"Ziti" was the codeword for power company bribes in NY Governor's office -- staffers, executives charged with federal crimes

NY Gov. ANDREW MARK CUOMO's best friend charged with bribery, called bribes "ziti."

Ex-Cuomo Aides Charged in Federal Corruption Inquiry

By WILLIAM K. RASHBAUM, VIVIAN YEE and BENJAMIN WEISER
SEPT. 22, 2016
THE NEW YORK TIMES


Joseph Percoco, left, with Gov. Andrew M. Cuomo of New York in 2013. Mr. Percoco, who is now facing corruption charges, was Mr. Cuomo’s all-purpose body man and political enforcer.
Credit Mike Groll/Associated Press

Federal corruption charges were announced on Thursday against two former close aides to Gov. Andrew M. Cuomo, a senior state official and six other people, in a devastating blow to the governor’s innermost circle and a repudiation of how his prized upstate economic development programs were managed.

The charges against the former aides, Joseph Percoco and Todd R. Howe, and the state official, Alain Kaloyeros, were the culmination of a long-running federal investigation into the Cuomo administration’s attempts to lure jobs and businesses to upstate New York’s limping economy by furnishing billions of dollars in state funds to developers from Buffalo to Albany. Mr. Howe is cooperating with the investigation, according to a 79-page criminal complaint unsealed on Thursday.

The charges stemmed from “two overlapping criminal schemes involving bribery, corruption and fraud in the award of hundreds of millions of dollars in state contracts and other official state benefits,” federal prosecutors said in the complaint.

Mr. Percoco, who had served as Mr. Cuomo’s executive deputy secretary, is accused of soliciting and taking more than $315,000 in bribes between 2012 and 2016 from two companies: Competitive Power Ventures, an energy company that was seeking state approvals to build a power plant in the Hudson Valley, and COR Development, a major developer in the Syracuse area that ended up with several large state-funded economic development projects. The bribes were arranged by Mr. Howe, who counted both companies among his clients.

The energy company and the developer are not named in the complaint, but several defendants charged are among the companies’ top officials.

In addition to Mr. Percoco, Mr. Howe and Mr. Kaloyeros, the complaint charged Peter Galbraith Kelly Jr., who oversaw lobbying and public relations for Competitive Power Ventures, the energy company based in Maryland and Massachusetts; Steven Aiello, the president of COR Development; Joseph Gerardi, another executive at COR; Louis Ciminelli, the founder of LPCiminelli; and Michael Laipple and Kevin Schuler, two other executives at LPCiminelli.

Mr. Kelly, known as Braith, was accused of offering and paying Mr. Percoco bribes in exchange for Mr. Percoco’s help with the power plant. The payments were made to Lisa Toscano-Percoco, Mr. Percoco’s wife, who was ostensibly employed as a consultant to Competitive Power Ventures’s educational outreach arm starting in 2012.

In emails and other correspondence, Mr. Percoco and Mr. Howe referred to the bribes as “ziti,” according to the complaint. Mr. Percoco apparently used the name “Herb” while discussing the arrangement.

Mr. Aiello and Mr. Gerardi were accused of giving Mr. Percoco about $35,000 in bribes to use his position in the governor’s office to “promote” the company’s economic development projects.

They sought Mr. Percoco’s help in reversing a decision by the state’s economic development agency that would have forced COR — Mr. Cuomo’s largest donor in Central New York — to make an expensive labor peace agreement; pushing the state to release payments that it owed to COR; and getting a $5,000 raise for Mr. Aiello’s son, who worked for Mr. Percoco at the governor’s office, according to the complaint.

The charges in the complaint included bribery, extortion under the color of right, wire fraud and honest services fraud.

Mr. Howe had already pleaded guilty to extortion, wire fraud and related conspiracy charges. His lawyer, Richard J. Morvillo, would say only that his client “has accepted responsibility for his actions and will testify truthfully if called upon.”

Todd R. Howe in 2009. Credit Will Waldron/Times Union, via Associated Press
Mr. Percoco and six of the seven other defendants were taken into custody before 8 a.m. Thursday; the remaining defendant was expected to surrender. They are expected to appear in federal courts in Manhattan, Syracuse and Buffalo later on Thursday.

Mr. Percoco’s lawyer, Barry A. Bohrer, characterized the prosecution as “an overreach of classic proportions,” adding that a Supreme Court decision in June that overturned the corruption conviction of former Gov. Bob McDonnell of Virginia rendered his client’s conduct lawful.

“Mr. Percoco performed services honestly and within the bounds of the law at all times,” Mr. Bohrer said.

Federal investigators from the office of Preet Bharara, the United States attorney in Manhattan, and F.B.I. agents in Buffalo have been examining whether state officials awarded lucrative projects to a few favored developers who had donated to the political campaigns of Mr. Cuomo, a Democrat. One major area of interest was the administration’s plan to inject $1 billion in state funds into Buffalo-area factories, research facilities and other projects, known together as the Buffalo Billion.

The sweeping corruption charges were expected to be announced at a news conference later on Thursday. The expected arrest of Mr. Percoco was first reported early Thursday by The Wall Street Journal.

Virtually all the state-funded projects were shaped under the umbrella of the State University of New York Polytechnic Institute and its subsidiaries, which is headed by Dr. Kaloyeros, a physicist who has become something of an economic development guru in Albany.

Preet Bharara, the United States attorney in Manhattan, announced the charges on Thursday with Andrew Goldstein, the chief of the public corruption unit. Credit Dave Sanders for The New York Times

Dr. Kaloyeros had been given free rein by Mr. Cuomo to conceive of high-tech economic development projects that could create jobs across the state. A lawyer for Dr. Kaloyeros had no immediate comment.

Dr. Kaloyeros will also face charges on Thursday filed by the New York attorney general, Eric T. Schneiderman, according to a person with direct knowledge of the allegations. Mr. Schneiderman is expected to announce charges of bid-rigging and collusion against Dr. Kaloyeros and Joseph Nicolla of Columbia Development, an Albany-area firm.

Mr. Kaloyeros and Mr. Nicolla are accused of colluding to make sure Columbia was awarded contracts to build multiple SUNY Polytechnic projects, including a campus dorm, the person said.

Until January, when Mr. Percoco left the administration for a job at Madison Square Garden, he was Mr. Cuomo’s all-purpose body man, political enforcer and shadow, an honorary brother who had been at Mr. Cuomo’s side since both worked for Mr. Cuomo’s father, former Gov. Mario M. Cuomo, in the 1990s.

As part of the investigation, investigators had looked into whether Mr. Percoco and his wife failed to properly disclose thousands of dollars they had been paid by at least one company that had business with the state.

Mr. Percoco’s financial disclosure forms, which he was required to file once a year while he worked for the governor’s office, reported that he and his wife had earned a total of $130,000 to $195,000 from two companies since 2012, COR and an entity affiliated with Competitive Power Ventures. Ms. Toscano-Percoco was not charged in the complaint.

Mr. Howe had worked for the elder Mr. Cuomo, and later for the younger Mr. Cuomo during his time as the secretary of the federal Department of Housing and Urban Development. Trading on his relationship with the governor and Mr. Percoco, Mr. Howe later became a lobbyist in Albany and Washington, with a hand in several of the state’s economic development projects in the Syracuse area.

When news of the investigation into the governor’s former aides broke in April, his office quickly cut ties to both men and ordered its own internal investigation. The results of that inquiry have not been released.

Jesse McKinley contributed reporting.



Gov. CUOMO's best friend charged with accepting bribes in 79-page charge, alleging he called bribes "ziti."