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'Buffalo Billion' case looked strong to jurors, but appeals court could disagree

NEW YORK – Louis P. Ciminelli and other defendants in the "Buffalo Billion" trial probably lost their case the moment one of Ciminelli's former underlings decided to plead guilty and cooperate with the government.

But defense lawyers have a potentially strong legal argument as they seek to overturn the convictions of Ciminelli and three other defendants on appeal.

Those were the conclusions independent legal analysts reached Friday, a day after a federal court jury convicted Ciminelli, former SUNY Polytechnic Institute chief Alain Kaloyeros and two Syracuse developers of conspiracy and wire fraud, saying they rigged the bids on Buffalo Billion projects.

Those lawyers said there was little more the defense could have done to exonerate their clients once Kevin Schuler, a former Ciminelli vice president, proved to be a reliable witness for the prosecution.

But those experts said there's plenty those defense lawyers can do on appeal, simply because this is an unusual fraud case where prosecutors didn't argue there was direct financial harm done to anyone.

The case weakened for the defendants, though, once Schuler pleaded guilty and accused his former boss and Kaloyeros of rigging the bid so that Ciminelli's company would get to build the state's giant Riverbend industrial project in Buffalo.

"I just think the nail in the coffin was for Schuler to break rank," said prominent Buffalo defense attorney Paul Cambria. "That was the problem."

Defense lawyers built their case around trying to discredit Schuler – a tactic that none of the lawyers or law professors interviewed for this story faulted.

Instead, they said the defense team faced two inherent problems once Schuler agreed to testify for the prosecution.

First, the former Ciminelli executive backed the defense lawyers into a corner when he took the stand and said he joined Ciminelli and Kaloyeros in tailoring the "request for proposals," or RFP, for the Buffalo project in a way that would ensure that LPCiminelli would get the work.

"To a lay person hearing that, it doesn't sound good," said Buffalo defense attorney Rodney Personius.

Schuler's testimony meant that prosecutors didn't have to call to the stand Todd Howe, the former lobbyist who pleaded guilty earlier in the Buffalo Billion case and then managed to get himself arrested by trying to cheat his credit card company during an earlier public corruption trial. That trial led to the conviction of Joseph Percoco, a former close aide to Gov. Andrew M. Cuomo.

Several lawyers said Howe would have been a weak witness for the prosecution, given his long criminal record. But Schuler proved to be a strong one, without whom prosecutors could not have won their case, Cambria said.

"This is a case that could have been won by all of the defendants if they had a united front," said Cambria, whose law partner, Herbert Greenman, represented Michael Laipple, a former LPCiminelli executive who was charged in the case initially, only to see prosecutors drop those charges shortly before the trial.

In addition, Cambria and other lawyers noted that the Buffalo Billion trial happened after a jury convicted former State Assembly Speaker Sheldon Silver and while former State Senate Majority Leader Dean Skelos was on trial just down the hall from the courtroom where the Buffalo Billion case was being tried.

All that surrounding corruption may have left jurors inclined to believe the worst in the Buffalo Billion case, said David A. Westbrook, a professor of law at the University at Buffalo.

"It may be that people in New York believe there is corruption in Albany," Westbrook said. "And there's something to that belief."

That doesn't mean, though, that the defense team is out of options on appeal. After all, the jury was charged with deciding what the facts were in the case, whereas the appeals court may be forced to look at the law and exactly how it was applied in this case, several lawyers noted.

At first blush, it might not seem as if the appeals – which all the defense lawyers promised – would have much of a chance, for one reason: the reputation of the federal prosecutors in the Southern District of New York.

"The Southern District of New York is one of the finest in the U.S. and this type of verdict could be difficult to overturn," said Carl Tobias, chairman of the University of Richmond School of Law.

On closer inspection, though, defense lawyers can hold out hope in two facts.

First, the initial convictions of Silver and Skelos were overturned on appeal, although on a very different legal point than the ones at play in the Buffalo Billion case.

Second, the key argument the Buffalo Billion defense lawyers will make on appeal could be a very strong one, several lawyers said, all because of one fact.

"There's no harm in this case that anyone proved that I saw or heard about" Cambria said.

Prosecutors argue that's not a problem.

"The government's 'right to control' theory does not depend on whether the projects were good deals or whether the projects were worthy of being financed," U.S. District Court Judge Valerie Caproni said at a hearing before the trial.

Instead, the prosecutors argue their fraud case is based on the notion that the pre-cooked deals for LPCiminelli and COR Development of Syracuse exposed Fort Schuyler Development Corp., the division of SUNY Poly that controlled the funding for the Buffalo and Syracuse projects, to "an unexpected economic risk," the judge said.

According to prosecutors, that meant Fort Schuyler was fraudulently deprived of its "right to control" the project.

Putting that pre-cooked deal together in part through electronic communication exposed the defendants to wire fraud charges, prosecutors argued.

But lawyers for both Ciminelli and Kaloyeros said Friday that they expect to appeal the convictions by arguing that the case law on that "right to control" theory doesn't indicate that what happened with the Buffalo Billion projects amounted to fraud.

The government relied on "a very novel theory of fraud," said Paul Shechtman, Ciminelli's attorney.

Michael C. Miller, Kaloyeros' attorney, agreed.

"The current state of the law on Right to Control is evolving, is uncertain and has the potential to sweep all kinds of legitimate conduct within its scope," Miller said. "It's a question of whether it is being properly applied here."

Both Cambria and Personius said that's a legitimate question, and an important one. After all, if the appeals court decides that Right to Control theory was misapplied in this case, not only would it have to reverse the wire fraud convictions against Ciminelli and the other defendants, but also the conspiracy convictions.

"It's a very good argument," Personius said. "It's cutting edge."

Even Caproni, the federal judge, admitted during the trial that the "right to control" argument may be a strong one at the appellate level – and beyond.

"Hey, look, you may be right. When you get to the Supreme Court, they may say, 'There is no right of control theory, this is cockamamie,' " Caproni told defense attorneys during the trial. "But as of right now, the law in the Second Circuit is that this is a viable fraud theory. So you're trying to challenge it."

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