Alain E. Kaloyeros, a principal architect of Gov. Andrew M. Cuomo’s signature economic development initiative, was convicted on Thursday in a bid-rigging scheme that steered hundreds of millions of dollars in state contracts to favored companies in Buffalo and Syracuse.
Dr. Kaloyeros, 62, was found guilty of wire fraud and conspiracy in the fourth week of a federal trial in Manhattan that invited harsh scrutiny of Mr. Cuomo’s ambitious plan to revitalize upstate and western New York, known as the Buffalo Billion.
The verdict was immediately seized on by the governor’s political rivals to criticize what they say has been a culture of corruption enabled by Mr. Cuomo; they also pointed to a conviction of one of the governor’s former top aides, Joseph Percoco, who was found guilty earlier this year of accepting more than $300,000 in bribes from executives working for two companies with state business.
Mr. Cuomo, who has not been accused by prosecutors of any wrongdoing, said after the verdict that he had “no tolerance for those who seek to defraud the system to advance their own personal interests. Anyone who has committed such an egregious act should be punished to the full extent of the law.”
Dr. Kaloyeros, the former president of SUNY Polytechnic Institute, had been credited with helping to create a high-tech industry in the capital region, which led Mr. Cuomo, a Democrat, to place him in charge of the Buffalo Billion project. The governor had praised Dr. Kaloyeros as a geniusand “New York’s secret weapon.”
Soon, the money began to flow to Buffalo; waterfront parks, gleaming modern factories and a cluster of medical and technology facilities were built.
[Has New York gotten its money’s worth out of the Buffalo Billion project? Read more here.]
But at the trial, the prosecution presented evidence that Dr. Kaloyeros and Todd R. Howe, a former lobbyist with ties to Mr. Cuomo, conspired to defraud Fort Schuyler Management Corporation, a nonprofit real estate arm of SUNY Polytechnic, by steering lucrative contracts to two firms whose executives were significant donors to Mr. Cuomo’s campaign.
As part of the scheme, Dr. Kaloyeros and Mr. Howe tailored requests for proposals, or RFPs, to fit the specific qualifications possessed by the two companies — LPCiminelli, a Buffalo construction management firm, and COR Development, a Syracuse-area firm — and ensure that they be chosen by Fort Schuyler for the projects.
LPCiminelli, for example, received a contract to build what became a $750 million solar-panel plant on the banks of the Buffalo River, while COR received contracts worth more than $100 million for other projects. Both firms were clients of Mr. Howe’s.
“When Kaloyeros was entrusted by the State of New York to spend upward of a billion dollars of taxpayer money to prop up the economy of upstate New York, he turned around and shared the key to the vault with his friend Todd Howe and his clients,” a prosecutor, Matthew Podolsky, said in a closing argument on Monday.
Three of the firms’ executives — Louis Ciminelli of LPCiminelli, and Steven Aiello and Joseph Gerardi, of COR — also were convicted of conspiracy and wire fraud, and Mr. Gerardi was also found guilty of making a false statement.
Michael C. Miller, a lawyer for Dr. Kaloyeros, said after the verdict that his client would appeal.
“Alain Kaloyeros is innocent,” Mr. Miller said. “He did not rig bids. Not a penny was lost. Not a bribe was paid. He did the best job that he could for the State of New York and for Fort Schuyler, and we’re just utterly disappointed with the outcome of this case.”
Mr. Gerardi’s lawyer, Milton L. Williams Jr., said his client would appeal, as did Mr. Ciminelli’s lawyer, Paul Shechtman. Mr. Aiello’s lawyer, Stephen R. Coffey, declined to comment.
Mr. Shechtman said that it was “a difficult time” to try a political corruption case, and also said that his client was innocent.
Mr. Cuomo’s opponents and critics pointed to the Kaloyeros case as another example of the governor’s poor decision-making and Albany’s corrupt culture.
Cynthia Nixon, the actress who is running a Democratic primary campaign against Mr. Cuomo, said in a statement, “We’re supposed to believe that the master architect of the governor’s economic development plan doled out nearly a billion dollars without the governor’s knowledge or guidance? I, for one, don’t believe that.”
She added, “Andrew Cuomo is either corrupt or he is spectacularly incompetent.”
Government watchdog groups said that the verdict, like dozens of previous cases touching on corruption in the state capital, was the result of a lack of strong ethics laws and enforcement.
Geoffrey S. Berman, the United States attorney in Manhattan, citing the Kaloyeros verdict and the recent corruption convictions of Mr. Percoco and Sheldon Silver, the former Democratic State Assembly speaker, said, “True justice can only be achieved through independence from politics or influence, and that has never been more important than today.”
Republicans, who have not won a statewide election in New York since 2002, also wasted no time to depict the Kaloyeros and Percoco cases as indicative of the governor’s bad management. “The facts that have been revealed in the two trials indisputably prove that Cuomo is the most crooked, corrupt governor New Yorkers have seen in more than a century,” said Edward F. Cox, the chairman of the New York Republican Party.
Much of the prosecution’s case was based on testimony of Kevin Schuler, a former LPCiminelli vice president who had pleaded guilty and cooperated with the government. Mr. Schuler testified that Mr. Howe had worked closely with LPCiminelli to customize the RFP to the firm’s qualifications.
“We had been asked to give input,” Mr. Schuler said, adding, “We were in the driver’s seat.”
But Mr. Howe, who had pleaded guilty to eight felonies and cooperated with the government, was not called to testify in the Kaloyeros trial. Mr. Howe, already an admitted liar and felon, had his credibility further damaged when he admitted under cross-examination during the Percoco trial that he had tried to defraud a credit card company after signing his cooperation deal with the government — a crime he had not revealed to prosecutors.
Defense lawyers, in their summations in the Kaloyeros trial, harped on Mr. Howe’s absence and the government’s decision not to call him to the witness stand.
“I’m submitting to you that the government didn’t call Todd Howe because they know he’s a liar,” Mr. Williams, the lawyer for Mr. Gerardi, argued. “They wouldn’t want to call him because he would probably undercut their case.”
When charges in the Kaloyeros case were first announced in September 2016, prosecutors said in a criminal complaint that Mr. Ciminelli, Mr. Gerardi and Mr. Aiello had all been “significant contributors” to Mr. Cuomo’s election campaigns, “at least in part to develop a relationship” with the governor’s office that would help them obtain the state-funded contracts.
Mr. Howe, the complaint said, encouraged Mr. Aiello and Mr. Gerardi to contribute “so that the governor’s office would know and remember them.”
Prosecutors told the judge before trial that the government did not allege that the contributions, which were legal, were part of any quid-pro-quo arrangement.
Ultimately, prosecutors removed references to the donations from the indictment and from the evidence introduced at trial. One reason may have been that Mr. Howe was not being called to describe how they came about.
The judge, Valerie E. Caproni, scheduled the men’s sentencing dates for October.
So far, the state has invested about $1.5 billion in Buffalo and the surrounding areas, an infusion Mr. Cuomo has consistently said has revitalized the city, though the governor’s job promises have been shown to be overblown. Mr. Cuomo has promised that the state-funded solar plant in Buffalo known as Riverbend would create at least 3,000 jobs; it has created about a fifth of that.
By Benjamin Weiser and Jesse McKinley – nytimes.com