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Cuomo Associates Charged With Bribery and Fraud

Sep 22, 2016

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A former Cuomo administration official is among those named in a criminal complaint by U.S. Attorney Preet Bharara that alleges kickback and bribery schemes carried out over several years.

Many of those illegal acts, the complaint alleges, involve the governor’s much-touted upstate economic development programs, including the Buffalo Billion. 

The 80-page complaint names Joe Percoco, until recently a top aide to Gov. Andrew Cuomo, and Alain Kaloyeros, the head of the State University of New York Polytechnic Institute and the highest-paid official in the state.

Bharara said Percoco and his wife, who was hired as a “low-show” consultant to a Hudson Valley power plant project, illegally “pocketed” $322,000 in four years.

“One of the most powerful people in all of New York was on the take,” Bharara said at a news conference in lower Manhattan.

Percoco was Cuomo’s right-hand man. The governor’s father, the late former Gov. Mario Cuomo, even referred to Percoco as his “third son.”

Percoco was known in state government as Andrew Cuomo’s “enforcer.” Most believed that when Percoco spoke — often admonishing those who disagreed with Cuomo — that he spoke for the governor.

Kaloyeros masterminded much of Cuomo’s vast upstate economic development programs. Bharara alleged that Kaloyeros, along with lobbyist Todd Howe, gamed the bidding system — in some cases even allowing key developers who made large campaign donations to Cuomo to write the bids to tailor them to their own needs. 

“Behind the scenes, they were cynically rigging the whole process,” said Bharara. “So that the contracts would go to the handpicked ‘friends’ of the administration — ‘friends’ being a euphemism for large donors.”

Howe made money on both sides — working both for the nonprofit associated with the state to facilitate the contracts and also accepting money from the developers. Bharara announced that Howe pleaded guilty to an eight-count indictment and is now a cooperating witness in the case.

Two major upstate developers also have been charged in the complaint: Syracuse-based COR Development and its officers, and Buffalo-based real estate developer Louis Ciminelli.

The complaint in part reads in part like an episode of The Sopranos. It alleges that Percoco actually took inspiration from the TV show about organized crime, using the word “ziti” as a code word when demanding bribe payments and saying at times, “keep the ziti flowing,” and “don’t tip over the ziti wagon.”

Cuomo issued a statement shortly after the complaint was made public, saying in part that he is “saddened and profoundly disappointed,” that he has “zero tolerance for abuse of the public trust,” and noting, “if anything, a friend should be held to an even higher standard.” Cuomo has distanced himself from Percoco and Howe since the spring, when word of the federal probe got out.

“If anyone did anything wrong, I will be the first to throw the book at them,” Cuomo said on May 10.

Cuomo was not named in the complaint, but is known to be a hands-on manager. Bharara was asked by a reporter whether, based on his investigations so far, he could give Cuomo a “clean bill of health.”

“There are no allegations of any wrongdoing or misconduct by the governor anywhere in this complaint,” Bharara said. “That’s all I’m going to say.”

The criminal charges against Cuomo’s associates and former top aide come as both former leaders of the state Legislature face lengthy prison terms over corruption convictions.

It also comes as State Attorney General Eric Schneiderman is charging Kaloyeros and another SUNY Poly board member with felony bid-rigging in connection with several public development projects.

Cuomo announced that Kaloyeros has been immediately suspended from his job, without pay.

In addition to federal criminal charges, Kaloyeros also is facing state corruption charges from New York Attorney General Eric Schneiderman in three alleged bid-rigging schemes.

Kaloyeros and a Schenectady-based developer, Joseph Nicolla, are accused of steering three multi-million-dollar state contracts to favored developers, including Nicolla’s own Columbia Development.

Schneiderman alleges that Kaloyeros shared a competitor’s proposal with Nicolla to help him eventually win a contract to build student dorms, and even bragged openly about his total control of the bid solicitation process. 

In other counts, the attorney general charges, Kaloyeros directly benefited by demanding that a chosen contractor contribute $3 million to a research grant for SUNY Poly. Kaloyeros’ pay is based in part on the amount of research money he attracts to the school.  

The developers who received the contracts are among Cuomo’s top campaign contributors.