Three top LPCiminelli executives facing corruption charges over an alleged bid-rigging scheme for a lucrative contract to build a solar panel factory in South Buffalo have resigned from the Buffalo contractor.
Louis P. Ciminelli, the chief executive officer of the Buffalo construction firm, and two of his top aides, Kevin Schuler and Michael Laipple, have stepped down as the company tries to restore public confidence after landing in the center of a high-profile state corruption case.
Louis Ciminelli also further distanced himself from the company by placing the shares he owns in LPCiminelli in a family trust.
That move will reduce the direct influence that Louis Ciminelli has over the company's operations, since the trust – and not Louis Ciminelli – will control the voting rights that accompany those shares. The transfer leaves Frank Ciminelli II, Louis' son and the company's president, and a family trust as LPCiminelli's main shareholders.
The resignations come as LPCiminelli – the region's biggest contractor – continues to operate under a cloud of scrutiny over the executives' alleged corruption tied to a $750 million state contract for the Buffalo Billion project to build a solar panel factory for SolarCity off South Park Avenue.
The resignations leave Frank L. Ciminelli II as the company's leader. He will take control of a business that could face added scrutiny as it tries to win new public sector contracts.
"We've got a lot of work out in front of us, and we're hoping to reinforce confidence in our customers," Frank Ciminelli II said in an interview with The Buffalo News on Monday.
[Related: Who is Frank Ciminelli II?]
The company also said it has hired Paul M. Moskal, a former FBI Special Agent in Buffalo, to conduct a risk assessment of the company and to develop a "robust" compliance program. Moskal will work with Nicholas L. Mineo, an attorney and consultant, on the program.
"We say we do the right thing. Now we're going to put it in writing," Frank Ciminelli II said. "And we'll back it up with a third party."
All 200 LPCiminelli employees will participate in compliance and ethics training programs conducted by Moskal, the company said. All of the firm's senior employees have been trained on state rules on procurement and lobbying.
"I am committed to ensuring that our company's 56-year record of integrity and excellence continues into the next generation," Frank Ciminelli II said. "I am confident that we will meet these challenges."
The company had faced questions about its leadership structure since the arrest of Louis Ciminelli and the two other executives last fall.
"I think they had to do it," Paul Brown, the president of the Buffalo Building & Construction Trades Council, said of the company's leadership change. "There's still that cloud hanging over them."
Louis Ciminelli, Schuler and Laipple face counts of wire fraud conspiracy and bribery. The three executives were indicted last fall, along with others across the state. Federal prosecutors allege they conspired to "secretly rig the bidding process for state contracts worth hundreds of millions of dollars" in favor of LPCiminelli and other companies.
The three have maintained they have done nothing wrong.
"They've resigned to go ahead and start focusing on the case," Frank Ciminelli II said of the three executives. "We certainly don't feel like the three of them did anything wrong. We feel they will be exonerated."
Federal prosecutors accused Lobbyist Todd Howe and Alain Kaloyeros, then president of the SUNY Polytechnic Institute, of steering a contract to LPCiminelli. In a complaint filed last fall, prosecutors said Howe and Kaloyeros set up a process that appeared to be an open competition for the Buffalo project, when they had actually pre-selected LPCiminelli. Howe already has pleaded guilty to eight felony charges of bribery, extortion, wire fraud and tax evasion.
U.S. Attorney Preet Bharara charges that Howe and Kaloyeros provided "secret information" to Ciminelli, Laipple and Schuler about the RiverBend project, including the "location and purpose of the first preferred developer project ... that was provided to no other developer." Laipple was president of LPCiminelli's infrastructure division. Schuler was its senior vice president.
Bharara accused Howe and Kaloyeros of working with Ciminelli, Laipple and Schuler to secretly alter the request for proposals sent to potential contractors to "include qualifications that would favor" LPCiminelli. The prosecution also contends that LPCiminelli falsely certified that nobody had influenced the contract award, when the company had retained Howe for exactly that purpose.
Aside from constructing the SolarCity factory, LPCiminelli has worked on a long list of public projects, including a 10-year, $1.3 billion construction program to renovate 48 Buffalo Public Schools buildings.
Just days after the charges against the three executives were filed last September, LPCiminelli was fired as construction manager by the developer of a Staten Island outlet-mall. The company has remained on other projects, including the construction a new building on Main Street that will house the University at Buffalo's Jacobs School of Medicine and Biomedical Sciences.
Frank Ciminelli II on Monday downplayed the impact of the corruption charges on the company's business. "2016 was the best year we've ever had. Much of that has rolled into 2017," he said.
Grand Island architecture firm CannonDesign hired Moskal as its director of compliance in 2014 amid a bribery scandal involving a former executive. CannonDesign in August agreed to pay a $12 million penalty as part of a settlement with the Justice Department.