Ex-Cuomo Aide Among 9 Charged in Upstate NY Corruption Bust, Feds Say

Preet Bharara
Preet Bharara, U.S. Attorney for the Southern District of New York, speaks at Harvard Law School’s Class Day on Wednesday, May 28, 2014. (U.S. Department of Justice photo).

A former aide to Gov. Andrew Cuomo was among nine people arrested for corruption in two alleged schemes that included bid-rigging and bribery involving the Buffalo Billion initiative, federal prosecutors said Thursday.

Cuomo’s former executive deputy secretary, Joseph Percoco, was charged with helping an energy company and a Syracuse-based real estate developer in exchange for more than $315,000 in what they called “ziti,” which was code for bribes in language adopted from The Sopranos, HBO’s popular mob drama, authorities said. In a separate but overlapping alleged scheme, SUNY Polytechnic Institute President Alain Kaloyeros was accused of steering work to contractors while overseeing the application process for the Buffalo Billion project, intended to revitalize the western New York city, prosecutors said.

“The companies got rich, and the public got bamboozled,” Preet Bharara, the U.S. Attorney for the Southern District of New York, told reporters during a news conference at his Manhattan office. “The bids allegedly were rigged, the results preordained.”

The case comes less than a year after his office’s prosecutors convicted former state Senate Majority Leader Dean Skelos (R-Rockville Centre) and ex-state Assembly Speaker Sheldon Silver (D-Manhattan) on separate but similar corruption charges. Both are appealing.

“It turns out that the state legislature does not have a monopoly on crass corruption in New York,” Bharara said.

Percoco was charged with soliciting bribes, conspiracy to commit extortion and conspiracy to commit honest services fraud. Authorities said he conspired with energy company executive Peter Galbraith Kelly Jr. and Buffalo Billion consultant Todd Howe to get Percoco’s then-unemployed wife $287,000 in pay for a no-show job, prosecutors said. Percoco also allegedly got expensive meals and a Hamptons fishing trip. In exchange, Percoco used his influence to help the company save $100 million on the construction of a power plant, among other favors, authorities said.

Percoco also received about $35,000 in bribes from Syracuse developers Steven Aiello and Joseph Gerardi in exchange for his help in reversing an Empire State Development Corporation decision related to a labor dispute, which in turn freed up $14 million in state funds awarded to their company, prosecutors said. The bribes also ensured a pay raise for Aiello’s son, who worked in the governor’s office, authorities said.

The money was funneled through a shell company controlled by Howe, who struck a plea deal with prosecutors in exchange for his testimony. Kelly and Aiello were each charged with bribery and conspiracy. Aiello’s son was not charged.

Madison Square Garden Co. named Percoco senior vice president last December following his stint with Cuomo. In a press release announcing his hiring, MSG referred to Percoco as a “distinguished” government worker.

“If the allegations are true, I am saddened and profoundly disappointed,” Cuomo said in a statement after the charges were announced. “I hold my administration to the highest level of integrity. I have zero tolerance for abuse of the public trust from anyone.”

Bharara added: “There are no allegations of wrongdoing by the governor anywhere in this complaint.”

In the second scheme, Aiello, Kelly and Buffalo-based developers Louis Ciminelli, Michael Laipple and Kevin Schuler were charged with paying hundreds of thousands of dollars in bribes to Howe in exchange for secretly rigging bids to ensure they would win taxpayer-funded construction project contracts worth tens of millions of dollars, prosecutors said. Kaloyeros and Howe secretly asked the developers for qualifications that would be inserted in the Requests for Proposals to minimize competition, authorities said. In one instance, the information was so specifically tailored to one developer, a conspirator asked if it was “too telegraphed,” according to investigators.

Kaloyeros was suspended without pay, effective immediately, Cuomo said.

At the news conference Adam Cohen, the FBI Special Agent-in-Charge of the Buffalo Field Office that led the investigation, recalled getting his start in government work while growing up on Long Island. He said the allegations were “personally upsetting” to him and his colleagues.

“These arrests speak volumes to those who…arrogantly took what was not theirs and who acted without morals and ignored ethics,” he said. “Each of them allegedly broke the law because they chose greed, and, as a result, personally tarnished an historic opportunity… We cannot say it often enough: It is the expectation of the public that government officials are not in their positions to self-deal or to serve their personal interests.”

Each of the suspects faces up to 20 years in prison, if convicted.