Federal Prosecutor Ups Ante for Cuomo, Charging ‘Soprano’-Loving Former Deputy

MANHATTAN (CN) — After taking down two branches of the New York Legislature, the crusade against corruption in Albany has hit the house of the proverbial third man in the room: Gov. Andrew Cuomo’s trusted former deputy.
Thick as a pulp novella and almost as tawdry, the 80-page criminal complaint unsealed Thursday morning shows Cuomo’s reputed “right-hand man” Joseph Percoco giving his best audition for “The Sopranos,” in referring to bribe payments as “zitti.”
In another wrinkle that could have come from Mafia fiction, Percoco called one of his alleged co-conspirators “Fat Boy” and “Fat Man,” according to the complaint.
Spelling out the silver screen references at a noon press conference today, Manhattan U.S. Attorney Preet Bharara returned to the same perch where he brought down ex-New York Assembly Speaker Sheldon Silver and ex-New York Senate Majority Leader Dean Skelos.
     The “Sopranos” episode in question featured the quotes “Keep the ziti flowing” and “Don’t flip over the ziti wagon,” he said.
But that was as playful as Manhattan’s top prosecutor got in denouncing what he called the “show-me-the-money culture that has so plagued Albany.”
“It turns out that the state Legislature doesn’t have any sort of monopoly on crass corruption in New York,” Bharara said.
Together with Silver and Skelos, Cuomo forms the third of the triumvirate known as the “Three Men in a Room,” where Albany’s most powerful legislators secretly conduct their business.
The governor’s deputy secretary Percoco, 47, acted as a confidant to his and his father’s administrations, and the son’s “gatekeeper” between January 2012 and mid-2014. Percoco is charged alongside seven others, including Alain Kaloyeros, the 60-year-old president of the State University of New York Polytechnic Institute, a key figure in Cuomo’s signature initiative “Buffalo Billion.”
     Announced during Cuomo’s 2012 “State of the State” address, the initiative flushed $1 billion into the western New York metropolis bordering Lake Erie and known as “The Nickel City.” The once-proud border city had been bustling economic hub, known for being a trade route to the Midwest with a booming grain, steel and automobile industry. It took a sad downturn, however, in the mid-20th century.
The departure of Midwestern industrial giants sent millions of residents elsewhere, and with them, fewer tourists to such sites as the four buildings designed there by legendary architect Frank Lloyd Wright.
“Buffalo Billion” had been intended to restore the city to its former glory with a quick influx of cash, and FBI agent Adam Cohen told reporters that the project gave hope to Buffalonians everywhere.
“Today, there’s an excitement about the future of Western New York,” the agent said.
But in a betrayal by public servants, prosecutors say, Kaloyeros and others “rigged” the bids.
     Bemoaning the “preordained” process, Bharara said: “Companies got rich and the public got bamboozled.”
The fumbling nature of these transactions got so brazen, prosecutors say, that an executive from one of the alleged real-estate cronies asked if the exchange was “too telegraphed?”
Another Buffalo developer opined that one bid seemed “a bit obnoxious,” according to the complaint.
Riffing off that remark, Bharara said: “We allege that it was more than obnoxious. It was criminal.”
New York Attorney General Eric Schneiderman, who unveiled his own charges against Kaloyeros this afternoon, invoked the “Gilded Age” of Alexander Hamilton and questioned whether his Empire State is experiencing a new “Golden Age of Graft.”
Kaloyaros’ attorney Michael Miller, from Steptoe & Johnson LLP, denied both sets of charges in a statement proclaiming that his client “very much looks forward to being exonerated.”
“These charges can’t be reconciled with Dr. Kaloyeros’ robust leadership of the SUNY Polytechnic Institute, Fort Schuyler and Fuller Road,” Miller said.
Fort Schuyler and Fuller Road are the nonprofit entities associated with the “Buffalo Billions” initiative.
“Over the past three decades, Dr. Kaloyeros has done everything within his power to make SUNY a beacon amongst academic institutions focused on cutting-edge technology and science,” the lawyer added. “Through the efforts of Dr. Kaloyeros and the many good people at SUNY Poly, the school is now ranked amongst the top United States universities, and is heralded for its amazingly innovative and forward looking academic environment.”
The AG also charged capital region real-estate tycoon Joseph Nicolla, the 59-year-old president of Columbia Development.
Back at the federal press conference, Bharara called the corruption of the “Buffalo Billion” predictable because Kaloyeros and lobbyist had substantial control of the purse strings for the project, and created bank accounts and a shell company that “funneled” bribes to Percoco.
That lobbyist is a cooperating witness named Todd Howe, from the firm Whitman, Osterman & Hanna.
The other major players in the dazzlingly complex court papers include an energy company and real estate developers based in Syracuse and Buffalo, none of whom are named but whose identities are easily surmised.
The Buffalo developer, for example, appears to be LPCiminelli, whose leader Louis Ciminello, a major Cuomo donor, and executives Kevin Schuler and Michael Laiple are also charged today.
Another of the named defendants is Peter Galbraith Kelly Jr., an executive for the energy company Competitive Power Ventures who allegedly arranged for his business to donate a private jet to shuttle the governor and his staff to campaign fundraisers in 2010.
Prosecutors say Kelly, a 53-year-old man shamelessly nicknamed “Fat Boy,” arranged $287,000 in bribe payments for a state contract worth $100 million that would help finance a $900 million power plant in Wawayanda, New York.
Howe arranged for Percoco and Percoco’s wife to receive more than $315,000 in bribes from his two clients between 2012 and 2016, according to the complaint.
Prosecutors say the favor also helped the company score millions of dollars in energy credits for a power plant it was building in New Jersey.
On Sept. 12, 2012, according to the complaint, Percoco, Kelly, Howe and other unidentified businessmen dined at a restaurant in Danbury, Connecticut, to discuss the power plant proposal, as well as finding a job for Percoco’s wife at the energy company.
The apparent conflict-of-interest tied to the New York governor troubled the company’s CEO, but Kelly agreed to a Thursday meeting at Percoco’s house to discuss the job, according to the emails flagged in the complaint.
“Fat boy locked and loaded… Thursday night at the estate,” one of Howe’s emails read.
Percoco allegedly replied, “is he bringing the check?? LOL.”
Apparently discussing the wife’s salary, Howe later wrote, “herb — need 7500 boxes of zitti!!!!”
Prosecutors say Percoco’s wife made $75,000 that year with the Department of Education.
Steven Aiello and Joseph Gerardi, the president and general counsel of Syracuse developer COR Development Co., respectively, put up $35,000 in bribes, according to the complaint.
Prosecutors say their money bought Percoco’s “official assistance … on an as-needed basis, including assisting the Syracuse developer in reversing a costly decision of a state economic development agency, influencing the state to release payments owed to the Syracuse developer, and obtaining a raise for Aiello’s son, a New York State employee who worked for Percoco.”
Bharara would not disclose whether Cuomo is still in his sights, except in a statement from January clearing the governor of interfering with the so-called Moreland Commission, an investigation into Albany corruption.
In a brief statement, Cuomo said that he is “saddened and profoundly disappointed” by the man who served two generations of his political family.
“If anything, a friend should be held to an even higher standard,” Cuomo said.
The governor was quick to draw a distinction between himself and his staff.
“Like my father before me, I believe public integrity is paramount,” the governor added, referring to Mario Cuomo.
Percoco’s attorney Barry Bohrer, a partner at Schulte Roth & Zabel, blasted the prosecution as an “overreach of classic proportions.”
“This prosecution, based on information provided by someone of utterly unreliable credibility, seeks to criminalize conduct that the Supreme Court of the United States recently found to be not unlawful,” Bohrer said in a statement.
The attorney appeared to have been referring to the Supreme Court’s decision in the case of Virginia Gov. Robert McDonnell, in which the justices unanimously decided that paying for political access was legal.
But prosecutors allege that Percoco provided for more than access to his corporate benefactors, such as freeing up state money, helping reverse a pro-union decision, and pushing forward an energy credit deal.
If convicted, Percoco could face 70 years imprisonment, though any possible sentence is likely to be much smaller. He was released today on a $100,000 personal-recognizance bond, and surrendered his passport, two hunting rifles, and a BB gun.
Kalayeros, whom SUNY suspended without pay, had his bail set for $300,000, and his travel is restricted to New York and New Jersey.
Only Kelly, who appeared, if anything, only mildly plump in court, protested giving up his firearms. His attorney Dan Gitner, a partner at Lankler Siffert Wohl LLP, told the judge his client is an “avid sportsman.”
“He was actually good enough to try out for the Olympics — skeet shooting,” Gitner said, referring to Kelly. “[His rifles are] his recreation. They’re how he relaxes.”
Looking vaguely uneasy, U.S. District Judge Sarah Netburn shot down the request.
“I don’t love the idea of defendants facing serious charges having access to guns,” she said. “He can find another activity to stress release.”
Percoco’s alleged confederates face anywhere between 5 and 55 years, and Kelly is smack in the middle with a maximum 30-year sentence, if convicted.
After the hearing, all three men walked out wordlessly from the courthouse, past photographers and cameramen stationed in front of the black vehicles that drove them away. They will appear in Manhattan Federal Court again on Oct. 24, and the other defendants will be prosecuted in the Western District of New York.
As for Bharara, the prosecutor trying to clean house in Albany says he’s eagerly awaiting this trial.
“I really do hope that there is a trial in this case so the people of New York can know in all of its gory detail, what their state government has been up to,” he said.

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