BUFFALO, N.Y. -- Three Buffalo-based developers face federal corruption charges connected to the Buffalo Billion project, the U.S. Attorney's Office in Manhattan announced Thursday morning.
LP Ciminelli Chairman Louis Ciminelli and company executives Kevin Schuler and Michael Laipple are among nine people facing charges related to an alleged pay-to-play scheme that helped them secure millions of dollars work of taxpayer-funded state contracts.
The three were charged with fraud conspiracy, related to the RiverBend project and the RFP process, and payments of bribes. The claim is that the wire fraud conspiracy charged defrauded the company, state of New York and the federal government. The first charge carries a maximum of 20 years and a $250,000 fine. The second, payment of bribes, holds up to 10 years in prison and a $250,000 fine. Each of the men are now fighting the charges. Attorneys say they are not looking for a plea deal.
Attorneys for Ciminelli, Schuler and Laipple want to get this played out in court as quickly as possible. They asked for a preliminary hearing in Buffalo, in the western district, even though the case will ultimately go to the southern district of New York.
Ciminelli paid a $300,000 signature bond, Laipple a $50,000 signature bond and Schuler did not enter a bond.
The three defendants were arrested at their homes around 7 a.m. Thursday. They appeared in court in their street clothes. Attorneys for the defendants from LPCiminelli say the way their clients were arrested was not called for.
"If the government has a significant case, they should put that on and they should start on Monday in our preliminary hearing, we look forward to that. We look very forward to it," said Daniel Oliverio, attorney for Ciminelli.
"I think that there was certainly a better way to do it. We believe that there was open communication and that should have been followed and then to just take them out of their homes early in the morning in front of their children, it wasn't called for it wasn't necessary and it just isn't the way things are done in the western district of New York," said Terry Connors, Schuler's attorney.
Attorney for Ciminelli says there was no bribery here. There was no crime committed. This is a total rush to judgment.
— Ryan Whalen (@RyanTWCNews) September 22, 2016
Ciminelli's attorney says the RiverBend project is complete, on time, and on budget and has been turned over to the owners.
“We are confident that all company officials acted appropriately and legally. When given the opportunity to fully respond to these charges, we are confident everyone will be vindicated. The company will have no further comment at this time,” said LPCiminelli in a statement.
U.S. Attorney Preet Bharara alleges LP Ciminelli retained an Albany-based lobbyist and consultant for SUNY's College of Nanoscale Science and Engineering, or CNSE, to help funnel state contracts their way. Court documents state the lobbyist, Todd Howe, is cooperating with investigators and pleaded guilty Wednesday to fraud and extortion. He is cooperating with the statement. Howe connected LP Ciminelli officials to CNSE, telling investigators he was paid bribes by Ciminelli -- $100,000 per year beginning in 2013 -- in return for becoming the preferred developer for CNSE projects in the Buffalo area.
Working with Alain Kaloyeros, the president of SUNY Poly and former CEO of CNSE, Howe helped prevent competing bids on Buffalo Billion projects from gaining traction and garnered support from the governor's office for projects important to Kaloyeros, court documents state.
One of those projects, the $750 million Riverbend Project, had not been discussed in public before Gov. Andrew Cuomo’s announcement of it Nov. 21, 2013, according to the federal complaint, yet LP Ciminelli already had drafted plans for the project. Bharara alleges the request for proposal for the Riverbend Project was written in such a way that officials awarding state contracts had no choice but to give it to LP Ciminelli. The non-profit real estate corporation deciding on contracts, Fort Schuyler, had no knowledge of the pay-to-play scheme, according to Bharara.
LP Ciminelli was awarded the Riverbend contract worth $225 million in March 2014. The contract would later jump to $750 million.
Between 2009 and 2014, Ciminelli and immediate family members gave at least $100,000 to Cuomo’s election campaigns, according to Bharara’s investigation. And, around the time Ciminelli was under consideration for CNSE projects, he hosted a fundraising dinner for Cuomo that brought in about $250,000 for Cuomo’s war chest, documents state.