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Subpoenas show Buffalo Billion probe is only the tip of a larger investigation

ALBANY – The first subpoenas from federal prosecutors arrived 11 months ago, demanding information about a couple of Buffalo Billion-funded projects, including the sprawling RiverBend project.

But a single federal subpoena to Gov. Andrew M. Cuomo’s office two weeks ago showed that U.S. Attorney Preet Bharara’s probe has expanded significantly, and extends far beyond Buffalo. The subpoena wants information about individuals and companies from Brooklyn, Albany, the Hudson Valley, Syracuse, Westchester County, Rochester, Manhattan and Maryland.

And though Cuomo last week said prosecutors are focusing on the actions of just two individuals the governor counted as among his longest and most trusted advisers – Joseph Percoco and Todd Howe – investigators appear to be headed in several directions that could take them well beyond just those two men.

That federal subpoena to Cuomo’s office was followed up in the days since with others sent to an array of individuals, companies and state agencies.

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The Buffalo News obtained a portion of the federal subpoena to the Cuomo administration, and it demands:

• All documents relating to the October 2013 request for proposals for the Buffalo Billion program as well as a development project by the same state university-created corporation – Fort Schuyler Management Corp. – in Syracuse, along with a March 2015 RFP by a sister entity for a since-stalled dormitory project at SUNY Polytechnic in Albany;

• Details about certain actions taken by Percoco, Howe, several top current Cuomo advisers and the head of the state Power Authority, as well as Peter Cutler, a longtime Democratic operative from Buffalo who recently left Cuomo’s economic development field office in Western New York. The New York Post first reported that last week. Cutler last week confirmed he, too, had received a subpoena from Bharara’s office, though he declined to say what he is being asked to provide;

• Any actions by those individuals “for the benefit of” nearly two dozen companies, including LPCiminelli, the Buffalo construction company handling construction of the RiverBend complex, and Norstar Development USA, a Buffalo-based company headed by the former top housing czar in the administration of the late Gov. Mario Cuomo, the current governor’s father;

• Phone logs, visitor logs and calendar entries going back to January 2012 that might show meetings or contacts between administration officials and two dozen people or entities, including Ciminelli, Norstar, several Syracuse firms, a Brooklyn real estate developer, a Rochester real estate company, and two firms that, according to Percoco, paid him up to $120,000 in consulting fees sometime in 2014. Also on the list: Alain Kaloyeros, the SUNY Polytechnic president and Cuomo point person on the Buffalo Billion, as well as Howe.

In addition, Bharara wants to see what the administration has been saying internally about the now expanding Buffalo Billion probe. The subpoena seeks “all documents or communications related to the investigation by the U.S. Attorney’s office” that are in possession of Cuomo’s office.

The broad subpoena has “driven the administration crazy,” according to a source close to the matter.

It seeks all documents Cuomo’s office has on file about Howe, the Washington lobbyist and Cuomo insider. He has been described as the go-between person between companies looking to expand to upstate ventures, such as the Buffalo Billion and high-tech projects in other upstate cities that SUNY Polytechnic, and the state’s economic development office oversee, according to sources.

Prosecutors want Cuomo’s office to also give them all documents relating to WOH Government Solutions, the lobbying entity Howe headed before he was recently fired, and its parent company, Whiteman Osterman & Hanna, the Albany lobbying and law firm. That firm has worn many hats, representing, for instance, SUNY Polytechnic or one of its subsidiary corporations and LPCiminelli.

The Ciminelli company declined comment for this story.

Probe expands statewide

Bharara wants to know if key Cuomo people, past and present, did anything to “benefit” several companies that have been a part of various state-financed projects. No company or person has been accused of any wrongdoing, and Bharara’s office declines to comment on any of its probes.

One company that turns up on the list in the subpoena to Cuomo’s office is Norstar Development, a construction and property management company based north of Toronto with its U.S. headquarters in Buffalo.

Also on the list is Swan Street Lofts, which is the limited partnership that built an affordable housing project rented by artists in a struggling area in north Albany. The project in 2011 got state money to help turn a former Catholic high school into 22 apartments with a large common space for arts-related work.

Swan Street Lofts shows up in state records as being tied to the Albany Housing Authority, a local government agency. Steven Longo, the agency’s executive director, said the project is now owned by private investors, not the city agency, and his agency has not been subpoenaed.

Norstar, however, was key to the Swan Street project, Longo said, as the entity responsible for arranging financing and then building the facility.

Norstar USA President Richard Higgins did not return repeated calls. The company, with its subsidiaries, constructs and manages buildings across the country and has dealings with government housing authorities in New York. It has given Cuomo at least $90,000 in campaign contributions in a recent four-year period.

The list of companies on the subpoena also includes COR Development and four of its subsidiaries. COR is the Syracuse firm that paid Percoco, the former Cuomo aide, consulting fees, and it was the contract winner in a big local project there with SUNY Polytechnic’s Fort Schuyler Management Corp.

Others on the list include:

• Carnegie Management, a Brooklyn real estate firm owned by Isaac Jacobs. Carnegie has developed several properties in New York City. In upstate, Carnegie had a fight with Syracuse officials over plans to redevelop a long-closed, former Nynex office building into commercial and residential space. The Syracuse Post-Standard reported the sides came to a deal and the project appears back on. Jacobs did not return calls for comment.

The Syracuse Post-Standard also reported that Howe represented Carnegie in a local building project in 2015.

• Center Armory, a mixed-used project in Syracuse whose principals are Robert Doucette and Richard DeVito. It did not return phone calls.

• Pyramid Network Services, an East Syracuse firm whose business includes acquiring property and construction of telecommunications towers, including a controversial tower project in southwest Albany County. It did not return calls.

• Hueber-Breuer Construction, a large, Syracuse building company whose public works projects included a state-subsidized project near the city’s Inner Harbor, along with projects at state colleges and the Syracuse Airport.

The company and its top executives spread political donations among Republicans and Democrats, including Cuomo. The company did not return calls for comment.

Other companies Bharara has asked the Cuomo administration about in the subpoena include Competitive Power Ventures, 3Gi Terminals, STV Group and Conifer Realty, which are firms with various business before the state.

The head of STV Group, a client of Howe’s firm, said Howe pulled a “bait and switch” involving a state grant program, the Albany Times Union reported last week.

Also on the subpoena list is Columbia Development, the big Albany real estate developer that was tentatively awarded a Fuller Road Management Corp. deal for a new dormitory at SUNY Polytechnic in Albany. The contract was never signed and the project pulled back last year after Attorney General Eric Schneiderman began investigating the arrangement. Schneiderman has subpoenaed the SUNY entity, Columbia and EYN Architecture & Engineering, an Albany firm that, according to a SUNY Polytechnic payment document dated Feb. 12, has had a $21.6 million subcontract on the Buffalo Billion project.

Cuomo last week said his knowledge of Bharara’s probe involves “possible improper actions” involving Howe and Percoco, and said his administration has offered “100 percent” cooperation. Cuomo cautioned against jumping to conclusions based on who gets questioned, and that no one has been charged with any crime.

Surge in subpoenas

Federal subpoenas have been flying across the state the past couple of weeks.

The administration’s Public Service Commission and New York State Energy Research and Development Authority have been subpoenaed for information about the Buffalo Billion and a downstate power plant project, Newsday reported last week.

Separately, SolarCity, the California company owned by billionaire Elon Musk, said it is also providing information to Bharara’s investigation. A company spokeswoman, Kady Cooper, would not say if SolarCity has been subpoenaed, but said it is not “a target or focus of the investigation as we were not involved in the vendor selection or contracting process” for the RiverBend project. She said it is also “premature” to speculate what effect the investigation might have on the Buffalo factory construction timetable.

Last week, a source with knowledge of the matter said that investigators also sent a subpoena to a current member of the Fort Schuyler Management Corp., the SUNY Polytechnic-created entity to manage state projects in the Buffalo Billion and other programs.

The source also said a subpoena was sent to a former member of Fuller Road Management Corp., another Polytechnic-created company that has run state building projects in Albany. The subpoena claim and recipients could not be independently confirmed.

Sources with knowledge of the Bharara investigation said prosecutors conducted interviews last December and January with individuals involved in the Buffalo Billion bidding process that led to the selection of LPCiminelli as general contractor for RiverBend and McGuire Development Co. to handle real estate matters for IBM moving an office to Key Center.

Both companies last June were subpoenaed, as was Cuomo’s economic development office and SUNY Polytechnic.

LPCiminelli and its owner, Louis Ciminelli, are on the list of entities and people that prosecutors are seeking information from Cuomo’s office about in the April 29 subpoena. However, the document makes no mention of seeking further information about McGuire Development or any of its officials.

The new subpoena also seeks information for any benefits that key Cuomo advisers – current or former – may have provided for an entity called Pemco Group.

The Syracuse newspaper reported Pemco, which won a $2.5 million contract during the Cuomo administration for a project in that city, was another Howe client. But Howe began representing a competing developer – Brooklyn’s Carnegie company – four months after Pemco lost out to Carnegie in its attempt to develop a former Nynex building in the downtown area of the city.

With federal and state investigators intensifying their interests in a several related and seemingly unrelated matters, the list of lingering gaps and questions mount by the day.

Consider the financial disclosure filings of Percoco, the longtime Cuomo adviser who left the payroll earlier this year. Missing is what, if any, outside dealings Percoco may have had in 2013 because he did not report his finances for that year. State officials say no filing was required for that year because Percoco left the payroll in April to run Cuomo’s re-election team. Had he been on the payroll on May 15, a disclosure form would have been required of him.

Why Percoco did not file the form when he returned as an adviser in December is another question. But a JCOPE spokesman said state employees coming on the payroll after Dec. 1, 2014, did not have to file their 2013 forms, but could, instead, wait until the following May to file a form covering the 2014 calendar year.

The practice today?

It has since been changed so employees entering the payroll late during the month of December would have to reveal their finances from the prior year.