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AG: Kaloyeros charged for "brazen bid-rigging using taxpayer dollars"

NEW YORK – A state official who plays a leading role in the Buffalo Billion program is involved not only in corruption involving Western New York’s largest economic turnaround effort, he engaged in a “major bid-rigging scheme” in Albany as well, New York’s attorney general said Thursday at a news conference in Manhattan.

Eric T. Schneiderman described the case against Alain Kaloyeros, president of the SUNY Polytechnic Institute, as a continuation of his years-long effort to “ensure there is one set of rules for everyone” in state government, and he made special mention of his case against the now-indicted Buffalo political operative G. Steven Pigeon. Pigeon is accused of bribing a State Supreme Court justice in Erie County but, Schneiderman suggested Thursday, he might still be charged with the potential Election Law violations that kicked off the state’s inquiry.

The news of the day, however, involved a two-pronged investigation by the U.S. attorney in Manhattan, Preet Bharara, and Schneiderman, into how bribes comes into play in awarding large state development contracts. Both prosecutors announced the placing of charges against state-government insiders and luminaries in the construction world.

Here's the attorney general's complaint: Kaloyeros Nicolla felony complaint

Kaloyeros was named in a federal indictment involving the Buffalo Billion, and Schneiderman revealed state charges against him as well for “brazen bid-rigging using taxpayer dollars” as he steered contracts “to his cronies.”

Kaloyeros, according to the state’s criminal complaint, gave special treatment to a Schenectady-area developer to ensure he won the right to build a student housing complex on Loughlin Street in Albany. One piece of evidence shows that Kaloyeros colluded with the developer, Columbia Development president Joseph Nicolla, by sending him an email describing the project’s scope a month before a formal “request for proposals” went to all interested development companies.

“Time to prepare an RFP for student housing,” said the email message, which was displayed at the news conference and in the criminal complaint. Nicolla also received advance notice so that he could start buying the land he would need for the student housing, Schneiderman said.

Nicolla, 59, of Schenectady faces one felony count of “combination in restraint of trade and competition” and could serve up to four years in prison if convicted.

But Kaloyeros, 60, faces three such felony counts, for allegedly steering the contract to Nicolla and for his alleged wrongdoing in two other arrangements. He faces 12 years behind bars if found guilty.

 

Under Gov. Andrew M. Cuomo, the SUNY Polytechnic Institute has emerged as a development arm of state government, and Kaloyeros is described by the Attorney General’s Office as an official with such total control over the selection of developers he would boast that he could “write an RFP in such a way that only one company could win it.”

In what Schneiderman called a “second scheme,” Kaloyeros awarded the most lucrative contract available for the construction of a research building to a contractor who agreed to loan $50 million to a non-profit connected to SUNY Polytechnic and provide a $3 million research grant to SUNY Poly itself. This directly enriched Kaloyeros, the state prosecutors allege, because his compensation was partly determined by the amount of research grants SUNY Poly pulled in.

 

In the third alleged scheme, Kaloyeros drew a formal agreement with an architectural firm that agreed to lease space in a SUNY Poly building with the understanding it would receive work on SUNY Poly projects, Schneiderman said. The criminal complaint says the pact also called for the tenant to ratchet up its rent payments in line with the state work steered its way.

Asked if such an arrangement is unusual, Schneiderman called it “stupid” and an “explicit agreement for a kickback.”

State contracts are to be determined on a level playing field, Schneiderman said, but it wasn’t done in those cases. He said of Kaloyeros: “This is an inexcusable way for a state official to behave.”

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