Bharara Promises ‘Gory Detail’ of Corruption at Core of Cuomo’s Office and Agenda

"Billions of dollars in public development monies, meant to revitalize and renew upstate New York, were instead just another way to corruptly award cronies."

Manhattan U.S. Attorney Preet Bharara in September.
Manhattan U.S. Attorney Preet Bharara.

U.S. Attorney Preet Bharara lashed out at the state’s executive branch and the “show-the-money-culture in Albany” today as he unveiled a massive criminal complaint implicating some of Gov. Andrew Cuomo’s closest associates—but he refused to say what the governor’s knowledge of the alleged scheme might be.

Addressing the press at his office in Lower Manhattan, the federal prosecutor asserted Cuomo’s ex-deputy executive secretary Joseph Percoco was “on the take” and that “pervasive corruption and fraud” infested one of the governor’s signature economic development programs.

“Companies got rich, and the public got bamboozled,” Bharara said. “I do hope there’s a trial in this case, so that all New Yorkers can see, in gory detail, what their state government has been up to.”

The speech was otherwise uncharacteristically stilted for the usually snarky and swaggering Bharara—perhaps the consequence of Judge Valerie Caproni reprimanding him for his press-hungry tactics during disgraced Assembly Speaker Sheldon Silver’s trial last year. The anti-corruption crusader succeeded in convicting not only Silver but ex-State Senate Majority Leader Dean Skelos on corruption charges this past December. (Both are appealing.)

The two heads of the State Legislature and the governor are often referred to as the “three men in a room”—a troika that controls almost all aspects of New York State government. Bharara has personally railed against this ruling arrangement and called for a more open and democratic capital.

Eight men in all stand accused in two separate alleged bribery and fraud rings. One involves Percoco and Peter Galbraith Kelly, the head of the Maryland-based Competitive Power Ventures, a company that has donated richly to the governor’s campaigns.

Bharara charged that Kelly channeled several hundred thousand dollars to Percoco and his wife in exchange for help building a power plant in upstate New York, and for other public assistance the company never received—including a guarantee the state would find a buyer for energy from the facility, and the closure of the controversial Indian Point nuclear plant in Westchester, which the governor has long advocated. Besides a wealth of cash, CPV also donated a private jet to the governor’s 2010 campaign. Kelly also took Percoco out on fishing trips and for expensive dinners.

Also part of the purported Percoco ring was Steven Aiello, the president of Syracuse’s COR Development. COR finds itself accused of passing Percoco another $35,000 to get the Empire State Economic Development Corporation—a Cuomo-controlled entity—to pay it for building a parking lot servicing a hotel in Syracuse, despite the hotel not having reached a required labor agreement.

The income the company provided to Percoco’s wife supposedly helped the couple meet their mounting personal expenses. The complaint claims Percoco went by the nickname “Herb” and referred to money as “ziti,” in the style of the mob family in HBO’s The Sopranos.

The complaint also describes another bid-rigging and bribery arrangement: this one involving State University of New York head Alain Kaloyeros, Buffalo developer—and Cuomo mega-donor—Louis Ciminelli and two executives at Ciminelli’s company.

Kaloyeros, the highest-paid state employee and an integral player in the governor’s Buffalo Billion initiative, allegedly worked with the developers to tailor requests for proposals so only their company could qualify. The instrument for doing this was the Fort Schuyler Management Company—an offshoot of SUNY Polytechnic, an arm of the governor’s under-performing START-UP NY program and a handler of construction contracts in the Buffalo Billion initiative.

As part of the state university system, SUNY Polytechnic and its affiliates fall under the control of a Cuomo-appointed board, and thus of Cuomo himself.

“Behind the scenes they were cynically rigging the whole process so that the contracts would go to handpicked ‘friends of the administration’—’friends’ being a euphemism for large donors,” said Bharara. “Through rigged bids, state contracts worth billions of dollars in public development monies, meant to revitalize and renew upstate New York, were instead just another way to corruptly award cronies who were willing to pay to play.”

Despite the intimate ties between Cuomo and nearly every individual accused today, Bharara refused to comment on whether the governor was complicit or complacent in any of these alleged illegal dealings—or even on whether his investigators had interviewed Cuomo at any point during the probe.

“There’s no allegation of wrongdoing on the part of the governor,” the prosecutor insisted when the Observer pressed him on whether it was realistic that Cuomo had been oblivious to the activities of his aides and allies.

The governor released a statement shortly after the press conference saying he would be “saddened and profoundly disappointed” if the charges proved true. Lawyers for the defendants have already begun to deny the allegations.

Kaloyeros, who has been removed from his position at SUNY Polytechnic, will face additional bid-rigging charges from State Attorney General Eric Schneiderman. Schneiderman unveiled a three-felony criminal complaint against the nanotechnologist this afternoon for steering construction contracts at the school’s sprawling Albany campus to several “handpicked” companies.

Joseph Nicolla, owner of Columbia Development, is set for arraignment in Albany in connection with these charges on September 26. Nicolla has also donated to Cuomo, both personally and through his company Ridgehill, LP.

Political insiders regard both Bharara and Schneiderman as potential contenders for Cuomo’s job. Both the attorney general and governor are up for re-election in 2018, while the U.S. Attorney will likely find himself replaced in the next presidential administration.

Updated to include Schneiderman’s accusations against Kaloyeros.

Bharara Promises ‘Gory Detail’ of Corruption at Core of Cuomo’s Office and Agenda