Facing Federal Probe, Cuomo Taps Ex-Giuliani Aide to ‘Review’ State Contracting

Andrew Cuomo acknowledged that contractors close to his office may have "deceived" and "defrauded" the state, and that one of his top lieutenants may have engaged in "improper lobbying."

Gov. Andrew Cuomo.
Gov. Andrew Cuomo.

Gov. Andrew Cuomo’s office acknowledged late today that contractors close to his office may have “deceived” and “defrauded” the state, and that one of his top aides may have engaged in “improper lobbying”—and announced he was putting a former lieutenant to Rudolph Giuliani in charge of a “full review.”

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The joint statement from Cuomo counsel Alphonso David and former federal prosecutor Bart Schwartz dropped shortly after 5 pm on a Friday, a classic tactic for burying potentially damaging news. Just minutes earlier, the Daily News reported that Joseph Percoco—the governor’s former executive deputy secretary and close personal and political confidante—may have engaged in “self-dealing” by taking work from a lobbyist while still employed by the state.

Mr. David said the allegations are tied to U.S. Attorney Preet Bharara’s probe of the “Buffalo Billion” economic development package in western New York, which saw major contracts go to top Cuomo donors like developer Louis Ciminelli.

“This investigation has recently raised questions of improper lobbying and undisclosed conflicts of interest by some individuals which may have deceived state employees involved in the respective programs and may have defrauded the state,” Mr. David wrote, never mentioning Mr. Percoco by name. “The governor has ordered an immediate full review of the program. Any grants made by this program will be thoroughly scrutinized—past, current or future.”

Mr. Percoco, long regarded as one of the most powerful men in New York State,  left the governor’s office at the end of last year to take a job in the private sector. However, he still frequently acts as the governor’s body man at events and as one of his political enforcers.

The hulking Mr. Percoco reportedly pressured members of the short-lived anti-corruption Moreland Commission into dropping subpoenas of individuals tied to the governor. Mr. Cuomo’s abrupt scuttling of the Moreland Commission in 2014 following an agreement with the State Legislature prompted Mr. Bharara to take a closer look at the activities of the state’s most influential figures—culminating in the corruption convictions of former Assembly Speaker Sheldon Silver and State Senate Majority Leader Dean Skelos last December.

The prosecutor announced last year that he had determined the governor had violated no laws in dismantling the commission. But in a speech earlier this month, the evangelizing U.S. Attorney for the Southern District of New York vowed to examine “the executive branch” next.

A source confirmed to the Observer that the governor’s office as a whole, though no one individual, had received a subpoena from Mr. Bharara earlier today requesting reams of documents.

The lobbyist in question, Todd Howe, was an adviser to Mr. Cuomo when the governor served as secretary of the Department of Housing and Urban Development during the Clinton administration. Mr. Howe gave money to Mr. Cuomo’s attorney general and gubernatorial campaigns. He also donated heavily in 2014 to the election effort of Mr. Cuomo’s lieutenant governor, Kathy Hochul, a native of the Buffalo area.

An administration official told the Observer that the governor had ordered all state employees to sever contact with Mr. Howe. It also directed a “suspension of any discussion of regulatory or other matters” with Competitive Power Ventures, a Maryland-based energy company also apparently linked to the lobbyist.

Competitive Power Ventures and an apparent affiliate, CPV Power Development Inc., has also given some $10,000 to Mr. Cuomo’s campaign coffers. The company did not respond to requests for comment.

To conduct his review, Mr. Cuomo brought in Mr. Schwartz, who served as chief of the criminal division of the U.S. Attorney’s office under Mr. Giuliani during the 1980s, when the future mayor held Mr. Bharara’s job. The ex-prosecutor’s website quotes the New York Times’ description of him as an attorney  “often sought out in…thorny situations.”

“The state has reason to believe that in certain programs and regulatory approvals they may have been defrauded by improper bidding and failures to disclose potential conflicts of interest by lobbyists and former state employees,” Mr. Schwartz said in the statement. “The U.S. Attorney has an ongoing investigation that has revealed important information in this regard.”

“I will conduct my review commencing immediately and report any information I find to the U.S. Attorney and the administration. The administration has made it clear to me that they have zero tolerance for any violation of the public trust from any actor or entity and I should follow the facts,” Mr. Schwartz continued.

Mr. David and Mr. Schwartz indicated the Buffalo Billion economic development program would continue to operate during the review.

Facing Federal Probe, Cuomo Taps Ex-Giuliani Aide to ‘Review’ State Contracting