,3

Approved: 

Assistant United States Attorneys 

   

Before: THE HONORABLE GABRIEL W. GORENSTEIN
United States Magistrate Judge

Southern District of New York 1 8  0 5

 

H. p?X
UNITED STATES OF AMERICA SEALED COMPLAINT

v. Violations of

. 18 U.S.C. 666, 1001,
JOSEPH PERCOCO, 1349, 1951, and 2

a/k/a ?Herb,?
ALAIN KALOYEROS,
a/k/a ?Dr. 
PETER GALBRAITH KELLY, JR., 1
a/k/a ?Braith,? COUNTY OF OFFENSE:
STEVEN AIELLO, NEW YORK
JOSEPH GERARDI,
LOUIS CIMINELLI,
LAIPPLE, and
KEVIN SCHULER,

Defendants.

SOUTHERN DISTRICT OF NEW YORK, 88.:

DELEASSA PENLAND, being duly sworn, deposes and says that she
is a Criminal Investigator with the'Gnited States Attorney?s Office_


COUNT ONE
(Conspiracy to Commit Extortion Under Color of Official Right)

1. From at least in or about 2012, up to and including in or
about 2016, in the Southern District of New York and elsewhere, JOSEPH
-PERCOCO, a/k/a ?Herb,? the defendant, and others known and unknown,
willfully and knowingly did combine, conspire, confederate, and agree
together and 18, UnitrxiStates Code,
Section 1951. -

 

2. It was a part and an object of the conspiracy that JOSEPH
PERCOCO, a/k/a ?Herb,? the defendant, and others known and'unknown,
willfully and knowingly, would and did obstruct, delay, and affect
commerce and the movement of articles and commodities in commerce
by extortion.as that tern1is defined.in'Title 18, United.States Code,
Section 1951, to wit, PERCOCO, who was a senior official in the Office
of the Governor of New York State (the ?State?), and others known
and unknown, would and did cause companies with.business before the
State to direct payments to PERCOCO in.exchange for official actions
taken or to be taken by PERCOCO for the benefit of the companies paying
him.

(Title 18, United States Code, Sections 1951.)
COUNT TWO
(Extortion Under Color of Official Right The Energy Company)

3. From at least in or about 2012, up to and including in or
about 2016, in the Southern District of New York and elsewhere, JOSEPH
PERCOCO, a/k/a ?Herb,? the?defendant, willfully and would
and did obstruct, delay, and affect commerce and the movement of
articles and commodities in commerce by extortion as that term is
defined in Title 18, United States Code, Section 1951, to wit, PERCOCO
used his official State position.and power and authority within the
Office of the Governor to cause an energy company seeking benefits
and business from the State (the ?Energy Company?) tOInake and(direct
payments to wife in exchange for official actions taken
and agreed to be taken by PERCOCO.

(Title 18, United States Code, Sections 1951 and 2.)
COUNT THREE

(Extortion Under Color of Official Right The Syracuse Developer)

4. From at least in or about 2014, up to and including in or
about 2015, in the Southern District of New York and elsewhere, JOSEPH
PERCOCO, theidefendant, would
and did obstruct, delay, and affect commerce and the movement of

articles and commodities in commerce by extortion as that term is
defined in Title 18, United States Code, Section 1951, to wit, PERCOCO

used.his official State position and.power and authority within the
Office of?the Governor to cause a Syracuse?based real estate developer
seeking benefits and business from the State (the ?Syracuse
Developer?) to make and direct payments to PERCOCO in exchange for
official actions taken and agreed to be taken by PERCOCO.

(Title 18, United States Code, Sections 1951 and 2.)
COUNT FOUR

(Conspiracy to Commit Honest Services Fraud)

5. From at least in or about 2012, up to and inCluding in or
about 2015, in the Southern District of New York and elsewhere, JOSEPH
PERCOCO, a/k/a ?Herb,? PETER GALBRAITH KELLY, JR., a/k/a ?Braith,?
STEVEN.AIELLO, and JOSEPH GERARDI, the defendants, and others known
and unknown, willfully and knowingly did combine, conspire,
confederate, and.agree together and.with.each.other to violate Title
18, United States code, Sections 1343 and 1346.

6. It was a part and an object of the conspiracy that JOSEPH
PERCOCO, a/k/a ?Herb, PETER GALBRAITH KELLY, JR. a/k/a ?Braith, 
STEVEN.AIELLO, and JOSEPH GERARDI, the defendants, and others known
and unknown, willfully and knowingly, having devised and intending
tC)devise:a scheme and.artifice to{defraud, and.to(deprive the public
of its intangible right to honest services as a senior
official in the Office of the Governor, would and did transmit and
cause to be transmitted byzneans of wire communication.in interstate
and.foreign.commerce, writings, signs, signals, pictures, and.sounds
for the purpose of executing such scheme and artifice, in violation
of Title 18, United States Code, Sections 1343 and 1346, to Wit,
PERCOCO, while serving as Executive Deputy Secretary to the Governor,
?would.and.did.take official action in return for bribes paid, at the
direction of KELLY, AIELLO, and GERARDI, by the Energy Company and
the Syracuse Developer.

(Title 18, United States Code, Section 1349.)

 

COUNT FIVE
(Solicitation of Bribes and Gratuities The Energy Company)

7. From at least in or about 2012, up to and including in or
about 2016, in the Southern District of New York and elsewhere, JOSEPH
PERCOCO, a/k/a ?Herb,? the defendant, being an agent of a State
government, to wit, a senior official in the Office of the Governor,
corruptly solicited and demanded for the benefit of a person, and
accepted and agreed to accept, a thing of value from a person,

transaction, and series of transactions of such government and agency
involving a thing of value of $5,000 and.more, while such.government
and agency was in receipt of, in any one year period, benefits in

subsidy, loan, guarantee, insurance, and other form of Federal
?assistance, to wit, PERCOCO, in his capacity as a senior official
in the Office of the Governor, solicited and accepted cash and things
of value from the Energy Company intending for PERCOCO to be influenced
and rewarded.

(Title 18, United States Code, Sections 666(a)(1)(B) and 2.)

COUNT SIX
(Solicitation of Bribes and Gratuities The Syracuse Developer)
8. From at least in or about 2014, up to and including in or

about 2015, in the Southern District of New York and elsewhere, JOSEPH
PERCOCO, a/k/a ?Herb,? the defendant, being an agent of a State
government, to wit, a senior official in the Office of the Governor,
corruptly solicited and demanded for the benefit of a person, and
accepted and agreed to accept, a thing of value from a person,

transaction, and series of transactions of such government and agency
involving a thing of value of $5,000 and more, while such.government
and agency was in receipt of, in any one year period, benefits in

subsidy, loan, guarantee, insurance, and other form of Federal
assistance, to wit, PERCOCO, in his capacity as a senior official
in.the<0fficmaof the<Governor, solicited.and accepted cash.and things

of value from the Syracuse Developer intending for PERCOCO to be
influenced and rewarded.

(Title 18, United States Code, Sections 666(a)(1)(B) and 2.)
COUNT SEVEN
(Payments of Bribes and Gratuities The Energy Company)

9. From at least in or about 2012 to at least in or about 2016,
in the Southern District of New York and elsewhere, PETER GALBRAITH
KELLY, JR., a/k/a ?Braith,? the defendant, who was an executive at

and agree to give a thing of value to a person, with intent to influence
an agent of an organization of a State government, and an agency
thereof, in connection with business, transactions, and series of
transactions of such.organizationq government, and.agency involving
a thing of value of 000 and more, while such government and agency
was in receipt of, in any one year period, benefits in excess of $10 000
under a Federal program involving a grant, contract, subsidy, loan,
guarantee, insurance, and other form of Federal assistance, to wit,
KELLY offered and gave bribes to JOSEPH PERCOCO, a/k/a ?Herb,? the
defendant, in order for PERCOCO to influence regulatory approvals
and funding related to the development of a power plant in Orange
County, New York, and take other official action to benefit the Energy
Company.

(Title 18, United States Code, Sections 666(a)(2) and 2.)
COUNT EIGHT

(Payments of Bribes and Gratuities The Syracuse Developer)

10. From at least in or about 2014 to at least in or about 2015,
in the Southern District of New York and elsewhere, STEVEN AIELLO
and JOSEPH GERARDI, the defendants, who were executives at the
Syracuse Developer, willfully and knowingly did corruptly give,
offer, and agree to give a thing of value to a person, with intent
to influence an agent of an organization of a State government, and
an agency thereof, in connection with business, transactions, and
series of transactions of such organization, government, and.agency
involving a thing of value of $5,000 and.more, while such government
and agency was in receipt of, in any one year period, benefits in

5

 


subsidy, loan, guarantee, insurance, and other form of Federal

assistance, to wit, AIELLO and GERARD: offered and gave bribes to
JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, in order for PERCOCO
to promote the Syracuse Developer? development projects in the State
-and take other official action to benefit the Syracuse Developer.

(Title 18, United States Code, Sections 666(a)(2) and 2.)
COUNT NINE

(Wire Fraud_Conspiracy The Preferred Developer RFPs)

11. From at least in or about 2013, up to and including in or
about 2015, in the ALAIN
KALOYEROS, a/k/a ?Dr. STEVEN AIELLO, JOSEPH GERARDI, LOUIS
CIMINELLI, MICHAEL LAIPPLE, and KEVIN SCHULER, the defendants, and
others known and unknown, willfully and knowingly did combine,
conspire, confederate, and agree together and with each other to
commit wire fraud in violation of Section 1343 of Title 18, United
States Code.

12. It was a part and an object of the conspiracy that ALAIN
KALOYEROS, a/k/a ?Dr. STEVEN AIELLO, JOSEPH GERARDI, LOUIS
CIMINELLI, MICHAEL LAIPPLE, and KEVIN SCHULER, the defendants, and
others known and unknown, willfully, and knowingly, having devised
and intending to devise a scheme and artifice to defraud, and for
obtaining money and property by means of false and fraudulent
pretenses, representations,enuipromises, wouldennidid transmit and
cause to be transmitted by means of wire and radio communication in
signs, signals, pictures,
and sounds for the purpose of executing such scheme and artifice,
in violation.of Title 18, United States Code, Section 1343, to wit,
KALOYEROS, AIELLO, GERARDI, CIMINELLI, LAIPPLE, and SCHULER, and
their co?conspirators, devised a scheme to defraud Fort Schuyler
Management Corporation (?Fort Schuyler?), a State~funded entity
charged with awarding significant taxpayer?funded development
Schuyler that the bidding process
for those contracts was fair, open, and competitive, when, in truth
and in fact, they secretly tailored the requests for proposals
for thoSe contracts so that companies that were owned,

.controlled, and.managed.by AIELLO, GERARDI, CIMINELLI, LAIPPLE, and
SCHULER were guaranteed to win the contracts.

(Title 18, United States Code, Section 1349.)
COUNT TEN
(Payments of Bribes and Gratuities The Syracuse Developer RFP)

13. From at least in or about 2013 to at least in or about 2015,
in the Southern District of New York and elsewhere, STEVEN AIELLO
and JOSEPH GERARDI, the defendants, willfully and knowingly did
corruptly give, offer, and agree to give a thing of value to a person,
with intent to influence an agent of an organization of a State
government, and an agency thereof, in connection with business,
transactions, and series of transactions of such organization,
government, and agency involving a thing of value of 000 and more,
while such government and agency was in receipt of, in any one year
period, benefits in excess of $10,000 under a Federal program
involving a grant, contract, subsidy, loan, guarantee, insurance,
and other form of Federal assistance, to wit, AIELLO and GERARDI
offered and gave bribes and gratuities to a representative of a New
York State university and foundation in order to obtain a development

contract.
(Title 18, United States Code, Sections 666(a)(2) and 2.)
COUNT ELEVEN
(Payments of Bribes and Gratuities The Buffalo Developer REP)

14. From at least in or about 2013 to at least in or about 2015,
in the Southern.District of Neerork.and.elsewhere, LOUIS CIMINELLI,
MICHAEL LAIPPLE, and KEVIN SCHULER, the defendants, willfully and
knowingly did corruptly give, offer, and agree to give a thing of
value to a person, with intent to influence an agent of an organization
of a State government, and an agency thereof, in connection with
business, transactions, and series of transactions of such
organization, government, and agency involving a thing of value of
$5,000 and more, while such government and agency was in receipt of,
benefits in.excess of $10,000 under?a'Federal
program involving a grant, contract, subsidy, loan, guarantee,
insurance, and other form of Federal assistance, to wit, CIMINELLI,

 

LAIPPLE, and SCHULER offered and gave bribes and gratuities to a
representative of a New York State university and foundation in order
to obtain a development contract.

(Title 18, United States Code, Sections 666(a)(2) and 2.)
COUNT TWELVE

(False Statements to Federal Officers)

15. On or about June 21, 2016, in the Southern.District of New
York and elsewhere, STEVEN AIELLO and JOSEPH GERARDI the defendants,
willfully and knowingly did make materially false, fictitious, and
fraudulent statements and representations in a matter within the
jurisdiction of the executive, legislative, and judicial branches
of the Government of the United States, to wit, AIELLO and GERARDI,
while meeting with federal agents and representatives of the United
States Attorney?s Office for the Southern District ofINew'York, each
made statements denying involvement in paying JOSEPH PERCOCO, a/k/a
?Herb,? the defendant, and in tailoring a request for proposal for
the benefit of their company; when, in truth and in fact, AIELLO and
GERARDI directed payments to PERCOCO and conspired to tailor a request
for proposal for the benefit of their company.

(Title 18, United States Code, Section 

The bases for deponent? knowledge and for the foregoing charges
are, in part, as follows:

16. I am a Criminal Investigator with the USAO, and I have been
personally involved in the investigation of this matter, which has

Buffalo Field.Office and.Criminal Investigators in the USAO.
I have been employed by the USAO since 2015, prior to which I was
a Revenue Agent with the Internal Revenue Service for more than twelve
years. I and other members of the investigative team have experience
in fraud and political corruption investigations and techniques
associated with such investigations, including executing search
warrants, financial analysis, and working with informants.

17. This affidavit is based.in part upon.my own observations,
my conversations with other law enforcement agents and others, my

examination of documents and reports by others, my interviews of
witnesses, and my training and experience. Because this affidavit
is being submitted for the limited.purpose of establishing probable
cause, it does not include all the facts that I have learned during
the course of the investigation. Where the contents of documents,
including emails, and the actions, statements and conversations of
others are reported herein, they are reported in substance and in
part, except where specifically indicated otherwise. For ease of
reference, I have included a table of contents below.

TABLE OF CONTENTS

 

I. OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

II. RELEVANT INDIVIDUALS AND ENTITIES . . . . . . . . . . . . . . . . . . . . . . ..12
A. New York State Government and the Office of the

Governor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..12

B. CNSE and Fort Schuyler . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . ..13

C. JOSEPH PERCOCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..14

D. ALAIN KALOYEROS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..15

E. Todd Howe . . . . . ..16

F. PETER GALBRAITH KELLY and the Energy Company . . . . . . . . . ..17
G. STEVEN AIELLO, JOSEPH GERARDI, and the Syracuse 
Developer . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . . ..18
H. LOUIS CIMINELLI, MICHAEL LAIPPLE, KEVIN SCHULER, and
the Buffalo . . . . . . . . . . . . . . . . . . . . . . . . . . . ..19
THE PERCOCO BRIBERY SCHEME . . . . . . . . . . .. . . . . . . . . . . 
A. The Energy Company Paid Bribes to PERCOCO in Exchange
for Official Actions by PERCOCO . . . . . . . . . . . . . . . . . . . . . . ..20
i. State Action Was Critical to the Energy Company 

ii. KELLY Began Providing Personal Benefits to PERCOCO ..23
PERCOCO Sought to Have His Wife Hired by the Energy

Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..26
iv. KELLY Caused the Energy Company to Make Payments to .
Wife . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
v. PERCOCO Failed to Disclose Payments from the Energ
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
vi, PERCOCO Agreed to Take Official Action for the Energy
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..33

 

IV.

vii. PERCOCO Helped the Energy Company Obtain the
Reciprocity Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . ..34
Took Official Action Regarding the PPA . . . . ..36
ix. PERCOCO Extorted KELLY for More Money After Learning
that the Energy Company Would Not Receive the PPA . .39
x. KELLY Stopped Payments to Wife After It
Became Apparent that the Energy Company Would Not
Receive the PPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .L . . . . . ..42
The Syracuse Developer Paid Bribes to PERCOCO in
Exchange for Official Action . . . . . . . . . . . . . . . . . . . . . . . . . ..43
i. PERCOCO Solicited Bribe Payments from the Syracuse
Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
ii. The Syracuse Developer Wanted Assistance
with ESD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..47
The Syracuse Developer Paid PERCOCO Approximately
$35,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..49
iv. PERCOCO Pressured BSD to Reverse Its Decision on the
Labor Peace Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..50
v. PERCOCO Assisted the Syracuse Developer in Obtaining
the Release of State Funds . . . . . . . . . . . . . . . . . . . . . . . . ..53
vi. PERCOCO Secured a Raise for Son . . . . . . . . . . ..56
THE BUFFALO BILLION FRAUD AND BRIBERY SCHEME . . . . . . . . . . . ..58
KALOYEROS Hired Howe to Be an Agent and Representative
Of CNSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..59

Executives of the Syracuse Developer and Buffalo
Developer Bribed Howe for His Assistance in Obtaining
State Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..60

Fort Schuyler Was Defrauded into Awarding State
Development Contracts to the Syracuse Developer and the

Buffalo Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..64
i. Fort Schuyler ISsued RFPs for Preferred Developers for
Syracuse and Buffalo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..65
ii. The Syracuse RFP Was Designed to Defraud Fort
?Schuyler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..67
The Buffalo RFP Was Designed to Defraud Fort
Schuyler . . . . . . . . . . . . . . . . . . . ..: . . . . . . . . . . . . . . . . . . . . ..71
iv. Fort Schuyler Awarded Contracts to the Syracuse
Developer and Buffalo Developer . . . . . . . . . . . . . . . . . . . ..76
FALSE STATEMENTS BY AIELLO AND GERARDI . . . . . . . . . . . . . . . . . ..78

10

I . OVERVIEW

18. The charges in this Complaint stem from two overlapping

of hundreds of millions of dollars in State contracts and other
official State benefits.

19. The first scheme (the Bribery Scheme?) involves
efforts by JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, who served
as the Executive Deputy Secretary to the Governor of the State between
in or about January 2012 and mid~2014, and again in or about 2015,
to abuse his official position and extensive influence within the
Executive Branch by seeking and accepting bribe payments from
executives at companies that were seeking benefits and business from
the State in exchange for use of official authority and
Ihiparttx>disguise1?xanature
and source of the bribe payments, bribes to PERCOCO were funneled
in.certain.instances 
instances through bank accounts and a shell company set up by Todd
Howe (?Howe?) a consultant who had been retained by the bribe?paying
companies to help them obtain official State favors, and who is now
cooperating with the Government.

20. More specifically, between 2012 and 2016, Howe arranged
for more than $315,000 in bribe payments to JOSEPH PERCOCO, a/k/a
?Herb,? the defendant, and wife, funded.by two clients of
Howe that were seeking substantial official State benefits at the
time the payments were solicited and made: an energy company (the
?Energy Company?) and a Syracuse?based real estate developer (the
?Syracuse Developer?). PETER.GALBRAITH KELLY, JR., a/k/a ?Braith,?
the:defendant, oversaw'external affairs and?government relations for
the Energy Company. KELLY arranged for PERCOCO and wife
to receive more than $287 000 in bribe payments from the Energy Company
in.exchange for official assistance for the Energy Company
on an aaneeded basis, including helping the Energy Company obtain
a State contract estimated.to be worth $100 million, that would.help
finance a $900 million power plant in Wawayanda, New York, and
assisting the Energy Company with obtaining millions of dollars in
energy credits for a power plant it was building in New Jersey.
STEVEN AIELLO the defendants, were the President
and the General Counsel, respectively, of the Syracuse Developer.
AIELLO and GERARDI arranged for PERCOCO to receive approximately
$35,000 in bribe payments in exchange for official

ll

 


assisting the Syracuse Developer in reversing a costly decision of
a State economic development agency, influencing the State to release
payments owed to the Syracuse Developer, and obtaining a raise for
son, a New York State employee who worked for PERCOCO.

21. The second scheme (the ?Buffalo Billion.Fraud.and.Bribery
Scheme?) involves bribery, corruption, and fraud in the award of
contracts under the Governor?s ?Buffalo Billion? initiative and
similar programs. In that scheme, executives at two companies, one
of which.was the Syracuse Developer, conspired with 
a/k/a ?Dr. the defendant, and Howe to deceive Fort Schuyler, a
Statemfunded 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 .

22. More specifically, ALAIN KALOYEROS, a/k/a ?Dr. the
defendant, who oversaw the application.process for many of the State
grants awarded under the Buffalo Billion and similar programs,
retained Howe to assist with developing the projects and identifying
developers for those projects. Howe in turn solicited and.received
bribe and?gratuity payments from RD 
among others, STEVEN.AIELLO and JOSEPH GERARDI, the defendants, who
were seeking State development grants for projects in Syracuse, New
York, and a Buffalo?based developer (the ?Buffalo Developer?),
run by, among others, LOUIS CIMINELLI, MICHAEL LAIPPLE, and KEVIN
SCHULER, the defendants, that was seeking State development grants
for projects in Buffalo, New York. In exchange for the bribe payments
to Howe, Howe worked with KALOYEROS to deceive Fort Schuyler by .
secretly for thosetdevelopment
deals so that the Syracuse Developer and.the Buffalo Developer would
be awarded the contracts, in Syracuse and Buffalo respectively,
without any meaningful competition.

II. RELEVANT INDIVIDUALS AND ENTITIES
A?.New York State Government and the Office of the Governor
23.. According to public sources and information provided by
the Governor?s Office, I know the following: the State?s executive
branch is headed by the Governor, who serves as the State?s chief

executive, managing various State agencies, including those charged
with overseeing economic development, environmental conservation,

12

transportath31andenergy. 
are referred to as working in the ?Executive Chamber. The Executive
Chamber includes the following officials, among others: Executive
Deputy Secretary, which is the position that was held by JOSEPH
PERCOCO, a/k/a ?Herb,? the defendant, as described.below; Secretary
to the Governor; andlDirector of State Operations. The Secretary to
the Governor is in charge of the Executive Chamber?s overall
management. The Director of State Operations oversees the day?to?day
functioning of State government, including overseeing and providing
direction to many of the State agencies . Within the Executive Chamber
there are also various Deputy and Assistant Secretaries organized
by subject area, who are the primary liaisons with their respective
State agencies, and report up to the Director of State Operations.

24 . I know from publicly available federal and State government
7 documents and'public reports that, in each year relevant to this
Complaint, the government of the State received funds from the federal
government in excess of $10,000 per year.

B. CNSE and Fort Schuyler

25. Based on public information and interviews with, among
lothers, individuals associated with the College of Nanoscale Science
and Engineering and its affiliated entities, I learned the
_following: i

a. CNSE ise1public institutitmlof higher education that
is funded in part by the State. In or around September 2014, CNSE
.merged.with.the State'University of New'York Institute of Technology
to become a new public university known as the SUNY Polytechnic
Institute Poly?), of which CNSE is now a part. Because CNSE
became part of SUNY Poly during the time period relevant to this
Complaint, unless otherwise specified? I refer to both.CNSE 
Poly as in this Complaint. SUNY Poly is part of the State
University of New York, which is a public, State~supported
organization.

b. The head of CNSE and SUNY Poly at all times relevant
to this Complaint was ALAIN KALOYEROS, the defendant.
Under his leadership, CNSE, and later SUNY Poly, focused on
developing partnerships with private companies to create large
development and.construction projects. When.thet30vernor?s Buffalo
Billion initiative was announced in 2012, CNSE created projects in

13

 

Buffalo and Syracuse, New York, in order to take advantage of new
State funds committed to development in upstate New York.

c. In or around 2009, CNSE created Fort Schuyler as an
affiliated non?profit real estate corporation to partner with
private companies on behalf to carry out its development
projects. As relevant here, Fort Schuyler manages development and
construction projects associated.with CNSE in.Buffalo and Syracuse,
New York. Fort Schuyler is governedlnra.Boartlof Directors, which,
among other things, is charged with selecting private companies to
partner with Fort Schuyler in CNSE?related development projects,
including Buffalo Billion?related projects in Buffalo and similar
development projects in Syracuse, among other places. Certain
public funding for CNSE goes through the Research Foundation.for'the
State University of New York (the ?Research Foundation?), which
employed many individuals associated with CNSE and Fort Schuyler,
including ALAIN KALOYEROS, a/k/a ?Dr. the defendant, and Howe
(as a retained consultant), during the times relevant to this
Complaint . During each year relevant to this Complaint, the Research
Foundation received more than $10,000 in federal funding.

C. JOSEPH PERCOCO

26. Based on my review of documents both publicly available
and obtained during this investigation, including electronic
communications to and from JOSEPH PERCOCO, a/k/a ?Herb,? the
defendant, and my interviews with I?Iowe as well as several individuals
who worked at the Governor4s Office at the relevant times, I learned
that:

a. In or around 1992, PERCOCO joined the Office of the
then?Governor of New York (the ?Former Governor?) as an intern.
PERCOCO later worked for the current Governor (the son of the Former
Governor) when the Governor was Attorney General . In or about January
2011, PERCOCO was appointed.to be the Executive Deputy Secretary to
the Governor, and remained one of the Governor's closest advisors
during the Governor?s first and second terms. The position of

part of the Governor?s Executive staff. PERCOCO was generally seen
as the Governor?s ?right?hand man,? who coordinated access to the
Governor and.often.spoke for himcx1a.broad.array cf substantive and
administrativelnatters. role included.servinge%3Eiprimary
?gatekeeper? of opportunities to speak or meet with the Governor,

14


appointments and administrative matters for the Executive Chamber,
and playing the principal role in organizing support for the
Governor?s initiatives among lawmakers, labor leaders, and other
constituencies. During all times relevant to this Complaint,
primary work location was in Manhattan, New York, although
he typically traveled to Albany, New York approximately several times
per month and was an almost constant presence with the Governor during
his official duties. PERCOCO alSC)maintained.a very close, personal
relationship with the Governor and the Former Governor, exhibited
by the Governor? public reference to PERCOCO as the Former Governor? 
?third son.?

b. On or about April 21, 2014, PERCOCO officially left
New York State employment to serve as campaign manager for the
Governor?s reelection campaign, and returned to State service on or
about December 8, 2014. PERCOCO permanently left his position as

an executive in the private sector.

0. According to multiple witnesses interviewed in this
investigation, as well as email communications at the
relevant time, although.PERCOCO was not on.the State payroll between
at least on or about April 22, 2014 and December 7, 2014, while he
was the manager of the Governor?s reelection campaign, PERCOCO
nevertheless'continued to function in a senior advisory and
supervisory role with regard to the Governor?s Office during that
time period, and continued to be involved in the hiring of staff and
_the coordination of the Governor?s official events and.priorities,
among other things, and to travel with the Governor on official
business. In addition, PERCOCO represented to others that he

application submitted on or about August 7, 2014, that he was
?guaranteed a position with [the Governor} after the November
election.?

D. ALAIN KALOYEROS

27. I have learned from emails, financial records, publicly
available information, and witness interviews, including interviews
with.Howe and executives of CNSE and its affiliated.entities, that:

15

 

a. ALAIN KALOYEROS, a/k/a ?Dr. the defendant,
currently serves as the President of SUNY Poly. Prior to 
merger into SUNY Poly, KALOYEROS served.as Senior'Vice President and
Chief Executive Officer of CNSE.

b. At all relevant times, KALOYEROS served as a member

also were hired by KALOYEROS and relied on staffing from the Research
Foundation, supervised.and.controlled.Fort Schuyler?s
daywtomday operations.

E. Todd Howe

28. I know from witness interviews, including interviews with
Howe, and the review of emails, financial records and publicly
available information that:

a. Howe has held.several public positions, including as
a strategic advisor to the Governor when the Governor was United States
Secretary of Housing and'Urban Development, and as a senior aide to
the Former Governor when the Former Governor was Governor of New York.
I also know that Howe has known JOSEPH PERCOCO, a/k/a ?Herb,? the
defendant, since PERCOCO was a college student, when Howe hired
PERCOCO to work for the Former Governor.

b. Duringa?j_times Complaint,Ikwmawas
the president and primary employee of a government relations and
lobbying firm (the ?Government Relations Firm?) located in
Washington,IKL that 
New York (the ?Law Firm"). The co?chair of the Law Firm controlled

and bonuses, and approved all retention agreements for new clients
of the Government Relations Firm. Also during all times relevant to
this Complaint, Howe was retained by several clients, most, if not
all, of which retained Howe for his contacts with State officials,
and for which Howe provided assistance with obtaining or facilitating
business before the State. Howe?s clients included the Energy
Company, the Syracuse Developer, and the Buffalo Developer.

c. During all times relevant.to this Complaint, Howe was

also retained.as a consultant to CNSE. In his role as a consultant
for CNSE, Howe maintained an office and parking space at CNSE, served

16

as a close advisor KALOYEROS, a/k/a ?Dr. the defendant,
actedzmaau1agent.of CNSE with.respect to, among other things, 
development projects, including large, state?funded development
projects in Syracuse and Buffalo, New York, and served as 
primary liaison to the Governor and the Governor?s senior staff.

d. In or around June 2016, Howe began meeting with the
In
those meetings, Howe admitted.to his role in the illegal schemes set
forth herein as well as other crimes. In or about September 2016,
Howe pleaded guilty pursuant to a cooperation agreement with the
Government to several federal crimes, including conspiracies to

bribery, and wire fraud, substantive extortion and wire fraud
offenses, and tax fraud. The information provided.by Howe has been
corroborated.by contemporaneous documents, including emails, and by
the statements of other witnesses.

EH PETER GALBRAITH KELLY and the Energy company

29. 
publicly available information, and witness interviews, including
interviews with Howe and with.employees of the Energy'Company, that:

a. The Energy Company is a privatelymowned electric
power generation development and asset management company that,
according to its website, focuses on a clean energy strategy
utilizing natural gas and wind?powered generation. Since in or
about 2008, the Energy Company has been working to develop a $900
million power plant (the ?Power Plant?) in Wawayanda, New York,
currently under construction.? As set forth in more detail below,
the development process for the Power Plant involved numerous State
approvals.

b. Since in or about 2008, PETER GALBRAITH KELLY, JR. 
a/k/a ?Braith,? the defendant, has been the Senior Vice President
of External Affairs at the Energy Company. In that role, which he
continues to hold, he oversees public relations and governmental
affairs for the Energy Company, in particular as it relates to the
building of new power plants across the United States.

17

 

 JOSEPH GERARDI, and the Syracuse Developer

36. I have learned from emails, financial records, publicly
available information, and.witness interviews, including interviews
with Howe, that:

a. The Syracuse Developer is a large real estate
development firm located.in.Syracuse, New'York'that, through various
corporate affiliates, builds, owns, and manages real estate in and
around New York State. Prior to 2013, the Syracuse Developer?s
business focused primarily on private development opportunities,
including stripznalls and.supermarkets. Beginning:h1curabout 20l3,
the Syracuse Developer began obtaining a significant portion of its
Specifically,in
or around December 2013 the Syracuse Developer was awarded a contract
with Fort Schuyler to serve as the preferred developer for projects
of CNSE to be created in Syracuse, New York. This award permitted
the Syracuse Developer to be chosen for CNSE development projects
of any size in or around Syracuse without further competitive bidding,
and, indeed, shortly thereafter, the Syracuse Developer received a
contract worth approximately $15 million to build a film studio in
Syracuse, New York, associated with CNSE, and in or around October
2015, 
$90 million to build a manufacturing plant in Syracuse, New York,
associated with CNSE.

b. STEVEN AIELLO, the defendant, is a founder of the
Syracuse Developer and has been its President since incurabout 1998.
ast?uacompany?s general
manager, focusing on business development, negotiating real estate
contracts and handling tenant negotiations.

c. JOSEPH GERARDI, the defendant, is a founder of the
Syracuse Developer and its General Counsel since in or about 1998.
Among other responsibilities, GERARDI is responsible for, among other
things, public permitting and negotiating company contracts.

18

H. LOUIS CIMINELLI, MICHAEL LAIPPLE, KEVIN SCHULER, and the Buffalo
Developer

31. I have learned from emails, financial records, publicly
available information, and witness interviews, including'interviews
with Howe, that:

a. The Buffalo Developer is a large Buffalo?based
construction and development company that provides, among other
things, construction management and general contracting services.
As relevanttxathis Complairug irLor?aroundnjanuary'20l4, the Buffalo
Developer was named by Fort Schuyler as a preferred developer for
projects of CNSE to be created in Buffalo, New York. This award
permitted the Buffalo Developer to be chosen for CNSE development
projects of any size in or around Buffalo without further competitive
bidding, and, indeed, in or around March 2014, as a result of its
position as a preferred developer, the Buffalo Developer received
a contract 
plant in Buffalo, New York, associated with CNSE. That contract
ultimately expanded to be worth approximately $750 million.

b. LOUIS CIMINELLI, the defendant, is the Chairman and
CEO of the Buffalo Developer, and served in that role at all times
relevant to this Complaint. In that role, CIMINELLI directs the
Buffalo Developer?s long?term strategy and develops strategic
partnerships in the State and elsewhere.

c. MICHAEL LAIPPLE, the defendant, is the President of
focuses, among<other things,
on initiatives involving publichrivate infrastructure projects,
and served in that role at all times relevant to this Complaint. In
this role, LAIPPLE works on, among other things, developing I
partnerships between the Buffalo Developer and public entities for
large?scale developments.

d. KEVIN SCHULER, the defendant, is a Senior Vice
President for the Buffalo Developer, and served in that role at all
timeszrelevanttxathis Complaint. SCHULERii;responsiblejkn; among
other things, the Buffalo Developer?s external communications,
government affairs, and community and media relations.

19

 

 THE PERCOCO BRIBERY SCHEME

A. The Energy Company Paid Bribes to PERCOCO in Exchange for Official
Actions by PERCOCO

32. As set forth in detail below, based on my review of emails,
documents obtained in course of this investigation, and financial
records, and interviews with, among others, Howe and current and
former State employees-and employees of the Energy Company, I believe
that JOSEPH PERCOCO, a/k/a ?Herb,? and PETER GALBRAITH KELLY, JR.,
a/k/a ?Braith,? the defendants, and Howe engaged in a multinyear
secret
payments to PERCOCO through.PERCOCO?s wife in.exchange for 
official assistance to the Energy Company. The evidence shows that:
State action.Was critical to the Energy Company?s business; 


requests for official assistance, PERCOCO requested that the Energy
Company hire his wife; in.or around.the end.of 2012, KELLY?caused
the Energy Company to create a position for wife; and 
in exchange for various personal benefits from KELLY as well as
payments of approximately $90,000 per year ($7,500 per month) from
the Energy Company to PERCOCO and his wife, PERCOCO agreed to use
his official position and influence, and did in fact use his official
position and influence, to help the Energy Company with specific State
matters as the opportunities arose. Among other things, PERCOCO
agreed to use his official position and influence to assist the Energy
Company?s efforts to obtain.(i) a valuable agreement from the State
allowing the Energy Company to buy lower?cost emissions credits in
New York for a power plant proposed to be built in New Jersey (the
?Reciprocity Agreement?) and (ii) a lucrative long?term power
purchase agreement with.the State guaranteeirmja.buyer for the power
to be produced.at a power plant proposed to be built in New'York (the


33. Furthermore, as explained in detail below, based on my

and financial records and interviews of, among others, Howe and
current and former State employees, I believe that JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, and Howe continued to extort monetary
payments from PETER GALBRAITH KELLY, JR., a/k/a ?Braith,? the

and.Howe in or around.the end of 2013 that the State would not award

20

a PPA to the Energy Company. PERCOCO and Howe did not inform KELLY
that they understood from State officials that the Energy Company
would.not be receiving a PPAJ To the contrary, PERCOCO continued to
promise official actions and influence related to the PPA in order
to ensure that KELLY and the Energy Company continued to employ and
pay wife.

i. _State Action Was Critical to the Energy Company

34. Based on my review of emails, Energy Company documents,
and public informationq I learned.that the Energy Company?s business
has depended significantly on its success in obtaining State
regulatory approvals, contracts, and agreements. For example, the
Energy Company?s Power Plant project, approximately

from the Department of Public Service Department of
Environmental Conservation and Department of?Iransportation
the Energy Company
was seeking to obtain a PPA, under which the State would purchase
virtually all power produced.by the Power Plant for up to 15 years,
guaranteeing a significant and long?term stream of income for the
PowerPlant. 
a PPA was worth at least approximately $100 million to the Energy
Company, and would significantly assist the Energy Company in
obtaining financing for the project. In or around 2012, the Energy
Company began actively seeking to apply'for and.obtain.a PPA.offered
through DPS and the New York Power Authority 

35. Based on my review of emails, Energy Company documents,
and public information, and on interviews with, among others, Howe
and employees of the Energy Company, I learned the following:

a. As of mid?2010, the Energy Company had retained the
Law Firm and Howe to provide consulting advice with respect to
regulatory approvals related to the Energy Company?s Power Plant
project. Pursuant to its arrangement with.Howe, the Energy Company
made regular payments to the Law Firm, a portion of which were paid

firm associated with the Albany Law Firm. In or about that time,
however, PETER.GALBRAITH KELLY, JR., a/k/a ?Braith,? the defendant,
sought to have the Energy Company make additional payments directly
to Howe. Howe understood, based on his conversations with KELLY, that
KELLY wanted to make additional payments to Howe in order to increase

21

 

 access to the Governor (who was expected to be elected in
the coming1nonths) and.certain.of thetGovernor?s advisers, including
JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, in order to secure a
PPA.for the Energy Company. In consultation.with KELLY, Howe set up
a limited liability company (?Howe?s that had no business-
purpose other tharLto conceal the source and receipt.of paymentSInade
to or through Howe. Howe then used his LLC to conceal from his
principal employer, the Government Relations Firm, additional
payments made to Howe from the Energy Company.

. Between August 2010 and April 2015 the Energy Company
paid Because Howe accepted.these
payments outside of his employment agreement with the Government
Relations Firm, KELLY agreed with Howe not to tell anyone at the
Government Relations Firm or the Law Firm about the additional
payments to Howe?s LLC. During that same period, the Energy Company
paid the Government Relations Firm approximately $332,062.

36. Based on my review of emails, Energy Company documents,
and public information, and on interviews with, among others, Howe,
State officials, and employees of the Energy'Companyy I learned that

that JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, and an individual
who worked closely with PERCOCO in the Executive Chamber from 2011
through in or around June 2014, in the position of State Operations
Director (referred to herein as the ?Former State Operations
Director?), 
Plant given their senior roles with respect to the Governor, and their
respective roles overseeing State operations and the functioning of
key agencies such as DEC, DOT, DPS and liaising with labor
unions. Ultimately, and as set out in greater detail below, KELLY
sought to have PERCOCO use his official position and influence with
respect to at least the following State decisions and actions:

a. As early as 2010, Howe began to seek 
assistance in influencing the Former State Operations Director with
respect to the Power Plant, most specifically by asking PERCOCO to
advise the Former State Operations Director that the Power Plant was
supported by labor unions and to advocate for the closing of a nuclear
power plant located in Westchester County, New York (the ?Nuclear
Power Plant?). Based on my review of publicly available documents
and my interviews of witnesses, including employees of the Energy
Company, the importance of the Power Plant to the State depended,

22

at least in part, on whether the Nuclear Power Plant was going to
be shut down. 

b. Beginning in or about 2011, after the Governor?s
election, KELLY sought information and assistance regarding the
process through.which.the Energy Company could apply for a long?term
PPA, something the Energy Company believed would be of great economic
benefit becauSe it would guarantee a steady and significant stream
of income for the Power Plant and assist the Energy Company in securing
financing to build the Power Plant.

c. In or about early 2012, the Governor announced in his
State of the State address the creation of an ?Energy Highway
Initiative,? which included the appointment of an interagency task
force to focus on increasing New York?s energy generation and
transmission capacity: In connection with this initiative, in or
about.April 2012, NYPA.issued.a request for information (the ?Energy
seeking information.on potential energy generation.projects.
On or about May 30, 2012, the Energy Company submitted a response
tc>the Energy RFI, highlighting its efforts tolmiild the Power Plant.

d. In or about April 2013, NYPA issued a request for
proposals for energy transmission projects and for the construction
of nerpow plants. NYPA.further offered a PPA to any selected new
power plant. On.or about May 20, 2013, the Energy Company filed its
response seeking the PPA.

e. In or around.August 2013, the Energy Company sought
a valuable agreement between a New Jersey state agency and the New,
York State DEC (the ?ReciprOcity Agreement?) which would allow the
Energy Company to purchase emissions credits which are required
to offset certain types of pollution created by power plants in
New York in connection with.a power plant being built by the Energy
Company'inINewujersey. The absence of a Reciprocity Agreement would
have made it difficult, if not impossible, for the Energy Company
to construct the New Jersey power plant.

ii. KELLY Began Providing Personal Benefits to PERCOCO
37. Based on my review of emails between and among PETER
GALBRAITH KELLY, JR., a/k/a ?Braith,? and JOSEPH PERCOCO, a/k/a

?Herb, the defendants, and Howe, and Energy Company expense records,
I know that KELLY began to offer and provide certain benefits to JOSEPH

23

 

PERCOCO, a/k/a ?Herb,? the defendant, in late 2010 and 2011, in an
effort to ingratiate himself to PERCOCO. Examples of these
interactions include the following:

a. In or around August 2010, KELLY took PERCOCO, Howe
and others on a weekend fishing trip in Montauk, New York, paid for
by the Energy'Companyz In.connection.with.the trip, KELLY submitted
a reimbursement request for approximately $2,748 in ?business
development? expenses connected to the Power Plant, which did not
reflect that PERCOCO was on the fishing trip.

b. On or about October 27, 2010, KELLY arranged, at
request, for the Energy Company to donate a private jet
to transport thetsovernor and his staff to campaign.events later?that
same week.

C. KELLY took PERCOCO and Howe to a $279 lunch at a steak
restaurant in Manhattan, on or about December 23, 2010, just a few
days before the Governor took office for the first time, and charged
the meal to the Energy Company, under a billing code for the Power
Plant.

d. On or about February 4, 2011, KELLY invited PERCOCO
fishing again and stated in an email, ?just know whenever YOU need
me I?m in.?1

 

the extent emails toror are referenced herein,
the emails were sent to or from PERCOCO's personal email address,
and not his New York State email address, and, as is true with all
documents referenced herein, were obtained pursuant to judicially
authorized search warrants, in response to grand jury subpoenas to
third parties, or through voluntary disclosures from third.parties.
Based on my review of policies and advisory opinions issued by the
State Office of Information.Technology Services and State Committee
on Open Government, I learned that State employees are not to use
personal email addressestxaconduct State busineSS'unless explicitly
authorized, and that emails received or sent by a State official in
his or her capacity as an official are records subject to disclosure
pursuant to the New York Freedom of Information Law regardless of
whether those emails are sent'or received from an official or personal

24

38. Based on emails and interviews with, among others, Howe,
I know that, by at least the spring of 2011, PETER GALBRAITH KELLY,
JR., a/k/a ?Braith,? the defendant, was actively seeking the
assistance of JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, with
obtaining State support for the development of the Power Plant, and
PERCOCO began to use his influence to assist the development of the
Power Plant.

a. On.or about.May 16, 2011, Howe reported to KELLY that
PERCOCO is ?all over? the Power Plant project and wanted to set up
a meeting with the Former State Operations Director to discuss the
project. Howe further reported.to KELLY that there was ?No opinion
yet .. . JP doing something with this though.? KELLY responded, 
got an email from Joe as well saying just that.? Based on my
conversations with Howe, I understand that the ?opinion? referred
to in this email is the opinion of senior members of the Governor?s
staff, including the Former State Operations Director, with respect
to supporting the development of the Power Plant.

b. Chlor?about June 5, 2011, the Former State Operations
Director sent an email from his personal email address to Howe that
stated that the ?project? the development of the Power Plant
faced a lot of challenges, including the need for a PPA, low energy
prices given.a ?supply glut in.NY State," and.stiff competition.from
other potential projects. That same day; Howe wrote to PERCOCO that
he had spoken to the Former State Operations Director regarding the
Energy Company and that the Former State Operations Director was ?good
but need now."

c. On.or about June 7, 2011, Howe advised.KELLY by email
that Howe had arranged a meeting for KELLY with the Former State
Operations Director on or about June 9, 2011 . In an email on the same
day as the meeting, June 9, 2011, Howe stated to PERCOCO: ?Herb, do
the right thing with Braith..this goes south herb, you will have to

 

email address. Nonetheless, I am aware of media reports of State
employees using personal email addresses to avoid disclosure of
records under the New York Freedom of Information Law.

25

 

clean out the ?herb cave? downstairs at the estate as I?ll have to
move I understand that, in this email, Howe is reminding
PERCOCO what a financially important client the Energy Company was
to Howe. PERCOCO responded, got it herb. Thx.?

d. On the day of the meeting, on or about June 9, 2011,
Howe instructed KELLY to ?go see Percoco after [Former State
Operations Director] meeting . Wait if necessary.? KELLY

replied, ?I?ll sleep in the streets of NYC waiting for JP if I need
to.? Howe has explained that is PERCOCO.

Sought to Have His Wife Hired by the Energy Company

39 . As set forth above, in or around May 2012 the Energy Company
responded to the Energy RFI with a submission that sought to convince
State officials of the Power Plant?s importance to energy generation
in the State . Based on emails and financial records of JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, and.my conversations with Howe, I know
that at or around the same time, PERCOCO was facing significant
financial difficulties and was struggling to pay his bills. In or
about July 2012, PERCOCO and his wife purchased a home in Westchester
County, New York, for approximately $800, 000. In or about September
2012, wife took a one?year unpaid leave of absence from
her job as a public school teacher in a New York City school, which
she resigned from the following year. Based on my review of financial
analysis conducted by the FBI, which reviewed financial records
pertaining to the PERCOCOs, I learned.that after PERCOCO's wife left
her job in September 2012, the average income
decreased from approximately $12,714 to approximately $8,594. At
that time, their expenses, which totaled at least .
approximately $20 000 per month, far exceeded their income, and their

 

2 Based on my review of emails in this investigation, and the
interview of witnesses, including Howe, I learned that ?Herb? is a
name PERCOCO, Howe, the Former State Operations Director, and at least
one other government official have used as a term of endearment to

was in?3ffice. Separatelyn I also learned that.Howe and.others often
referred to KELLY as ?Braith,? short for middle name,
GALBRAITH.

26

savings was close to being depleted. Between in or about May and
October 2012, PERCOCO attempted HM unsuccessfully to assist his
wife in obtaining a substitute teaching job near their new home in
Westchester County. 

40. Based.on.my review of emails and.my discussion.with Howe,
I learned that in the spring of 2012 at or around the same time

PERCOCO, a/k/a ?Herb,? the defendant, asked PETER GALBRAITH KELLY,
JR., a/k/a ?Braith,? the defendant, to have the Energy Company hire
his wife. Indeed, according to Howe, from in or about

pressured Howe and KELLY to provide wife a-job with the
Energy Company. My review of emails during this time period confirms
and corroborates the pressure brought to bear by For
example:

a. 
from Howe on the Energy Company?s proposed response to the Energy
RFI, Howe wrote to KELLY, ?Spoke to Joe. He?s calling you possibly
issue.? Howe further noted,i11the same email, that
he had spoken to the Former State Operations Director, who ?said 87
[Energy RFI respOnses] came in.? I know from publicly available
information that the State received approximately 85 responses to
the Energy RFI, including the response from the Energy Company.

b. On or about September 11, 2012, PERCOCO wrote an email
to Howe stating, ?Herb: Nail down that issue. Happy to have dinner
or meet with you guys anytime! Thanks . According to Howe, ?nail down
that issue,? referred to finding a job for wife. Howe
forwarded the email to KELLY, and stated: ?Braith need to talk.?

c. On or about September 18, 2012, Howe wrote an email
Howe, PERCOCO) and KELLY
the following week. In the same email chain, Howe suggested KELLY
and Howe talk the next day, ?Need to try and hammer something out
for jp. Wants you and I to try and identify something he wants to
try and stay removed if possible if know what I mean.? Howe
understood that PERCOCO wanted to ?stay removed? because it was
improper for PERCOCO to be asking KELLY for a job for his wife given
the work PERCOCO had done and was doing to advocate for the Power

27

 

Plant. Howe further understood that PERCOCO did.not want others to
know that he was asking the Energy Company for a job for his wife.

d. 
records and cellular phone records noting the location.of calls made
by Howe and PERCOCO, and discussions with Howe, I learned that, on
or about September 26, 2012, PERCOCO, KELLY, and Howe had dinner at
a restaurant in Danbury, Connecticut. .According to Howe, during
dinner, PERCOCO, KELLY and Howe discussed, among other things, the
Energy Company hiring wife and the Energy Company obtaining
a PPA. KELLY agreed at this dinner that he would work on finding a
job at the Energy Company for wife. KELLY charged this
dinner, which cost approximately $386.00, to the Energy Company?s
budget for the Power Plant, request from
KELLY that was approved by the Energy Company. The reimbursement
request further noted that the meal was with Howe, but made no
reference to PERCOCO.

41. Based on my interview of the then?President of the Energy
Company (?Executive?1?), I learned that, in or about October 2012,
PETER GALBRAITH KELLY, JR., a/k/a ?Braith,? the defendant, met with
Executive?1 and the then?CEO of the Energy Company to advise them
that KELLY wanted.to hire the wife of JOSEPH PERCOCO, a/k/a ?Herb,?
the defendant, to work on a community education project that KELLY
was planning to develop. Executive~1 and the then?CEO expressed
concern about hiring the wife of a senior member of the Governor?s
staff while the Energy Company was seeking extensive regulatory review
of its Power Plant before State agencies, and directed KELLY to obtain
an ethics opinion or approval from the Governor?s Office before
proceeding. KELLY later advised them that he had obtained, in sum
and substance, an ethics opinion from the Governor? Office approving
the Energy Company?s hiring of wife. Based on my review
of documents provided by the Governor? Office and the Energy Company,

I learned.that.no such ethics opinion was ever provided.to the Energy
Company and there is no evidence to suggest that one was ever sought
or prepared. 

42. Emails in or around the fall of 2012 reflect continued
pressure a/k/a ?Herb,? the defendant, to finalize
the hiring of his wife by the Energy Company. For example, on or about
November 12, 2012, PERCOCI)wrote:tolHowe stating, 
the trigger here. things getting bad. What do you think about this

28

iv.-

Thursday at my house?? Howe has explained that he understood ?things
getting bad" to refer to financial situation.at the time.

a. In a follow~up email, Howe confirmed, ?Fat boy locked
and loaded.. 7Thursday night at the estate.? PERCOCO replied, ?is
he bringing the check?? Based on.my interviews of Howe and my
review of emails in this investigation, I know that Howe and PERCOCO
often referred to KELLY as ?Fat Man, or ?Fat Boy. Howe later wrote,

?herb need 7500 boxes of Zittill? PERCOCO responded, ?yes
7500/month is her old salary.?3
b. Howe has explained that ?zitti? or ?ziti? was a code

word.he used for money, came up with based
on the use of the term in the television show ?The Sopranos."

KELLY Caused.the Energy Company to Make Payments to 

43. As documents
obtained.intjmacourse of this investigation, financial records, and
interviews with, among others, Howe and employees of the Energy

and PETER GALBRAITH KELLY, JR., a/k/a ?Braith,? the defendants,
reached.an agreement under which.the 
make payments to wife and, in exchange, PERCOCO agreed to
use, and did in fact use, his official position and influence to assist
the Energy Company with State actions as opportunities arose. To
carry out his end of this agreement, KELLY caused the Energy
Company to create a previously non?existent job for wife;
ran payments to the PERCOCOs of approximately $7,500 per month
through a consultant who worked for the Energy Company
(?Consultant?1?) in order to disguise the source of the payments,
and also took additional steps to conceal wife? employment
at the Energy Company; wife a much higher salary
than warranted by her limited work; and falsely told his superiors
at the Energy Company (on two occasions) that PERCOCO had obtained
an.ethics opinion from the Governor?s Office approving of 

 

3 Based on my review of Department of Education records,
wife annual salary during the 20ll~2012 school year was
approximately $75,796.

29

 

wife?s employment with the Energy Company. Moreover, when recently

made false statements about the purpose of making payments through
Consultantul in an apparent effort to conceal the criminal nature
of his conduct. For his part, PERCOCO further concealed the criminal
scheme by failing to include the Energy Company as the source of
payments on his State?mandated financial disclosure forms.

44. Evidence of the nature of the job created for the wife of
JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, and of the efforts of
PETER GALBRAITH KELLY, JR. a/k/a ?Braith, the defendant and PERCOCO
to conceal the payments made by the Energy Company includes the
following:

a. Based on my review of emails, documents obtained in
the course of this investigation, financial records, and interviews
with, among others, Howe and.employees of the Energy'Companyy I know
that, in.orearound.fall 2012, after KELLY learned.that 
to find a job for his wife, KELLY and others he supervised began
developing an education program targeted at fourth grade students
located.in and around a power plant the Energy Company was building
in New Jersey (the ?Education Program"). Based on an interview of
Executive~1, I learned that this was the first time the Energy Company
developed an education program for elementary school students in
connection.with.the development of one of its power plants, and that
Executive?1 was not aware of any particular issue, either duringtnid
to late 2012 or at or around the New Jersey location, that necessitated
such a program.

. Based on my review of financial records and interviews
with employees of the Energy Company, I know that the Energy Company
began making payments of approximately $7,500 to the wife
of PERCOCO on or about December 18, 2012. On or about December 6,
2012, Howe advised PERCOCO that the payments would begin shortly:
?Herb. with bk in dc. Ziti gets cleared on 15 th.When all the boxes
Howehasexplained
that ?bk? refers to KELLY.

c. Based on my review of emails, documents obtained in

the course of this investigation, financial records, and interviews
with, among others, Howe, and employees of the Energy Company, I

30

 the fact
that the Energy Company was the sourcec?fthese payments, as follows:

i. Throughout wife's tenure with the
Education Program, the Energy Company used Consultant?1 as a
for,its payments to wife. Between
December 2012 and January 2016, wife received a 
check of approximately $7,500 from Consultant?l. During each of
these months; shortly before each payment to wife,
Consultant~1 receivedeapayment 
amount to be paid to wife.

ii. and.other
employees of the Energy'Companyy I learned that Consultantwl did not
hire or supervise wife. Consultant?1 stated that, in or
about fall 2012, he was KELLY that payments to wife
would be made through Consultant?1. KELLY provided two reasons for
this payment structure: it purportedly was more convenient for
billing purposes; and (ii) there wouldkxenegative ?optics? oflniring
the wife of a senior official in State government while the Energy
Company had business before the State.

Based.on an interview with an external affairs
manager at the Energy Company (the ?External Affairs Manager?), who
has worked for KELLY since in or about 2010, I learned that, based 1
on conversations the External Affairs Manager had with KELLY and
others in the External Affairs team, the External Affairs Manager
purposefully kept wife?s last name out of brochures for
the Education Program, directed wife to refer to herself
by her first name when in classrooms, and purposefully kept 
'wife out of any pictures used to promote the program.

d. Based on my review of emails and interviews with
employees of the Energy Company, I believe that the hours worked.by
wife did.not come close to justifying the $7,500 per month
sala?yshewasreceiVing. 
2014, during which time the Education Program was being developed,
wife worked.no more than.15 hours per month assisting with
the development of the curriculum and participating in calls. Once
wife began teaching in classrooms in.or around April 2014,
she worked approximately 16 to 25 hours per month during the school
year, primarily teaching partial-day courses to fourth graders once

31

 

or occasionally twice per week. During the summer, when school was
not in session, wife worked approximately ten hours per
month, and sometimes as little as two to three hours per month, on
special projects assigned Affairs]?anager. 
wife was paid $7,500 per month regardless of the number of hours she
worked, and was paid approximately three and.a half times more than
another employee at the Education Program, who worked more hours per
week. 

e. Based on my review of Energy Company documents and

I learned that, in or around June and July 2014, KELLY, for the second
time, falsely claimed to have an ethics opinion authorizing the Energy
Company?s hiring of wife. This false representation was
made in response to questions raised by two executives of the Energy
Company after they noticed a substantial invoice from Consultantml
in or around June 2014. On or about July 2, 2014, in.a meeting with
those executives and the then?CEO of the Energy Company, KELLY stated,
in sum and substance, that wife was being paid through

because of who she was, i. e. the wife of a high?level State official.
In the same meeting, KELLY stated falsely that there was an
ethics Office approving'the.arrangement,
and that he had seen such opinion, but he did.not have a copy. KELLY
further (falsely) stated that lawyers had reviewed the arrangement
and there was ?nothing illegal about it.? Although KELLY was asked
tc>provide additional from
the Governor?s Office after the meeting, KELLY never did so.

f. KELLY was voluntarily interviewed by federal law

of the investigation in this matter. During that interview, KELLY
admitted, in part and in substance, that Consultant?l acted as a
pass?through for the payments from the Energy Company to 
wife but also falsely claimed that the arrangement was strictly for
administrative ease.

v3 PERCOCO Failed to Disclose Payments from the Energy Company

45 . Pursuant to the New York State Public Officers Law, certain
employees of the Executive Chamber, including, during his State
employment, JOSEPH PERCOCO, a/k/a ?Herb, thedefendant, are required

32

to file financial disclosure statements on an annual basis with the
New York State Joint Commission on Public Ethics. The financial
disclosure statement is entitled ?Annual Statement of Financial
Disclosure? (the ?Disclosure Form?) and.is required to be signed.and
presented.for filing by the reporting individual. A.primary purpose
of the Disclosure Form is to require high?ranking public officials
to disclose outside income, activities, finances, and assets that
may indicate a financial impropriety or conflict of interest.

At all times relevant to this Complaint, the
Disclosure Form.required reporting individuals, among other things,
to list ?completely? the ?nature and amount of any income in EXCESS
of $1,000 from EACH SOURCE for the reporting individual and such
individual?s spouse." (Emphasis in original.)

b. In his required filings for the years 2012 and 2014,
PERCOCO represented that his wife was employed by a limited liability
company in the name of Consultantml, and did not list the Energy
Company. As set forth herein, however, the representations made with
respect to his wife were false and misleading because, in truth and
in fact, and as PERCOCO well knew, wife did not work for
Consultant?l, but rather Was employed by the Energy Company, which
paid wife through Consultant?l at the direction of PETER
GALBRAITH KELLY, JR., a/k/a ?Braith,? the defendant, in order to
disguise the source of the payments.

vi. PERCOCO Agreed to Take Official Action for the Energy Company

46. As set forth in more detail below, based on my review of
emails and interviews of individuals including Howe and various State
employees and officials, I believe that in return for the secret
payments from the Energy Company to his wife, JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, agreed to use, and did in fact use, his
official position and influence to benefit the Energy Company and
advance its interests as the need arose. PERCOCO was effectively ?on
call? for PETER.GALBRAITH KELLY, JR., a/k/a ?Braith,? the defendant,
whenever KELLY required help for the Energy Company before the
Executive Chamber or State agencies. More specifically, in return
for the payments to his wife, PERCOCO agreed.to take, and.did in fact
take, official.actions:related totnwaState issues that.were?oritical
to the Energy Company?s business: the Reciprocity Agreement and.the
PPA.

33

 

vii.

PERCOCO Helped the Energy Company Obtain the Reciprocity Agreement

47. Based on my review of emails and interviews of, among
others, Howe and an official at the DEC (the Official?), I know
that in or about August 2013, at the request of PETER KELLY,
JR., a/k/a ?Braith,? the defendant, JOSEPH PERCOCO, a/k/a ?Herb,?
the defendant, agreed to use, and in fact did use, his official

Reciprocity Agreement described above, which allowed the Energy
Company to purchase emission.reduction credits in.New York
in connection with the power plant it was building in New Jersey.
Evidence of this agreement includes the following:

a. On or about August 12, 2013, KELLY advised.Howe that
KELLY had been attempting to secure the Reciprocity Agreement from
the DEC and a New Jersey state agency, and that the DEC Official
?indicated that he could use a ?push from above? to get it done as
a priority.? I understand from reviewing Energy Company documents
and interviewing an Energy Company employee that a certain number
of ERCs were required before the New Jersey plant could become
operational, and purchasing ERCs in New York was necessary at that
time because there were a limited number available for sale in New
Jersey and the cost of purchasing the ERCs in New Jersey was much
higher than purchasing them in New York.

b. On or about August 14, 2013, PERCOCO responded to an
email from Howe regarding the Reciprocity Agreement, stating that
he (PERCOCO) would ?check with? the Commissioner of DEC. Later in
the same email chain, on.or about August 24, 2013, PERCOCO responded
to the same email chain and asked that the Former State Operations
Director or another member of the Former State Operations Director?s
staff (the ?Operationleeputy?) ?help 
was dealing with a pressing personal situation? .Approximately one
hour later, the Former State Operations Director (who appears to have
been blind copied on email) agreed to assist.4

 

4 The Former State Operations Director used his personal email
in agreeing to take this action despite having a signature line that

34

c. Based.on.my review of emails and.my interview of the
Operations Deputy, I learned that the Operations Deputy instructed
the DEC Commissioner to enter into the Reciprocity Agreement.
Specifically, on or about Tuesday, August 27, 2013, the Operations
Deputy, responding to the same email chain, which contained all of
the emails set forth.in the above paragraphs, wrote to Howe, copying
PERCOCO, stating, ?Spoke to [the DEC Commissionerl. They'are1noving
'forward and will get it done 

d. Based on an interview of the DEC Official, I learned
that the DEC?3fficial Office,
via the DEC Commissioner?s Office, to proceed with the Reciprocity
Agreement. 
the<30vernor?s Officesto enter into the Reciprocity Agreement, which
I believe, based on the emails and interviews described above, came
initially from PERCOCO, the DEC likely would not have entered into
the Reciprocity Agreement.

48. Basedcx1records DEC,
I learned that, in or around late 20l4, the DEC and the New Jersey
state agency signed the Reciprocity Agreement, which allowed the

credits in New York for its New Jersey power plant then in development,
and resulted in significant savings to the Energy Company.

 

stated: ?Important Note: Please direct any emails or questions
regarding New York State official business to [the Former State
IEwiLlnotreply
to any emails dealing with state business on this account.?

5 Records obtained from the DEC indicate that just four days
earlier, on or about of August 23, 2013, DEC had ?not identified a
material state interest to be served by the reciprocity agreement,
other than interstate cooperation,? and planned to confer with the
Executive Chamber on whether to enter in to such an agreement.

35

 

 PERCOCO Took Official Action Regarding the PPA

49. Based on my review of emails, documents obtained in the
course of this investigation, and interviews of, among others, Howe
and.State employees, I know that starting:h1cn:about September 2012,
JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, agreed to use, and did
in fact use, his official position and influence to help the Energy
Company obtain the PPA described above . While the PPA ultimately was
not awarded to the Energy Company or to any other energy company in
light of the State?s energy needs, PERCOCO intervened and used his
official authority in the Executive Chamber to exert pressure on
behalf of the Energy Company in particular. 

50. Based on publicly available information, I learned that
on or about April 3, 2013, NYPA issued the Energy RFP, which, as set
forth.above, sought proposals for nerpow plants and.offered.a PPA
to purchase all output for up to fifteen.years from any selected.new
power plant. On.or about May 20, 2013, the Energy Company filed its
response to the Energy RFP, whichq among other things, set forth its
plans and progress to date to build the Power Plant.

51. In.the fall of 2013 as theINew'York.State Public Service
Commission which was in charge of making selections under
the Energy REP, was in the process of making certain decisions
regarding the Energy RFP JOSEPH PERCOCO, a/k/a ?Herb,? the

for the Power Plant, as follows:

a. On or about September 18, 2013, Howe sent an email
to PERCOCO which stated, in part, ?When we talked last week, you asked
that I send you a note on the ?fat man? proj ect.? As set forth above,
Howe and PEROCCO sometimes referred to PETER GALBRAITH KELLY, JR.,
a/k/a ?Braith,? the defendant, as ?fat man." The email continued:
_?They put up $14m, last week and are awaiting the results of the award.
Word.on the street is that the is recommending the starting-
up some old plants in the City, and not giving it to the [Energy Company]
project. As you.know Labor is all<3ver the [Energy'CompanyJ project.
Again Fat Man said there is some former [State Official] who is
spearheading the starting up [of old plants . . . Can you talk
tijour folks and.see what the story is?? PERCOCO respondedq need
that guys name asap 1 and Howe replied with a name and employer. Howe
understood response to mean that he intended to work to

36

stop the reigniting of old coal?fired.plants that would.potentially
compete with the construction of the Energy Company?s Power Plant.

b. On or about October 8, 2013, Howe wrote in an email
to PERCOCO, reporting, ?Herb spoke to [the NYPA President] this
morning about ?operation.fat man?. He says you need to get Herbert

focussed [sic] so he calls a1neeting with all involved.to coordinate
otherwise those folks will be off the reservation? Seems like
[the NYPA.President] feels it should be done soon as this issue goes
public mid?week next week. Will let you handle as you know best how
tOImove forward.? PERCOCO:responded, ?ok. Thanks.? In.reference to
this email, Howe explained that ?Herbert? is the Former State
Operations Director (who was part of the same group of friends,
including Howe and PERCOCO, who called each other ?Herb?) and that
Howe was asking PERCOCO to influence the Former State Operations
Director to set up a meeting with NYPA, NYSERDA, and the PSC to
encourage the issuance of a PPA to the Energy Company.6

c. Two days later, on or about October 10, 2013, Howe
wrote an email to PERCOCO reflecting that the NYPA President, among
other things, ?said he wants to make sure ALL the options come to
[the Former State operations Director]." PERCOCO responded,
ZEknowd?antheconteXt
of this email, my review of many other similar emails in this
investigation1 and my discussions with Howe, that ?Herbert? in this

was emphasizing that he was going to talk to the Former State

 

6Howe forwarded this chain.to KELLY, witha.note, ?See 

Company]? and also changed ?ok. Thanks? to ?0k. on it now. thanks.?
Howe has acknowledged that he revised this email and certain others
before forwarding, and.explained.that he did so in part to emphasize
that PERCOCO was advocating for the Energy Company, as PERCOCO had
promised.tocdo. 'When I reference herein.PERCOCO?s email statements,
I am relying unless otherwise noted on original emails provided by
personal email service provider in response to
judicially?authorized search warrants, or other sources for which
there is no indication of alteration. 

37

 

 favor the Energy Company?s
bid to obtain the PPA.

. d. On or about October 14, 2013 the NYPA President, from
his personal email address, informed Howe that the Governor?s
then?Assistant Secretary for Energy (the ?Former Energy Assistant
Secretary?) was trying to set up a briefing with the Former State
Operations Director, and suggested, ?You might want to tell [the
Former State Operations Director] to make time at least an hour
for him to understand the entire picture including all pros and
cons.? Based on my review of emails and discussions with State
employees, I know the proposed meeting was to discuss certain issues
related to the Energy REP, including PPAs.

i. Howe forwarded this email chain to PERCOCO,
stating, ?Herb?can you push on [the Former State Operations Director]
the fat man is sweating it!?

ii . PERCOCO replied, ?He always sweats! i Ok will get
to herbertll? I know from the context of this email, my review of
many other similar emails in this investigation, and.my discussions
with Howe, that ?Herbert? in this email refers to the Former State
Operations Director, and that PERCOCO was again telling Howe that

the PPA for the Energy Company.

Howe replied, ?Good man Thanks,
concerned.as the PSC is supposed.to hold_a'meeting on this Thursday,
so [the NYPA.President] believes something will come out about this.
Hold [the Former State Operations DirectorJ?s feet to the fire Herb

got to keep the ziti flowing Herb!? Howe has explained that,
in the email chain, he was telling PERCOCO to influence the Former
State Operations Director to help the Energy Company get the PPA,
which PERCOCO agreed to do HH and that by doing so, PERCOCO would
be able to keep the ?ziti? (i . e. the payments from the Energy
Company to wife) ?flowing.?7

 

7 When Howe sent this email chain.to KELLY, Howe edited.the NYPA

including all pros and cons?; modified Howe?s email to PERCOCO to

38

ix.

PERCOCO Extorted KELLY for More Money After Learning that the Energy
Company Would Not Receive the PPA

52. Based on my interview of the Former Energy Assistant
Secretaryy I learned.that, in.or about October 2013, JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, contacted the Former Energy Assistant
Secretary and asked whether the Energy Company was going to be awarded
a PPA under the Energy RFP. The Former Energy Assistant Secretary
advised PERCOCO that the Energy Company was unlikely to be awarded
a PPA because there were other projects that were viewed more favorably
by the reviewing committee. The Former Energy Assistant Secretary
recalled that PERCOCO appeared surprised by the Former Energy
Assistant Secretary?s response. The Former Energy Assistant
Secretary also explained.that what he told PERCOCO was confidential
information, to which the Energy Company did not have access, and
in fact the Energy Company?s application for a PPA remained.pending
for at least another 20 months. The Former Energy Assistant Secretary
further ekplained.that he interacted infrequently with PERCOCO, and
when.they interacted.it often.related.to logistics of the Governor?s
events. This contact was one of very few such contacts on substantive
issues that the'Former Energy Assistant Secretary recalled having
with PERCOCO during the approximately four years they both worked
at the Governor?s Office.

a. On or about October 16, 2013, PERCOCO told Howe by
email that Howe should call PERCOCO at his office in Manhattan and
noted that Howe should ?get the pine box Howe understood ?pine
box? to mean casket that there was going to be bad.news for
the Energy Company: When they ultimately connected, Howe learned
from PERCOCO that the Energy Company was not likely to be awarded
the PPA.

 

add ?You should be in mtg?; and modified response to add
?and make sure all is good"; and removed the last part of the chain
about ?ziti.? Howe explained that he made these edits for the same
reasons as explained above.

39

 

53. Based on my review of emails, documents obtained in the
course of this investigation, and interviews of, among others, Howe
and State employees, I believe that, in or around the end of 2013,
JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, and Howe deliberately
did not inform PETER GALBRAITH KELLY, JR., a/k/a ?Braith,? the
defendant, that they had learned that a PPA would not be forthcoming.
To the contrary, PERCOCO and Howe decided to continue to assure KELLY
that PERCOCO was using his official position and influence to help
the Energy Company'obtain.a the Energy Company would continue
to make payments both to wife and to Howe through Howe?s
LLC. In order to maintain the illusion, PERCOCO arranged several
meetings in 2014 and.2015 between.KELLY and State officials who held
relatively senior positions but, in reality, had little or no
selection processes. Evidence
of efforts to continue to extract money from KELLY includes 
among other things, the following:

a. In or around July 2014, PERCOCO arranged a meeting
between KELLY and the Chairman of Energy and Finance for New York,
a member of the Governor?s Cabinet who is often referred to as the
State? ?energy czar, and to whom the following State agencies report
NYPA, NYSERDA, DPS and the Long Island Power Authority (the ?Energy
and Finance Chair?).

i . On or about July 17, 2014 KELLY wrote to PERCOCO:
?Joe wondering if you had a couple minutes to talk Monday? I taking
heavy heat. A.quick conversation.could help a lot.? In reference to

this email, Howe explained that the Energy Company?s leadership was
criticizing KELLY for the lack of progress with respect to the PPA,
as the Energy Company?s application for the PPA was still pending.

ii. On or about July 18, 2014, Howe emailed PERCOCO,
?Herr>? getting messy: I told.Braith.that.you were asking [the Energy
and Finance Chair] to hold a meeting with Braith and the ISO [or,
Independent dealj?;possible.
. This makes Braith.happyu And gets us out of the middle and
the group determines if possible. If he gets you on the phone just
listen to him as I have been trying to keep this alive now at the
end of the line as time has run out so a meeting is necessary.? Based
on public documents, I know that the ISO is an organization that,
among other things, operates wholesale electricity markets and
manages transmission lines.

40

 On or about July 22, 2014 Howe wrote to PERCOCO,
in part, ?Handle fat boy carefullyz We don?t need an interruption
in.that Zitti delivery or else really be up the creek. Just
need to tell him ?you called [the Energy and Finance Chair] and he
is arranging a meeting the end of this week beginning of next week
with himself, Braith and [an individual at the New York to figure
Out how to move this forward.? We can not have any interruption in
delivery, and right now we are teetering. Ok?? In reference to this
email, Howe has explained that he was telling PERCOCO to pay attention
to KELLY so that KELLY would feel assured that the Energy Company?s
interests were being handled by PERCOCO, and KELLY would then continue
to pay Howe and wife. -

iv. Later that day, PERCOCO wrote to Howe, ?ok. he
is here in.my ofc now? to which.Howe replied, ?Remember Zittill? In
reference to this email, Howe confirmed that ?he? is KELLY.

v. Approximately'201ninutes later, PERCOCI)emailed
Howe that his meeting with KELLY ?Just finished? and it ?looks like
[the Energy and Finance Chair] will see him and his guys this fri.?
Howe replied, ?Great work Herbl,? to which PERCOCO replied ?now do
your parti sending new invoices shortly. As set forth in more detail
below, I know from documents I reviewed and from discussions with
Howe, that around thiS'time, PERCOCE)sought;payment through Howe from
other clients of Howe who had business before the State, and Howe'
has confirmed that the ?invoices? PERCOCO referred to relate to
seeking payments from the Syracuse Developer.

vi. Based on interviews with.the Energy and.Finance
Chair?s Chief of Staff (the ?Chief of Staff?) and the Energy and
Finance Chair, I learned that PERCOCO asked the Chief of Staff to
arrange a meeting between KELLY and the Energy and Finance Chair.
The Chief of Staff ultimately arranged the meeting, which occurred
on or about July 25, 2014. request to the Chief of Staff
was the only such request for a meeting the Chief of Staff could recall
receiving from PERCOCO.

b. Chlor?about.August 20, 2014, Howe informed KELLY that
PERCOCO was ?anxious? to set up a meeting for KELLY with the
newly?appointed.Director of State Operations (the ?State Operations
Director?), who had reCently replaced the Former State Operations
Director; Howe and PERCOCO then worked to set up this meeting, as
follows:

41

 

i. On or about October 1, 2014, at approximately
7:50 Howe wrote to PERCOCO, ?Herb Braith wants to meet with
[the State Operations Director] this Friday either or.Albany
. Can you make it happen?" Approximately three hours later,
PERCOCO wrote, ?Have Braith call [the State Operations Director?s
Administrative Assistant] at [phone number] and ask to see [the State
Operations Director] Friday in NYC. [They] are expecting the call.?
In an interview, the State Operations Director?s administrative
assistant confirmed that PERCOCO requested a meeting between KELLY
and the State Operations Director around this time, and it was one
of relatively few meetings the administrative assistant recalled
PERCOCO requesting for the State Operations Director.

ii. Howe replied to PERCOCO, ?On it. Make sure to
have the ?be receptive? discussion with [the State Operations
Director]. Don?t want to tip over the Zitti wagon.? Based on an

interview of Howe, I understand that Howe was explaining to PERCOCO
that the State Operations Director had to appear receptive to KELLY
so that KELLY would continue to pay PERCOCO and Howe.

Ultimately, due to a scheduling conflict, the
State Operations Director sent his Deputy Director to the meeting.
After the meeting, Howe informed PERCOCO that KELLY was upset and
gave Howe ?an earful.?

c. In or around March 2015, PERCOCO and Howe arranged
a meeting for the Secretary to the Governor. In.an email
to the Secretary to the Governor, Howe wrote, ?As Joe told you, Braith
is ?family? and we have been trying to figure out his project for
the last few The Secretary to the Governor replied that
he looked ?forward to connecting with Braith.?

x. KELLY Stopped.Payments to Became.Apparent
that the Energy Company Would Not Receive the PPA

54. Based on my review of publicly available information and
my interviews of various State employees I know that, to date, NYPA
has not selected any new power generation projects nor has it awarded
a PPA to any company in connection with the Energy REP.

55. Based on interviews of, among others, Howe and employees
of the Energy Company, and my review of emails, I believe that by

42

in or around the spring of 2015, it had become clear to PETER GALBRAITH
KELLY, JR., a/k/a ?Braith,? the defendant, that the Energy Company
likely would not be getting the PPA, and the Energy Company?s need
for the PPA had lessened.because the Energy Company had obtained at
least some private funding for the construction.of the Power Plant.
Jxlor'aroundmjune 2015, the Energy Company stopped 
retainer for Howe that it had been paying to Howe?s LLC, and Howe
reached out to KELLY by email to try to get paid? Based on the

August.2015, KELLY?informedt?maExternal Affairsl?anager?that funding
for the wife of JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, would
not be included in the Energy Company? budget for 2016 . In an?email
dated November 23, 2015, the External Affairs Manager discussed.with
KELLY the nerpayment structure for teachers, a per diem.of $250 per
day (far less than wife was paid in the preceding years)
and noted that the External Affairs Manager wanted to hire a new
teacher. Based on my interview of the External Affairs Manager, I
understand.that the new teacher was being hired.to replace 
wife, and would be paid at the new per diem rate.

56. Financial records reflect that the last payment from
Consultant?1 to the wife of JOSEPH PERCOCO, a/k/a ?Herb,? the
defendant, was on or about January 28, 2016.

Syracuse Developer Paid Bribes to PERCOCO in Exchange for
Official Action

57. As set forth in more detail below, even after JOSEPH
PERCOCO, a/k/a ?Herb,? the defendant, was able to get the Energy
Company to make payments to his wife in the amount of 500 per month,

to address this by seeking additional money from Howe?s clients who
had business before the State. Beginning in or around early 2014,
PERCOCO, through Howe, solicited bribe payments from the Syracuse
Developer. In response to these requests, in or around the spring
of 2014, PERCOCO, Howe, and.two executives of the Syracuse Developer
President STEVEN AIELLO and General Counsel JOSEPH GERARDI, the
defendants entered into a bribery scheme whereby the Syracuse
Developer would make tens of thousands of dollars in payments to
PERCOCO, using Howe as a pass?through to help conceal that the payments
to PERCOCO came from the Syracuse Developer, and in exchange, PERCOCO
agreed to use, and did in fact use, his official position and influence
to assist the Syracuse Developer with a number of issues as the

43

 

opportunities arose. Specifically, PERCOCO agreed to, and did, take
official action to reverse the adverse decision by the Empire
State Development Corporation which is the State?s main
economic development agency, that would have required the Syracuse
Developer to enter into a costly labor peace agreement 
free up a backlog of State funds that had already been awarded
to the Syracuse Developer but were delayed.in1g1yment, and.(c) secure
an approximately $5,000 raise for son, who worked in the
Executive Chamber.

i. PERCOCO Solicited Bribe Payments from the Syracuse Developer

58. Based on my revieW'of emails and.my discussions with.Howe,
I learned that, in or about January 2014, while still employed as
the Deputy Executive Secretary to the Governor, JOSEPH PERCOCO, a/k/a
?Herb,? the defendant, began.discussions with.Howe about how PERCOCO
wanted to receive payments from the Syracuse Developer. For example:

a. On or about January 15, 2014, PERCOCO and Howe were
scheduled to meet with STEVEN AIELLO, the defendant at the Governor? 
Office in New York, New York. Shortly before that meeting, Howe
emailed PERCOCO and advised.PERCOCO to ?Lay it on thick., govs loves
you . Lay it on heAvy Herbie? Zitti herb! 'Zittil z" PERCOCO
then responded, may pull gov and herbert in to say hello to him
if they are still here!" Howe replied, ?That would.be great! Worth
another crate of Zitti!? Howe has explained that the ?herbert?
referenced in message was the Former State Operations
Director, and that PERCOCO was suggesting that he might have the
Governor and the Former State Operations Director greet AIELLO during
visit to the Governor?s Office in order to be able to later
solicit ?zitti? from the Syracuse Developer. Howe has confirmed that
the meeting with AIELLO, the Governor, and the Former State Operations
Director took place, which is corroborated by records showing that
AIELLO did in fact visit the Governor?s Office that day.

b. In a subsequent email in the same chain described
above, which appears to have been sent prior to the meeting, Howe
wrote, in part, that Howe had suggested that PERCOCO might
eventually seek advice about the Syracuse region in
connection with the Governor?s upcoming reelection campaign.
PERCOCO, however, responded, ?only if that other thing happens! I
will advise him on how to play a role and be relevant!? Howe has

44

explained that the ?other thing? referred to expectation
that he would receive payments from the Syracuse Developer.

59 . Based on my review of documents and emails and an interview
with a former assistant counsel to the Governor (the ?Assistant
Counsel?) I know that in or around July 203.4, before JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, left the Executive Chamber to work as
the Governor?s campaign.manager, PERCOCO sought an opinion from the
Assistant Counsel about the possibility of PERCOCO working private
sector jobs while he was employed as the Governor? campaign manager.
Based on the interview with the Assistant Counsel and related
documents, and the information uncovered in this investigation, I
believe that PERCOCO provided false and misleading statements when
lmamet.with.the.Assistant Counsel and sought the.Assistant Counsel?s'
guidance. For example, PERCOCO informed.the Assistant Counsel that
he planned to work at a law firm on issues related to labor
organizations, and that he would work only on issues pending before
municipal governments. Percoco did.not mention that he anticipated
to work on issues related to New York State government when, in truth
and in fact, and as set forth.below, PERCOCO did not expect that his
work would be strictly confined to issues pending before municipal
governments. Instead, at the time of this conversation, PERCOCO
already was planning to receive payments from the Syracuse Developer,
which, as he well knew, had substantial business before the State.

a. On.or about the same day of the meeting 
the Assistant Counsel wrote a memorandum, dated on or about July 9,
2014, with the subject line ?Post?Employment Ethics
Rules/Restrictions? (the ?Employment Memorandum?). The Employment
Memorandum addressed whether PERCOCO would be allowed under New York

The Assistant Counsel wrote, in part, ?Joseph Percoco has asked
whether Public Officers Law (POL) 74, subd. 8 impacts his post?State 
employment activities. He has advised.me that he has been asked by
a law firm.to engage in<iiscussions with various labor organizations
TheAssistant
Counsel concluded that, ?In sum: there are no restrictions on his
proposed activities. The POL limits the actions of a covered State

not local governmental entities.?

b. The pointed.out that

45

 

PERCOCO was barred by State law from working on issues pending before
State agencies or the Executive Chamber. The Assistant Counsel wrote
that, for two years after leaving State service, ?an Executive Chamber
employee is prohibited from receiving compensation for services
rendered.in connection with any matter before the Executive Chamber
and is also prohibited from appearing or practicing before the
Executive Chamber or any state agency.? (Emphasis in original.)

c. The Assistant Counsel has explained that his advice
with respect to post?State employment would have been
different if PERCOCO had.proposed.working on behalf of clients with
business before New York State government. The Assistant Counsel
also stated that, following their early July 2014 meeting, PERCOCO
did not seek any additional advice or guidance from the Assistant
Counsel.

d. On or about July 10, 2014, PERCOCO forwarded the
Employment Memorandunlto Howe. In.response, Howe wrote, ?Herb Zitti
11 Very nice.?8

60. Based on my review of emails and my discussions with Howe,
I know that, in and around this same time period, between June and
July 2014, JOSEPEIPERCOCO, the defendant, sent aliumber
of increasingly aggressive emails to Howe requesting additional
monetary payments from Howe?s clients. Based on my review of bank
records and the financial analysis, I know that PERCOCO had

 

8 AS described above, PETER GALBRAITH KELLY, JR. a/k/a ?Braith, 
the defendant, told.executives at the Energy Company on.two separate
occasions that he had obtained a memo from the Governor?s Office
approving the hiring of wife. Based on my review of
documents and interviews in this matter, the Employment Memorandum
cannot be the purported memo to which KELLY was referring. First,
the Employment Memorandum was written more than a year after KELLY
first claimed he had seen such a memo and approximately one week after .
KELLY, for a second time, claimed he had seen it. Second, the
Employment Memoranduntdoes not relate in.any way to wife?s
employment, and it expressly prohibits PERCOCO from doing any work


4:6

an approximately $800,000 balloon payment due on his mortgage in or
around July 2014. Furthermore, PERCOCO indicated to Howe that he
would not.provide Howe's clients with.his official assistance unless
and until he received monetary payments. For example:

a. On or about July 23, 2014, Howe forwarded PERCOCO an
email from a client proposing a promotional opportunity for the
administration and added, in part, ?Herb we should talk about this . 
PERCOCO replied, ?ok. will deal with it after I get my ziti!"

b. Two days later, on or about July 25, 2014, Howe sent
an email to PERCOCO related to the Energy Company in which Howe
reported that ?Braith me to say [the Energy and Finance Chair]
meeting went well. Looks like a few1nore months of Zitti.? PERCOCO
replied, have no ziti herb. none. but . . . enjoy-your vacation.
I will send my kids in the backyard with the garden hose.?
Approximately two hours later, Howe asked PERCOCO to, among other
things, speak with the Energy and Finance Chair about the Energy
Company. PERCOCO responded in part: ?No. I cannot. I am barred from
having those conversations." Howe has explained that PERCOCO had
never previously refused to intervene with a State official on behalf
of the Energy Company (once the Energy Company had begun paying
wife), and in.fact had repeatedly done exactly'that despite
?being barred from having those conversations . Howe understood that
refusal to speak with the Energy and.Finance Chair at this
time was because PERCOCO was seeking additional money from other
clients of Howe and had not yet received it.

ii. The Syracuse Developer Wanted Assistance with ESD

61. Based on my review of emails, my discussions with Howe,
and interviews with employees of ESD, I learned that, around this
same time, in the summer of 2014, the Syracuse Developer was locked
in.a disagreement with.ESD over whether, by law, one of the Syracuse

peace agreement with organized labor. Having failed to
persuade ESD that its project did not need an LPA or to modify the
project as suggested by ESD to avoid triggering the statutory LPA
requirement, the Syracuse Developer repeatedly sought the assistance
of JOSEPH PERCOCO, a/k/a ?Herb,? the defendant, to avoid the LPA
requirement.

47

 

a. The issue first arose:h1curaround.early summer 2014.
At that time, the Syracuse Developer was constructing a parking lot
(the ?Parking Lot?) in Syracuse. ESD had awarded more than

On or about June 27, 201%, JOSEPH GERARDI, the defendant, informed
ESD that a portion of the Parking Lot would service, among other.
things, a neighboring hotel and a future hotel that had.not yet been
built.

b. On or about July 7, 2014, a Syracuse?based employee
of ESD Employee?l?) emailed GERARDI and explained that 
legal counsel has reviewed the information you have provided? and
?has determined that? because the Parking Lot will directly service
a hotel, funding for this project will trigger the requirement
for the Labor Peace Agreement (LPA) we previously discussed.? ESD
Employee?1 instructed.the Syracuse Developer to ?please contact the
appropriate local labor organization and negotiate an LPA at your
earliest.convenience.? 
I learned that certain State?funded construction projects that
involve or relate to hotels require an LPA between the developer and
the relevant hotel workers? unions, which would have significantly
increased the cost-of the Parking Lot.

62. Based on my review of emails and interviews of, among
others, Howe, I learned that STEVEN AIELLO and JOSEPH GERARDI, the
defendants, were concerned that the need to obtain a LPA.would delay
construction of the Parking Lot or would compel the Syracuse Developer
to forgo ESD funding. .AIELLO and GERARDI characterized their
disagreement over the need for a LPA as ?time sensitive . In or around
late July 2014, having failed.to persuade ESD to change its mind on
theirown1 AIELLO and GERARDI asked Howe to secure the help 
PERCOCO, a/k/a ?Herb,? the defendant, in reversing decision
that an LPA was necessary.

a. On or about July 30, 2014, AIELLO emailed Howe and
asked, in part, ?is there any way Joe can help us with this issue
while he is off the 2nd floor working on the Campaign. We can?t seem
to put it behind us. I think Labor keeps drumming up their
interpretation to force us to sign with them. I could really use
an advocate with regard to labor issues over the next few months.?

b. The following day, on or about July 31, 2014, the head

48

 labor union (?Labor Leader?l?) wrote
an email to AIELLO stating, in part, ?Attached is a copy of the ?Labor
Peace Agreement' that we spoke about at our meeting earlier this?month.
. 2 look forward to getting the Labor Peace Agreement finalized
and signed.? A.few hours later, AIELLO forwarded.this email to Howe
and wrote, ?Todd, can call Joe P. Need help on this. Thanks.?

The Syracuse Developer Paid PERCOCO Approximately $35,000

63 . Based on my review of emails and my discussions with Howe,
I believe that, less than two weeks after STEVEN AIELLO and JOSEPH
GERARDI, the defendants, sought the help of JOSEPH PERCOCO, a/k/a
?Herb,? the defendant, with respect-to the LPA, PERCOCO, AIELLO,
GERARDI and Howe reached an agreement whereby the Syracuse Developer
would.pay'PERCOCO approximately $35,000 in return for use
of his official influence to help the company, including with regard
to the company?s issues with ESD. The Syracuse Developer?s payments
to PERCOCO would be run through Howe, who acted as a pass through-
in order to disguise the source of the payments. Evidence of the
disguised payments to PERCOCO include, among other things, the
following:

a . Based on my discussions with Howe, I learned that after
AIELLO and GERARDI agreed to make payments to PERCOCO, AIELLO and
Howe decided that the payments would be made through Howe? LLC (31 . e. 
the shell company Howe originally set up, in coordination with PETER
GALBRAITH KELLY, JR. a/k/a ?Braith,? the defendant, to receive
additional payments from the Energy Company) in order to mask the
source of the payments, because AIELLO and Howe were concerned about
the optics of paying PERCOCO while the Syracuse Developer had business
and procurement contracts before the State. I Accordingly, and as
reflected in financial records I'have reviewed, the Syracuse Developer
paid PERCOCO by writing checks to Howe?s and Howe then wrote
checks in the same amount from Howe? LLC to wife, to further
disguise the source and nature of the payments.

b. The Syracuse Developer? first payment to PERCOCO was
made in August 2014 . On or about August 11, 2014, Howe sent an invoice
for approximately $15,000 from Howe?s LLC to AIELLO. Howe wrote in
the accompanying email, ?Steve per our discussion. Attached is the
Labor Relations Invoice for June, July August 2014. Thank you."
According to the invoice, Howe?s LLC sought payment for 

4.9

 

Consultation Labor Strategy?Relations Labor Financing? work
covering the ?June?July?August, 2014? time period? Howe has
explained that the invoice in fact sought payment for PERCOCO,
ostensibly for work for the Syracuse Developer even.though
PERCOCO had not yet performed any work on behalf of the company.

0. In.or around1nid?August 2014, the Syracuse Developer
paid.by check $15,000 to Howe?s LLC. In.turn, Howe wrote a check for
the same amount to wife, which was later deposited into
the joint bank account.

d. A second payment from the Syracuse Developer to
- PERCOCO, in the amount of $20 000 was made in or around October 2014 .
As with.the.August 2014 payment, the Syracuse Developer paitiby'check
$20,000 to Howe?s LLC. Howe then sent a check for the same amount

joint.bank account using an.automated.teller?machine located
in Westchester County, New York.9

iv. PERCOCO Pressured ESD to Reverse Its Decision on the Labor Peace
Agreement

64. As set forth in more detail below, I believe, based on my
review of emails and.my discussions with Howe, that, in exchange for
the $35,000j51payments fromt?maSyracuselDevelopery JOSEPH PERCOCO,
a/k/a ?Herb,? the defendant, agreed to use, and did in fact use, his
official position and influence to benefit the Syracuse Developer
on at least three occasions as those opportunities arose. PERCOCO
agreed to use, and did in fact, use his influence to cause ESD to

 

9As set forth above in paragraph 45, PERCOCO completed the

Disclosure Form for the year 2014 in or around May 2015 . Despite prior
efforts to mask the payments from the Syracuse Developer by running
the payments through Howe? shell company (i . e. Howe? LLC) PERCOCO
ultimately represented that he earned consulting fees totaling

approximately $50,000 to $75,000 from the Syracuse Developer on the
Disclosure Form. Pursuant to State law, the disclosure forms of State
employees, including are not made available to the public
unless sought through a State Freedom of Information Law request.

50

reverse its decision that the Parking Lot required a costly LPA. The
evidence showing agreement to use, and.his actual use, of
his influence on that issue includes, among other things, the
following:

a. On or about August 22, 2014, JOSEPH GERARDI, the
defendant, emailed Howe and copied STEVEN AIELLO, the defendant.
GERARDI wrote, in part, wanted.to on position.that
we are required to enter into a LPA, in order to be able to utilize
ESD funds and infrastructure along
the eastern shore of the Inner Harbor development.? GERARDI
continued, in part, ?Steve and I wondered whether it would be
appropriate at this time to engage our labor consultant, to try to
resolve this matter, given that we would like to start construction
this fall, but will not be able to proceed if an LPA is required.?
Howe has explained that reference to ?our labor consultant?
referred to PERCOCO, who at this time had already been paid $15,000
by the Syracuse Developer.

b. On or about August 28, 2014, Howe sent an email to
PERCOCOenulwrote,ijlpart: ?Will Leader?IJ?s
number tomorrow, you need to call her let her know you don?t see an
issue (as she agrees) with.the:needjin:a.Laboe [sic] Peace.Agreement
for the [Syracuse Developer] INter [sic] Harbor Hotel parking lot
project. Then after you.hear from her that she?s ok with it,
let [the Deputy State Operations Director] know so he can get the
damn ESD lawyer to drop it, as no one sees it as an issue other than
our own lawyer!? From Speaking with Howe and employees of ESD, I know
that the Deputy State Operations Director was the Executive Chamber
official responsible for development policies and therefore had
significant interaction with, as well as influence over, officials
at ESD.

c. Also on or about August 28, 2014, Howe sent an email
to AIELLO and copied PERCOCO. Howe wrote, ?Steve email Joseph,
[Labor Leader?1? s] number and he said he' call her per our discussiOn
tonight regarding the need to have a Labor Peace Agreement for the
parking lot of the Inner Harbor Hotel. Joe understands the message
that needs to be delivered and understands that [Labor Leader?1]
agrees with us, that there is no need for one given the lot is primarily
[for the general public.?

51

 

d. In or about November 2014 mw after the Syracuse
Developer had.paid PERCOCO a total of $35,000 mm AIELLO and GERARDI
again sought assistance in attempting to change 
decision.requiring the LPA.for the Parking Lot. On.or;about November
19, 2014, GERARDI wrote aneanail to PERCOCO, copyinngIEIJ?)a Howe,
that explained the Syracuse Developer? unhappiness and disagreement
with requirement of an LPA. The email began, ?Hello Joe, 
the local.ESE>RegionalIDirector,
ESD NYC Counsel has determined that our ?project? will trigger the
requirement for a 

e. On.or about December 1, 2014, ESD Employee~2 emailed
GERARDI to schedule time to discuss the LPA and ?get this issue
resolved.? GERARDI then forwarded that email on or about December
3, 2014 to Howe, copying.AIELLO, and.wrote, in part, ?Anything with
JP on this. Employee?2] is pressing to ?resolve? this issue
. and we don?t want to be in jeopardy of losing the ESD funding
sorry to be a pest.?

i. Howe, in turn, forwarded the email to PERCOCO
with the message PERCOCO responded to Howe and wrote ?stand
by.? By this time, the Governor had been reelected and PERCOCO was
less than a week away from returning to his former State position.

ii . Approximately ten minutes later, Howe wrote back
to GERARDI and AIELLO: ?Just hung up with JP. Employee?2] is
being informed.as I type this that ESD HQ in NYC does NOT concur with

his read on this . .. . . JP said.we should.stand.by and let message
sink in over next several hours and then look for BSD to reach back
out to you, with a ?different? perspective.? Soon thereafter, Howe

sent another reply stating, in.part, just called.me back to say
[ESDIEmployee?2] should be reaching out to you. Let.me know'when.you
_do and I?ll close loop with 

The next day, on or about December 4, 2014,
GERARDI wrote an email informing Howe that ESD Employee?2 called and
stated that ESD had changed its position on the need for an LPA.
GERARDI reported, in part, wanted to let you know that I spoke
with Employee?2] this morning and he advised that they have
convinced ESD that the hospitality portion of the Syracuse Inner
Harbor development is relatively minor. Therefore, the ESD funds
awarded can be used to build the parking lot and infrastructure

52

contemplated without the need for a LPA. . Thank you and JP
for your efforts!? AIELLO responded, ?They convinced 
Laughablel? Howe then replied, ?Amazing how Employee?2]
re?writes history!?

f. Basedcnimy'discussions'with Howe and.interviews with
employees of ESD, I learned that the Syracuse Developer in fact was
not required to obtain an LPA for the Parking Lot and was allowed
to use ESD funds for the project.

PERCOCO Assisted the Syracuse Developer in Obtaining the Release
of State Funds

65. I also believe, based on my review of emails and my
{discussions with.Howe, that, in exchange for the $35,000 he was paid
by the Syracuse Developer, JOSEPH PERCOCO, a/k/a ?Herb,? the
defendant, also agreed to use, and did in fact, use his official
position and influence on a second State matter of concern to the
Syracuse Developer: the release of more than $14 million in State
funds that had previously'been.awarded.to the Syracuse Developer but
had.not yet been paid.out due to backlogs at certain State agencies.
The evidence showing use of his official position and
influence:on.this issue includes, among other things, the following:

a. the State had.not yet released
significant blocks of funds to the Syracuse Developer for the

to the Syracuse Developer. As set forth.in.more detail below, in or
around the end of 2013, CNSE chose the Syracuse Developer as its
preferred developer in the Syracuse area and subsequently awarded


$15 million fil?ihub (the ?FileHub?). By in or around August 2015,
the Syracuse Developer complained that approximately'S14.2 million
in State payments were either past due or about to come due on the
two projects. Pressured by subcontractors and vendors that were
threatening to stop working unless they were paid, STEVEN AIELLO,

as Executive Deputy Secretary, to intervene and help secure the
release of those payments.

b. On or about.August 31, 2015, AIELLO:notified Howe and
an.employee of CNSE about a ?vendor demanding payment? in connection

53

 

with the manufacturing plant. AIELLO wrote: ?Help! 1 It mounting! 
Howe forwarded email to PERCOCO and asked him to attend a
conference call with.Howe, AIELLO, GERARDI, an.employee of CNSE, and
an employee at the Dormitory Authority of the State of New York
which is responsible for facilities financing and
construction. As Howe explained in the email, the purpose of the call
was ?to go over these asap this week if your schedule permits? As
we discussed, [the Syracuse Developer] is getting hit left and right
by vendors who are threatening to walk off the job . . . etc.? 
responded, ?ok. let me find out who is the right person to talk to
at dasny. thanks.?

0. Based on emails sent and received from 
personal email account, I believe that within a day of the above
exchange with AIELLO, PERCOCOIhadtdetermined.that the State Division
of the Budget was the source of the delay in releasing the
State.funds to the Syracuse Developer, and that PERCOCO would meet
with the DOB himself to try to resolve the issue. In an email sent
on or about September 1, 2015, PERCOCO told Howe to ?do alntg On.this
tomorrow with budget folks which is where I am told this is stuck.
thanks . Howe responded and asked PERCOCO to ?do call with us?? They
aren?t going to listen to us.? PERCOCO, however, responded, ?you
misunderstood me. I am doing the with.budget. as of now I dont
need your guys on the call.?

d. On or about September 3, 2015, Howe asked PERCOCO,
?how did you make out with Budget on [the Syracuse Developer]. Out
here in Syracuse and Steve is having a heart attack? Do you need a
PERCOCO:replied,
?No. Sit tight. is today.?

e. The next day, on or about-September 4, 2015, Howe
emailed PERCOCO again to ask, in part, for ?an update on the DOB meeting
yesterday. PERCOCO responded, ?There are some checks that are being
freed up from the slow process next week. I am getting the exact list
as we speak.?

f. On or about September 9, 2015, the Deputy State
Operations Director wrote to an employee of the DOB Employee?1?)
and asked about the ?timeframe? of the first significant disbursements
for the Film I?Iub. Later the same day, DOB Employee?l replied, in part,
?$1.184m: Should happen.within a week or so, depending and
SUNY Poly?s responsiveness. DOB has allocated the funds. We?re

 

54

checking with DASNY on [grant disbursement agreement] status,
information outstanding from SUNY Poly and anything else needed for
payment.? (Emphasis in original.) Based.on.my review of emails and
publicly available sources, I learned that, after the DOB made the
Film Hub funds available, DASNY had to complete its own approval
process and then enter into aggrant disbursement agreement with Fort
Schuyler, which, in turn, would provide the Film Hub funds to the
Syracuse Developer.

g. Based on my review of emails, I know that, in or around
the second of half of September 2015, DASNY requested certain
additional documents from Fort Schuyler and the Syracuse Developer
related to the Film Hub funds.

h. Oncnrabout September 30, 2015, Howe forwardedeatext
message from AIELLO in which AIELLO expressed disappointment that
he had not been invited to the events surrounding the Governor? visit
to Syracuse that was scheduled to take place later that day. In a
follow?up email to PERCOCO and the Deputy State Operations Director
that day; Howe?wrote,iilpart, ?Today is just another nail in.Steve?s
[sic] back, he wasn? even invited to attend. We need to put ourselves
in.his position. He built one building on time and completed.it and
can?t get final payment and he?s half way'done on a second building
and hasn?t gotten paid a penny, we constantly ask him to help us.

It?s not a good situation. It?s an issue of managing our
friends. We just can? abandon them when things get tough and I think
that?s what he is venting about.?

i. In a reply soon thereafter, PERCOCO aSked, in
part, ?agree with you todd about abandoning people. [Deputy State
Operations Director] why didn?t we invite steve??

ii. Howe replied.and.wrote, in part, ?Just.neeclyour?
help to get that funding moving the bureaucracy is killing them.?

PERCOCO responded to Howe?s email and stated,
in part, have done everything I can. The small check should be
breaking free soon. The problen1is your client at-nano. You
fix. I am fucking'pissed.at nano and the team there. I need
a with you, alain and [the current Secretary to the Governor]
asap! I am fuckin pissedlill? Based on my review of emails and my

refers to CNSE, which, as set forth above, was a client of Howe and

55

 

has the nickname ?Nano? and that ?alain? refers KALOYEROS,
a/k/a ?Dr. the defendant.

iv. In a subsequent email in the same chain, also
sent on or about September 30, 2015, the Deputy State Operations
Director wrote, spoke to Steve directly. He will be at the site
and have a few construction workers from the hotel ready to greet
the gov at 115."

v. Howe replied, ?Thank you. This eases the
funding headache. Important that community see this project is still
on Govs radar screen.?

vi . I learned from reviewing emails and media reports
that, later the 2015, the<30vernor
toured a hotel located in the Syracuse Inner Harbor that was being
constructed by the Syracuse Developer and met with, among others,
AIELLO.

vi. PERCOCO Secured a Raise for Son

66. I also believe, based on my review of emails and my
discussions with.Howe and.State employees, that, in.exchange for the
$35,000 he was paid by the Syracuse Developer, JOSEPH PERCOCO, a/k/a

position and influence in a third way to benefit the Syracuse
Developer: to secure a salary increase of approximately $5,000 for
the son.of STEVEN AIELLO, the defendant, Son?) who worked
in the Executive Chamber. The evidence showing use of his
official position and influence with respect to Son? salary
includes, among other things, the following:

a. In or around.July 2014, Son.left his job at
New York State Housing and Community Renewal to work on the
Governor?s reelection campaign.as an assistant to PERCOCO. 
Son was not paid while working for the campaign. Following the
election in November 2014 Son returned to HCR and then' moved
to a position.in the Executive Chamber in or around September 2015.
Between November 2014 and around.August 2015, Son received
two raises and a locality adjustment, increasing his salary
approximately ten percent. From speaking with, among others, an
employee of the Executive Chamber who managed a variety of human
resources issues and reported directly to PERCOCO (?Chamber

56

Employee?l?) I learned that salary increases for Executive Chamber
employees are usually limited to no more than ten percent in a given
year. Chamber Employee?l could not recall any specific employee. who
has received a salary increase of greater than ten percent.

b. Notwithstanding bhetxulpercent.increaseijlhis son?s
salary in less than a year, AIELLO sent an angry text message to Howe
on.or about September 25, 2015 complaining about the modest size of
his son?s most recent pay raise: just got a call from [my son],
he got his paperwork for his raise. He went from 54 thousand.a year
to 56 thousand! We have waited.patiently months for money for these
projects with The administration has embarrassed me in my
community, as a slow pay.completely tarnished our reputation, we are
considered a slow pay: [My son] bust his ass, loyal as the day is
long. I have been loyal as the day is long. They insult us like this.
I?m finished! I 1 Everybody else gets what they need and want . I keep
giving. It?s a sad statement!? Howe forwarded text to
PERCOCO, and added: told Steve just now that I spoke to you and
you were going to address the salary issue today try to get
him to 65 or above.? Howe then followed up later that same day,
and PERCOCO responded, am working on it herb!?M

c. Based on my review of emails, publicly available
documents, documents obtained in the course of this investigation,
and interviews of, among others, Howe and.employees of the Executive
Chamber, I learned that, on or about September 25, 2015 the Same
day that Howe passed.along complaints to PERCOCO PERCOCO
sent an email to Chamber Employee?l and three employees of the State
Office of General Services which handles certain human
resources issues for the Executive Chamber. PERCOCO asked: ?What

 

10 This email echoed one from several months before. On or about
May 27, 2015, Howe emailed PERCOCO and wrote, in part, ?get a call
from Steve Sr. Wanted.to see if you could try'and.help jr. with that
salary issue we had talked about?? Howe then specifically asked, ?Is
it impossible for him to get a $10k bumppossible
to get him to 64k. ?7 At the time, PERCOCO had responded, in part:
?Tough do [sic] $10k bump. Can do $6k now then the rest later after
session? Concerned about optics.? 

5'7

 

happened with Son? s] raise when he was moved to policy team?
I am told he never got it. Also, we discussed moving him out of 

i . An employee of OGS Employee?1?) responded,
?We moved him out of HCR. Didn?t know it was supposed to go with a
bump. 

ii. PERCOCO replied, ?This is another stupid
blunder. Another we had no idea. BS. I raised this months ago; Now
he is quitting because you guys cant get the simplest things executed.
[Chamber Employee?1], you handle this. I will call you.?

. OGS Employee?1 informed PERCOCO that they would
prepare a request for'an additional ten percent salary increase; OGS
then submitted the request to the DOB, which approved the raise on
or about September 28, 2015. From speaking with Chamber Employee?1
and two of the OGS employees copied on the above email, I learned
that they had no recollection of PERCOCO being so involved in seeking
the raise of any other Executive Chamber employee.

d. On or about September 25, 2015, approximately two
hours after PERCOCO learned the salary increase request had been
submitted to the DOB, PERCOCO emailed Howe and wrote, Son]
issue resolved. will take effect immediately: spoke to him.and all
is good. I know that, in fact, 5 Son did receive a ten percent
raise amounting to approximately $5,700 per year on or about October
1, 2015 that was made retroactive to on or about September 24, 2015.
The raise pushed his total salary to approximately $65,000 per year.

IV. THE BUFFALO BILLION FRAUD AND BRIBERY SCHEME

 

67. 
scheme involving bribery and unlawful access to State benefits in
which the Syracuse Developer participated. Rather, as described
below, beginning in or around 2013, the Syracuse Developer and the
Buffalo Developer conspired with Howe and ALAIN KALOYEROS, a/k/a ?Dr.
the<?efendant, Schuyler which was charged with
awarding significant development contracts paid for with taxpayer
dollars obtained from ESD into giving lucrative contracts to the
Syracuse Developer and the Buffalo Developer.

58

68. As part of this scheme, the Syracuse Developer and the
Buffalo Developer paid bribes to Howe, which were purported to be
?consultancy? payments and bonuses but which were in fact payments
for Howe?s actions in his capacity as an agent and representative
of CNSE and the Research Foundation who had, along with ALAIN
KALOYEROS, a/k/a ?Dr. the defendant, substantial control over
Fort Schuyler?s State?funded.development projects. In.exchange for
the payments to Howe, and as described.more fully below, Howe worked
to defraud.Fort Schuyler by secretly rigging the bids


that the bidding process was fair, open, and competitive. In
particular, as set forth below, KALOYEROS caused Fort Schuyler
to issue purportedly competitive requests for proposal for
companies to be named preferred developers for CNSE in Buffalo and
Syracuse, where CNSE intended to undertake significant development
projects paid for under the Buffalo Billion initiative and other state
development programs; KALOYEROS and Howe secretly tailored the
RFPs so that the RFPs requested qualifications held.by the Syracuse
Developer and the Buffalo Developer; and Fort Schuyler?s
evaluation committee and Board of Directors evaluated and voted on
the bids not knowing that KALOYEROS and.Howe had.prevented.competing
bids and designed.the requirements to fit the Syracuse Developer and
the Buffalo Developer. For his part in the scheme, KALOYEROS was able
to maintain his leadership position and substantial salary at CNSE
and garner support from the Office of the Governor for projects
important to him, including the creation of SUNY Poly.

AH.KALOYEROS Hired Howe to Be an Agent and Representative of CNSE

69. Based on my review of emails and interviews with, among
others, Howe, I learned that, in or around the fall of 2011, ALAIN
KALOYEROS, a/k/a ?Dr. the defendant, contacted Howe for the
purpose of retaining Howe as a consultant for CNSE. As set forth
above, Howe had close connections to the Office of the Governor, whose
support would be helpful with two goals of KALOYEROS: the receipt
of State funding; and (ii) the merger of CNSE into SUNY Poly, which
KALOYEROS would.found.and.lead. .Among'other things, Howe'understood
- that KALOYEROS was concerned about his relationship with.the Office
of the Governor and was worried that he might lose his leadership
position at CNSE. According to public records, in 2011 KALOYEROS
was paid a salary of approximately $800,000 and received at least
$500,000 in additional compensation through grants and/or ether

59

 

payments. KALOYEROS accordingly told Howe that he wanted to hire
Howe to help KALOYEROS maintain his position at Pely,
assist CNSE in its relationship with the Office of the Governor, and
represent CNSE in its efforts to undertake large, State?sponsored
development projects.

70. Basedcminmrreview'of documents obtained.from.CNSE and.the
Government Relations Firm and its associated Law Firm, and interviews
with, among others, Howe and individuals associated with CNSE and
Fort Schuyler, I learned that in or around 2012, ALAIN KALOYEROS,
a/k/a ?Dr. K, the defendant, caused the Research Foundation to retain
Howe2as a consultant for CNSE and.Fort Schuyler, at a rate of $25,000
per month, which continued until at least in or about 2015. These
payments were1nade tot?ueIemrFirm. During the relevant time period,
Howe physically worked at CNSE approximately twice per week. Howe
had a parking space and an offiCe at CNSE. Although the location.of
the office changed from time to time, it was always near 
office.

B. Executives of the Syracuse Developer and Buffalo Developer Bribed
Howe for His Assistance in Obtaining State 

71. Basedzmanqrrevifmrof emails, publicly available and.other
documents, and interviews with, among others, Howe, I learned that
throughout 2013 and 2014, STEVEN AIELLO and JOSEPH GERARDI, the
defendants, caused the Syracuse Developer to pay Howe as a
?consultant? knowing that Howe was acting as an agent and
representative of CNSE and intending for him to use his official
position for their benefit, as set forth below.

a. In or around.November 2011, AIELLO, on behalf of the
Syracuse Developer, entered into an agreement with the Government
Relations Firm (which was run by Howe) under which Howe would serve
as a ?consultant? (and not a lobbyist), and the Syracuse Developer
would pay the Government Relations Firm $6,500 per month. The
following year, the Syracuse Developer expanded its relationship with
Howe, agreeing to pay an additional $7,500 per month, for a total
fee of $14,000 per month.

b. 

and June 2015 which were after the Syracuse Developer was named 
preferred developer for Syracuse as set forth below, the Syracuse

6O

Developer paid Howe bonuses totaling at least approximately $385 000 .
These bonuses were not paid to the Government Relations Firm. Rather,
$135,000 in.bonuses were paid.to Howe?s LLC, and $250,000 in.bonuses
were paid directly to Howe.

c. Furthery I have learned.from Howe that.he kept AIELLO
informed as he (Howe) negotiated his role at CNSE with ALAIN KALOYEROS 
a/k/a ?Dr. K, the defendant and that Howe informed AIELLO and GERARDI
of his official role and influence within.CNSE. This fact has been
corroborated.by, among other things, an interview of a principal of
another development company who worked with Howe, who stated that
Howe told.him, in substance and.in.part, that Howe acted.as an agent
and representative of CNSE in finding partners for development
projects; interviews with certain State employees; and emails
(including ones described below) in which Howe forwarded 
and GERARD: communications with KALOYEROS and other individuals
associated with.CNSE in which internal CNSE business was discussed.

72. 
documents, and interviews with, among others, Howe, I learned that
throughout 2013 and 2014 LOUIS CIMINELLI, MICHAEL LAIPPLE, and KEVIN
SCHULER, the defendants, caused the Buffalo Developer to pay Howe
as a ?consultant? knowing that he was acting as an agent and
representative of CNSE and intending for him to use his official
position for their benefit, as set forth below.

a. In or around January 2013 mm just as the Buffalo
Developer 
Buffalo Billion initiative SCHULER, on behalf of the Buffalo
Developer, entered into an agreement with the Law Firm, through which
the Government Relations Firm would provide ?strategic advice and
counsel regarding business generation initiatives across New York
State.? The agreement specified that it would not include any
lobbying of State or Federal officials. In return for Howe's
services, the Buffalo Developer agreed to pay $100,000 per year.
Prior to this agreement, the Buffalo Developer had not retained or
paid any money to Howe or the Government Relations Firm.

b. I believe, based on my review of emails and interviews
with, among others, Howe, that before and during the time in which
CIMINELLI, LAIPPLE, and SCHULER caused the Buffalo Developer to pay
Howe, they knew that Howe was an agent of CNSE who had substantial

61

 

influence with ALAIN KALOYEROS, a/k/a ?Dr. the defendant, the
iniparticular,
Howe has stated that, in or around the end of 2012, he approached
CIMINELLI and told CIMINELLI, in substance and in part, that he (Howe)
was acting on behalf of the Office of the Governor and CNSE, which
were looking for help in creating large development projects in the
BuffalC)area. CIMINELLI, LAIPPLE, knowledge that Howe
was acting as an agent and representative of CNSE has been corroborated
by, among other things and as noted above, an interview of a principal
of another development company who worked with Howe, interviews with
certain State employees and emails in which Howe forwarded to LAIPPLE
and SCHULER communications with KALOYEROS and other individuals
associated with CNSE in which internal CNSE business was discussed.
For.example:

i. On or about October 7, 2013, Howe forwarded to
LAIPPLE and SCHULER an email exchange between Howe and KALOYEROS in
which Howe discussed internal CNSE matters, including
personnel matters, as well as the timing and method of the announcement
of the Buffalo RFP. In his email to LAIPPLE and SCHULER, Howe stated,
?we decided to get this Buffalo out asap."

ii. On or about December 3, 2013, Howe forwarded an
emailabetween.him, a partner at the law firm representing CNSE, and
a representative of another company that had business with CNSE,
discussing business between that other company and CNSE . In his email
to LAIPPLE and SCHULER, Howe wrote, among other things, ?Keep this
close to the vest.?

73. Prior to the Fort Schuyler bidding process, individuals
associated.with.the Syracuse Developer, including STEVEN AIBLLO and
thetdefendants, and the Buffalo Developer, including
LOUIS CIMINELLI, the defendant, had.become significant contributors
to the Governor?s election campaigns. I believe that these

with the Office of the Governor that would help enable the Syracuse
Developer and the Buffalo Developer to obtain State?funded
development contracts. Evidence of this intent includes the
following:

a. Based.on.my review of publicly available records and
interviews of Howe, I learned that from in or around 2001 through

62

in or around 2010, the Syracuse Developer did not make large 
contributions to State gubernatorial campaigns contributing a
Similarly,
prior to the fall of 2011, AIELLO made two contributions to the
Governor?s campaign, each in the amount of $5,000, and GERARDI made
no contributions to State gubernatorial campaigns. During these
years, as set forth.above, the Syracuse Developer?s business focused
development projects. 
2011, however, as the Syracuse Developer began to seek State?funded
development.work:with.the assistance of Howe, contributions from its
executives and related parties increased dramatically. Beginning in
December 2011, after the Syracuse Developer retained Howe, AIELLO,
GERARDI, and.other executives frontthe Syracuse Developer largely
at the direction of Howe personally began making, and directed
the Syracuse Developer to make, substantial campaign contributions
to the(Sovernor?s campaign.and:related.entities. Specifically} from
December 2011 through 2013, AIELLO, GERARDI, their family members,
another executive of the Syracuse Developer (?Syracuse Developer
an entity associated with Syracuse Developer
Executive~1, and the Syracuse Developer itself contributed.at least
approximately $250,000 to the Governor?s election campaigns, with
each contribution being in an amount of $10 000 or greater. Notably,
on or about July 9, 2013, which, as described below, was approximately
one month before AIELLO and GERARDI supplied information to Howe to
use to rig the Syracuse RFP, AIELLO, GERARDE, their family members,
Syracuse Developer Executive?1, and.the Syracuse Developer together
contributed approximately $65,000 to the Governor?s election
campaign. The following day, on or about July 10, 2013, an entity
associated with Syracuse Developer Executive~1 made a $60,000
contribution to the Governor?s election campaign. .As a result of
these contributions, the Syracuse Developer has been publicly
reported as the top donor to the Governor in or around upstate New
York.

b. I know from my review of emails and interviews with
Howe that Howe encouraged.AIELLO and GERARDI to make contributions
to the Governor?s campaigns and to make contributions in higher
amounts so that the Governor?s Office WOuld know and remember them.
For example, on or about May 18, 2011, Howe sent an email 
in which Howe instructed, ?you should hold on making any political
contributions to any state or federal electeds, so we can make
sure you can [get] the most leverage out of them.?

63

 

c. Between.in or around.December 2009 and January 2014,
CIMINELLI and his immediate family members contributed at least
$100,000 to the Governor?s election campaigns. Additionally; in or
around November 2013 when the Buffalo Developer?s bid to become
a preferred developer was under consideration by Fort Schuyler, as
described below CIMINELLI hosted a fundraising dinner for the
Governor, at which approximately $250,000 was raised.

d. Further, JOSEPH PERCOCO, a/k/a ?Herb, the defendant,
made specific requests to Howe for both the Syracuse Developer and
the Buffalo Developer to make donations to the Governor?s campaign,
and Howe relayed those requests to the Syracuse Developer and the
Buffalo Developer. For example, on or about November 12, 2013,
PERCOCO wrote an email to Howe, in which PERCOCO stated that a

in which $175,000 would be raised for the Governor?s re?election
campaign ?does not work Herb,? because CIMINELLI had previously
amount. As:noted, thetdinner ultimately raised
approximately $250,000.

C.Pbrt Schuyler was Defrauded into Awarding State Development
to the Syracuse Developer and the Buffalo Developer

74. Based.on1ny:reviewrof emails, publicly available and.other
documents, and interviews with, among others, Howe, 1 learned that
in 2013, ALAIN KALOYEROS, a/k/a ?Dr. the defendant, and Howe
developed a plan to identify preferred developers for potential
construction projects associated.with.CNSE in Syracuse and.Buffalo,
New York. This plan was motivated, in part, by the announcement of
the Governor, in or about January 2012, that the State would invest
$1 billion in Buffalo, New York. This plan included issuing two
requests for proposal (the one for Syracuse (the ?Syracuse
and one for Buffalo (the ?Buffalo that would give the
appearance of an open competition to choose ?preferred developers?
in Syracuse and Buffalo. However, the Syracuse Developer and the
Buffalo Developer had been preselected by KALOYEROS and Howe to become
the preferred developers in Syracuse and Buffalo, respectively, after
the Syracuse Developer and the Buffalo Developer had each made sizable
contributions to the Governor and had begun paying Howe for Howe?s
access to the Governor and for Howe? influence over the RFP processes .
These preferred.developer contracts were particularly lucrative for
the Syracuse Developer and the Buffalo Developer, as the Syracuse

64

Developer and.the Buffalo Developer were then.entitled to be awarded
future development contracts of any size in Syracuse or Buffalo,
respectively, without additional competitive bidding, and thus

In.order to award.these valuable deals to the Syracuse Developer and
Buffalo Developer, KALOYEROS and Howe manipulated the RFP process
to prevent Fort Schuyler from receiving or being able to fairly
consider competing bids.

Fort Schuyler Issued RFPs for Preferred Developers for Syracuse
and Buffalo

75. Based.on publicly available and corporate documents,_and
interviews with, among others, employees and members of the Board
of Directors of Fort Schuyler, I have learned that the Board of
Directors of Fort Schuyler has the authority to enter into agreements
with private companies in which public funds will be spent to pay
the companies to build facilities for CNSE. Prior to entering into
a significant contract with private companies, Fort Schuyler
typically issues a ?request for proposal.? ?Request for proposal"
is a term of art that refers to a type of solicitation in which an
organization such as Fort Schuyler sets forth the fact that funding
is available for a project and seeks bids from qualified and interested
parties. I know from.speaking'with.members of Fort Schuyler?s Board
of Directors that, particularly with respect to Staterunded
projects, RFPs issued.by Fort Schuyler were supposed.to be designed
and.drafted.to provide a fair, open, and.competitive bidding process
with respect to both quality and price, and accordingly should not
be drafted to favor any particular potential bidder and should not
be provided to any parties in advance of publication. 

76. Further, I learned that in or around 2013 and 2014, the
Research Foundation had policies governing procurement that were used
by Fort Schuyler. .As set forth in these policies, the procurement
process was intended ?to promote open and free competition in
procurement transactions? and ?to ensure that procurements are priced
competitively and that the selection process is not influenced
improperly.? Among other things, the policies required that
?[s]uppliers that develop or draft specifications, requirements,?

must be excluded from competing in any resulting procurement."

65

 

77. documents
and interviews of members of the Board of Directors of Fort Schuyler,
I learned the following regarding the process by which the Board of
Directors selected preferred developers for Syracuse and Buffalo:

a. On or about August 20, 2013, ALAIN KALOYEROS, a/k/a
?Dr. the defendant, sent an email to Howe and to an executive
of Fort Schuyler (the ?Fort Schuyler Executive?), 
told the Fort Schuyler Executive that KALOYEROS would ?like to issue
an RFP for a strategic partner in Syracuse and a similar one in Buffalo .
It should not focus On a specific project, but more on a strategic
partnership with local developers who know the two regions, are grass

to expand in jobs and investments in those regions in partnership
with 

b. As set forth.in1nore detail below, KALOYEROS and.Howe
worked together to draft the Syracuse and Buffalo RFPs. I know, based
on interviews of, among others, a former executive of Fort Schuyler,
that KALOYEROS maintained close oversight and control over the.
day?to?day operations of CNSE and Fort Schuyler, including over the
design of development projects and the drafting of RFPs.

c. In or around October 2013, the Board of Directors of
Fort Schuyler, by resolutions of the Board, issued the Syracuse and
Buffalo RFPs, which requested proposals ?for a strategic research,
technology outreach, business development, manufacturing, and
education and.workforce training partnership with.a qualified local
developer? in the greater Syracuse area and in the greater Buffalo
area, respectivelyu Because the RFPs were designed to select
preferred developers that would, once chosen, be able to obtain

from Fort Schuyler without further competitive bidding, the RFP
selection.process had substantial economic importance for both Fort
Schuyler and the Research Foundation, through which such future
contracts would be funded, The Board Resolutions authorizing the RFPs
each stated that the Fort Schuyler Board would approve a contract
only ?[u]pon completion.of a competitive RFP process and.evaluation
of responses.? The RFPs themselves explained that Fort Schuyler

recommend the selection of a preferred developer to the Board of
Directors of Fort Schuyler. The Board.oleirectors of Fort Schuyler

66

had the final authority'for making the selection of preferred
developers and authorizing contracts.

d. Despite the highly lucrative nature of the contracts,
the Syracuse Developer ultimately was the only party to bid on the
Syracuse RFP, and the Buffalo Developer was one of only three parties
to bid on the Buffalo RFP.

e. In.or about December 2013, the Board.of Directors of
Fort Schuyler voted to name the Syracuse Developer the preferred
developer for Syracuse, and in or about January 2014, the Board of
Directors of Fort Schuyler voted to name the Buffalo Developer one
of two preferred developers for Buffalo. The Board of Directors based
its decisions on, among other things, matrices created by the
evaluation committee in which the evaluation committee compared each
bidder?s submission.to the qualificatiOns set forth in the relevant
RFP.

ii. The Syracuse RFP Was Designed to Defraud Fort Schuyler

78. Based on my review of emails and interviews of, among
others, Howe, I learned, that, unbeknownst to members of the Board
of Directors of Fort Schuyler, the Syracuse RFP was designed.so that
the Board.of Directors of Fort Schuyler would have no choice but to
name the Syracuse Developer the preferred developer for Syracuse,
as follows:

a. IrLor'about.August 2013, Howe 
and STEVEN AIELLO, the defendants, that Fort Schuyler would issue
the Syracuse RFP. Chlor?about.August 15, 2013, GERARDI sent an email
to Howe, copying AIELLO and another executive of the Syracuse
Developer. The subject line of the email stated: ?[Syracuse
Developer] Company Qualifications and.Experience.? Attached.to the
email was a document entitled ?[Syracuse Developer] Company


b. The Syracuse Developer Qualifications contained a
list of qualifications of the Syracuse Developer and.its executives,
including AIELLO and GERARDI. For example, the Syracuse Developer
Qualifications stated that employees use ?Sophisticated project
management tools, such as InSite SiteWork 
to accurately and efficiently coordinate all aSpects of site and

6'7

 

utility construction, to create ideal building conditions, and
USGlobalNet, or web?based project management
software, to effectively manage all projects on budget and on
schedule.?

c. On or about August 16, 2013 Howe replied to 

works. Let me hand deliver to dr k. You guys should not email this
to anyone but me. All goodu? I know based.on.my review of email and
interviews with.Howe and others that ?Dr. is a nickname 
KALOYEROS, a/k/a ?Dr. the defendant. Howe has explained.that he
sent this email because he did not want anyone else at CNSE or Fort
Schuyler, other than.himself or KALOYEROS, to learn.of their scheme.

d. As described above, on or about August 20, 2013,
KALOYEROS sent to Howe and to the Fort Schuyler Executive an email
directing the Fort Schuyler Executive ?to issue an RFP for a strategic
partner in Syracuse and a similar one in Buffalo."

e. The following day; on or about August 21, 2013, Howe
responded to KALOYEROS only, at work email address,
stating have ?vitals? for buffalo and Syracuse friends . Howe has
explained.that ?buffalo and Syracuse friends" referred.specifically
to the Buffalo Developer and the Syracuse Developer, respectively.
Howe has further explained.that the word.?friends? was used to refer
to ?friends of the Governor," and that the Buffalo Developer and
Syracuse Developer qualified as ?friends? due, in part, to their
donations to the Governor?s campaigns and, in part, due to their
relationship as clients of Howe. Furthermore, ?Vitals? referred to
information about the Buffalo Developer and the Syracuse Developer
that would be used.to tailor the RFPs so that the Buffalo Developer?s
and the Syracuse Developer?s proposals would be selected.

. Later that day, on or about August 21 2013 KALOYEROS 
using his personal ?gmail? address, responded to Howe?s email and
stated, ?Please gmail not email.?u Howe then asked in an email to

 

appears that KALOYEROS forwarded Howe?s email to his
personal ?gmail? address before responding.

68

KALOYEROS, ?did you understand that.gmail email.I sent thiSInorning??
KALOYEROS responded, apparently sarcastically, ?Vitals is so
complicated to understand that was hoping you?d.break it down for
me in 3 letter words, 2 word sentences.?

g. On or about August 23, 2013, Howe sent an email to
KALOYEROS at KALOYEROS gmail account with the subject [Syracuse
Developer? 
email was the Syracuse Developer Qualifications, which Howe has
explained.were sent to him from GERARD: to be used in the
development of the Syracuse RFP.

h. 
to seVeral executives and employees of CNSE and Fort SChuyler and
to Howe that contained a draft of the Syracuse (the ?Draft Syracuse
. Howe forwarded the email and the Draft Syracuse RFP to AIELLO
and GERARDI, writing are fine tuning now, but expect to
release to public this weekm.what do you think? Keep Confidential
pls?' 
RFP provided, among other things, the following language, which is
nearly identical to language excerpted above from the Syracuse
Developer Qualifications: the developer should use ?sophisticated
tools and advanced capabilities (such as InSite Sitework
to accurately and efficiently coordinate
all aspects of site and utility construction, to develop ideal
building conditions, and USGlobalNet, or 
web?based project management-software) to effectively manage projects
expeditiously, professionally,_onwtime, and within budget.?

i. On or about September 13, 2013, GERARDI replied by
email to Howe and AIELLO, attaching a scanned version of the Draft
Syracuse RFP that contained handwritten notes. These
handwritten notes included the following:

i. In the paragraph of the Draft Syracuse RFP quoted
above, the phrases ?(such as InSite Sitework
com)? and ?USGlobalNet, or 
were underlined, and in the margin was written ?too
telegraphedE? these specific:programs.? Based.on
the context of this email and others, and interviews with Howe, I
believe that GERARDI was expressing his concern.that including these

69

 

specific qualifications in the RFP would make it too obvious that
the RFP was being rigged to favor the Syracuse Developer.

ii. 
that ?the response to the RFP must specifically include . .. Latest
audited financial statement for the word ?audited? was
crossed out in handwritten notes, and in the margin was
written, among other things, ?not 
notHforwprofits, or public corp.? Howe has explained.that, based.on
his experience working with the Syracuse Developer, GERARDI and AIELLO
were concerned about any requirement for audited financial statements
because such a requirement had disqualified them from previous public
contracts.

j. On or about September 13, 2013, several hours after
sending the Draft Syracuse RFP containing the handwritten notes to
Howe, GERARDI sent another email to Howe, copying AIELLO, reiterating
that the Syracuse RFP should not include a requirement of audited
financials, and suggesting instead that it read, ?Latest audited
financial statement if available, or other financial
information/statements that demonstrate the financial

qualifications." On or about September 16, 2013, Howe sent to
KALOYEROS an email stating: ?On where it says ?audited
financials? just need to add an additional few words, ?audited

financials or letter of financial reference from major financial
institution.??

k. On or about September 24, 2013, Howe forwarded to
AIELLO a revised.draft Syracuse RFP. This revised draft
Syracuse RFP still contained the phrases ?(such as InSite Sitework
and ?USGlobalNet, or 
but after the phrase ?Latest audited financial
reference
includedq aslnuibeen requested
by AIELLO and GERARD: via Howe.

1. Despite having retained.Howe and.worked.with.Howe to
tailor the Syracuse RFP to match the qualifications of the Syracuse
Developer, the Syracuse Developer?s RFP submission (which was
_affirmed by JOSEPH GERARDI, the defendant) falsely stated that no
one ?was retained, employed or designated by or on behalf of [the


7O

 The Buffalo RFP Was Designed to Defraud Fort Schuyler

79. Based on my review of emails and interviews of, among
others, Howe, I learned, that, unbeknownst to members of the Board
of Directors of Fort Schuyler, the Buffalo RFP also was designed so
that the Board of Directors of Fort Schuyler would have no choice
but to name the Buffalo Developer the preferred developer for Buffalo,
as follows:

a. As noted above, on or about August 21, 2013, Howe sent
an email to ALAIN KALOYEROS, a/k/a ?Dr. the defendant, stating
have ?vitals? for buffalo and Syracuse friends.?

b. On or about August 23, 2013, Howe sent an email to
KALOYEROS at his gmail account with the subject in*which
Howe wrote ?Attached are vitals for buffalo. They expressed the
Belowthattext
was a section that Howe has explained came from the Buffalo Developer
and that began ?Todd Our thoughts for the RFQ: RFQ Requirement 
Selecting based on qualifications not price is important.? Below
that text'were seven bullet.points that'were 
the defendant, to be used to draft the Buffalo RFP.

c. Also on or about.August 23, 2013, an individual from
an architecture firm sent to KALOYEROS, Howe, and others associated
with CNSE a power point containing details, including, among other
things, the location, of a potential construction project (the
?Riverbend.Project?) to be undertaken by CNSE in.Buffalo. Howe then
forwarded the email and.power point regarding the Riverbend Project
t0 LAIPPLE .

i. 
individuals associated with CNSE, and.developers, I learned.that the

 

Howe has explained.that he occasionally referred.to the RFPs
as which stands for ?Request for Qualifications,? because
the RFPs requested qualifications from interested bidders, as opposed
to proposals on building specific projects.

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Riverbend Project was not made public prior to the Governor?s
announcement of the Riverbend Project on or about November 21, 2013
HH which was more than three months after Howe had forwarded
information about the Riverbend Project to LAIPPLE and that the
details associated with.the Riverbend.Project contained.in the power
point described above were not shared with any developer other than
the Buffalo Developer prior to the issuance of the Buffalo RFP.

d. Later in 23, 2013, LAIPPLE
sent an email to Howe stating, ?One last thought on the RFQ. If the

be helpful.? Howe has explained.that refers to ?minority and
women business enterprises,? and that the Buffalc>Developer?believed
that they were stronger than their competitors in terms of their
working with MWBEs. My review of the Buffalo Developer?s website
further confirmed.that the Buffalo Developer publicly highlights its
commitment ?to proactively supporting Minority and Women?Owned
Business Enterprise Later on August 23, 2013, Howe
forWarded the email to KALOYEROS, stating, ?Additional
vital for buffalo, stronger on the mwbe than usual would help.?

. e. On or about September 3, 2013, KALOYEROS responded
to Howe?s email fronlAugust 23, 2013 regarding the ?Additional vital
for buffalo,? writing: ?these are not unique to [the Buffalo
Developer]..we need.more definite specs, like minimum.X'years in'Y,
number of projects in high tech, etc, etc . Howe has explained that
it was his understanding based on his course of dealing with KALOYEROS
that referred.to Nninimunanyears in he was asking
for information about the number of years that the Buffalo Developer
had worked in a particular area, so that the Buffalo RFP could be


E. On or about September 6, 2013, the Deputy State

andauiexecutive
at CNSE, with the message, pulled together the following ppt. A
cut and paste of the various documents we have done over the last
few weeks. Can you review. If all is okay, I will send for final review. 
The contained.further details, including, among
other things, the location and purpose, of the Riverbend Project.?
Later that day, on or about September 6, 2013, Howe forwarded this
email, including the attachment, to LAIPPLE, with the message,

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?Michael. FYI, confidential.? LAIPPLE forwarded.the email, with.the
attachment, to KEVIN SCHULER, the defendant.

g. On or about September 9, 2013 KALOYEROS sent an email
from his gmail address to the gmail address of LOUIS CIMINELLI, the
defendant, stating, ?Draft of relevant sections from REP
enclosed..obviously, we need to replace Syracuse with Buffalo and
fine tune the developer requirements to fit.}hopefully, this should
give you a sense of where we? re going with this . .thoughts?? Attached
to the email was a draft of the Syracuse REP. Under the ?Developer
Requirements? section of this draft of the Syracuse RFP, the draft
stated, among other things, ?Over 15 years proven experience." On
the same day, CIMINELLI forwarded the email from KALOYEROS and the
attached draft of the Syracuse REP to LAIPPLE and SCHULER.

h. On or about September 13, 2013, an email
to KALOYEROS, copying CIMINELLI, LAIPPLE, and Howe. The email
stated, among other things: ?As Louis continues to enjoy the much
warmer weather on the West Coast, I am sending along three attachments
that I hope will meet your request for information." Attached to
email to KALOYEROS was, among other things, a two~page
document entitled ?Company Profile.? Included in the ?Company
Profile? was a statement noting'that the Buffalo Developer had ?over
50 years of experience.?

80. The Buffalo RFP as publicly issued in or around October
2013 contained several provisions that were not in the draft of the
SyracuseIUHPthat ALAIN KALOYEROS, thetdefendant, sent
as a model on or about September 9, 2013, to LOUIS CIMINELLI, the
defendant, but that were consistent with the Buffalo Developer?s
qualifications and.I believe were included.to further tailor the RFP
for the Buffalo Developer, including the following:

a. Under ?Developer Requirements,? the Buffalo RFP
stated, ?Bidder is required to comply with equal opportunities for
minorities and women pursuant to section 312 of the New York Executive
Law. This includes the achievement of at least 23% Women and Minority
Owned Business Enterprise participation (WMBE). Accordingly, it is
expected that DEVELOPER be able to demonstrate a track record in WMBE.
participation.?

'73

 

b. Als0'under ?Developer Requirements,? the Buffalo RFP
stated.that it was seeking ?a local the Greater Buffalo
Area," with ?Over 50 years of proven.experience,? which corresponded
to the ?Company Profile? provided.to KALOYEROS by KEVIN SCHULER, the
defendant.

81. On.or-about.November l, 2013, an.email (the ?50/15 Email?)
was sent by the Director of Procurement for the Research Foundation
to developers who had expressed interest in the Buffalo indicating
that the requirement of 50 years of proven experience was a
typographical error and that the requirement should have been 15 years
of proven experience. Based on interviews with executives of CNSE
and their related entities, I learned that it was the practice of
ALAIN KALOYEROS, a/k/a ?Dr. the defendant, to closely edit the
language of all RFPs prior to publication and was known not to miss
errors or changes . Based on these interviews the timing of the 50/15
Email, the inclusion of the ?50 years? requirement in the original
RFP following'KALOYEROS?s receipt.of the Buffalo Developer?s company
profile, and the emails set forth below; I believe that the original
?50 years? requirement was not in fact a ?typographical error.?

a. On or about November I, 2013, the following email
exchange occurred:

i. An.executive of the Buffalo Developer (?Buffalo
Developer Executive?l?) forwarded the 50/15 Email to LOUIS CIMINELLI
and KEVIN SCHULER, the defendants, with the message 

ii. SCHULER responded, ?50 was.a bit obnoxious.?

b. Beginning or about November 2, 2013, the following
email exchange occurred:

i. Buffalo Developer Executive?l replied to the
50/15 Email, stating, ?We confirm receipt and understand the intent
of the change.? Buffalo Developer Executive?l then forwarded his

message to two employees of the Buffalo Developer, including a
marketing coordinator (the ?Buffalo Developer Marketing
Coordinator?).

74

ii. On or about November 4, 2013, the Buffalo
Developer Marketing Coordinator forwarded the email from Buffalo
Developer Executive?l to SCHULER, stating, so much for that
thought.?

SCHULER responded to the Buffalo Developer
Marketing Coordinator: ?15 is still pretty good.?

82. On or about November 6, 2013, ALAIN KALOYEROS, a/k/a ?Dr.
the defendant, sent an email (the ?NovemberL6 Email?) to a
representativecxfezlarge, global construction.companyy that stated,
among other things: i

As you know, we are in the midst of an RFP process and,
while you are a valued and qualified partner, particularly
for cleanrooms, we cannot endorse nor support a pre?cooked
process or any process that singles out anyone, including
you for business before the RFP process has been.completed
and a merit based group has been selected.

On or about November 6 2013 KALOYEROS forwarded the November 6 Email
to Howe. Approximately'two1ninutes latery Howe forwardesthat email
the defendants, with the
message ?See below. Ouch!?

83. Based on my review of emails and publicly available
documents and interviews of, among others, Howe, I learned that on
or about November 14, 2013, which.was approximately one week before
the Governor announced the Riverbend Project publicly, Howe sent an
email to LOUIS CIMINELLI, KEVIN SCHULER, and MICHAEL LAIPPLE, the
defendants, stating, among others things, ?Well looks like the
Riverbend.Announcement is going to happen.next Thursday Please
keep confidential." SCHULER responded, ?How do they announce the
riverbend.site in the middle of this procurement? Site selection is
supposedly part of the eval. NOW'mind.you, I don?t think it?s a big
deal but it does need to be considered. Based on my review of emails 
I believe that concerned that if the Governor announced
the Riverbend Project publicly before bids on the Buffalo RFP were
due, the Buffalo Developer could lose the improper advantage it had
secured from advanced notice that Riverbend would be the site of a
CNSE project.

'75

 

84. Based on my review of emails and publicly available
documents, and interviews of, among others, Howe and employees of
I learned? amongtother?things, that
on or about December 10, 2013, the Buffalo Developer submitted its
response to the Buffalo RFP, which included a proposed.option of a
development at the Riverbend Project site . Despite having retained
Howe and worked with Howe to tailor the Buffalo RFP to match the
qualificatitunaof thelBuffalc>Developery the Buffalo Developer?s RFP
submission (just like the Syracuse Developer?s) falsely stated that
no one ?was retained, employed or designated by or on.behalf of [the
BuffaloIDeveloperJ tC)attempt to influence the procurement process.?
Two other companies submitted responses to the Buffalo RFP . However,
based.on my review of emails between other developers, I know that
at least two other developers decided at the time not to submit
responses to the Buffalo RFP, because, among other thing, the RFP

company.

iv. Fort Schuyler Awarded Contracts to the Syracuse Developer and
Buffalo Developer

85. Based on interviews of employees of CNSE and members of
the Board of Directors of Fort Schuyler, I believe that the individuals
associated with Fort Schuyler involved in evaluating the responses
to the Syracuse RFP and to the Buffalo RFP and voting on awarding
the preferred developer contracts were not aware of any developer
receiving a draft of the Syracuse RFP or Buffalo RFP in advance of
their public announcements. I learned from both employees of CNSE
and members of. the Board of Directors of Fort Schuyler that they would
have viewed the pre?announcement sharing of a draft of an RFP with
a developer as an unfair and improper practice. One member of the
Board of Directors stated that he was disappointed that only one
company the Syracuse Developer submitted a response to the
Syracuse RFP and that only three developers submitted responses to
the Buffalo RFP, because additional responses would have created
competition and yielded a better result for Fort Schuyler.

86. Based on my review of emails and public documents and

interviews of employees of CNSE and members of the Board of Directors
of Fort Schuyler, I learned that:

76

a. 2013, the Syracuse Developer
was chosen.by vote of the Board of Directors of Fort Schuyler as the
preferred developer for CNSE in Syracuse, and soon thereafter was
awarded an approximately $15 million contract to construct the Film
Hub . In or around October 2015 without any further RFP, the Syracuse
Developer was awarded.an.approximately $90 million.contract.to build
a manufacturing plant in Syracuse.

b. On or about January 28, 2014, by vote of the Board
of Directors of Fort Schuyler, the Buffalo Developer, along with
another company (the ?Second.Buffalo Developer?), was chosen as the
preferred developer for CNSE in Buffalo.

c. ALAIN KALOYEROS, a/k/a ?Dr. the defendant,
officially ?recused? himself from the votes and accordingly he did
not officially vote to select either the Syracuse Developer or the
Buffalo Developer. I believe KALOYEROS did so in order to continue
to deceive the other members of the Fort Schuyler Board.of Directors
into believing that the bidding process was fair, open, and
competitive, when in fact KALOYEROS had manipulated the process so
that the Syracuse Developer and the Buffalo Developer would be chosen
regardless of whether KALOYEROS was involved in the voting.

87. Based on my review of emails'and publicly available
documents, and interviews of, among others, Howe and employees of
CNSE and its affiliated entities, I learned, among other things, that
in ?or around March 2014., without any further RFP process, the Buffalo
Developer was chosen over the Second Buffalo Developer and without
further competition from other interested developers to receive
a contract worth approximately $225 million for the Riverbend
Project.B fort?maRiverbend project
was expanded to be worth approximately $750 million.

 

The Second Buffalo Developer received a contract worth
approximately $25 million for another project in.Buffalo, NeW'York.

77

 

V. FALSE STATEMENTS BY AIELLO AND GERARDI

88. On or about June 21, 2016 STEVEN AIELLO and JOSEPH GERARDI 
the defendants, each met with law enforcement agents and prosecutors
at the United States Attorney?s Office. .AIELLO and GERARDI were
represented.by counsel, and.each spoke with the Government pursuant
to a proffer agreement that protected each of them from having his
statements used against him except, among other things, insofar as
he lied and was accordingly charged with making false statements.
Before the proffers, the<30vernment informed.counsel that AIELLO and
GERARDI were subjects of the Government?s investigation, and.warned
them that the Government believed that statements that AIELLO had
previously made to the FBI, which were consistent with the statements
described below, were false. During their respective proffer
sessions AIELLO and GERARDI were warned repeatedly that if they told
any lies, they could be charged with a federal crime. Moreover, both
AIELLO and GERARDI were told that their respective stories did not
appear to be credible, and they were given multiple opportunities
to tell the truth. During these meetings, AIELLO and GERARDI made
the following statements, which I believe to be false, based.on the
facts set forth above:

a. AIELLO and GERARDI each separately stated that, after
AIELLO was approached by Howe in or around late spring 2014 to ask
whether AIELLO would be interested in hiring JOSEPH PERCOCO, a/k/a
?Herb,? the defendant, to work for the Syracuse Developer, AIELLO
spoke and.they'both.decided not to hire orInake payments
to PERCOCO. Furthermore, AIELLO each separately stated
that they did not pay PERCOCO approximately $35,000 by sending money
tC)Howe?s shell company bank account, and they each.separately stated
that they had no knowledge that Howe had.paid.PERCOCO, and that they
never authorized Howe to do so. I believe, based on my review of emails
and interviews of, among others, Howe, and as further described above,
that these statements were false because AIELLO and GERARDI agreed
to and did pay PERCOCO and deliberately did so through Howe?s LLC
in.order to disguise the fact that the Syracuse Developer was making
payments to PERCOCO.

AIELLO and GERARDI each separately stated that Howe
never asked them to make campaign contributions. I believe, based
on my review of emails and interviews of, among others, Howe, and
as further'described.above, that these statements were false because

78

Howe did in fact advise AIELLO and GERARDI to make certain campaign
contributions.

c. GERARDI stated that Howe sent the Draft Syracuse RFP
to him and AIELLO in order for the Syracuse Developer to help Howe
and his associated Law Firm draft a broader, more open RFP so that
other companies could compete to be the preferred developer, even
though, drafting the RFP in this way would hurt the Syracuse Developer.
GERARDI further stated that when he wrote ?too telegraphed?? next

from the Syracuse Developer Qualifications, he meant that the section
in the Draft Syracuse RFP was too narrow and should be made broader
to allow other developers to apply. I believe, based on my review
of emails and interviews of, among others, Howe, and as further
described.above, that these statements were false because.AIELLO and
GERARDI conspired.with others to tailor the Syracuse RFP to benefit
the Syracuse Developer.

WHEREFORE, deponent respectfully requests that warrants be
issued for the arrests of JOSEPH PERCOCO, a/k/a ?Herb,? ALAIN
KALOYEROS, JR., a/k/a ?Braith,?
STEVEN AIELLO, JOSEPH GERARDI, LOUIS CIMINELLI, MICHAEL LAIPPLE, and
KEVIN SCHULER, the defendants, and that they be imprisoned or bailed,

as the case may be.




Criminal Investigator
United States Attorney?s Office
Southern District of New York

Swo?E to before me this
0 day of September, 2016

.Qw


THSVE ORABLE GABR 
UN STATES STRATE JUDGE
OUTHERN DISTRICT OF NEW YORK

 

79