Alain Kaloyeros, President Of Suny Polytechnic Institute, And Three Executives Of Real Estate Development Companies Found Guilty Of Fraud In Connection With Buffalo Billion Projects
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ALAIN KALOYEROS, the former president of the State University of New York Polytechnic Institute (“SUNY Poly”), was convicted of defrauding and conspiring to defraud a SUNY Poly-affiliated not-for-profit organization in connection with Buffalo Billion construction projects worth hundreds of millions of dollars. LOUIS CIMINELLI, STEVEN AIELLO, and JOSEPH GERARDI – three executives of real estate development companies based in Syracuse and Buffalo – were also convicted of fraud and conspiracy.
U.S. Attorney Geoffrey S. Berman said: “The inscription, ‘The true administration of justice is the firmest pillar of good government,’ is set in stone in the New York County Courthouse. Those words have never been more poignant for the citizens of New York, as in quick succession less than four months apart they have seen this Office secure convictions in separate prosecutions against the State Assembly Speaker, a close confidant and executive aide to the governor, and now the president of SUNY Poly, the executive leading the expansive ‘Buffalo Billion’ initiative. The guiding principle of the Southern District holds that true justice can only be achieved through independence from politics or influence, and that has never been more important than today. I commend the career prosecutors of our Public Corruption unit for their enduring commitment to true justice in our government.”
According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:
KALOYEROS conspired with AIELLO and GERARDI, two top executives at Syracuse-based COR Development Company (“COR Development”), and CIMINELLI, the head of Buffalo-based LPCiminelli Inc. (“LPCiminelli”), to deceive Fort Schuyler Management Corporation (“Fort Schuyler”), a State-funded entity charged with awarding State contracts worth hundreds of millions of dollars, by secretly rigging the bidding process so that the contracts would be awarded to those two companies.
KALOYEROS, who oversaw the application process for many of the State grants awarded under the Buffalo Billion and similar programs, retained Todd Howe to assist with developing the projects and identifying developers for those projects. KALOYEROS, Howe, AIELLO, GERARDI, and CIMINELLI worked together to deceive Fort Schuyler by, among other things, secretly tailoring the required qualifications for those development deals so that COR Development and LPCiminelli would be awarded contracts in Syracuse and Buffalo, respectively, without any meaningful competition, while falsely representing to Fort Schuyler that the bidding process was fair, open, and competitive.
More specifically, in or about October 2013, Fort Schuyler issued requests for proposals (“RFPs”) to solicit bids from interested and qualified developers for the Syracuse and Buffalo projects. KALOYEROS, with Howe’s assistance, oversaw the drafting of the RFPs and, unbeknownst to Fort Schuyler, KALOYEROS and Howe secretly solicited from AIELLO, GERARDI, and CIMINELLI qualifications of COR Development and LPCiminelli to put in the RFPs so that the RFPs would request qualifications specifically held by those companies. For example, the Syracuse RFP requested the use of specific project management software used by COR Development. After Howe emailed GERARDI and AIELLO a draft of the Syracuse RFP approximately two weeks before its public issuance, GERARDI sent back a handwritten mark-up of the draft RFP, on which GERARDI had, among other things, underlined the software names and wrote “too telegraphed??” For its part, the Buffalo RFP, as initially issued, required 50 years of experience by a local developer – a qualification touted by LPCiminelli in promotional materials provided to KALOYEROS. This requirement was later changed and claimed to be a “typographical error.” LPCiminelli also was provided internal State documents to use in drafting its response to the RFP.
In or about fall 2015, after the FBI interviewed other real estate development and construction companies that expressed interest in the Buffalo RFP, KALOYEROS deleted from his Gmail account numerous emails involving Howe, including emails in which KALOYEROS and Howe exchanged “vitals” for COR Development and LPCiminelli during the drafting of the RFPs. In addition, CIMINELLI deleted a number of emails between himself and KALOYEROS, including an email in which KALOYEROS, from his Gmail account, sent a draft of the Buffalo RFP to CIMINELLI and promised to “fine tune the developer requirements to fit.”
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KALOYEROS was convicted of one count of conspiracy to commit wire fraud, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison. CIMINELLI, AIELLO, and GERARDI were each convicted of one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison. GERARDI was also convicted of one count of making false statements, which carries a maximum sentence of five years in prison.
KALOYEROS is scheduled to be sentenced on October 11, 2018; AIELLO is scheduled to be sentenced on October 12, 2018; GERARDI is scheduled to be sentenced on October 15, 2018; and CIMINELLI is scheduled to be sentenced on October 17, 2018. All defendants will be sentenced by U.S. District Judge Valerie E. Caproni, who presided over the trial.
Mr. Berman praised the work of the FBI Buffalo Field Office and Internal Revenue Service-Criminal Investigation, which jointly conducted this investigation with the Special Agents from the U.S. Attorney’s Office.
This case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Robert Boone, David Zhou, and Matthew Podolsky are in charge of the prosecution.