ALBANY — The U.S. Supreme Court will consider the constitutionality of the convictions of executives and SUNY Polytechnic Institute founder Alain Kaloyeros in the so-called "Buffalo Billion" bid-rigging case when the court begins its new term in the fall.
In a case related to the same scandal, the court on Thursday also agreed to hear arguments from Joseph Percoco, a former top aide to ex-Gov. Andrew M. Cuomo who contends his March 2018 bribery and wire fraud convictions should also be overturned.
In the Kaloyeros case, the court agreed to hear development executive Louis Ciminelli's appeal of his July 2018 conviction for federal wire fraud. His attorneys, as well as those representing Kaloyeros and Steven Aiello, another development executive convicted at the same trial, argue the "right to control" theory of the federal government's case was flawed.
The theory, when applied to wire fraud, holds that anyone who denies necessary fiscal information to an entity is criminally culpable for denying it the right to control its economic decisions.
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While the court agreed to take on Ciminelli's specific case, the convictions of all three men could be impacted by the court's eventual decision.
Michael Miller, the New York City attorney representing Kaloyeros, declined to comment Thursday, deferring to Ciminelli's attorney Michael Dreeben, who will be the lead lawyer in arguing the case before the Supreme Court.
“Our team is gratified that the Supreme Court has agreed to hear Mr. Ciminelli’s case, which will allow the court to address our challenge to the validity of the right-to-control theory used in the prosecution," Dreeben told the Times Union. "We look forward to presenting our position to the court in full briefing and argument.”
Dreeben, of the Washington, D.C., law firm of O'Melveny & Myers, has significant Supreme Court experience. He worked in the Department of Justice’s Office of the Solicitor General for three decades and was deputy solicitor general for the Justice Department for 24 years, arguing more than 100 cases before the Supreme Court on behalf of the U.S. government.
Ciminelli, Kaloyeros and Aiello are serving federal prison terms; Percoco was released from prison last year.
Kaloyeros, once one of the state's highest-paid employees, asked the high court to hear his case after the U.S. Court of Appeals for the Second Circuit last year rejected his request for the judges on that court to toss out his conviction in the federal bid-rigging case.
He was arrested in 2016 and charged with wire fraud in a bid-rigging scheme involving two upstate construction firms. At trial in U.S. District Court in Manhattan, the jury determined he steered state business to upstate contractors and major Cuomo donors who were eventually awarded hundreds of millions of dollars in construction contracts for SUNY Poly-related projects in Syracuse and Buffalo.
Although federal prosecutors couldn't prove that Kaloyeros profited from the scheme, they were able to convince the jury that he had deceived the board of the Fort Schuyler Management Corp., a nonprofit that managed the school's development projects outside of its Albany campus, during the process that led to the selection of the two companies, LPCiminelli of Buffalo and COR Development of Syracuse.
The right-to-control theory of wire fraud is only recognized as law in a few federal circuits — including the Second Circuit in Manhattan, where Kaloyeros was tried. Lawyers for Kaloyeros and the others hope that the Supreme Court would take up the case in order to clear up the inconsistencies between circuit courts.
In taking up Percoco's appeal, the court will consider whether — as it was phrased in his attorneys' February filing with the court — "a private citizen who holds no elected office or government employment, but has informal political or other influence over governmental decision-making, owe a fiduciary duty to the general public such that he can be convicted of honest-services fraud?"
Percoco, who served as Cuomo's executive deputy secretary, was convicted in 2018 of three counts, including solicitation of bribes that were paid to him by developers in his private capacity as a "consultant" or provided to his wife in the form of a "low-show" teaching job. Percoco's defense argued that many of the favors he provided to those companies were executed during a period of time when he was away from government service and was managing Cuomo's 2014 re-election campaign, and therefore should not be implicated by the honest services statute.
Prosecutors, however, argued in that trial that Percoco was working regularly out of Cuomo's Executive Chamber offices in Manhattan, and remained an influential member of the governor's inner circle. The former governor, who resigned last Augusts amid allegations of sexual misconduct, has said he thought his longtime confidant was merely doing "transition work" as he moved from his taxpayer-funded role to campaign work.
After Cuomo's re-election, Percoco returned to his Executive Chamber role before leaving for good the following year. Like Kaloyeros and the rest of the defendants, he was arrested in September 2016.
The court has already chopped down the scope of the honest services statute in a case with implications for New York state government: After former state Senate Majority Leader Joseph Bruno was convicted under the law in 2009, a high court decision in an appeal brought by a former Enron executive resulted in a new trial — where Bruno was acquitted.
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Supreme Court to hear appeals in 'Buffalo Billion' cases that convicted Kaloyeros, Percoco - Times Union
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