Howard Zemsky, of ESD, in Buffalo (photo via the Governor's office)
Alain Kaloyeros, the former head of SUNY Polytechnic Institute heading to trial this month for alleged corruption, was known for his luxury sports cars, self-aggrandizing boasts, and awkward social media posts.
The new face of the state’s tech development projects, Doug Grose, strikes a different image: subdued, old-school business executive.
Coming after Kaloyeros’ fall from grace and amid twin corruption trials, Grose’s appointment seems aimed at assuring taxpayers that state government is turning a new page when it comes to investing public funds in ambitious research and business ventures.
Last month, Grose became president of the Fort Schuyler and Fuller Road management corporations -- the state entities at the center of the Kaloyeros bid-rigging and bribery case. The two nonprofits have doled out state grants and overseen projects spearheaded by Kaloyeros, who was empowered by Governor Andrew Cuomo, and will be merged to form a new organization, called NY CREATES. Grose will be president of that nonprofit body once the ongoing process is complete.
Empire State Development, the state’s main economic development agency, partnered with SUNY to form NY CREATES -- or New York Center for Research, Economic Advancement, Technology, Engineering and Science. The new organization filed its certificate of incorporation with the state last month and plans to file for 501(c)3 status, according to an ESD spokesperson. Since shortly after the indictments of Kaloyeros and other top Cuomo aides, associates, and donors, ESD was charged with overseeing the nonprofits associated with SUNY and the governor’s extensive economic development programming. It was a move announced by the governor in response to the scandals involving some of his signature projects.
After the November 2016 indictments of Kaloyeros, former Cuomo top aide and campaign manager Joseph Percoco, and others, Fort Schuyler and Fuller Road became synonymous with corruption, leading to the effort to rebrand and reorganize.
Fort Schuyler awarded multimillion-dollar contracts that Kaloyeros allegedly helped rig in 2013 so they went to major Cuomo campaign donors. Along with Fuller Road, which was not named in the Kaloyeros indictment, Fort Schuyler has overseen hundreds of millions of dollars in state investment in the governor’s economic development programs, namely the Buffalo Billion. Some of them have been associated with SUNY Polytechnic, an advanced science research institution founded by Kaloyeros, a physicist.
As NY CREATES launches and seeks to attract both trust and partners, Grose is seen at ESD and elsewhere as the right person for the job. He insists NY CREATES will bring transparency to the economic development programs under its umbrella. Those range from a $1.5-billion computer chip center in Utica to a sprawling $24-billion nanotechnology complex at SUNY Polytechnic in Albany.
“How I want to run this has the elements of a business, with sound fiscal and legal controls and a focus on return on investment,” Grose told Gotham Gazette in an interview.
Grose’s long resume includes a stint as executive vice president of NanoTech Resources in 2004. Kaloyeros, who oversaw growth in the nanotech complex at SUNY Polytechnic, was Grose’s boss at the time.
“My leadership style is quite different,” Grose said of Kaloyeros. “It’s much more, I’ll say, business-based, and you got rewarded or you got in trouble if you didn’t provide the return on investment made.”
Grose, 68, came out of retirement to helm NY CREATES, which he said will pay him $280,000 a year. ESD and SUNY leaders and the former president of Fort Schuyler and Fuller Road, Bob Megna, worked to draft Grose. His job will have a tighter focus than that of Kaloyeros, who made nearly $1 million per year helming all of SUNY Polytechnic.
“I didn’t come here, honestly, for financial reasons. I came here because of an allegiance that I have to New York State,” said Grose, who was raised in the Mohawk Valley and earned multiple degrees from Rensselaer Polytechnic Institute.
He previously held numerous roles in the upstate tech industry, often overseeing public-private partnerships.
In 1979, he began a more than 20-year-long run at IBM, where he was in charge of chip production at labs in East Fishkill and Vermont, according to the Times Union. He came back to the company in 2004, helping lay the groundwork for a public-private partnership that has seen IBM establish a large lab at SUNY Polytechnic.
Grose is also a former CEO of GlobalFoundries, one of the biggest semiconductor makers in the world. It began receiving state funds and tax breaks in 2006, under then-Governor George Pataki.
Empire State Development touts GlobalFoundries as a success story. The company, which runs a computer chip lab called Fab 8 in Saratoga County, has created 3,500 jobs, according to the Albany-based Center for Economic Growth.
Grose has kept a low profile throughout his career. That marks a strong contrast with Kaloyeros, who was was known to speed around Albany in a Ferrari Spider. “Dr. Nano,” as his license plate said, made immature Facebook posts and was known for braggadocio, as the New York Times pointed out in 2002. After a Gotham Gazette profile in 2015, spurred by reports that SUNY Polytechnic had been subpoenaed, Kaloyeros offered, then rescinded an interview, citing the “threat of jail.”
While Grose sought to distinguish his style from that of Kaloyeros, he also had praise for SUNY Polytechnic’s former leader.
“He was a visionary in terms of what he wanted to create and he had big ideas,” Grose said of Kaloyeros. “Many of them came true.”
Asked about improving transparency into Fort Schuyler and Fuller Road (and, soon, NY CREATES) projects, Grose noted steps that boards of those organizations took before he came on about a month ago.
They voted to voluntarily conform to the state’s Freedom of Information Law in 2016 and 2017. A bill ensuring that FOIL applies to agencies like Fort Schuyler has been introduced in the state Assembly, though it is currently stalled in the Governmental Operations Committee.
Cuomo, a Democrat, appoints the head of ESD, currently Howard Zemsky. The governor in the past pushed both more funding through Fort Schuyler and Fuller Road and resisted calls to increase transparency and oversight of their projects. He also appears to have a fairly tight grip over what legislation moves through the Democrat-led Assembly. A variety of accountability measures that have passed the Republican-controlled Senate are currently stalled in the Assembly.
However, hard numbers about Fort Schuyler and Fuller Road projects remain difficult to come by. Their websites do not detail how much money the state has actually invested in their projects so far, and they don’t show proof of job growth -- the stated goal of the those investments. One bill in the accountability agenda that has not moved through the Assembly is for a “database of deals” that would catalog such spending and its results across all state economic development programming.
Grose said NY CREATES will dispel the mystery. He said his approach is to make sure “there is no doubt about what an investment may be for and who’s involved and what the result is.” He did not provide specifics for what that will look like.
Asked how much debt projects under Fort Schuyler and Fuller Road have accumulated, Grose said, "I can't give you a sense. I have no context where I would say I've seen it all added up." Asked whether it would be fair to say the projects were facing hundreds of millions in debt, Grose replied, "I think that's an accurate portrayal." He added, "It’s related to building facilities in Albany. It’s basically paying back loans to build Albany campus facilities."
Cuomo has been keeping his distance from Fort Schuyler and Fuller Road and is yet to comment on NY CREATES. His office did not respond to requests for comment for this article.
Shortly after the criminal complaint against Kaloyeros became public, the governor announced that Empire State Development would assume oversight of all the projects under SUNY Polytechnic’s aegis.
"I want the taxpayers of New York to know that every dollar is guarded and guarded professionally,” Cuomo said in announcing the move in September of 2016.
However, government watchdogs have decried that change -- and the creation of NY CREATES -- as inadequate. To groups like Reinvent Albany, Cuomo is doing too little, too late.
“Ultimately, we would look at NY CREATES as shuffling around the deck chairs on the titanically confusing and corruption-prone apparatus that the state has created to hand out tax dollars,” said John Kaehny, executive director of Reinvent Albany, which closely tracks state economic development efforts.
He noted that Cuomo has blocked the reform legislation that includes a bill to restore the state comptroller’s power to pre-audit state contracts over $250,000 that flow through SUNY-affiliated nonprofits -- a power that was stripped by Cuomo and the Legislature in the governor’s first year in office, 2011. Comptroller Tom DiNapoli has repeatedly said it should be brought back.
“Whatever marginal gain comes out of this is going to be so tiny as not to warrant the pixels on the press release that will come from it,” Kaehny said of NY CREATES.
ESD argues that NY CREATES is not just a rebrand, but that it represents a new way of doing business that will be more transparent and less conducive to exploitation.
Government watchdogs say irrespective of the bureaucracy surrounding development projects, under the status quo, Cuomo ultimately calls the shots.
Grose said he will be answerable to the boards of Fort Schuyler and Fuller Road and, later, the board of NY CREATES; ESD is getting a say in who joins the board of the new organization, and Zemsky will serve as an “ex-officio” member. “I also report to the chancellor of SUNY as a direct boss,” Grose said.
Grose indicated his vision is at least as ambitious as Kaloyeros’ was -- even if it comes without the boasting.
Grose plans to expand the scope of the state’s public-private tech partnerships to include educational institutions outside SUNY Polytechnic -- and even in other states.
He said he will continue Fort Schuyler and Fuller Road’s focus on nanotechnology, and seek to further develop its work in photonics, tech dealing with data transfer through light waves.
“I haven’t really focused on what’s happened in the last 10 to 12 years,” he said, alluding to the scandals. “My view going forward is to focus on core objectives and develop strong partnerships that have the right agreements that back them up.”