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Cuomo’s office gets subpoena in probe of Buffalo Billion

ALBANY – Hours after his office received a subpoena as part of a criminal probe of the Buffalo Billion program, Gov. Andrew M. Cuomo on Friday ordered a review of his own signature economic development program, which is anchored by the massive SolarCity project along the Buffalo River.

The governor’s counsel, Alphonso David, said Friday that the investigation begun last year by U.S. Attorney Preet Bharara has “recently raised questions of improper lobbying and undisclosed conflicts of interest by some individuals” that may involve cases in which the state was “defrauded.”

The revelation by Cuomo comes after months in which the governor said he had no knowledge of the probe. The investigation heated up late last spring when subpoenas were issued to the governor’s economic development agency and SUNY Polytechnic, which are both involved in administering the Buffalo Billion program, along with two Buffalo companies that won contracts under the program, LPCiminelli and McGuire Development Co.

A spokesman for Bharara declined comment Friday night.

The governor’s office did not identify what were described as “some individuals” it said may be under scrutiny, but the New York Daily News, citing an anonymous source, said the focus of the federal probe may now include Joseph Percoco, one of the governor’s most trusted advisers, who earlier this year took a job with Madison Square Garden Co., and Todd Howe, a Washington-based lobbyist who worked with Cuomo in state and federal government posts and who has done work for LPCiminelli.

Percoco, who first began working in the administration of the late Gov. Mario M. Cuomo, the current governor’s father, could not be reached for comment and Howe did not return an email seeking comment.

The Buffalo News has identified a number of ways in which the contracts for the Buffalo Billion projects were driven through a vague request-for-proposal process instead of a job-specific bidding system. State officials have defended it as the same process used by Empire State Development Corp. and SUNY Polytechnic for other upstate economic development projects during the Cuomo administration.

A source with knowledge of the investigation said Cuomo’s office received the Bharara subpoena on Friday. The source would not discuss what documents or information were being requested by Bharara, the same federal prosecutor who in December won the corruption convictions of former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos. Bharara also recently opened a probe into fundraising activities by the campaign of New York Mayor Bill de Blasio, one of Cuomo’s chief protagonists.

The source said the new subpoena was not directed at any individuals in the Cuomo administration, including the governor, but was sent to the executive chamber.

When the Buffalo Billion probe opened last year, Bharara’s office was looking into how the contracts for the Cuomo initiative were entered into by Fort Schuyler Management Corp., an entity created by SUNY Polytechnic to oversee the program. Investigators were seeking information on everything from changes made to the bidding after the original request for proposals was issued to what role, if any, campaign contributions to Cuomo may have played in the awards process.

Cuomo, as just one example, was thrown a campaign fundraiser in Buffalo hosted by Louis P. Ciminelli, chairman and chief executive officer of the company that bears his name, in November 2013, just two days before he would return to Buffalo to announce the RiverBend project. Cuomo last fall dismissed a question about potential problems created by donations to his campaign from individuals and companies getting state contracts.

“It hasn’t been a problem for the past 100 years, so I don’t know why it would be today,” he said at the time.

Another source said subpoenas have been issued to at least two other entities during the past week; the source would not identify the recipients.

Though quiet for months, the activity from Bharara’s office firmly puts an end to optimism within the Cuomo administration that the Buffalo Billion probe was running its course. The governor himself, after limiting travel to Western New York for a part of last year, has stepped up his trips to the region.

Following receipt of the subpoena Friday, the Cuomo administration provided more information about the investigation than it has since word of the probe began last year. The administration Friday evening emailed reporters two statements – one from David, the counsel, and another from Bart M. Schwartz, a lawyer and former federal prosecutor – about the new developments.

In his statement, David noted that Bharara has “an ongoing investigation” involving the Buffalo Billion program. Of what he called questions about improper lobbying, undisclosed conflicts and possible defrauding of the state, David said, “We take violations of the public trust seriously and we believe these issues must be resolved by further investigation by the U.S. Attorney.”

The administration said the Buffalo Billion, which includes the SolarCity project under construction at RiverBend, is still operating on a “daily basis,” the counsel said. The administration said Schwartz, who worked for the U.S. Attorney’s office for the Southern District in Manhattan when Rudolph Giuliani was the chief prosecutor in the office in the 1980s, is being tapped to review all grants made by the Buffalo Billion program – “past, current or future.”

Cuomo’s counsel said that “ensuring the integrity of the contracting process for this program is paramount” so that it can continue investing in projects in the Buffalo area.

Without giving details, Schwartz, in a statement accompanying David’s comments, said that the state “has reason to believe that in certain programs and regulatory approvals they may have been defrauded by improper bidding and failures to disclose potential conflicts of interest by lobbyists and former state employees.”

Schwartz said he will report his findings to both Bharara’s office and Cuomo. “The (Cuomo) administration has made it clear to me that they have zero tolerance for any violation of the public trust from any actor or entity and I should follow the facts,” he said.

A Cuomo spokesman did not respond to a question about the details, including any state payments, to retain Schwartz.

LPCiminelli, through David C. Oliverio, the company’s attorney, said the firm has received no additional subpoenas since Bharara’s investigation first began nearly a year ago.

“LPCiminelli has cooperated with all facets of the U.S. Attorney’s investigation to date and will continue to do so,” Oliverio said in a written statement. He said neither the company, nor any of its principals, has been identified by prosecutors as the “subject or target of any investigation.”

Though the Cuomo administration sought, in its public statements, to highlight its new, internal review of the Buffalo Billion program, officials were privately telling reporters that contacts have been banned between state officials and Howe, whose ties with Cuomo include serving as his deputy chief of staff when Cuomo was the federal housing secretary during the administration of President Bill Clinton, along with Competitive Power Ventures, a Maryland company with a power plant project in Orange County. Such comments could suggest the Bharara probe has spread beyond questions about the awarding of the Buffalo Billion program.

The governor’s actions Friday are a sharp turn from his position in October, a few weeks after word surfaced of the Bharara investigation into one of the governor’s single biggest economic development efforts. Asked on Oct. 7 if he was confident that the Buffalo Billion contracts, including $750 million in state money for the big SolarCity project, were awarded properly, Cuomo said, “I have no reason not to.”

Asked if he has looked into the Buffalo Billion matter since Bharara’s investigation, Cuomo said in the same appearance with reporters: “No.” Why not? “Because … I have no reason to question them,” he said.