Ciminelli among nine named in Bharara's latest corruption charges

Sep 22, 2016

The U.S. Attorney's Office in New York City has announced the arrests of nine people in what it calls the "show-me-the-money culture in Albany." The arrests include a former aide to Governor Cuomo and three executives with local developer LPCiminelli in the Buffalo Billion federal probe. 

U.S. Attorney Preet Bhahara announced bid-rigging and bribery charges against the defendants, including Joseph Percoco, the former Executive Deputy Secretary to the Governor; Alain Kaloyeros, the President of SUNY Polytechnic Institute; and Buffalo-based developer Louis Ciminelli for their alleged roles in fraud schemes to win hundreds of millions of dollars in New York State real estate contracts and other official state actions.

Bharara says Kaloyeros and Howe presented the appearance of fair and open bidding for contracts to work on projects including some related to Governor's ambitious Buffalo Billion economic development plan.

"But behind the scenes, they were cynically rigging the whole process so that the contracts would go to hand-picked friends of the administration," Bharara said. "Friends, being a euphemism, for large donors."

Bhahara says Percoco and his wife pocketed some $322,000 in bribes from real estate firms in Buffalo and Syracuse over four years. They "paid hundreds of thousands of dollars" to guarantee winning "hundreds of millions of dollars worth of state contracts," Bhahara said.

LP Ciminelli executive Michael Laipple (r.) and his attorney Herbert Greenman appeared in federal court in Buffalo Thursday following his arrest on wire fraud and bribery charges.
Credit Chris Caya/WBFO News

See the complaint filed here

Also speaking at Bharara's news conference was Adam Cohen, Special Agent In Charge at the FBI's Buffalo office. After giving a lengthy talk about growing up in New York and New Yorkers' loyalty, Cohen made the point that Western New York, which had been downtrodden for decades, finally had hopes raised by the Buffalo Billion.

"The new construction, and its promises of increased economic development and jobs, have now been tainted by the acts of people who held positions of power," Cohen said.

Governor Cuomo issued the following statement following Bharara's news conference:

“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.”

Others charged include Peter Gailbraith Jr. and his The Energy Company in connection with bribes to secure contracts for a $900 million power project downstate; Syracuse developers Steven Aiello and Joseph Gerardi for $35,000 in bribes; and three LPCiminelli executives: Chairman and CEO Louis Ciminelli, Infrastructure Division President Michael Laipple and Senior Vice President Kevin Schuler, also a former Vice President of Government Affairs at the Buffalo Niagara Partnership. 

U.S. Attorney Preet Bharara
Credit Richard Drew

Three top executives of LPCiminelli, the developer of Riverbend, appeared in U.S District Court in Buffalo after their arrests Thursday morning. Ciminelli, Laipple and Schuler are charged with wire fraud and bribery. The prosecutor wanted their preliminary hearing delayed for two weeks, but Judge Michael Roemer set the hearing for next Monday.

"There was no bribery here. There was no crime committed. This is a total rush to judgment," said Louis Ciminelli's attorney, Dan Oliverio.

Ciminelli was released on $300,000 bond, Laipple on a $50,000 bond, and Schuler was released on his own recognizance. They're due back in court Monday at 10 a.m. If convicted, the defendants could face up to 20 years in prison and hefty fines. 

LPCiminelli released the following statement Thursday afternoon: “We are confident that all company officials acted appropriately and legally. When given the opportunity to fully respond to these charges, we are confident everyone will be vindictated. The company will have no further comment at this time.” 

Governor Cuomo's office said in April that Bharara was examining possible undisclosed conflicts of interest and improper bidding related to the Cuomo's efforts to attract high-tech jobs upstate.  The federal probe revealed a web of individuals and businesses tied to Cuomo that stand to make millions from the projects.

Buffalo Mayor Byron Brown issued the following statement late Thursday afternoon:

"The trust of the public is very important, and any abuse of that trust is unacceptable. As the Governor said, if the allegations prove to be true, that will be very disappointing. However, the progress and growth in the City of Buffalo over the past decade is real, and I do not want to see our momentum impeded or stymied in any way. We should be proud of the great progress that has been made in the City of Buffalo, and across the State of New York, by many, many hard-working people."