Alain Kaloyeros, the former president of SUNY Polytechnic Institute, was found guilty on Thursday on all three counts against him in a federal corruption case related to rigging bids for state economic development projects.
Kaloyeros was accused of hand-picking developers, through a lobbyist, to work on state projects in Syracuse and Buffalo, including Gov. Andrew Cuomo’s “Buffalo Billion” initiative.
SUNY Polytechnic Institute was involved in two key economic development contracts in Syracuse and Buffalo in 2013. One of those was Cuomo’s signature”Buffalo Billion” initiative, which sought to spend $1 billion to revitalize the city of Buffalo. Three-quarters of that investment, $750 million, went to a solar panel factory that is owned by the state but housed by SolarCity.
Fort Schuyler Management Corp., a state entity that awards state government contracts, was in charge of approving bids for the factory and two other projects in Syracuse valued at more than $100 million. Kaloyeros was in charge of overseeing the application process for those bids.
He hired a lobbyist, Todd Howe, to solicit bids in exchange for bribe money and gratuity from Buffalo developer LPCiminelli and Syracuse developer COR Development, prosecutors said. Howe has already pleaded guilty to his involvement in the schemes.
Kaloyeros, through Howe, asked the two developers how he should write the request for proposals to make them the ideal choice for the projects. Kaloyeros included that information in the request for proposals while telling Fort Schuyler Management the bids were fair and open.
In the case of the Syracuse project, Kaloyeros even sent a draft of the RFP to the developer for suggestions. It came back with edits, which Kaloyeros applied before putting it out.
The initial Buffalo RFP required the chosen developer to have 50 years of experience in the Buffalo area, which was a characteristic touted by LPCiminelli in its promotional materials. That was billed as a ‘typographical error’ before it was revised, prosecutors said.
The developers, Louis Ciminelli from Buffalo, and Joseph Gerardi and Steve Aiello from Syracuse, were also found guilty on charges of wire fraud and wire fraud conspiracy. Gerardi was also found guilty of making a false statement to a federal official.
U.S. Attorney for the Southern District of New York Geoffrey Berman said Thursday’s verdict represents his office’s continued effort to root out corruption in state government. The charges were initially brought by former U.S. Attorney Preet Bharara.
“The inscription, ‘The true administration of justice is the firmest pillar of good government,’ is set in stone in the Manhattan federal courthouse. Those words have never been more poignant for the citizens of New York, as in quick succession less than four months apart they have seen this Office secure convictions in separate prosecutions against the State Assembly Speaker, a close confidant and executive aide to the governor, and now the president of SUNY Polytech, the executive leading the expansive ‘Buffalo Billion’ initiative,” Berman said.
The conviction is another mark on the record of Cuomo, who has not been accused of any wrongdoing by prosecutors. A former close aide to the governor, Joseph Percoco, was also recently convicted in his own corruption trial. He was accused of taking bribes from the Syracuse developer and an energy company that sought business with the state.
Cuomo responded to the Kaloyeros verdict in a statement Thursday afternoon.
“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 said.
Cuomo’s opponents in this year’s gubernatorial election have been quick to link him to the litigation, though Cuomo has said publicly that he had no knowledge of either scheme. Dutchess County Executive Marc Molinaro, a Republican running for governor, has made corruption in state government a solid plank of his campaign. So have Cuomo’s other opponents, including actress and education advocate Cynthia Nixon, a Democrat, and former Syracuse Mayor Stephanie Miner, who is running on a third-party ticket.
The indictments of Percoco and Kaloyeros, announced in 2016, led to a renewed push by State Comptroller Thomas DiNapoli and Republicans in the state Legislature for more oversight of the state procurement process. The State Senate, which is controlled by Republicans, passed a bill in May that would reinstate oversight to the state comptroller of certain bids through SUNY, CUNY, and the state Office of General Services. That oversight was removed in 2011 and 2012, according to the bill.
The legislation stalled in the Assembly, where it has a majority sponsor in Assemblywoman Crystal Peoples-Stokes, D-Buffalo. Lawmakers did not otherwise act in any significant way this session to strengthen oversight of the state’s economic development projects.
Kaloyeros was represented by Michael Miller and Reid Weingarten, partners at Steptoe and Johnson in Manhattan. Associates Katherine Dubyak, David Hirsch, and Michael Scavelli were also on the case.
Wednesday’s verdict isn’t the end of Kaloyeros’ legal troubles. He also faces charges from the state attorney general’s office in an unrelated bid-rigging scheme.
In that case, Kaloyeros is accused of three different schemes. In one, he allegedly arranged for a specific developer to be chosen on a student housing project at SUNY Polytechnic Institute. In another, Kaloyeros allegedly chose a developer to build a major wing of SUNY Polytechnic Institute that in turn agreed to provide a research grant to the college and a loan to a SUNY-affiliated nonprofit. Kaloyeros’ salary was tied to the amount of grants awarded to the school, prosecutors said.
In a third scheme, prosecutors say Kaloyeros arranged a deal where a company agreed to lease space at SUNY Polytechnic in exchange for work on state contracts.
Assistant State Attorney General Christopher Baynes is leading that case. Miller and his team are also representing Kaloyeros in that matter.