Gotham Gazette http://www.gothamgazette.com/component/tags/tag/1250 Fri, 16 Nov 2018 10:00:23 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Alain Kaloyeros, Cuomo’s Buffalo Billion Star, Found Guilty on All Charges http://www.gothamgazette.com/state/7802-alain-kaloyeros-cuomo-s-buffalo-billion-star-found-guilty-on-all-charges http://www.gothamgazette.com/state/7802-alain-kaloyeros-cuomo-s-buffalo-billion-star-found-guilty-on-all-charges Kaloyeros Cuomo Buffalo Billion

Alain Kaloyeros (photo via The Governor's Office)


Alain Kaloyeros, the former president of SUNY Polytechnic Institute who spearheaded key pieces of Governor Andrew Cuomo’s vaunted Buffalo Billion economic revitalization program, was found guilty in federal court on Thursday of bid-rigging state contracts in favor of upstate firms whose executives were major donors to the governor’s campaign.

Following a trial that lasted just under a month, a jury found Kaloyeros guilty on charges of wire fraud and conspiracy to commit wire fraud in connection with two separate schemes in which he colluded with a prominent lobbyist to manipulate state contract bids. Prosecutors charged Kaloyeros with rigging requests for proposals (RFPs) to favor prominent executives from two specific firms -- Louis Ciminelli from Buffalo-based LPCiminelli, and Joseph Gerardi and Steven Aiello from Syracuse-based COR Development. Ciminelli, Gerardi and Aiello also stood trial with Kaloyeros and were found guilty on Thursday as well. The defendants are all expected to be sentenced in October.

Kaloyeros, who the governor praised in lofty terms when appointing him to lead the Buffalo Billion and over the course of subsequent years, conspired on the two schemes with the developers and Todd Howe, a now infamous lobbyist with close ties to Cuomo. Howe was the government’s star witness in another federal corruption case earlier this year involving former top Cuomo aide Joe Percoco, who was also convicted. COR executives Gerardi and Aiello were co-defendants in that trial as well.

Prosecutors in the Kaloyeros trial relied on email records that showed the eccentric tech guru plotted to ensure that LPCiminelli received a contract to construct a solar panel factory, which eventually ballooned in cost to $750 million, and that COR development was awarded more than $100 million to build a manufacturing plant and film studio. The bid-rigging was done in apparent effort to please Cuomo, though the governor himself was not accused of committing any crimes.

In a statement, Geoffrey Berman, the U.S. Attorney for the Southern District of New York, whose office prosecuted the case, expressed pride that the Kaloyeros verdict was just the latest successful conviction won by the office’s Public Corruption Unit, following the conviction of Percoco and former state Assembly Speaker Sheldon Silver. “The guiding principle of the Southern District holds that true justice can only be achieved through independence from politics or influence, and that has never been more important than today,” he said.

All of the cases were originally brought by former U.S. Attorney Preet Bharara, who was fired by President Donald Trump and celebrated the verdicts on Twitter, writing, “All four Buffalo Billion defendants guilty on all counts. Congratulations to the team at SDNY for continuing to strike big blows against corruption in New York State.”

The two corruption cases involving Percoco, Howe, and Kaloyeros, among others, have been a black eye for Cuomo, though he was never accused of criminal wrongdoing in either one, and his political opponents have repeatedly used them to criticize both the governor and the pay-to-play culture in state government. In a harshly worded statement following the verdict, actor and activist Cynthia Nixon, the governor’s Democratic primary challenger, scoffed at the governor’s proclaimed ignorance of Kaloyeros and Percoco’s misdeeds. “Andrew Cuomo is either corrupt or he is spectacularly incompetent,” Nixon said. “Either way, the facts from the trials of Joe Percoco and Alain Kaloyeros lead to only one conclusion: We can’t clean up Albany until we clean out the governor’s mansion. Nothing is going to change until we change who’s in charge.”

Cuomo, who has said that he has not followed the case closely, said in his own statement, “The jury has spoken and justice has been done. There can be no tolerance for those who seek to defraud the system to advance their own personal interests. Anyone who has committed such an egregious act should be punished to the full extent of the law." Cuomo did not mention anyone by name or promise any reforms. He has not followed through on several governmental and campaign promises he made when the scandal broke.

In response to the verdict, government watchdogs warned that the lax state regulations that allowed Kaloyeros’ criminal actions remain unchanged. A coalition of groups including Reinvent Albany, Citizens Budget Commission, NYPIRG, and Fiscal Policy Institute issued a statement repeating calls for “clean contracting” reforms, saying that “evidence introduced at the federal trial of Alain Kaloyeros, the governor's former nano-czar, and executives from LP Ciminelli and COR Development highlight the vulnerability of the state’s economic development programs to corruption and abuse.”

“The convictions in the ‘Buffalo Billion’ trial underscore the huge corruption risks that continue to plague Albany,” read a statement from the New York Public Interest Research Group. “The Governor 's failure to produce meaningful reforms, coupled with the Legislature's inability to come to an agreement on its own, highlight the failures of the state's elected leadership to grapple with unending scandals.”

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by Samar Khurshid, Senior reporter, Gotham Gazette
     

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Alain Kaloyeros, Cuomo’s Buffalo Billion Star, Found Guilty on All Charges Thu, 12 Jul 2018 04:00:00 +0000
Citing Broken Cuomo Promises, Nixon Unveils Campaign Finance Reform Plan http://www.gothamgazette.com/state/7746-citing-broken-cuomo-promises-nixon-unveils-campaign-finance-reform-plan http://www.gothamgazette.com/state/7746-citing-broken-cuomo-promises-nixon-unveils-campaign-finance-reform-plan cyn nixon cam fin plan unveils

Cynthia Nixon outside Tweed Courthouse (photo: Gotham Gazette)


Standing on the steps of the Tweed Courthouse in Manhattan, a symbol of corruption in New York government, Andrew Cuomo launched his run for governor eight years ago last month, vowing to clean up the rot in Albany. On Monday -- as the corruption trial of a close ally to the two-term governor began in federal court -- Cynthia Nixon, the actor and activist and Democratic primary challenger to Cuomo, stood at the same spot to criticize the governor’s broken promise and to propose a far-reaching plan to fight the graft and corruption that she says has become further entrenched under Cuomo’s tenure.

“Instead of taking on corruption in the state capital, Andrew Cuomo’s administration has taken it to new heights,” Nixon said at an afternoon news conference. “Cuomo’s two terms in office have been a greatest-hits reel of dysfunction, corruption, and pay-to-play politics. If Washington is a swamp, then Albany under Andrew Cuomo is a cesspool.”

Taking aim at the “legalized bribery” rampant in the state’s election system, Nixon proposed “Government by the People,” a 15-page plan to promote public financing of elections, close loopholes in state campaign finance laws, reduce pay-to-play in state contracting, and shore up independent ethics oversight of state government.

The plan also details many conflicts and corruption scandals that have emerged from Cuomo’s administration and political campaigns in recent years, while the announcement coincided with the start of the corruption trial of Alain Kaloyeros, the former SUNY Polytechnic Institute president who was charged with rigging state contracts under Cuomo’s signature Buffalo Billion economic revitalization program. Prominent real estate developers who are major Cuomo campaign donors are also charged in the scheme.

Nixon critiqued the “networks of vast wealth” and power that she said are necessary to run for office in New York and that historically shut out women and people of color. “Too many of the people in power, and the donors who keep them there, don’t want things to change,” she said, insisting that she can herald reforms as an “outsider” to Albany. New York is known to have porous campaign finance laws, which allow large individual and corporate contributions to candidates, alongside loopholes that effectively do away with those limits for entities that created multiple limited liability companies, each of which can give up to the individual corporate limit. There are also no “doing business” limits that would place restrictions on entities with or seeking government contracts.

By exploiting the current rules, Cuomo has raised many tens of millions of dollars over his handful of statewide campaigns, including his now third consecutive gubernatorial run. At the same time, the governor has expressed support for campaign finance reform, but seen almost no changes move through the Legislature. A pilot campaign finance program with public matching was passed in 2014, but quickly fizzled. In a statement, Abbey Fashouer, a spokesperson for Cuomo's campaign, claimed credit for the reforms that Nixon proposed. "We thank Ms. Nixon for her support for our reforms. Unlike others who claim to be good Democrats, the governor is 100 percent focused on flipping the State Senate to pass these important reforms to increase government transparency and accountability,” Fashouer said.  

Nixon’s plan envisions phasing in a voluntary statewide public financing system for elections, largely resembling the current program administered in New York City by the Campaign Finance Board, where small-dollar donations are incentivized with public matching funds. Some of Nixon’s ideas are nearly identical, proposing a 6-to-1 match for campaign donations up to $175 or a greater match of 9-to-1 for donations below $50.

Nixon proposed similar thresholds to qualify for public funds as those used in the city, including a minimum amount raised from a minimum number of contributors. Under her plan, for instance, a candidate for governor would have to raise at least $500,000 from a minimum of 5,000 contributors who gave at least $10. The plan proposes similar thresholds, with lower amounts, for the posts of lieutenant governor, attorney general, comptroller, state Senate, and Assembly.

The plan also brings individual contribution limits for all state offices in line with the $2,700 limit for members of Congress, for each of the primary and general elections. It would also require candidates to participate in a debate and return unspent public funds after satisfying a campaign’s liabilities.

Nixon proposes creating a new agency called the “Fair Elections Board,” with enforcement powers, to administer the program, with a seven-member board appointed by the governor, comptroller, attorney general, and each of the four legislative major-party conference leaders. The entire program would cost between $100 and $160 million for each four-year cycle, the plan estimates, and would be paid for by a “New York State Fair Elections Fund” with several funding sources.

Nixon also reiterated proposals that she has voiced over the last few months while pitching herself as the progressive alternative to Cuomo’s centrist politics. She said she would ban campaign contributions from companies or individuals who hold or are actively seeking state contracts. She has insisted that the state should do away with the so-called LLC loophole that allows limited liability companies with opaque ownership to donate virtually unlimited funds to candidates. She also said she would ban donations from political appointees, an apparent reference to a New York Times expose showing that Cuomo has loosely interpreted an executive order limiting donations that the governor can receive from appointees or their family members.

Throughout her campaign, Nixon has derided Cuomo’s reliance on wealthy donors -- over years the governor has raised more than $30 million in campaign cash available to his current campaign while Nixon has raised a little more than $1 million during her few months in the race -- and insists that his policies on everything from affordable housing to criminal justice are driven by fealty to those contributors. “When candidates have to start their campaigns from day one by asking the wealthy for contributions...the culture of pay-to-play becomes inescapable,” she said.

The upstart candidate’s plan would give more teeth to state watchdogs to fight corruption. Nixon promised to dissolve the state Joint Commission on Public Ethics -- which many have criticized for being beholden to the governor and generally ineffective -- and said she would empanel a new independent Moreland Commission to tackle corruption unlike the one convened and abruptly disbanded by Cuomo in his first term.

She also proposed giving the attorney general a “standing referral” to investigate corruption on an ongoing basis, something Cuomo called for during his time as AG but has not granted his successors in the post -- and said she would restore the comptroller’s oversight powers over various state contracts that was stripped by Cuomo and the Legislature in 2011. She said she would sign a “database of deals” bill that was recently passed by the Republican-led state Senate but has been held up by the Democrat-controlled Assembly.

Recent polls have shown that New Yorkers have jaded views of their state government, but also that Cuomo is in relatively strong position with less than three months until the Democratic primary. Nixon argued Monday that voters do care about honest government, though corruption is not generally seen as a winning focus issue, taking a back seat to “kitchen table” or “pocketbook” issues like jobs, education, and health care. Nixon did recently release her campaign platform on education, her top issue area of focus.

She also presented her campaign finance reform platform the same day that former Syracuse Mayor Stephanie Miner, a Democrat, announced she would run for governor this year as an independent, creating her own ballot line. Asked about Miner's candidacy, Nixon said that she is focused on winning the Democratic primary and understands Miner is running in the general election. She also called Miner "more of a moderate" and referred to herself as "definitely part of the progressive wing of the Democratic Party."

Nixon wasn’t the only candidate to use the Kaloyeros trial as the backdrop to pounce on the governor’s record. On Monday morning, outside federal district court just around the corner, Dutchess County Executive Marc Molinaro, the Republican nominee for governor, and his lieutenant governor running mate, Julie Killian, called out the governor for enabling Kaloyeros’ corruption.

“Every instance of corruption and corruption charges being brought against individuals around New York’s corrupted government is about enabling and benefitting a governor who has consumed an obscene amount of campaign contributions,” Molinaro said.

Zephyr Teachout, who unsuccessfully challenged Cuomo in the 2014 Democratic primary and is now running for attorney general, also held a separate news conference outside the court. The Kaloyeros trial, she said, highlights the need for an independent attorney general willing to challenge the state’s top elected official and root out graft. “When people break the law in New York state, even if they are powerful people, it is the job of the attorney general to make sure that justice is done,” she said.

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by Samar Khurshid, Senior reporter, Gotham Gazette
     

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Note - This article has been updated with comment from a Cuomo campaign spokesperson. 

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Citing Broken Cuomo Promises, Nixon Unveils Campaign Finance Reform Plan Mon, 18 Jun 2018 04:00:00 +0000
Buffalo Billion Trial Begins with Differing Portraits of Former SUNY Poly Mastermind http://www.gothamgazette.com/state/7747-buffalo-billion-trial-begins-with-differing-portraits-of-former-suny-poly-mastermind http://www.gothamgazette.com/state/7747-buffalo-billion-trial-begins-with-differing-portraits-of-former-suny-poly-mastermind cuomo and kaloyeros walking

Gov. Cuomo & Alain Kaloyeros (photo: The Governor's Office)


Lawyers presented starkly different portraits of Alain Kaloyeros, the former head of SUNY Polytechnic Institute, in opening statements of his corruption trial at federal court in Manhattan on Monday. Critics say the case -- and the related trial of Joseph Percoco, a longtime aide to Governor Andrew Cuomo found guilty in March of taking bribes -- show the governor’s multimillion-dollar economic development projects were fundamentally corrupt.

Kaloyeros rigged bids for development projects to avoid losing his job, expand his influence, and gain a promotion, Assistant U.S Attorney David Zhou argued.

“Kaloyeros decided that the rules didn’t apply to him, so he cheated and he lied to get the results he wanted,” the prosecutor said as Kaloyeros, sporting a blue suit and stubbly beard, sat at the front of the courtroom.

On the contrary, defense lawyer Reid Weingarten sought to depict Kaloyeros as a visionary who had personal flaws but committed no crimes.

“In truth, he’s not a saint. He’s a very, very complicated guy,” Weingarten said, adding that Kaloyeros, a physicist, had “wrought miracles” launching major tech projects in Albany. “What this case is about is the desire of Governor Cuomo to bring [Kaloyeros’] miracle to upstate New York.”

Federal prosecutors say Kaloyeros schemed to make sure a nonprofit charged with overseeing a huge swath of Cuomo’s development projects favored companies run by major Cuomo donors -- Louis Ciminelli of Buffalo-based LPCiminelli, along with Steven Aiello and Joseph Gerardi of Syracuse-based COR Development. The executives, who are on trial alongside Kaloyeros, have also pleaded not guilty to fraud charges; Gerardi is also accused of lying to FBI agents. Cuomo is not accused of criminal wrongdoing, but critics say that the Democratic governor knowingly presided over programs with insufficient checks and transparency, pushing through state funding, stripping the Comptroller of audit powers, and empowering Kaloyeros and others to run wild while his campaign coffers filled.

The prosecution’s case appears to hinge in large part on emails between Kaloyeros and the developers that allegedly show they conspired to rig the bids starting in 2013. LPCiminelli won a contract for a solar panel factory in Buffalo, as part of the governor’s Buffalo Billion program, the cost of which eventually rose to $750 million; while COR Development won contracts for a $90 million manufacturing plant and $15 million film studio, the latter of which the state recently sold for $1 after years of floundering.

Prosecutors say Kaloyeros ensured inclusion of measures like requiring the winner of the Buffalo request-for-proposals (RFP) to have 50 years of experience in an effort to ensure LPCiminelli would be the only company to even qualify to bid. In one email, he allegedly promised to “fine tune the development requirements” to guarantee only LPCiminelli could win, Zhou said on Monday.

However, Weingarten argued that emails between Kaloyeros and his client were perfectly legal.

He said for a nonprofit like the one doling out the upstate development grants, called Fort Schuyler Management Corporation, “the procurements can be any way you want them to be.” Weinstein added that the RFPs in the Kaloyeros case followed all procurement rules set by the federal government, Albany, and SUNY, which helped oversee the projects.

While Zhou highlighted Kaloyeros’ use of his personal email address instead of his SUNY account -- instructing one of his alleged collaborators, “please gmail, not email” -- Weinstein seemed to shrug off the matter.

It's "almost a sport in New York State government to put things on your private email so reporters can't get them,” the defense lawyer said.

Monday’s opening statements suggested the role of Todd Howe will be another turning point in the case.

Kaloyeros hired Howe, an Albany lobbyist and longtime member of Cuomo’s inner circle, to help work on the development projects -- and, prosecutors say, maintain friendly ties with Cuomo. Howe made a plea deal with the government, but is not expected to testify in the Kaloyeros case after he was arrested on new charges in the middle of the Percoco trial, where he was the government’s star witness.

Prosecutors say Howe helped Kaloyeros transform a SUNY college for nanotechnology into the sprawling SUNY Polytechnic Institute in Albany, where Kaloyeros launched an array of ambitious public-private tech partnerships in addition to the LPCiminelli and COR Development projects.

“Kaloyeros developed a strong relationship with the governor’s office after he hired a lobbyist named Todd Howe for SUNY,” Zhou said. “Howe was the key to the governor’s office.”

Weingarten and the other defendants’ lawyers assailed Howe’s credibility. “He was a master criminal,” Weingarten said of Howe. “He deceived virtually every relevant person in this courtroom.”

Lawyers for Aiello, Ciminelli and Gerardi echoed Weingarten’s lines of reasoning. Discussing Aiello and Ciminelli, Aiello’s attorney Steve Coffey said they “hardly knew each other in 2013.”

“What they have in common is they’re developers. And they’re Italian,” though he said no more about their heritage.

Cuomo previously said Percoco, who was found guilty of taking bribes in exchange for preferential treatment for developers, was like a brother. And the Kaloyeros trial centers on the governor’s most vaunted development programs -- Cuomo regularly heaped praise on Kaloyeros and ensured that he had a great deal of power. But prosecutors have not implicated Cuomo in any of the alleged crimes.

However, his political opponents were quick to link him with the Kaloyeros trial on Monday.

Cuomo’s Democratic primary opponent, Cynthia Nixon, referenced the trial repeatedly as she unveiled a campaign finance reform agenda from the steps of the Tweed Courthouse, where Cuomo had promised eight years ago to clean up state government.

“Despite others’ attempts to politicize, the US Attorney and Judge have repeatedly said that campaign contributions were not unlawful and were not part of the alleged criminality,” Cuomo campaign spokesperson Abbey Fashouer said in an emailed statement.

“Cuomo has enabled individuals who think that they must peddle influence and peddle resources and sell out New Yorkers to the highest bidder,” Marc Molinaro, the Republican nominee for governor, said outside the federal courthouse during a morning press conference.

Zephyr Teachout, who previously ran against Cuomo for governor and is now running for attorney general, spoke to reporters just ahead of Molinaro.

“This trial illustrates that we have an underlying corruption and ethics emergency in New York State,” she said. “This trial shows the ways in which corruption impacts people’s lives.”

Asked for comment on the trial, the campaign of New York City Public Advocate Letitia James, who is also running for state attorney general but is aligned with Cuomo, issued a statement touting James’ past anti-corruption work.

“Any act of corruption in government betrays the people of the state of New York and cannot be tolerated,” James spokesperson Delaney Kempner said in the statement. “As Attorney General, Tish will deploy the full arsenal of weapons at her disposal to fight corruption and will never shy away from tackling illegal behavior in government.” The statement did not directly address the Kaloyeros case.

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by Shant Shahrigianh, Gotham Gazette
      

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Buffalo Billion Trial Begins with Differing Portraits of Former SUNY Poly Mastermind Mon, 18 Jun 2018 04:00:00 +0000
State-Backed, Scandal-Plagued Entities Seek New Chapter http://www.gothamgazette.com/state/7732-state-backed-scandal-plagued-entities-seek-new-chapter http://www.gothamgazette.com/state/7732-state-backed-scandal-plagued-entities-seek-new-chapter govcuomo roswell

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.

Recent months have seen Fort Schuyler and Fuller Road open their meetings to the public, and they have begun posting recordings of their sessions to YouTube.

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.”

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by Shant Shahrigianh, Gotham Gazette
      

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State-Backed, Scandal-Plagued Entities Seek New Chapter Tue, 12 Jun 2018 04:00:00 +0000
Post-Percoco Conviction, Kaloyeros Trial Likely to Further Stain Cuomo Administration http://www.gothamgazette.com/state/7558-post-percoco-conviction-kaloyeros-trial-likely-to-further-stain-cuomo-administration http://www.gothamgazette.com/state/7558-post-percoco-conviction-kaloyeros-trial-likely-to-further-stain-cuomo-administration Alain Kaloyeros

Alain Kaloyeros (photo: The Governor's Office)


Following the recent conviction of Governor Andrew Cuomo’s longtime aide Joseph Percoco on corruption charges – a humiliating blow for a governor who once campaigned on a promise to reform Albany – Cuomo quickly sought to shift attention from the executive to the legislative branch.

A day after Percoco was convicted of fraud and soliciting bribes, Cuomo called for ethics reform – in the Assembly and Senate.

“The single best ethics reform, which makes everything else moot, is no outside income in government,” he said, pointing to the State Legislature. Jobs there are considered part-time and outside income is allowed, though the Percoco trial had nothing to do with legislators’ outside income.

Cuomo called Percoco’s behavior an “aberration” for those in his administration, and said he himself was not mentioned at the trial; in fact, Cuomo’s name or title was invoked hundreds of times. The governor has sought to quickly put the Percoco news behind him, though there are a number of unanswered questions about what Cuomo either allowed to occur under his watch, didn’t know about, or empowered Percoco to do.

Just on the horizon, too, is the trial of Alain Kaloyeros, scheduled to start June 18, proceedings sure to raise further questions about the governor’s leadership and deepen the stain on the Cuomo administration. Valerie Caproni, the same judge who presided over the Percoco trial, will oversee the Kaloyeros case.

Kaloyeros, the eccentric scientist whom Cuomo empowered to lead key parts of his Buffalo Billion revitalization initiative, is accused of bid-rigging to help developers who donated to the Cuomo campaign. Expect the trial -- which also includes alleged Kaloyeros co-conspirators -- to reveal even more damning details about how members of Cuomo’s inner circle doled out hundreds of millions of dollars through Buffalo Billion.

Cuomo announced the initiative in 2012 in hopes of revitalizing the western New York city’s struggling economy.

“The billion dollars was important for shock and awe value,” the governor said as Buffalo Billion projects got underway. “They were so down, and they had heard everything for so long, and they were so distrustful that I needed to say something that would actually get their attention and allow them to think, ‘Maybe it’s different this time.’”

Though the biggest Buffalo Billion project, a solar panel factory called SolarCity, is at the center of the Kaloyeros trial, Cuomo recently launched a sequel called Buffalo Billion II that will focus on small- and medium-sized manufacturers.

The Kaloyeros trial could shed more light on an alleged pay-to-play culture in which developers were rewarded after donating to the governor, a key aspect of the Percoco trial.

Further, for all the attention Kaloyeros received during his years as a flamboyant tech-industry pioneer, there’s the question of why he allegedly helped rig bids to ensure major campaign contributors won state contracts – without being accused of taking bribes himself. The trial might provide answers about that, too.

The federal corruption investigation prompted Kaloyeros to resign as president of SUNY Polytechnic Institute in October. Prior to the scandal, he had gained notice for bringing expensive tech projects to the state starting during the Pataki administration. Kaloyeros’ ostentatious public profile, replete with luxury sports cars and awkward social media posts, drew bemused coverage from newspapers; The New York Times dubbed him “a dapper dervish of a scientist” in 2002. His knack for persuading huge companies to invest in the state led Cuomo to call him “the closest thing to a genius I’ve ever worked with.”

For his part, Kaloyeros was never modest about his work.

“The job requires being a scientist, being a psychiatrist, being a priest, being a cop, being a negotiator, being a business developer or manager, being a teacher, being an adviser and being an ego-kisser,” he said in 2011. “I’d like to think I do all of them very well.”

John Kaehny, executive director of Reinvent Albany, said Kaloyeros “stands out as a much more independent figure than Percoco.”

“He had his own aspirations as an empire-builder and his own vision of these gigantic multibillion-dollar chip factories that were going to spur a manufacturing renaissance,” Kaehny explained.

Kaloyeros allegedly collaborated with Albany insider Todd Howe, who made a plea deal in the Kaloyeros and Percoco cases, to rig bidding for hundreds of millions of dollars’ worth of state contracts.

The indictment from the U.S Attorney for the Southern District of New York describes a scheme in which two companies – COR Development and LP Ciminelli – paid thousands of dollars in bribes to Howe. In exchange, he and Kaloyeros allegedly ensured that the developers won a range of lucrative contracts – a $15 million film studio and a $90 million manufacturing plant for COR Development; and a $225 million solar panel plant for LPCiminelli, with the cost eventually rising to $750 million, according to the indictment. All of it came from taxpayer dollars allocated toward Cuomo’s signature economic development programs.

Last week, COR Development’s President Steven Aiello was found guilty of his role in the Percoco case, while the company’s general counsel Joseph Gerardi was found not guilty. LP Ciminelli executives did not face charges in that trial. The dollar figures in the Kaloyeros trial are much larger than those in the Percoco matter. The program at play, Buffalo Billion, is inextricable from Cuomo’s record as governor, unlike anything involved in the Percoco trial – except Peroco himself and the state’s porous campaign finance system.

The indictment notes that Kaloyeros hired Howe as a consultant at the College of Nanoscale Science and Engineering (CNSE), which later became SUNY Polytechnic, as the college was crafting requests for proposals for the development projects in 2013. COR Development and LP Ciminelli allegedly made its bribes to Howe, disguised as consultancy payments and bonuses, around the same time.

The nature of the relationship between the scientist and the former lobbyist, a longtime Cuomo ally and operator in the upper echelons of state government in spite of a 2010 bank fraud conviction,  could come into sharper focus during the upcoming trial.

“The question is why exactly did Kaloyeros hire Howe, what was Howe’s role and what was Howe telling Kaloyeros to do?” said Kaehny, whose organization closely monitors state government spending. “That’s what we’ll be looking for.”

It is also not entirely clear what Kaloyeros, who was not charged with receiving bribes himself, hoped to get out of the alleged scheme. Mention of Kaloyeros’ possible motives is limited to a single sentence in the 79-page indictment:

“For his part in the scheme, Kaloyeros was able to maintain his leadership position and substantial salary at CNSE and garner support from the Office of the Governor for projects important to him, including the creation of SUNY Poly.”

Blair Horner, executive director of NYPIRG, another good government group, speculated that Kaloyeros’ role in the alleged scheme could come down to love of his work.

“He was the highest paid staff person in the state, probably in the history of the state,” Horner said, referring to Kaloyeros’ combined annual salary of more than $800,000. “It wouldn’t surprise me if it turned out he loved what he was doing and did not want to lose it,” he added, emphasizing that the charges remain to be proven.

Thus far into the corruption scandal, both prosecutors and journalists have mostly focused on the alleged bribery, the players involved, and their ties to Cuomo.

But the investigation also raises questions about apparent favoritism for developers who gave big to Cuomo’s campaign accounts.

The indictment notes that Howe and Kaloyeros allegedly began crafting bids to favor COR Development and LP Ciminelli in 2013, after the governor had launched his Buffalo Billion initiative and executives from the companies “had each made sizable contributions to the Governor.”

The indictment does not detail the contributions, and none of the federal charges against Kaloyeros or the other defendants appear to directly stem from campaign finance law.

However, the investigations prompted Cuomo’s reelection campaign to “set aside” a total of roughly $350,000 in contributions from COR Development and LP Ciminelli. Last fall, a Democratic official told lohud.com the move would enable authorities to recover the funds, pending the outcome of the trials.

Discussing COR Development and LP Ciminelli’s campaign contributions, Kaehny said, “It’s fairly shocking that a business or a group could donate essentially unlimited amounts of money to the governor and legislature while they’re trying to get state contracts or state grants.”

“The [Percoco] trial spotlights state laws that are so weak that what’s unethical is legal,” he added. New York State has no “doing business” restrictions on campaign donations. In New York City, entities on the “doing business” list are limited to about $400 in donations to an individual candidate.

Government watchdogs, and a few elected officials, hope the trials will give renewed momentum to long-stalled proposals for a range of reforms.

“I think the most important questions are ones not only about how the state can prevent future wrongdoing, but also what investments make sense for the state going forward, which may or may not come out” of the trials, said David Friedfel, director of state studies for the Citizens Budget Commission. Corruption or not, there have been ongoing questions about the Cuomo approach to economic development spending.

Reinvent Albany, NYPIRG, and other watchdogs have long called for tighter controls on campaign contributions, including closing the so-called LLC loophole, which featured prominently during the Percoco trial. It emerged that developers were encouraged to donate heavily to Cuomo, through several limited liability corporations that would help mask the contributors.

Good government groups also emphasize the need for greater transparency for state spending, through measures like restoring the state comptroller’s power to pre-approve contracts. Cuomo and legislative leaders took away that power in 2011.

Additionally, watchdogs hope the trials will boost support of a proposed “Database of Deals” that would list all state projects awarded to companies and detail the return on investment to taxpayers.

Robin Schimminger introduced the Assembly bill to create the database. Asked about Percoco’s recent conviction and the upcoming Kaloyeros trial, the Buffalo-area Democrat took a wide view.

“The most important thing is that when people serve in government, they have a moral compass,” he said. “If people don’t have that compass, they’re going to go astray.

“However, there are things the state could and should be doing to deter and make it more difficult for those actions to occur. Those are actions that enhance transparency and accountability.”

While Cuomo has a long list of ethics reforms again in his platform this year, including closure of the LLC loophole, he has not been outspoken in pushing for them.

The governor’s campaign finances will again be on the stand, so to speak, during the Kaloyeros trial, which will begin as election season is heating up, with spring party nominating conventions.

Cynthia Nixon’s dramatic entrance into the gubernatorial race, challenging Cuomo in this year’s Democratic primary, included a focus on corruption. She named Percoco from the podium at her launch event in Brooklyn on Tuesday, leveling a variety of blistering criticism at the governor.

Nixon is likely to have ample opportunity to connect Cuomo to the trial, as will other gubernatorial candidates, like expected Republican nominee Marc Molinaro, currently Dutchess County Executive.

Whatever the long-term consequences of the Kaloyeros trial, observers expect it to go more smoothly than the Percoco case, in which jurors were deadlocked twice before reaching guilty verdicts on some of the counts.

Discussing the Kaloyeros case, Kaehny said, “It’s simpler, more straightforward, and the email evidence is quite strong in favor of the prosecution.”

***
by Shant Shahrigianh, Gotham Gazette
      

Read more by this writer.

Ben Max contributed to this article.

Note: this article has been updated to reflet the Kaloyeros trial being moved back one week, to a June 18 start.

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Post-Percoco Conviction, Kaloyeros Trial Likely to Further Stain Cuomo Administration Wed, 21 Mar 2018 04:00:00 +0000
DiNapoli, Seeking Restored Power, Points Finger at Only the System http://www.gothamgazette.com/state/6577-dinapoli-seeking-restored-power-points-finger-at-only-the-system http://www.gothamgazette.com/state/6577-dinapoli-seeking-restored-power-points-finger-at-only-the-system DiNapoli speech charts

Comptroller DiNapoli (photo: @NYSComptroller)


Comptroller Tom Dinapoli is not interested in pointing fingers at any of his fellow elected officials when it comes to the massive scheme alleged to have corrupted major state economic development programs under the noses of Governor Andrew Cuomo and state legislators.

In the wake of corruption charges brought against nine individuals by U.S. Attorney Preet Bharara, DiNapoli was given multiple opportunities Friday during a radio interview, but he declined to criticize either Cuomo or the Legislature. Speaking with host Susan Arbetter on The Capitol Pressroom, DiNapoli instead called for greater oversight through his office of the large state contracts that had been awarded by SUNY Polytechnic and two affiliated nonprofits as part of Cuomo’s Buffalo Billion program and other state efforts to boost the economies of central and western New York.

Calling the bribery and bid-rigging allegations “very troubling,” DiNapoli said that the situation “seems to speak to a systemic failure, as to not having adequate checks and balances.” But asked by Arbetter if Cuomo helped create the system that was so ripe for abuse, DiNapoli demurred. After pausing and searching for his words, DiNapoli said, ”I don’t know that it’s productive to, you know, finger-point at the governor.”

The comptroller repeatedly said that the system lacked oversight and accountability, but excused the mindset behind its creation, saying that communities needed help and that he understood the desire for efficiency in moving money to projects meant to stimulate local economies that had not recovered from the Great Recession. His office, he said, is designed to approve contracts and is incorrectly known for slowing down the process -- when his office does slow something down, DiNapoli said, it is for good reason.

In September, Bharara brought charges against former Cuomo aides, prominent developers who were generous Cuomo campaign donors, and the now former head of SUNY Poly, Alain Kaloyeros, on whom Cuomo heaped praise and responsibility over years.

When Arbetter pressed DiNapoli on Cuomo and the Legislature enabling SUNY Poly and the system that appears to have been abused by what the comptroller called “a web” of stakeholders, DiNapoli again struggled to find his answer, then said, “From my perspective there was not adequate oversight in the way the process was set up, both with SUNY Poly and with the use of Fuller Road or Fort Schuyler, these nonprofits that were set up.” He pointed to the fact that the Comptroller’s oversight of construction contracts was diminished in 2011 and called for it to be restored.

Later in the interview, Arbetter asked DiNapoli why the Legislature, which he was once part of as an Assembly member, had been so quiet about the questionable system at play. DiNapoli began answering by saying officials were trying to help downtrodden communities, that there was consensus “we need to do more.”

“There is a hopeful expectation that it’s all going to be handled in the right way,” DiNapoli said of the mindset when a key priority is established by state government. Arbetter asked, “So lawmakers don’t want to get in the way?” To which DiNapoli said, “Well, unless there’s a reason to. In fairness, you did have the hearing that the economic development committee had in the Assembly and some fireworks came out of that.”

DiNapoli was referring to a recent hearing that came well after media reports of the federal investigation into the Buffalo Billion and years after flags were raised by watchdogs about the system at hand.

After Arbetter pushed back further, DiNapoli conceded, “Well, I think clearly that there’s more that could have been done, more questions asked...Clearly the lesson of this is that you can’t just trust that it’s all going to be handled in the right way.”

“I think the Legislature does have to play a more effective role in oversight,” DiNapoli said. DiNapoli's office did not provide further comment when asked on Sunday to clarify why the comptroller was hesitant to more directly hold anyone accountable.

When Cuomo and the Legislature stripped power from the Comptroller in 2011, they left the independent auditor’s office on the sidelines as hundreds of millions of tax dollars flowed to developers and other corporations through SUNY Poly. It was this cash flow, the opaque contracting process, and the state’s loose campaign finance laws that helped allow former Cuomo aides Joseph Percoco and Todd Howe to manipulate the system for their means, according to Bharara’s allegations.

While DiNapoli has called for restoration of all contract vetting powers before, he, like legislative leaders, has largely been quiet as Cuomo and others have revved up economic development programming through a system some watchdogs have long warned can too easily be taken advantage of by nefarious actors.

A careful, serious elected official who is well-regarded by many across the state, DiNapoli, a Democrat like Cuomo, is not one to throw verbal bombs or pursue headlines. Not necessarily media shy, DiNapoli is, however, inclined to let his audit and contract oversight work do the talking.

Recently, DiNapoli was on the receiving end of Cuomo vitriol when the comptroller released audits of other Cuomo economic stimulus programs, calling into question their efficacy. In turn, Cuomo called audits “opinion” and said that DiNapoli needed to “educate himself,” referring to him as “the Assemblymember” in an apparent effort to undermine him further.

DiNapoli responded in typical fashion -- by downplaying conflict and pointing to the content rather than escalating the back-and-forth. An astute headline from Politico New York read, “Cuomo thunders, and DiNapoli shrugs.” It is unsurprising that DiNapoli took the path he did on Arbetter’s show, pointing toward the future and needed changes, rather than laying direct blame with the governor or legislative leaders for past mistakes.

In May, DiNapoli did announce a series of proposed “reforms to state fiscal practices” that he led with a call for restrictions on “‘backdoor spending’ by public authorities” and requirements for “more comprehensive public authority disclosure.” In a press release, DiNapoli’s office said that “public authorities are not subject to the same checks and balances that apply to state agencies, resulting in hundreds of millions of dollars being spent annually with limited oversight.”

The proposals also came after news reports of the federal investigation into Cuomo’s economic development programming.

Earlier in May, DiNapoli had released his analysis of the recently-passed state budget for Fiscal Year 2017. His office wrote, “the budget expands on actions in recent years that have blurred both fiscal and operational distinctions among state agencies and public authorities.”

Cuomo paid DiNapoli's May suggestions and analysis little public mind, but did announce plans for procurement reform in the wake of the September charges brought by Bharara. The day after the U.S. attorney outlined the criminal complaint, Cuomo said in Buffalo that the revitalization of the city would not miss a beat, but that he was immediately moving power from SUNY Poly to the Empire State Development Corp. Cuomo also said that he had received recommendations from a private investigator he had hired and that he was accepting all of them -- but he declined to make them public.

On Thursday budget and government watchdog groups called on state legislative leaders to “hold emergency oversight hearings on the allegations by the U.S. Attorney of the largest bid-rigging scandals in state history.” A coalition including Reinvent Albany, Citizens Union, NYPIRG, Citizens Budget Commission, and others said that the public deserves more information about how “more than a billion dollars in state contracts were rigged and what reforms will be implemented to address this huge and systemic failure.”

Asked by Arbetter about the call for such hearings, DiNapoli said no one should rush to do anything, that it is important for all the best minds to get together and figure out the path ahead. Noting that state legislators are focused on their impending elections next month, he said that if they want to hold hearings toward the end of the year, that would be “their prerogative.”

The watchdog groups on Thursday also laid out “five clean contracting reforms” including that all state funds be awarded through “competitive and transparent contracting” and empowering “the comptroller to review and approve all state contracts over $250k.” Additionally, they called on the state to enact “pay to play” laws as are found in 19 states and New York City that would limit what entities with state business can donate to political campaigns.

DiNapoli appears to be largely on the same page. The comptroller has not been aggressive about publicly pushing his reforms, though -- while he gave a speech in May to outline his proposals, he has not, for example, called a press conference to put more public pressure on lawmakers to act.

When asked by Arbetter what he could have done differently to protect against the type of corruption alleged by Bharara, DiNapoli said he could have been more aggressive, but focused more on his “limited authority.”

“I would hope the Legislature would look at our role, restore what’s been taken away...perhaps some areas where our role can be strengthened,” he said. When Arbetter asked if he’s going to be more aggressive, DiNapoli paused and said, “We will certainly be more vigilant.”

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by Ben Max, Gotham Gazette
     

Read more by this writer.

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union.

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DiNapoli, Seeking Restored Power, Points Finger at Only the System Sun, 16 Oct 2016 04:00:00 +0000
For Review, Cuomo Chooses Outside Agent Over Existing State Investigators http://www.gothamgazette.com/state/6377-for-review-cuomo-chooses-outside-agent-instead-of-existing-state-investigators http://www.gothamgazette.com/state/6377-for-review-cuomo-chooses-outside-agent-instead-of-existing-state-investigators schneiderman cuomo moreland corruption

Scheiderman, left, & Cuomo, center (photo via The Governor's Office on Flickr)


More than a month after Governor Andrew Cuomo announced that Bart Schwartz, a former federal prosecutor, would head an “independent investigation” into the Buffalo Billion economic development program, it remains unclear whether Schwartz has begun his work and the governor has repeatedly said that his contract with the state is still being finalized. The Buffalo Billion project and other pieces of Cuomo’s economic development programs have drawn scrutiny from the U.S. Attorney and Attorney General Eric Schneiderman due to allegations including bid-rigging that favored large Cuomo donors.

This past week, the State Inspector General’s office issued a report on the source of a leak about an investigation into Mayor Bill de Blasio’s fundraising practices at the State Board of Elections. By all accounts the investigation was conducted expeditiously.The Joint Commission on Public Ethics is also involved in a de Blasio matter as it probes his allies’ lobbying practices. These matters, not to mention the existence of the Attorney General and Comptroller, make it clear that state government already has a number of investigative bodies that would not have required extended contract negotiations and monetary compensation to conduct an investigation of the Buffalo Billion. But, Cuomo decided not to call on an existing investigative body to look at all aspects of his major economic development programs.

Gov. Cuomo’s office did not respond to questions about why an existing agency was not selected. Schwartz’s office declined to respond to questions about whether he had a contract and how many staff he would bring to his review of state economic development programming.

Schwartz’s role is murky given that the U.S. Attorney and Attorney General are now both pursuing widespread investigations. It is unclear what he can do investigatively that won’t interfere with active probes. Government watchdogs say that Schwartz’s appointment would have had an impact when concerns about the bidding process were initially raised, but at this point many believe Cuomo is simply trying to obscure the scope of the federal probe and claim high ground as state integrity is questioned.

“Schwartz’s investigation was triggered by a criminal probe. If he had been brought in years ago, that would have been a different thing,” said John Kaehny, executive director of Reinvent Albany.

Jennifer Rodgers, a former federal prosecutor and head of Columbia Law School’s Center for the Advancement of Public Integrity sees value in Schwartz’s hiring. “There are two things Bart Schwartz brings to the table: independence and resources,” Rodgers said.

“JCOPE is constantly tagged as not independent, and the state IG is ostensibly independent although appointed by the Governor,” noted Rodgers, adding that Schwartz’s firm, Guidepost Solutions, “has all the experts he might need to examine such a complex system: lawyers, former law enforcement officials, computer people - people with a set of skills that the IG and JCOPE would be hard-pressed to bring together.”

While Cuomo has said Schwartz will take a soup-to-nuts approach to his review, no one will know exactly what he is tasked with and how his work will be done until his contract is finalized and made public.

Schwartz’s firm details its approach to internal investigations on its website:

“Guidepost Solutions is frequently called upon by businesses to conduct internal investigations into allegations or suspicions of corrupt or fraudulent conduct by employees. We rely upon our full-time staff of attorneys, forensic accountants, research analysts, field investigators and computer forensics experts to staff these assignments, and we work collaboratively with our business clients to develop an investigative plan that is appropriate to the suspected misconduct...Since most of our investigative professionals have had experience in federal, state and local law enforcement—as prosecutors, auditors and agents—our investigative strategies are developed with an understanding of the evidence that may be needed to support an eventual criminal prosecution.”

The section goes on to state that the team is “equally sensitive to matters of confidentiality and public perception.”

Blair Horner, legislative director of the New York Public Interest Research Group (NYPIRG), said that Gov. Cuomo had a full menu of options to choose from before even considering Schwartz. “The governor had a toolbox he could have gone to to review this, but instead he went out and bought a new hammer.” Critics of the state's approach to economic development, including the Buffalo Billion, have repeatedly said that the state Comptroller should have more oversight of contracts and spending - something Comptroller Tom DiNapoli recently addressed in a series of proposals.

Horner said that the arrangement with Schwartz could technically allow Cuomo to address issues faster than if the IG’s office was investigating.

“Schwartz reports directly to him, so in theory it would all happen faster, although the IG did just turn a report around in a few weeks,” said Horner, referring to the investigation of the BOE leak. “The IG would have to issue a report and the IG would have to act.”

In other words, if the IG’s office was investigating the case the governor wouldn’t be able to fix anything until after a report was released, and the IG would have to recommend actions to be taken, which could include civil cases or referrals to law enforcement agencies for violations of the law, according to New York Executive Law section 53.

The Cuomo administration has said Schwartz will have the ability to review contracts and control cash flow, while also looking for larger fixes to the system, giving him a more proactive role than standard investigators. In an April 29 statement announcing his impending hire, Schwartz said that given the investigation and the administration’s desire to keep the Buffalo Billion program running, “they have asked me to commence an immediate review of all grants and approvals – past, current and future – in certain programs and operations,including the Buffalo Billion/Nano Economic Development Program.”

“It’s belt and suspenders, but I’d rather have it that way,” Cuomo told reporters in New York City last week, referring to redundancy and noting that he will consider making changes to economic development programs depending on the findings. Cuomo aides have periodically reminded reporters that Schwartz will also have direct approval of contracts and cash allocations. No one has confirmed whether Schwartz has indeed begun his work.

Last week, when asked if Schwartz’s report would be made public Cuomo appeared less sure of what Schwartz would be doing and admitted he had yet to secure a contract with him. “He is being hired as an independent to do an independent review,” said Cuomo. “I don’t know what his standard protocol is. I wouldn’t have a problem with [making his findings public], but I don’t know how he operates.”

Cuomo’s aides later clarified Schwartz’s report would be made public if it didn’t interfere with the U.S. Attorney’s investigation. It is unclear if there has been communication between Schwartz and U.S. Attorney Bharara’s office.

Kaehny of Reinvent Albany said he finds it a “stretch of the imagination” to think the governor could appoint someone to investigate the Buffalo Billion matter when the crux of the federal investigation appears to hinge on whether contracts were exchanged for major donations to the governor’s campaign.

“He could have asked the Attorney General and Comptroller to jointly choose an investigator and signed an MOU [memo of understanding] that would give them access to the documents they need. It would have been highly credible, people would believe it.” He noted that “most observers don’t think of the IG or JCOPE as independent” and so wouldn’t have the ability to “give the governor a clean bill of health.”

Rodgers said a joint investigation by Attorney General Eric Schneiderman and Comptroller Thomas DiNapoli, both Democrats like Cuomo who are known to have strained relationships with the governor, could have appeared independent but the relational friction could have prevented the governor from wanting to hand them the keys to his signature economic development program. She noted both offices would have the resources necessary for an investigation the scope of the Buffalo Billion.

The main question surrounding Schwartz’s usefulness in the matter remains exactly what Cuomo has tasked him with investigating. Cuomo has repeatedly said that Bharara’s investigation focuses on two men, longtime associates Todd Howe and Joseph Percoco, something disputed by those familiar with the investigation.

On Thursday Cuomo was asked whether he has been told by the U.S. Attorney’s Office that its probe focuses on only a few people. Cuomo said that he hadn’t but that he believes the actions of a few people are at issue.

“Our investigator will talk to hundreds of people, but it’s about the actions of several people,” Cuomo said, adding that he would consider changes to economic development practices if Schwartz’s indicates they are necessary.

“There are major question marks around the scope of his engagement and the access he will get,” Rodgers said of Schwartz. “He has the tools and independence, but what was he asked to do with them? That is why it's so important we see a contract.”

While Schwartz’s role has remained unclear, U.S. Attorney Preet Bharara’s investigation into alleged bid-rigging in Cuomo’s economic development initiative appears to be quickly expanding; last week the U.S. Attorney’s office and Attorney General Eric Schneiderman's office conducted a joint raid on the headquarters of SUNY Polytechnic, the organization that oversees Buffalo Billion contracting. The raid appeared partly targeted at the office of Howe, a Cuomo ally and lobbyist, who has lobbied the administration while also representing semi-governmental entities and remaining close with key players in the Cuomo administration.

A recent Wall Street Journal story revealed emails showing that Howe, someone Cuomo himself has said is a target of the probe, had a close hand in guiding SUNY Poly head Alain Kaloyeros as well as directing conversations with the governor’s top aides about how to do so. Cuomo insisted last month that he wasn’t close friends with Howe. On Thursday he said otherwise, telling reporters “I know Todd Howe. I’ve known him for many years. He worked for nano, he’s worked on a lot of these projects. But it’s also irrelevant. If anyone does anything improper, they will be punished to the fullest extent of the law, period.”

Kaehny said that Schwartz’s appointment has in a way already failed the administration. “The problem Schwartz faced from the very first moment is that his client is the governor, and the people targeted by subpoenas are extremely close to the governor,” said Kaehny, adding that it is hard to have faith in an investigation launched by the governor himself. However, it won’t be clear exactly what kind of investigation Schwartz is undertaking until his contract is made public, if one is indeed signed.

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

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For Review, Cuomo Chooses Outside Agent Over Existing State Investigators Sun, 05 Jun 2016 04:00:00 +0000
Role of Cuomo’s ‘Independent Investigator’ Remains Unclear http://www.gothamgazette.com/state/6363-role-of-cuomo-s-independent-investigator-remains-unclear http://www.gothamgazette.com/state/6363-role-of-cuomo-s-independent-investigator-remains-unclear cuomo purple tie

Gov. Cuomo (photo: Kevin P. Coughlin, Governor's Office)


In trying to stifle the blaze that has become U.S. Attorney Preet Bharara’s investigation into the Buffalo Billion economic development program, Governor Andrew Cuomo has repeatedly invoked the name of Bart Schwartz, a former federal prosecutor the administration has retained (or is in the process of retaining) to carry out an “independent” review of the project.

In acknowledging that people close to him were being investigated in relation to the Buffalo Billion, Cuomo announced Schwartz’s hire on April 29.

When the Public Authorities Control Board met this week and approved without debate another $485 million for a key Buffalo Billion project, the administration quickly reminded reporters that Schwartz would now provide another layer of oversight by considering approval of disbursement of the funds.

The day before, Cuomo told reporters he had yet to finalize Schwartz’s contract. The governor also appeared unsure whether Schwartz would make his findings public. Administration officials later clarified Schwartz would release his findings as long as doing so wouldn’t interfere with Bharara’s investigation, which appears to be focused on bid-rigging and a web of relationships among private and public entities.

Even as Schwartz’s presence is held up as a measure of confidence in the Cuomo administration and the state’s vast economic development apparatus, several questions about Schwartz’s role and power remain. These include whether Schwartz has already started his work; when his contract will be available to the public; if his efforts are duplicative of the U.S. attorney’s office’s; and what authority Schwartz will invoke to audit the nonprofits that oversee the Buffalo Billion, which are said to be independent from the Governor’s Office.

Both the Cuomo administration and Schwartz’s recently-hired public relations firm failed to respond to Gotham Gazette’s questions about Schwartz’s role.

“In the real world someone doesn’t start work before they have a contract,” said Blair Horner of The New York Public Interest Research Group.

In conjunction with Cuomo's office, Schwartz issued a statement April 29 detailing some of his plans and saying he would begin immediately.

“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,” Schwartz wrote, in apparent reference to Cuomo associates Joseph Percoco and Todd Howe.

“As the state needs to continue operating these important programs, they have asked me to commence an immediate review of all grants and approvals – past, current and future – in certain programs and operations including the Buffalo Billion/Nano Economic Development Program,” Schwartz wrote.

It remains unclear exactly what Schwartz will be reviewing and how he will conduct his work. Part of the uncertainty and unease around Schwartz’s role held by some stems from Cuomo’s messaging around the investigation and various long-standing concerns about the Buffalo Billion.

There are three major questions about the Buffalo Billion raised by watchdogs and, it seems, Bharara’s office: Was the contracting process designed to benefit Cuomo campaign donors? Did Cuomo loyalists use their connections to play both sides of the contracting process? Are SUNY Polytechnic, the college that oversees the distribution of Buffalo Billion funds, and its associated nonprofits doing enough to make sure corporations like SolarCIty make good on their jobs promises and other deliverables. SolarCity recently appeared to revise the number of jobs it expects to host in its Buffalo Billion-funded factory and pushed back the factory’s open date.

Cuomo himself appears to have introduced a fourth question, which goes something like: Did someone steal money? It's a question watchdogs see as misdirection given that many of them doubt any money was actually secretly taken by lobbyists or contractors - they are more concerned about contracts being awarded improperly.

While Cuomo is calling it a measure to ensure integrity, Schwartz’s appointment is seen as a smokescreen by many legislators and watchdogs who are concerned about the Buffalo Billion. The governor has continued to tell the press that the investigations by Bharara and Schwartz will examine the possible wrongdoing of “one or two” individuals while analysts say Bharara’s subpoenas indicate an investigation into systemic corruption.

“This is a major effort the state is running that is working extraordinarily well and is vitally important to upstate New York,” Cuomo told reporters in Syracuse on Wednesday of the Buffalo Billion. “There is no reason to stop investing in upstate New York, to hurt the upstate economy, because a couple of people may or may not have done something wrong.” He went on to say: “You have questions raised about the conduct of several individuals. That’s now being investigated by the U.S. attorney. We also started our own internal investigation by a former prosecutor.”

Cuomo has also said he will “throw the book” at anyone found to have violated the public trust, and that he holds every Buffalo Billion dollar as “sacred.”

Without seeing Schwartz’s contract it won’t be possible to ascertain what Cuomo has actually tasked him with investigating. It also won’t be clear what the public is actually paying him to investigate a project that watchdogs say should have already been monitored by the state Comptroller.

“It’s ironic that [Cuomo] has gone out and hired someone who apparently will have access to contracts and information that the Comptroller of New York, who is independent, doesn’t have access to,” said E.J. McMahon, president of the Empire Center for Public Policy. McMahon did note that Schwartz isn’t “political” or “one of the governor’s people,” though.

When Schwartz’s role was first announced on April 29, Cuomo Counsel Alphonso David said of the Buffalo Billion, “Any grants made by this program will be thoroughly scrutinized – past, current or future.” David’s statement accompanied Schwartz’s in the same release to the media.

Schwartz may indeed be performing duties that once belonged to the Comptroller, Thomas DiNapoli, who was formerly allowed to review SUNY and CUNY contracts. That ability was stripped by Cuomo and the Legislature in 2011. SUNY Polytechnic has created two nonprofits to distribute state cash to various economic development projects across New York.

John Kaehny of Reinvent Albany, a group that has been closely tracking the Buffalo Billion, said that it is unclear to him what problems the governor has asked Schwartz to examine, especially because Schwartz’s contract has yet to be made public. “Where is his contract? Exactly what does it say?” Kaehny asked, wondering whether Schwartz is focused on everyday expenditures or aspects of possible pay-to-play and conflict of interest in the awarding of contracts.

After news broke this month that Bharara had subpoenaed Cuomo’s office, DiNapoli unveiled a series of reform proposals that watchdogs say would upend how the Buffalo Billion is administered and overseen by the state. His plan would ban lump sum appropriations, create a council to plan capital spending, and require economic development program proposals to be scored and ranked in a public database.

“Public authorities are not subject to the same checks and balances that apply to state agencies, resulting in hundreds of millions of dollars being spent annually with limited oversight,” reads a release from DiNapoli’s office detailing the reforms. “DiNapoli’s proposal would require state-funded public authority projects to be scored and ranked using measurable and objective criteria. His proposal also requires more disclosure of public authorities’ spending and financing activities.”

DiNapoli also recently indicated that he may investigate parts of the Buffalo Billion.

“Why, other than Cuomo saying so and Schwartz saying so, is there any reason to think that Schwartz is completely independent of the governor's office?” asked Kaehny. “Schwartz is not a court appointed monitor, nor is he reporting to a board of directors. He is effectively reporting to a CEO with no board whose top associates are under federal investigation.”

Dick Dadey, executive director of government reform group Citizens Union, said it is critical for the integrity of Schwartz’s work to make the terms of his employment clear. “If this investigation is about transparency it should start by making this contract public to reassure people that there will not be a repeat of the Moreland Commission where the governor promised independence but abruptly shuttered it.”

Cuomo told reporters on Tuesday “We're doing a contract that's being finalized now. When it's finalized we’ll give it to you.” He added negotiations were about “the dollars.”

The use of nonprofits to disburse government funds has led many to question the application of state procurement rules requiring an open request for proposals process. The RFPs for two major Buffalo Billion projects appeared tailored for the two firms that won them, both of which donated generously to Cuomo.

Kaehny, in a press release, asked members of the Public Authorities Control Board, a five-member group appointed by the governor, four of whom are recommended by heads of the Legislature’s majority and minority conferences, that is tasked with approving funding for state economic development projects, to pose that very question in their meeting on Wednesday. It was not asked.

However, the Assembly Democrats' representative on the board said she was voting for disbursing the funds with several conditions of more transparency and oversight.

SUNY Poly has previously insisted that the nonprofits do abide by those rules.

“SUNY Poly and our related entities follow New York state government’s well-established and legally defined procurement procedures — to the letter,” David Doyle, a spokesman for SUNY Poly, told the Times Union in a September letter.

State Attorney General Eric Schneiderman’s office declined to comment on whether the office believes the law actually applies to the nonprofits.

For the first time, on Wednesday Cuomo denied having influenced the contracting process for the Buffalo Billion. “The way it worked...the state didn't do any of the contracts," Cuomo was quoted as saying by The Post Standard. "It's all done through SUNY, the state university system. They are the ones that actually managed the contracting process. They are the ones who ran the contracts, ran the competitions, made the selections," he said. "I had absolutely nothing to do with that. It was done by SUNY.”

However, as Cuomo distances himself from SUNY Poly and its decisions in contracting, his appointment of Schwartz brings into question just how much control the governor does have over the SUNY nonprofits. It appears, in a sense, by hiring Schwartz Cuomo is saying he has direct authority over all the entities involved despite legal and rhetorical framework painting them as independent.

Kaehny said he doesn’t believe Cuomo has “the legal authority” to direct the Empire State Development Corporation or SUNY’s nonprofits to allow Schwartz to review their contracts or approve them. “ESDC is a public authority with a legally independent board and the nonprofits also have legally independent boards,” said Kaehny. “If they want to vote to subject themselves to control by Schwartz, they could do that, but that would be abdicating their fiduciary duty to a consultant to the governor, which raises questions of separation of powers. Are these entities independent of the governor or not? If they are not, then why are they exempt from state contracting and conflict of interest rules?”

SUNY Poly and a representative of Fort Schuyler Management, one of SUNY Poly’s nonprofits that administers the Buffalo Billion, failed to return requests for comment on whether Schwartz had begun his work and whether the boards of Fort Schuyler Management and Fuller Road Management had decided to give Schwartz access to their decision making processes.

On Tuesday Cuomo was asked about the scrutiny of his use of nonprofits and whether he would consider changing the process. “What's interesting is that all predated me, right?” Cuomo said to reporters. “That went back to Governor Pataki, who was a saint. That was all in place and we used the existing mechanism; we did not design that mechanism.”

Watchdogs say this is another misdirection by Cuomo as the particular system he has used to expedite Buffalo Billion was pioneered by SUNY Poly head Alain Kaloyeros during Cuomo’s time in office.

“The governor said the structure was here when he got here,” said McMahon of the Empire Center. “That isn’t true. It was set up by a very ambitious college president [Kaloyeros] who wanted to expedite the construction of his empire. The governor has used it because he can get done what he wants to get done faster. It avoids the niceties that usually go into spending public money.”

Dadey said there should be no mistake that Schwartz’s full task is to examine systemic issues in the Buffalo Billion and not just look for possible wrongdoing. “The SUNY cartel is hard to follow and that is a problem. Bart Schwartz's task is not just to find out if someone did something wrong, but to examine this opaque system and suggest ways to improve it, so voters can have faith in it.”

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union.

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Role of Cuomo’s ‘Independent Investigator’ Remains Unclear Thu, 26 May 2016 04:00:00 +0000
IBM Hired Influential Lobbyist Months Before Securing Buffalo Billion Deal http://www.gothamgazette.com/state/6356-ibm-hired-influential-lobbyist-months-before-securing-buffalo-billion-deal http://www.gothamgazette.com/state/6356-ibm-hired-influential-lobbyist-months-before-securing-buffalo-billion-deal IBM sign

IBM (photo: Patrick via Flickr)


International Business Machines (IBM) has a long history in New York - its headquarters is located on the New York-Connecticut border in Armonk; it used to be one of the largest employers in the state; and it was part of a 2011 deal to bring $4.4 billion in investments to upstate New York through the creation of a high-tech computer chip manufacturing plant. The success of the company and the overall state economy have travelled similar paths, both flourishing at times, but when IBM laid off scores of employees, the state suffered.

Given its massive business interests it isn’t surprising that the company contracts with a host of New York-based lobbying firms. But IBM’s choice of a new firm in 2013 is raising eyebrows.

That year, as Gov. Andrew Cuomo ramped up his Buffalo Billion economic development program, IBM retained Whiteman Osterman & Hanna LLP. A few months later, IBM was part of a September 2013 Buffalo Billion deal that saw the state pledge $55 million to create information technology infrastructure in the beleaguered western New York city Cuomo had targeted for roughly a billion dollars of investment. In turn, IBM pledged to bring 500 information technology jobs to the area.

Whiteman Osterman & Hanna is one of Albany’s largest firms, with 75 attorneys, a wide variety of service offerings, and a location across the street from the state capitol. The firm has been influential in securing development deals with SUNY Polytechnic and its nonprofits that oversee the distribution of Buffalo Billion funds.

The Washington, D.C. subsidiary of Whiteman Osterman & Hanna, formerly run by lobbyist Todd Howe, is a target of the federal probe into the Buffalo Billion by the office of U.S. Attorney Preet Bharara, and the Cuomo administration has banned state employees from interacting with that subsidiary, WOH Government Solutions.

Whiteman, Osterman & Hanna is deeply involved in a web of relationships surrounding the Buffalo Billion program. Hiring the company is an apparent gateway to major business with state entities.

IBM retained WOH for the first time in early 2013, according to filings with the Joint Commission on Public Ethics (JCOPE), a state regulatory body that tracks lobbying. In September of that year SUNY Poly entered into a deal with IBM, which would see the state invest $55 million into the Buffalo Information Technologies Innovation and Commercialization Hub. The hub is being designed and built by the state and IBM, other information technologies firms will have access to its resources. Cuomo announced the project in February 2014.

IBM promised in return to bring the 500 new information technology jobs to Buffalo by September of 2020. Company officials have stressed that not all of the jobs will be IBM employees - they expect some to be provided by firms that deliver services to the technology center.

Essentially, the state funded the creation of a ready-to-use research center and has handed it over to IBM while expecting other businesses and state agencies to also utilize the infrastructure.

“New York State will commit, through CNSE (College of Nanoscale Science and Engineering), $55 million, which includes $25 million to establish an open innovation facility and $30 million to purchase IT equipment and software to be used at the Buffalo Information Technologies Innovation and Commercialization Hub,” reads a February 2014 announcement from the Cuomo administration. “The Hub will be owned by New York State with IBM as the first anchor tenant and made available to all IT units at all state agencies. The facility will open in early 2015 in downtown Buffalo.”

Jerry Gretzinger, spokesperson for SUNY Polytechnic, said that funding for the project is going towards purchase of the building, infrastructure, equipment, and installation. “IBM has taken up residence in Buffalo with hundreds of employees working in Key Tower. The company is receiving no funding, which is consistent with the state's economic development model,” Gretzinger told Gotham Gazette.

The federal probe into the Buffalo Billion appears to be examining possible bid rigging around the construction contracts for both the SolarCity project and the information technology innovation center. There are concerns the requests for proposals (RFPs) for both projects were designed specifically for large Cuomo donors to win. McGuire development, winner of the information technology innovation center contract, donated $35,500 to Cuomo from December 27, 2013 to October 12, 2014. The project was announced in February 2014. The largest single donation from McGuire Development, $25,000, came in May of 2014.

McGuire development wasn't the only major Cuomo donor to benefit from IBM's participation in the Buffalo Billion. The New York Times reported on Tuesday that Ciminelli Real Estate lost a major tenant at its property, The Key Tower, in 2013 - IBM has since moved in to the tower as part of its deal with the state. Paul Ciminelli, head of Ciminelli Real Estate, has donated $9,000 to Cuomo. His brother Louis Ciminelli, head of LPCiminelli, donated $29,200 to Cuomo in January 2014, just before the firm was awarded a contract, now reported to be under federal investigation, to develop parts of the Buffalo Billion. The Times found that the Ciminellis and their associates have donated $150,000 to Cuomo's various campaigns.

Recent subpoenas appear to target the relationship between former Cuomo aides Todd Howe, the aforementioned lobbyist, and Joe Percoco and work they did lobbying for clients to win Buffalo Billion contracts. No one, including IBM, has been charged with any wrongdoing.

Three sources familiar with the workings of the Buffalo Billion program say that WOH and Howe’s D.C. subsidiary were seen as critical in getting the attention of the Cuomo administration on Buffalo Billion projects. IBM did not return requests for comment, neither did WOH. WOH’s website advertised Howe and the services he could provide for New York clients until the page was removed after news broke of Bharara’s probe into Howe’s relationships and dealings.

JCOPE filings show IBM paid WOH a combined $240,000 in 2013 and 2014 and $120,000 in 2015. WOH was the only new New York-based lobbying firm IBM hired in 2013. The filings do not list any lobbying activity by WOH on behalf of IBM on any specific legislation or issue. However, the WOH employee listed on the disclosure, Richard Leckerling, a partner at WOH specializing in government contracts and government relations, is listed as managing the account. Another WOH lobbyist listed on the disclosure, William Crowell, is shown to have the sole area of practice as government relations according to the firm’s site. Leckerling did not respond to requests for comment.

Leckerling also serves on the board of the SUNY Poly’s children’s museum along with three members of SUNY Poly.

The Investigative Post has detailed Leckerling’s involvement with the two nonprofits that SUNY uses to funnel money to Buffalo Billion projects.

Fuller Road Management Corporation, one of Suny Poly’s nonprofits, paid $330,000 in legal fees to WOH from 2012 to 2014, according to The Investigative Post. Meanwhile, Leckerling has attended meetings of SUNY Poly’s other nonprofit, Fort Schuyler Management Corp.

Robert Samson, former head of IBM’s global public sector, serves on the board of Fort Schuyler Management Corp. Samson has served as a technology advisor to Cuomo and has donated to Cuomo’s campaigns. He joined the Fort Schuyler board in 2014.

The Whiteman Osterman & Hanna website advertises its government affairs work and ability to help clients land government business. “Whiteman Osterman & Hanna’s focus on matters at the intersection of the private and public sectors has led to the natural development of a vibrant practice of advising and assisting commercial enterprises and public entities through the state and municipal procurement processes. Based in Albany, New York, the Firm has represented commercial enterprises in a wide range of commodity and service procurements, including telecommunications, information technology, industrial supplies, food commodities, and environmental and financial services,” reads the firm’s site.

State law bans lobbying on procurement after the state issues requests for proposals, but IBM’s residency in the technology center did not come about as the result of an RFP. Like a host of other subsidy projects aimed at large corporations, negotiations around IBM’s involvement in the Buffalo Billion appear not to have taken place in public or through a public process.

SUNY Polytechnic reported doing business with WOH in 2015 for $2,056. The work is listed as lobbying related to “higher education” and involving the Assembly, Senate and executive branch. SUNY Poly’s founding president and chief operating officer, Dr. Alain Kaloyeros, is also a target of the U.S. Attorney’s investigation.

As the Buffalo Billion probe has ramped up and become more public, Whiteman Osterman & Hanna fired Todd Howe, a Cuomo family confidante who worked on at least one of Andrew Cuomo’s campaigns. Howe worked with SUNY Polytechnic as well as a number of firms with business before the state that won contracts with the Buffalo Billion while he ran the WOH subsidiary in D.C.

Howe worked for former Governor Mario Cuomo for a decade and is reported to have been a key member of the Cuomo clan. He worked for Andrew Cuomo during his time at HUD and on his reelection campaign and has done fundraising work for him. Howe landed major clients as a lobbyist because of his status as a Cuomo insider. At the same time, a recent New York Times profile painted a picture of someone struggling to hide a serious personal financial crisis while maintaining the image of a successful lobbyist. The Cuomo administration issued statements acknowledging there may have been improper lobbying involving Howe and Percoco, who was a long-time aide to Andrew Cuomo.

Cuomo has sought to distance himself from Howe. “I wouldn’t call us close friends,” the governor told reporters earlier this month. “He worked for the state for a number of years, but I had no knowledge of his personal situation.”

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

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IBM Hired Influential Lobbyist Months Before Securing Buffalo Billion Deal Tue, 24 May 2016 04:00:00 +0000
Spurred by Buffalo Billion, Reformers Look to Fix State Business Subsidies http://www.gothamgazette.com/government/5940-spurred-by-buffalo-billion-reformers-look-to-fix-state-business-subsidies http://www.gothamgazette.com/government/5940-spurred-by-buffalo-billion-reformers-look-to-fix-state-business-subsidies Cuomo Buffalo thank you

Cuomo in Buffalo (photo: Governor's Office via flickr)


United States Attorney Preet Bharara's attention has been drawn away from his normal stomping grounds to Buffalo, intrigued by what critics say is a shadowy network of state authorities and state-controlled non-profits handing out large business subsidies and contracts with little to no oversight.

Watchdogs say that Gov. Andrew Cuomo, through SUNY Polytechnic head Alain Kaloyeros, is essentially rewarding campaign donors with major contracts while using state cash to win political favor in economically-depressed areas. That sense has been exacerbated by a forceful push back against transparency by both the Cuomo administration and Kaloyeros.

Last legislative session the renewal of the 421-A tax break for real estate developers was the center of debate over business subsidies thanks to Bharara's indictments of former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos. Both face corruption charges stemming from their involvement with a major donor who sought renewal of the tax break.

But Bharara's interest in Buffalo Billion has shifted the gaze of some reformers and legislators to discretionary subsidies that are controlled by the Governor. At the heart of the U.S. Attorney's investigation appears to be requests for proposals written in a way to ensure one company, led by a major donor to the governor, would win the lucrative contract at stake.

"We believe many of these programs are out of control," said John Kaehny of Reinvent Albany, a group that has been focused on these subsidies. Kaehny said the programs have been "generally wasteful and driven more by pay-to-play or interest in providing local pork than derived from sound public policy."

Kaehny, a number of other reformers, and a small group of legislators want to pull back the curtain on these deals and create a system of true accountability that would show how contracts are awarded, how many jobs the contracts create, and how much state money is spent per job. Kaehny isn't exactly holding his breath, though, because he believes the current system was designed specifically to obfuscate and confuse.

"We do not see any reasonable motivation for the convoluted governance structure created by the governor other than to avoid oversight," Kaehny told Gotham Gazette. Kaehny said Cuomo has "created a legal fiction" involving SUNY Research Foundation and the Fort Schuyler Management Corporation, which sign contracts "on behalf of" state agencies like SUNY Poly. The state funnels money for a number of programs from Empire State Development Corporation, a state-run authority that has virtually no legislative or public oversight.

"Funding also comes from theoretically independent state authorities like NYSERDA and the Power Authority, which are told by the governor to provide money, power and land to SUNY Poly, which then gives resources away to select businesses," said Kaehny. "We believe this complexity is a deliberate effort to avoid transparency and accountability by the governor."

Some lawmakers are in the early stages of exploring legislative changes to how the state approves business subsidies. A few of them have been motivated by an Investigative Post report that the Cuomo administration dropped requirements to hire workers of color in one Buffalo Billion contract from 25 to 15 percent.

Others have been troubled by Cuomo's efforts to entice General Electric (GE) to move its headquarters back to the state. So far Cuomo has refused to detail what kind of incentives he has offered the company. Some legislators are concerned the company has yet to make good on its pledge to clean up the PCBs it poured into the Hudson River years ago and that its headquarters would have no economic benefit for the state.

"We have a real problem in New York with learning from history," said Ron Deutsch of the Fiscal Policy Institute. He said that New York has given businesses like GE, IBM, and Globalfoundries major incentives only to see them cut jobs, or move overseas. "We do nothing to hold anyone accountable" in the end, he said.

Cuomo has made it clear in conversations with the press that he sees no reason to scrutinize the Buffalo Billion program. Asked if he thought any procedures needed to be changed because of the investigation, Cuomo responded: "Do you know if there was any problem? No. If you knew there was a problem, then you would fix the problem. But we don't know any problem."

Good Jobs First, a national policy group that tracks business subsidies, actually rated New York 8th out of all 50 states on transparency for subsidy disclosures in a report released in January of last year.

Another study by the group found that New York spends more on "megadeals" than any other state. Megadeals are defined as subsidy agreements with businesses that cost $75 million or more. The 2013 report by Good Jobs First found that New York had spent $11.4 billion on such deals from 1984 to 2013.

When asked where New York's subsidy programs rank overall compared to other states, Greg LeRoy, executive director of Good Jobs First, replied, "Pick your metric."

SUNY Poly issued the following statement:

"In fact, neither SUNY Poly nor its affiliates have ever been in a position to unilaterally approve a single Buffalo project, including Buffalo project contracts or expenditures. The New York State system simply does not allow it. There are checks and balances at every step, layers of state oversight, internal and external audits, public hearings, public board meetings, and public votes."

So what can be done to prevent both the appearance and the reality of conflicts of interest; restore transparency and confidence in the system; and make sure someone is accountable for the way billions of dollars of taxpayer money is spent? Reformers have some suggestions.

One simple reform would be to ban businesses that win subsidies from donating large amounts to elected officials. The state need only look to New York City to see an effective model. In 2007, then City Council Speaker Christine Quinn and Mayor Michael Bloomberg reached a campaign financing deal that drastically reduced the amount any government contractor or group with business before the city can give to any campaign.

"Even the appearance of conflict of interest is a problem," said Deutsch, of the Fiscal Policy Institute.

Another piece of the puzzle could be eliminating the LLC loophole so that businesses cannot create multiple fronts to pour cash into the campaign coffers of state electeds.

To enhance transparency, advocates say the convoluted route by which money goes from the state to businesses needs to be simplified.

Kaehny said he wants to see the Empire State Development Corporation become a one-stop shop for business subsidies. Preventing state-controlled non-profits from distributing state funds would theoretically increase transparency by streamlining the decision-making process.

Both the Comptroller and Attorney General do have some oversight capabilities, but the Comptroller had some authority stripped away in 2011 by a bill that limited the office's ability to audit SUNY and CUNY as well as its hospitals and construction funds. Fort Schuyler and SUNY Poly have led the distribution of Buffalo Billion funds.

DiNapoli noted the situation during a recent appearance on WCNY's Capitol Pressroom with Susan Arbetter. "Our authority in some of these areas was curtailed a few years ago," DiNapoli said. "We complained about that at the time."

Kaehny said he wants to see the Comptroller and the Attorney General push publically on the issue of transparency. It isn't totally obvious how hard the Comptroller has been pushing for this information or not. If we had a right-wing Republican in the office I'm fairly sure we would see someone pushing relentlessly and using their bully pulpit when they weren't given the answers," Kaehny said, referring to the fact that all of the statewide offices are controlled by Democrats.

"The Comptroller could speak up clearly and directly and say: 'Here is what we don't know. Here are the dark spots. Here is where we see these structures created to defeat transparency,'" Kaehny said.

Still, many calling for change would like the Comptroller's office to have complete oversight over all subsidy deals.

One final, and perhaps farfetched possibility would be creating a State Independent Budget Office in the model of New York City's that would actually weigh the risks and possible rewards of highly nuanced tech and other business deals so that legislators and the public would understand where state money may be going. Deutsch said that someone needs to start asking a basic question: "How much is a job worth?"

The Cuomo administration has repeatedly stated that the Buffalo Billion will create 14,000 reliable jobs and attract $8 billion in investment as a result of the roughly $1 billion state expenditure.

It seems unlikely any of the reforms being discussed to the subsidy process will pick up steam in an election year, especially as Albany waits to see if Bharara's investigation leads to criminal charges.

"There are simple solutions," said Kaehny, "but they are very hard to get done because there is no will."

***
by David King, Albany editor, Gotham Gazette
@DavidHowardKing

Note: this article has been updated with a clarification from John Kaehny that Reinvent Albany beieves "many," not "most," of the subsidy programs are "out of control"

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Spurred by Buffalo Billion, Reformers Look to Fix State Business Subsidies Mon, 19 Oct 2015 00:37:47 +0000