Search NYPIRG

Another New York Corruption Trial Starts Up

Posted by NYPIRG on June 11, 2018 at 10:51 am
Share on FacebookTweet about this on Twitter

It started three and a half years ago with a news report from the Investigative Post, a Buffalo-based media outlet.  In its review of the so-called “Buffalo Billion” economic development programs, the Investigative Post identified an incredible clause in one of the state’s bid offerings that would allow spending on construction projects.

The Investigative Post found that in the state’s request for proposals to develop facilities to build a solar manufacturing plant there was a requirement that limited the pool of respondents to those based in Buffalo who have been in business for at least 50 years.  That’s correct; the company had to be in business in Buffalo for 50 years.

More Investigative Post research revealed that only one company could meet the criteria – LP Ciminelli, whose president, Louis Ciminelli, is one of Governor Cuomo’s biggest campaign contributors, having donated nearly $100,000 to the governor’s campaigns during his two races for governor.  While a big donor, the company was considered a legitimate contender given its work in the area for many years.

Once exposed, the state argued that the proposal’s 50 year requirement was just a typo, which should have said 15 years.  The state revised the bid request, yet the company – LP Ciminelli – won the contract anyway.  But the state’s decision-making process triggered interest by federal prosecutors examining corruption in New York State government.  LP Ciminelli earned more than $20 million in fees to manage the project, which involved the state spending $750 million to build and equip the solar plant.

Two years ago, federal prosecutors – headed by then-U.S. Attorney Preet Bharara – brought charges against the company and key New York State economic development officials.  In addition to the Buffalo case, the feds also charged that corrupt activities occurred in state economic development decisions in Syracuse and the mid-Hudson Valley.

The trial addressing the Syracuse and mid-Hudson Valley cases came earlier this year and led to the convictions of a former top aide to Governor Cuomo, a close ally of the governor’s, and some business executives.  The Buffalo case starts up this week.

Prosecutors contend that the then-head of the State University of New York’s Polytechnic Institute, with the help of the governor’s close associate Todd Howe, favored the Buffalo developers in a corrupt scam to award them hundreds of millions of dollars in state contracts for the solar plant.  Howe has pleaded guilty and admitted to accepting payments from the businessmen in exchange for influence over the awarding of the contracts.

The upcoming “Buffalo Billion” trial will focus on the allegations that the state’s contracts were rigged to benefit certain companies, those which happened to donate big bucks to the governor’s elections campaigns.  Of course, those charged – except for Howe the lobbyist and an executive at LP Ciminelli, who have pled guilty – are presumed innocent and there have been no allegations that the governor was involved in the wrongdoing.

Yet, the crimes identified in the first case and the ones alleged in the upcoming case, shine a light on what can only be described as serious ethical and financial oversight weaknesses in how the state awards billions of taxpayer dollars.

These glaring weaknesses cry out for a legislative response.  Thus, in the seven remaining days of the state legislative session, the governor and the legislature must act to restore public confidence in how the state doles out the public’s money, to protect taxpayers and ensure economic development spending is based on the merits, not rewarding connected insiders.

The first step is to enhance the power of the separately-elected state Comptroller to review state contracting decisions.  In the early days of the Cuomo Administration, the governor successfully advanced initiatives that cut back on the Comptroller’s oversight role in this area.  It is clear that his powers should be restored and strengthened.

Second, the governor and lawmakers should agree on legislation to create a “database of deals” to identify the recipient of every taxpayer subsidy for economic development and describe the details of contracts and job creation goals.  Third, they should agree to ban “pay to play” by sharply limiting campaign contributions from businesses that get state contracts.  And lastly, there should be an agreement to close the “LLC loophole” that allows contributors to pour an unlimited amount of money into political campaigns.

Neither Governor Cuomo nor legislative leaders seem to hoping for anything of consequence to get done in the seven days left in the legislative session, despite a long list of unfinished business.  Acting to prevent government corruption should be something that must get done.