Thursday, September 22, 2016

Nine Defendants Charged with Federal Corruption And Fraud Offenses in New York


Preet Bharara, the United States Attorney for the Southern District of New York, Adam Cohen, Special Agent-in-Charge of the Buffalo Field Office of the Federal Bureau of Investigation (“FBI”), and Shantelle P. Kitchen, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of a Complaint charging eight defendants with federal public corruption offenses, including Joseph Percoco, the former Executive Deputy Secretary to the Governor of the State of New York, and Alain Kaloyeros, the President of SUNY Polytechnic Institute (“SUNY Poly”). The charges arise from two separate but overlapping schemes involving bribery, corruption, and fraud in the award of hundreds of millions of dollars in New York State contracts and other official state actions. 

In the first scheme, Percoco is charged with soliciting and accepting more than $315,000 in bribes in return for taking official state action to benefit an energy company (the “Energy Company”) and a Syracuse-based real estate developer (the “Syracuse Developer”).  As part of this scheme, Peter Galbraith Kelly, Jr., an executive at the Energy Company, and Steven Aiello and Joseph Gerardi, executives at the Syracuse Developer, are charged with orchestrating the payment of bribes to Percoco. 

In the second scheme, Aiello and Gerardi, along with Louis Ciminelli, Michael Laipple and Kevin Schuler, who are executives at a Buffalo-based development company (the “Buffalo Developer”), are charged with paying hundreds of thousands of dollars in bribes to Todd Howe, a consultant hired by Kaloyeros to help administer the state’s “Buffalo Billion” initiative and related programs. As the charges allege, in exchange for the bribe payments, Howe and Kaloyeros secretly rigged the bids on lucrative state-funded contracts to ensure that the Syracuse Developer and the Buffalo Developer would win the contracts. 

All eight defendants charged in the Complaint were arrested this morning. Percoco, Kelly, and Kaloyeros are scheduled to be presented later today before U.S. Magistrate Judge Sarah Netburn in Manhattan federal court. Aiello and Gerardi are scheduled to appear later today in federal court in Syracuse. Ciminelli, Laipple and Schuler are scheduled to appear later today in federal court in Buffalo. 

Also unsealed today is the guilty plea of Todd Howe in connection with his participation in both corruption schemes described above. Howe pled guilty pursuant to an Information before U.S. District Judge Richard M. Berman on September 20, 2016, and is cooperating with the Government.

U.S. Attorney Preet Bharara said: “Today’s charges shine a light on yet another sordid side of the show-me-the money culture that has so plagued Albany. As alleged, Joseph Percoco, the former Executive Deputy Secretary to the Governor, was on the take. And pervasive corruption and fraud allegedly infected signature state development projects like the Buffalo Billion program. The bids allegedly were rigged, the results preordained; companies got rich and the public got bamboozled. As alleged in the Complaint, it turns out the state legislature does not have a monopoly on crass corruption in New York.”

Click here to read the full statement

Source: United States Attorney's Office, Southern District of New York     


Statement from Governor Andrew Cuomo

“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.” 

Source: Press Office, Governor Andrew M. Cuomo 

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