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Former Cuomo Aide Joseph Percoco, Others Facing Public Corruption Charges

NEW YORK (CBSNewYork/AP) -- A former top aide to Gov. Andrew Cuomo has been charged in connection with an alleged bribery and kickback scheme, authorities announced Thursday.

Joseph Percoco, Cuomo's former executive deputy secretary, and Alain Kaloyeros, president of SUNY Polytechnic Institute, are among eight who face charges, according to a criminal complaint by U.S. Attorney Preet Bharara. As the leader of SUNY Polytechnic, Kaloyeros was instrumental to Cuomo's efforts to bring high-tech jobs to upstate New York.

As CBS2's Valerie Castro reported, Percoco pulled up to his South Salem home after leaving the federal courthouse in Lower Manhattan without saying a word.

EXTRA: Percoco Complaint | Howe Complaint

As CBS2 Political Reporter Marcia Kramer reported, Percoco was so close to the Cuomo family that when former Gov. Mario Cuomo died, his son the current governor described Percoco as the elder Cuomo's "third son." He was also described as Gov. Andrew Cuomo's right-hand man and gatekeeper.

But now, the only gate he is keeping leads to the federal courthouse door.

"Today's complaint shines a light on yet another sordid side of the 'show-me-the-money' culture that has so plagued Albany," said U.S. Attorney Preet Bharara.

"The arrest speaks volumes to those who aggressively take what are not theirs and act without morals and ethics," added Buffalo FBI Special-Agent-in-Charge Adam Cohen.

According to the federal complaint that Bharara unsealed on Thursday, Percoco took $322,000 in bribes from 2012 through 2016 to Syracuse-based COR Development and Competitive Power Ventures, an energy company looking to build a power plant in the Hudson Valley. Todd Howe, a consultant for the two companies and former Cuomo associate, set up bank accounts and a shell company to funnel bribes, including payments to Percoco's wife, Lisa, the complaint said.

The complaint says Howe pleaded guilty to several federal charges, including conspiracy to commit fraud, extortion, bribery and wire and tax fraud. He is now cooperating with federal authorities.

Peter Galbraith Kelly, an executive at Competitive Power Ventures, is accused in the complaint of conspiracy and paying bribes to Percoco. The company, based in Braintree, Massachusetts, didn't immediately reply to queries.

Authorities accused Percoco of conspiring with Kaloyeros and Howe to rig bidding in the Buffalo Billion upstate revitalization project and deceive Fort Schuyler, the state-funded entity awarding the lucrative contracts, so they would go to Syracuse-based COR Development and Buffalo contractor LPCiminelli. They said Kaloyeros, who oversaw the application process for many of the state grants, retained Howe to help him, and Howe in turn solicited and received bribes.

"Howe worked with Kaloyeros to deceive Fort Schuyler by secretly tailoring the required qualifications for those development deals" so COR and LPCiminelli would win the contracts "without any meaningful competition," the complaint said.

Kaloyeros Facing Multiple Charges

New York Attorney General Eric Schneiderman also filed separate charges against Kaloyeros, alleging the former university president worked with Columbia Development head Joseph Nicolla to help direct contracts to the company.

"This self-serving scheme alleged in the complaint was particularly egregious because it was aimed at enriching powerful people at the expense of the state's public university system," Schneiderman said.

The complaint also alleges Kaloyeros worked in collusive agreements with certain companies to manipulate the bidding process to award university-related contracts to favorable bidders. The felony complaint states that in once instance, Kaloyeros allegedly boasted about his ability to "write an RFP in such a way that only one company could win it."

SUNY has suspended Kaloyeros without pay following the allegations.

"SUNY will review the charges against Dr. Kaloyeros and cooperate fully with prosecutors on any further action as state and federal investigations continue," SUNY Chairman Carl McCall and Chancellor Nancy L. Zimpher said in a statement Thursday.

In 2015, Cuomo praised Kaloyeros, CBS2's Andrea Grymes reported.

"Dr. Alain Kaloyeros, who sees things that mere mortals don't see -- and has economic visions that other mere mortals can't actually see," Cuomo said.

Kaloyeros is expected to be arraigned in court on Monday, Sept. 26.

Other Allegations

Also charged in the complaint are two executives at COR Development -- Steven Aiello and Joseph Girardi -- and three executives at LPCiminelli: Michael Laipple, Kevin Schuler and chief executive officer Louis Ciminelli.

The charges stem from a federal investigation into the Buffalo Billion project, as well as Nano, an initiative effectively led by Kaloyeros that aimed to bring high-tech jobs to the upstate. The federal probe revealed a web of individuals and businesses tied to Cuomo that stand to make millions from the projects.

Investigators pieced together several emails Percoco sent to other defendants, having fallen on hard times financially, WCBS 880's Marla Diamond reported.

The complaint alleges that Percoco and his wife suffered financial problems stemming from an $815,000 mortgage of their South Salem home.

The complaint claimed that Percoco was known by the nickname "Herb" and others were called "Herbert," and that in speaking about money, Percoco and his co-conspirators referred to dollars as "ziti" based on a term used in "The Sopranos."

In one email exchange, Howe allegedly wrote to Percoco, "Herb, need 7,500 boxes of ziti," and Percoco replied, "Yes, $7,500 a month is her old salary."

The eight individuals facing charges are all expected to appear in court Thursday.

Percoco's Lawyer: 'He Is Not Guilty'

Percoco's lawyers called the prosecution's allegations an "overreach of classic proportions," and said Percoco intends to plead not guilty.

"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," the statement reads.

"Mr. Percoco performed services honestly and within the bounds of the law at all times. He will enter a plea of not guilty because he is not guilty."

Percoco was long known as one of Cuomo's most loyal advisers, a political enforcer who worked for his father, Gov. Mario Cuomo. He was Andrew Cuomo's $156,000-a-year executive secretary when he resigned in 2014 to lead Cuomo's re-election campaign. At the funeral of his father last year, Cuomo called Percoco "my father's third son who sometimes I think he loved the most."

According to state financial disclosures, Percoco also made as much as $125,000 by becoming a consultant for COR Development and CHA Consulting, two firms involved in Buffalo Billion and Nano. The firms are also big Cuomo political donors.

Cuomo said Percoco told him he might take consulting clients. But he never asked Percoco to identify them.

Percoco rejoined the administration in late 2014 and received a $20,000 raise from his old salary before quitting a second time in January to become a vice president at Madison Square Garden.

Late Thursday, Percoco was released on a $100,000 personal recognizance bond, and was placed under pre-trial supervision. His travel was limited to the southern and eastern federal districts of New York and to Connecticut, and he was ordered to surrender his passport and all firearms – including two hunting rifles and a BB gun.

Kaloyeros was ordered to pay $50,000 to secure a $300,000 personal recognizance bond, and was restricted to travel in New York and New Jersey. He was also ordered to surrender his passport.

Kelly was released on a $50,000 personal recognizance bond and restricted to travel in New York and Connecticut. He was ordered to surrender his passport and firearms.

A preliminary hearing for the defendants was set for Oct. 24.

None of the defendants made any statements as they left the courthouse, CBS2's Valerie Castro reported. All three were whisked away by waiting sport-utility vehicles.

Cuomo Makes Statement On Case

Cuomo's office said in April that Bharara was examining possible undisclosed conflicts of interest and improper bidding related to the Cuomo's efforts to attract high-tech jobs upstate. The administration also launched an internal review and Cuomo promised to "throw the book" at anyone found to be violating the law.

"If the allegations are true, I am saddened and profoundly disappointed. I hold my administration to the highest level of integrity," Cuomo said in a statement on Thursday. "I have zero tolerance for abuse of the public trust from anyone. If anything, a friend should be held to an even higher standard. Like my father before me, I believe public integrity is paramount. This sort of breach, if true, should be and will be punished."

CBS2's Kramer asked political analyst Doug Muzzio, of Baruch College, how the charges might affect Cuomo. Muzzio said it reflects "poorly" on the governor.

Kramer also asked what the charges against Percoco and the others might mean when it comes to Cuomo's reelection campaign.

"The election isn't until 2018," Muzzio said. "It may wear way. The impact may be minimized. You've got to figure the trial lasts several months, it's going to dog him right till the elections."

There are no allegations of wrongdoing against the governor.

(TM and © Copyright 2016 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2016 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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