ALBANY – Some of New York's largest upstate development projects under Gov. Andrew Cuomo were tainted by self dealing and bid rigging, prosecutors alleged in wide-ranging criminal complaints Thursday.
U.S. Attorney Preet Bharara and Attorney General Eric Schneiderman unveiled criminal charges against 10 top state power brokers and prominent developers -- including former top Cuomo aide Joe Percoco and SUNY Polytechnic Institute President Alain Kaloyeros -- as part of a wide-ranging corruption probe touching major construction projects across much of upstate.
The scandal was the latest to give New York state government a black eye, damaging Cuomo's vows to clean up the state Capitol and infringing on his pledge to revive the sagging upstate economy.
In all, the 10 defendants are facing a collective 37 felony counts of bribery, extortion, fraud and other related charges.
Cuomo himself was not charged, and U.S. Attorney Preet Bharara said there are "no allegations of any wrongdoing or misconduct" by the Democratic governor.But the charges against Percoco, a South Salem resident who was Cuomo's closest aide for decades before leaving state government last year, and Kaloyeros rocked state government and peeled back the behind-the-scenes deal-making by state officials.
Bharara charged that the defendants were more focused on their own personal gains than the public good.
"Today’s complaints shines the light on another sordid side of the ‘show me the money’ culture that has so plagued government in Albany," Bharara, who has led a crusade against public corruption in New York, said at a Manhattan news conference.
This comes on top of Bharara's convictions last year of the two former legislative leaders, Dean Skelos and Sheldon Silver, and the misdeeds of nearly 40 current and former state legislators since 2000.
Charges had been expected for months after Bharara opened a federal investigation into potential misdeeds around Cuomo's economic-development projects.
The federal probe led Cuomo to hire his own independent investigator to look into any problems within his administration and SUNY Poly.
Good-government groups said Thursday's arrests were another sign that Albany can't clean itself up.
"It's up to all New Yorkers to demand that our elected officials commit to changing the culture of corruption that has come to define Albany," said Susan Lerner, executive director of Common Cause/NY.
Kaloyeros built an empire over nearly three decades at the burgeoning nanotechnology center in Albany that has spread in recent years to facilities in Buffalo, Rochester, Syracuse and Utica.
The flashy and brash Kaloyeros, who often made more than $1 million a year, was accused of conspiring with lobbyist Todd Howe to steer SUNY Poly contracts to two upstate developers. He also faces charges of rigging a bid for an ill-fated Albany student-housing complex, as well as steering work to a contractor that provided research money to SUNY Poly, which boosted his salary.
Kaloyeros was charged with a single count of wire fraud conspiracy in the federal case, and three felony counts in a separate state case.
State Attorney General Eric Schneiderman brought state charges against Kaloyeros and Joseph Nicolla, the president of Columbia Development in Albany, for allegedly rigging the bid for an ill-fated student-housing project.
“The charges filed today outline a blatant and brazen abuse of taxpayer dollars and the public trust,” Schneiderman said.
SUNY put Kaloyeros on unpaid leave Thursday, and Cuomo condemned any misdeeds by Kaloyeros, Percoco and the others.
"If the allegations are true, I am saddened and profoundly disappointed. I hold my administration to the highest level of integrity," Cuomo said in a statement. "I have zero tolerance for abuse of the public trust from anyone. If anything, a friend should be held to an even higher standard."
There was no immediate comment from Kaloyeros' attorney.
Kaloyeros is a key player in the Rochester photonics institute, a major public-private partnership launched last year by the federal government, and gained influence and power as the Cuomo administration tasked him with overseeing many of the state's largest construction projects.
Two tracks of investigation
At the center of the case was Howe, who on Tuesday pleaded guilty to eight corruption charges and has cooperated with federal investigators. He is a former aide to Cuomo and late-Gov. Mario Cuomo.
Now, as a lobbyist and political fixer, Howe is accused of using his influence to help the upstate developers get lucrative SUNY Poly deals.
He is also accused of helping to get about $315,000 in payments to Percoco and his wife from two companies, COR Development in Syracuse and Competitive Power Ventures, which was seeking to build a power plant in Orange County.
In exchange, Bharara contended, Percoco used his influence to help the companies wade through state government. At one point, Percoco helped obtain a raise for Aiello’s son, who was working in Cuomo’s office.
Ciminelli received as much as $750 million to build a massive solar energy factory to be used by SolarCity in Buffalo, and COR got contracts for a $15 million film hub in central New York and a $90 million manufacturing plant.
"In each case, the bids were rigged, and the results were pre-ordained," Bharara said. "Companies got rich, and the public got bamboozled."
Peter Kelly, an executive with Competitive Power Ventures, was charged, as were COR's president Steven Aiello and executive Joseph Gerardi.
Louis Ciminelli, chairman and CEO of LP Ciminelli in Buffalo, was charged along with two company executives, Michael Laipple and Kevin Schuler.
There was no immediate comment from COR. In a statement, LPCiminelli President Frank Ciminelli said the company is “confident that all company officials acted appropriately and legally.”
Lengthy list of charges
Percoco worked as the younger Cuomo's executive deputy secretary from 2011 until 2014, when he took a leave to manage Cuomo's re-election campaign and when Cuomo's office contended he received the outside payments.
He then returned to his role in Cuomo's administration following the election, leaving for a private-sector job with the Madison Square Garden Co. in 2015.
Percoco had been facing financial difficulties after his wife took an unpaid leave from her job as a teacher in New York City in 2012 before ultimately resigning, according to the complaint.
Months after the Percocos purchased an $800,000 home in South Salem, Bharara's complaint claims the couple's average monthly income was around $8,000 while their expenses exceeded $20,000.
It was around that time that CPV, the energy company, began paying Percoco's wife $90,000 a year for a job that required little work.
“Need to try and hammer something out for (Percoco)," Howe wrote to Kelly shortly before the payments to Percoco's wife began. "Wants you and I to try and identify something he wants to try and stay removed if possible if u know what I mean.”
Barry Bohrer, an attorney for Percoco, said his client will enter "a plea of not guilty because he is not guilty."
"This prosecution, based on information provided by someone of utterly unreliable credibility, seeks to criminalize conduct that the Supreme Court of the United States recently found to be not unlawful," Bohrer said in a statement. "It is an overreach of classic proportions."
Economic-development officials across New York said ongoing projects would not be derailed.
"It is imperative that any charges brought against SUNY Poly President Alain E. Kaloyeros today do not distract from the educational mission, ground-breaking research, and academic operation of SUNY Polytechnic Institute or negatively impact the thousands of students, faculty, researchers, and staff that the campus serves," SUNY leaders said in a statement.
LPCiminelli President Frank L. Ciminelli II released the following statement:
“We are confident that all company officials acted appropriately and legally. When given the opportunity to fully respond to these charges, we are confident everyone will be vindictated. The company will have no further comment at this time.”
SUNY Chairman H. Carl McCall and Chancellor Nancy Zimpher released the following statement reacting to Thursday's announcement:
“It is imperative that any charges brought against SUNY Poly President Alain E. Kaloyeros today do not distract from the educational mission, ground-breaking research, and academic operation of SUNY Polytechnic Institute or negatively impact the thousands of students, faculty, researchers, and staff that the campus serves.
“Effective immediately and until this matter is resolved, Dr. Kaloyeros has been suspended without pay. SUNY will review the charges against Dr. Kaloyeros and cooperate fully with prosecutors on any further action as state and federal investigations continue.
“In order to ensure a seamless leadership transition for the entire campus community, we are directing executive staff at SUNY System Administration, under the leadership of Provost and Executive Vice Chancellor Alexander N. Cartwright, to collectively serve in an officer-in-charge capacity for the campus until an individual can be appointed.”
New York Governor Andrew Cuomo issued this statement:
“I learned this morning of the charges filed by the U.S. Attorney’s office that include a former member of my administration. If the allegations are true, I am saddened and profoundly disappointed. I hold my administration to the highest level of integrity. I have zero tolerance for abuse of the public trust from anyone. If anything, a friend should be held to an even higher standard. Like my father before me, I believe public integrity is paramount. This sort of breach, if true, should be and will be punished.
“SUNY has rightly relieved Alain Kaloyeros from his duties and has suspended him without pay, effective immediately.
“This matter is now in the hands of the court, which is exactly where it belongs. My administration will continue to be fully cooperative in the matter as we have been since it began.”
Beginning in 2014, our partner, Investigative Post, has tried to obtain records/information on the process of awarding contracts, but were refused. You can watch our previous stories here: