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On display in a Manhattan courtroom: Buffalo's 'incestuous' business ties

People in Buffalo know just how small the local community can seem, especially the business world.

Now everybody in a New York City courtroom does, too.

Testimony last week by former LPCiminelli executive Kevin Schuler in the corruption case against Louis P. Ciminelli and three other defendants revealed the delicate and interconnected relationships between Buffalo developers and construction companies, and the personal politics that often come into play.

"Things were kind of incestuous," remarked U.S. District Court Judge Valerie E. Caproni, who is presiding over the federal trial.

"It's not a small city; it's a big room," Schuler responded.

LPCiminelli received the $750 million state contract to build a sprawling solar manufacturing plant in South Buffalo for SolarCity, now Tesla. That's the contract that is at the center of the corruption and bid-rigging allegations against its former CEO and founder, Louis Ciminelli. Schuler previously agreed to plead guilty and testify against his former boss in exchange for a reduced sentence.

No other developers in Buffalo are accused of wrongdoing in the case. But hours of trial testimony last week touched on the complicated relationships between some of the region's biggest development firms.

First and foremost, of course, is the relationship between LPCiminelli, the general contracting company owned by Louis Ciminelli, and Ciminelli Real Estate Corp., the development firm owned by Paul Ciminelli. Paul and Louis are brothers, and the two companies have worked together, but they are legally separate entities.

Other developers in Buffalo were involved in the complex bidding process for two state projects in 2013 and 2014, including McGuire Development Co. That firm ultimately won the bid for another big public project at that time, the construction of a high-technology hub anchored by IBM Corp. in the KeyCenter building at Fountain Plaza.

And McGuire won that project, according to Schuler's testimony, with a recommendation from LPCiminelli to lobbyist Todd Howe and former SUNY Poly executive Alain Kaloyeros. Schuler testified that LPCiminelli made the recommendation unbeknownst to McGuire Development in an attempt to "prevent a holy war of all these Buffalo companies kind of opening up a public battle with each other."

"We were asked who we liked. We said McGuire, and that's who ended up with (it). And I thought our opinion carried weight," Schuler said.

That's because one of the other candidates for the IBM project at KeyCenter was Carl Montante Sr.'s Uniland Development Co.

Schuler told the courtroom there was friction between Uniland and the ownership at Fountain Plaza because Uniland had previously won an unrelated contract to construct the Delaware North Headquarters building at 250 Delaware Avenue. That resulted in Delaware North leaving Fountain Plaza, which made the Fountain Plaza owners "less than happy," Schuler said.

"Uniland took DNC?" the judge said, seeking clarification.

"Away from Key Tower," Schuler said.

"So Key Tower was miffed?" the judge continued.

"Very much so," Schuler replied.

LPCiminelli, according to Schuler, attempted to avoid potential tension by recommending a different developer.

"If the second developer was going to be Uniland building out a piece in Key Tower" for an owner who was angry at Uniland for taking Delaware North, Schuler testified, "that was going to be problematic."

"There was this whole idea of not letting the thing spiral out of control," Schuler later added.

And if that's not confusing enough, Ciminelli Real Estate – which did not win any of the contracts – managed and now co-owns the Fountain Plaza complex. "So there were different, multiple considerations. I'm confusing myself a little bit," Schuler said.

"Based on some stuff that had gone on, Ciminelli Real Estate and Uniland did not have a good relationship and would be somebody we would not want to partner with," Schuler said earlier in his testimony.

Meanwhile, the other developer that LPCiminelli recommended to state officials was TMMontante, owned by Thomas Montante. Schuler said LPCiminelli had a good relationship with TMMontante and "high regard for their professional competence" and "most important their personnel."

"If we are going to be working with them to some degree, it would be better to have someone that we had a good working relationship with," Schuler explained.

Indeed, Schuler testified, there was significant uncertainty at LPCiminelli about how the Riverbend and KeyCenter projects would be linked and whether the two developers would be collaborating.

"You were confident you would get a big chunk of Riverbend, but you didn't know how it was going to shake out," said one of the defense attorneys, in cross-examination. "That's why you were worried."

"Yes. We were worried we were going to be put in some kind of shotgun marriage with McGuire," Schuler said.

LPCiminelli executives preferred TMMontante, Schuler said, but the latter didn't respond to the request for proposals, so they were never under consideration.

The trial is scheduled to resume in federal court Monday.

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