“Herb, do the right thing with Braith,” Howe told Percoco in an email dated June 7, 2011. To prosecutors, Howe wanted to drive the point home that Competitive Power was an important, well-paying client for him. Wrote Howe: “this goes south herb, you will have to clean out the ‘herb cave’ downstairs at the estate as I’ll have to move in!!!”

In 2012, Percoco began a lobbying effort of his own, for a job for his wife. On Sept. 11 of that year, he sent this to Howe: “Herb: Nail down that issue. Happy to meet with you guys anytime! Thanks.”

Howe forwarded the email to Kelly and said: “Braith need to talk.”

One week later, on Sept. 18, Howe sent Kelly a suggestion to schedule a dinner with “jp.”

“Need to try and hammer something out with jp,” Howe wrote. “Wants you and I to try and identify something...”

Howe went on to say Percoco wants to “stay removed if possible if u know what I mean.”

The following week, the three met over a $386 dinner in Danbury, Conn., and, according to the court papers, discussed Competitive Power’s business matters before the state and a job for Lisa Percoco. When Kelly submitted the check to his employer, he wrote that the meal was with Howe and made no mention of the Cuomo aide.

Kelly suggested to his company’s top executives that they hire Percoco’s wife into a “community education” project Kelly was developing. The executives, who are not named in the criminal complaint, balked and questioned whether it would be ethical, given the company matters before state government.

A fabrication

Kelly, prosecutors say, told them it would be fine, because the Governor’s Office had given him an opinion stating there was no ethical breach.

Penland, the criminal investigator, suggests that was a fabrication.

“I learned that no such ethics opinion was ever provided to the energy company,” she wrote, “and there is no evidence to suggest that one was ever sought or prepared.”

By the fall of 2012, Percoco ramped up the tone of his emails.

“Herb: need to pull the trigger here,” he wrote to Howe, “things getting bad.”

They set up a meeting with Kelly at the Percocos new home, the one the couple bought for $815,000 in Westchester County’s South Salem. Not only was Percoco unable to meet his monthly expenses, a huge balloon payment on the mortgage was just two years away, according to a report by the New York Post.

Howe confirmed Kelly would be there. “Fat boy locked and loaded,” he wrote.

That’s when Percoco revealed the salary expectations. “herb---need 7500 boxes of ziti.’’

He meant that Lisa Percoco would need to be paid $7,500 a month, or $90,000 a year.

“Her old salary,” Percoco said.

Never revealed income

A job was forthcoming for Lisa Percoco at that rate of pay. According to the criminal complaint, the income was shuttled through a consulting company that worked for Competitive Power Ventures; her last name was purposely left out of brochures generated for the program; Joseph Percoco never revealed the income on the financial disclosure forms that state ethics rules required him to complete; and the hours his wife worked hardly justified an income that was almost four times that of a co-worker’s on the program.

During the summer, when school was not in session, she worked anywhere from three to 10 hours a month, federal prosecutors say.

Percoco’s attorney, Barry Bohrer of New York City, told news outlets there that Percoco not only denies breaking any laws, a U.S. Supreme Court ruling in July, which made it more difficult to prosecute public corruption cases, should help him. In a unanimous ruling centered on the conviction of former Virginia Gov. Bob McDonnell, the justices said that informal actions, like setting up a meeting or talking to someone influential, are not the “official acts” required to prove a bribery conspiracy. A more formal action, like an agency decision, or the filing of a lawsuit, is needed, the court said.

The federal complaint goes on at length to describe how Percoco allegedly used his connections to reap his gains.

“Percoco was effectively on call for Peter Galbraith Kelly Jr.,” wrote Penland, the U.S. attorney’s criminal investigator.

For example, with Competitive Power’s reciprocity agreement still pending, Kelly in August 2013 told Howe he could use help from above – meaning an official close to the governor – according to the criminal complaint.

Howe relayed the request to Percoco, and Percoco asked the state operations director at the time to help, the complaint says.

Soon after, the DEC was told to approve the agreement, even though one of its officials had questioned whether there was “a material state interest to be served,” the complaint says.

Percoco also helped run interference for Competitive Power’s project in Orange County, prosecutors say. But there, the outcome did not help the company. The state Public Service Commission was reluctant to approve a long-term power purchase agreement with the state.

At the time, the deal was crucial to the company, worth some $100 million, prosecutors say.

Howe implored his friend Percoco to keep at it. “Got to keep the ziti flowing Herb,” Howe told him in an email, the complaint says.

Prosecutors allege that both Howe and Percoco, to keep the money coming in, led Kelly to think his company still had a shot at the deal long after they knew Competitive Power had lost it.

Wife’s job evaporates

In June 2015, Competitive Power Ventures stopped paying Howe his monthly retainer, and Kelly determined that Lisa Percoco’s job would not continue into 2016, said the criminal complaint. She was replaced by someone earning $250 a day.

But by then, Percoco was already extracting payments from another Howe client, COR Development of Syracuse, prosecutors say.

In advance of an early meeting with COR Development president Steven Aiello in January 2014, Howe urged Percoco to do his best to impress him as an official who could make things happen.

“Lay it on heavy, Herbie!,” Howe wrote in an email.

“Ziti herb! Ziti!!”

email: mspina@buffnews.com

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