By Nate Raymond
NEW YORK (Reuters) - Federal and state prosecutors on Thursday announced charges against 10 men, including two onetime senior advisers to New York Governor Andrew Cuomo, in corruption and fraud cases involving state contracts worth hundreds of millions of dollars.
The charges followed a federal investigation into Buffalo Billion, a signature $1 billion economic development project of Cuomo aimed at revitalizing the area around the city of Buffalo, once an upstate industrial powerhouse.
Joseph Percoco, a former executive deputy secretary to the governor; Alain Kaloyeros, president of the State University of New York's Polytechnic Institute; and six others were charged in a criminal complaint filed in federal court in Manhattan.
Todd Howe, a lobbyist and an ex-adviser to Cuomo when he led the U.S. Department of Housing and Urban Development, pleaded guilty to federal charges and is cooperating. Richard Morvillo, his lawyer, said Howe "will testify truthfully if called upon."
Prosecutors said in one scheme, Percoco, whom they called Cuomo's "right-hand-man," sought $315,000 in bribes in exchange for offering help to two of Howe's corporate clients, an energy company and a Syracuse real estate developer.
In an overlapping scheme, they said, Kaloyeros, who oversaw a grant application process for Buffalo Billion and similar programs, and Howe, whom he hired to help develop projects, conspired to rig bids for contracts favoring two developers.
New York Attorney General Eric Schneiderman announced separate state charges against Kaloyeros and a real estate executive, Joseph Nicolla, over alleged bid-rigging involving three multimillion-dollar contracts.
The cases were the latest to focus on Albany, New York's capital, following last year's convictions of the leaders of the state legislature's two houses, Democrat Sheldon Silver and Republican Dean Skelos.
"Today's complaint shines a light on yet another sordid side of the show-me-the-money culture that has so plagued the government," Manhattan U.S. Attorney Preet Bharara said.
Cuomo was not accused of wrongdoing. In a statement, Cuomo said he was "saddened and profoundly disappointed" by the allegations involving Percoco, who previously worked for and was a close friend of Cuomo's late father, former Governor Mario Cuomo.
"Like my father before me, I believe public integrity is paramount," Cuomo said. "This sort of breach, if true, should be and will be punished."
Percoco, 47, and Kaloyeros, 60, self-surrendered on Thursday morning and were later granted bail at a court hearing. In response to the charges, SUNY suspended Kaloyeros without pay.
Barry Bohrer, Percoco's lawyer, called the prosecution "an overreach of classic proportions." Kaloyeros' lawyer, Michael Miller, said his client was innocent. Nicolla's company, Columbia Development, did not respond to a request for comment.
Some of the bribes paid to Percoco were arranged by Peter Galbraith Kelly, a senior vice president at Competitive Power Ventures, which obtained a $100 million contract that would help finance a $900 million power plant, prosecutors said.
In the Buffalo Billion-related scheme, prosecutors said Howe received bribes from Syracuse's COR Development Co, run by Steven Aiello and Joseph Gerardi, and Buffalo's LPCiminelli, run by Louis Ciminelli, Michael Laipple and Kevin Schuler.
Prosecutors said executives at both companies were major donors to Cuomo's election campaigns, with COR becoming its top upstate donor after ramping up contributions beginning in December 2011.
Daniel Gitner, Kelly's lawyer, said his client was innocent. Lawyers for Aiello, Gerardi, Ciminelli, Laipple and Schuler either declined comment or did not respond to requests for comment.
(Additional reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Leslie Adler)