Eric Schneiderman

Schneiderman Outlines ‘Stupid,’ ‘Brazen’ Corruption Scheme

Less than two hours after U.S. Attorney Preet Bharara wrapped up his press conference detailing a complex public corruption case against nine individuals, including now-former SUNY Poly President Alain Kaloyeros, state Attorney General Eric Schneiderman followed suit, revealing the outcome of his own – related, but independent – investigation.

The result of that probe, which, like Bharara’s, is still ongoing, was more charges for Kaloyeros, who, according to the AG, engaged in bid rigging to benefit Albany developer Joseph Nicolla, president of Columbia Development.

Schneiderman said Kaloyeros, who was once the state’s highest compensated public employee but has been suspended without pay by SUNY, and Nicolla colluded to benefit each other, the former even going so far as to provide details of a competitor’s solicitation for a lucrative state contract to the later to give him a leg up on the process six months before an RFP was officially issued.

Kaloyeros also allegedly awarded another lucrative contract to a firm that agreed to provide a nonprofit he controlled with a $50 million loan along with a $3 million research grant to SUNY Poly, the AG said, and engaged in a “collusive” agreement with an architectural firm that served to increase his own annual compensation.

Schneiderman called the actions by Kaloyeros “stupid” and “brazen” accusing them of “acting in an unrestrained way to enrich themselves.”

Kaloeryos is facing three felony counts of restraint of trade and competition and is scheduled to arraigned in Albany City Court tomorrow. Nicolla faces one count, and is scheduled to be arraigned in the same court on Monday.

If convicted on all charges, Kaloyeros faces a maximum sentence of 4 to 12 years in prison, while Nicolla faces 1.3 to 4 years in prison.

Schneiderman said he exercised the anti-trust powers afforded to him under the Donnelly Act. He said more individuals could be charged in the future, but stressed – when asked – that “there are no charges today that related in any way to” Gov. Andrew Cuomo.

Note the careful placement of “today” in that sentence by Schneiderman, who succeeded Cuomo in the AG’s office, and hasn’t always seen eye-to-eye with the governor, who even tried on his way out the door to take Martin Act power and give it to the newly created Department of Financial Services superintendent – a job created for his onetime top aide, Ben Lawsky.

You can read the AG’s complaint against Kaloyeros and Nicolla below.

Kaloyeros Nicolla – Signed Felony Complaint by liz_benjamin6490 on Scribd

NY Dem House Members To GOP: Drop Schneiderman Subpoena

The Democratic members of New York’s congressional delegation this week urged Republicans on a House committee to drop subpoenas issued to state attorneys general, arguing such a move is a waste of time and violates the separation of powers.

The subpoenas issued by the House Science, Space and Technology Committee are seeking documentation related to Attorney General Eric Schneiderman’s investigation of ExxonMobil and whether the energy giant underplayed the causes of climate change.

Republicans have alleged the investigation is being conducted in part to curry favor with deep-pocketed environmental groups and donors.

But Schneiderman, as well as House Democrats, argue the subpoenas violate the principle of federalism and are, in essence, a sign of congressional overreach.

In addition to issuing subpoenas to Schneiderman, the House panel has also sought records from the Massachusetts AG.

“We are deeply concerned that these subpoenas will interfere with the legitimate fraud investigations of ExxonMobil undertaken by these independently elected law enforcement officials,” the lawmakers wrote.

Schneiderman’s office on Tuesday in a letter to Chairman Lamar Smith wrote it would not comply with the subpoenas, citing the federalism argument.

The AG was back in the news on Tuesday again when he launched an investigation of the Trump Foundation, the charity founded by Republican presidential candidate Donald Trump, which has com under scrutiny for its record of donations.

New York Delegation Letter to Chairman Smith 9.13.16 by Nick Reisman on Scribd

AG’s Office Knew About History Between Prosecutor And Defendant In Pigeon-Michalek Case

Assistant Attorney General Susan Sadinsky will continue to work on the criminal case involving state Supreme Court Judge John Michalek and political operative Steve Pigeon, for now.

“Things could always change,” was the addendum from AG spokesperson Matt Mittenthal a day after we first reported Sadinsky served as Michalek’s campaign treasurer in 2008.

The attorney general’s office also noted Friday, the prosecutor’s supervisor knew about her history with the judge, as did the division responsible for reviewing conflicts of interest. Sadinsky helped prepare and present the felony complaint against Michalek.

The judge accepted a plea deal last week and admitted to accepting bribes from Pigeon. He’s agreed to cooperate with the investigation moving forward.

The Buffalo News reported Friday, the other prosecutor assigned to the cases, Diane LaVallee, received court fees over the years for services rendered in cases assigned by Michalek. One of the people who submitted the initial election law complaint that led to the indictments, believes its a clear conflict in both cases.

“My entire complaint from the start of the Pigeon matter, related to conflicts of interest which prevented prosecution of election law crimes,” said attorney Mark Sacha. “I am very disturbed to learn that out of all the prosecutors in the attorney general’s office, the two prosecutors on Pigeon and Michalek’s case are the ones that have both professional and political conflicts. The citizens of Erie County deserve better.”

Prosecutor Who Worked on Pigeon/Michalek Case Used To Work On Judge’s Campaign

One of the prosecutors who helped prepare and present the complaint against state Supreme Court Judge John Michalek used to work on the judge’s campaign. The state attorney general’s office confirms Assistant Attorney General Susan Sadinsky of the office’s Public Integrity Bureau served as Michalek’s campaign treasurer in 2008.

Last Wednesday, Michalek pleaded guilty to two felony charges: receiving a bribe and false filing. The judge admitted to trading favors with Western New York political operative Steve Pigeon.

“As indicated by Justice Michalek’s guilty plea and the very serious criminal charges against Mr. Pigeon, the prosecutors in this case proceeded aggressively and impartially in their pursuit of a brazen bribery and extortion scheme that should offend anyone who believes in the rule of law. No one – regardless of years-old affiliations or connections – is above the law,” AG spokesperson Matt Mittenthal said.

Pigeon pleaded not guilty to nine charges last Thursday, including bribing the judge. As part of Michalek’s plea agreement he resigned from his seat and promised to cooperate with the investigation moving forward.

Schneiderman Press Conference Leaves Door Open For More Corruption Charges

You couldn’t help walking away from Attorney General Eric Schneiderman’s press conference in Buffalo Thursday thinking this is just the beginning. That’s not to take away from the magnitude of the events of the last two days.

Getting a sitting state Supreme Court judge to plead guilty to two felony charges including accepting a bribe is a huge story. That plea deal is expected to be instrumental as the AG’s office attempts to prosecute notoriously bullet-proof Western New York political operative Steve Pigeon, for among other things allegedly giving those bribes.

The two are accused by Schneiderman of essentially gaming the political and judicial system for their own benefits.

“For a judge to sell their office for favors, for benefits, for money is something that I think should offend all Americans, but certainly should offend all American lawyers,” Schneiderman said.

According to the Michalek complaint, much of the evidence for this case came from emails, seized when authorities raided Pigeon’s home last year. Those raids were the result of an investigation into election law complaints.

The attorney general said there could still be charges involving those initial accusations.

“Yes. I don’t want to comment on any other ongoing aspects of the investigation but it is an ongoing investigation,” Schneiderman said.

Then there’s the ripple effect this could have on the court system in Erie County. Schneiderman said the state Office of Court Administration has started a broad investigation of cases Michalek presided over, including specific cases connected to this complaint.

Sources have told us investigators we’re speaking to at least one other judge. Schneiderman had a chance to make a definitive statement when asked if he had questions about the impartiality of anybody else on the bench.

He didn’t.

“As I said, I’m not going to comment on any other aspects of the ongoing investigations,” he said.

The attorney general would not even comment on whether the special grand jury was still empaneled. Meanwhile, a representative for the FBI said there could be federal charges associated with the investigation down the line.

So how far does this reach? It’s hard to even guess.

Pigeon has connections to attorneys and politicians, not just across Western New York, but all over the state.

According to one of the communications in the Michalek complaint, Pigeon even talked up the judge to the governor. Nobody asked specifically if Governor Cuomo had any further connection to the investigation, but based on the rest of the press conference we probably could’ve expected a “no comment.”

 

Pigeon Indicted

Ryan Whalen reports:

A well-known Western New York political operative with ties to high-profile Democrats, including former President Clinton and Gov. Andrew Cuomo, faces nine separate charges in connection with a bibery case involving a now-former state Supreme Court judge. G. Steven Pigeon pleaded not guilty to all counts in state Supreme Court this morning. This is the culmination of a long and well-documented public corruption investigation by the state attorney general’s office.

Pigeon faces two counts of bribery, six counts awarding misconduct and one count of grand larceny. The indictment handed up by a special grand jury two days ago was unsealed in court earlier today. Pigeon’s attorney Paul Cambria waived a reading of the indictment. If convicted on all counts Pigeon could face up to 15 years in Prison. Cambria said he doesn’t expect this case to get to sentencing.

“The prosecution says it has a strong case, made stronger yesterday when state Supreme Court Judge John Michalek took a plea deal and admitted to taking bribes from Pigeon,” said Paul Cambria, defense attorney.

The prosecution said its case is stronger because of the cooperation agreement it reached with state Supreme Court John Michalek, who pleaded guilty to two felonies Wednesday and agreed to resign his seat on the bench. He is continuing to cooperate with investigators in hopes of avoiding time behind bars.

“I will not stand for this kind of brazen contempt for the rule of law and the interests of everyday New Yorkers. Anyone who breaches the public trust will be held accountable by my office. Our investigation is ongoing,” Attorney General Eric Schneiderman said.

Most of the charges in the Pigeon indictment involve the series of favors exchanged between him and the judge, including an attempt on at least one occasion by Pigeon to get Cuomo to appoint Michalek to an associate judgeship in the Appellate Division.

The charge of grand larceny involve an unnamed attorney whom Pigeon allegedly extorted for about $5,000. That same attorney was appointed by Michalek as a receiver at Pigeon’s request, even though Schneiderman said he only had about two years of experience.

The prosecution asked the judge set bail at $25,000. Despite the defense arguing Pigeon has known about this investigation for a year and a half and was no threat to flee, the judge set bail at $10,000 cash. The defense had a bondsmen at court and was processing the bond immediately after the hearing.

Pre-trial motions need to be in by Aug. 16.

Schneiderman: ‘In Orlando, A Bad Guy Got The Gun Because They Have Lax Laws.’

In Buffalo Thursday, Attorney General Eric Schneiderman, D, pointed to the Orlando, Fla. mass shooting as an example of exactly why New York state passed the SAFE Act. He said the AR-15, gunman Omar Mateen bought legally in Florida and used to murder dozens of people, can’t be purchased in New York.

“In Orlando a bad guy got the gun because they have lax laws.” he said.

Schneiderman held the press conference just days after announcing the largest gun bust in the state since the gun control legislation was passed in 2013. He said state police have seized the majority of more than 100 illegal guns sold by a Rochester-area gun shop.

“We don’t know how many lives we’ve saved by getting these guns off the streets but we know that we’ll do everything that we possibly can in my office, working with our colleagues in government to ensure that nothing like Orlando happens in the state of New York,” he said.

The main defendant is former shop owner Kordell Jackson, who has been an outspoken critic of the SAFE Act. Jackson closed his shop in January 2015 because he said the legislation was too restrictive for his business to continue to be viable in New York.

At his court appearance Tuesday, Jackson’s attorney said the law was not intended to target people like his client.

“I think no one ever contemplated that someone who was licensed by the ATF, monitored by the state, who had over half of his customers law enforcement, either active or retired law enforcement people purchasing from him, would be in a situation like this now,” defense attorney Paul Ciminelli said.

“These people feigned ignorance,” Schneiderman said. “They said, well we’re confused by the SAFE Act but then witnesses were able to report that they knew in great detail what the SAFE Act required, what features of guns had to be changed before they could be sold.”

While applauding his state partners, the AG also criticized the federal government for making his life harder. He said because federal laws are weak, illegal guns are bought in other states and brought into New York.

“This really is a problem where our federal government is worse than the American people deserve,” he said.

As Investigations Continue, DiNapoli Reviewing Parts Of The Buffalo Billion

As two separate investigations into the Buffalo Billion continue, one from the U.S. Attorney’s office and another ordered by the governor, State Comptroller Thomas DiNapoli said his office is also looking into parts of the economic development program. DiNapoli said he is not looking at the program as a whole but rather reviewing a number of programs that help fund the Buffalo Billion.

“We are looking at a variety of economic development programs across the state, some of which may impact that but again, when you do have an investigation going on, we’re also very mindful of not doing anything that would interfere or impede with the work of prosecutors,” DiNapoli said.

For example, he said his office is in the middle of auditing the Excelsior Jobs Program. According to the governor’s 2014-2015 budget, $170 million in tax credits were reserved from the program for the Buffalo Billion.

DiNapoli has been critical of Cuomo’s signature project in the past. Earlier this year he criticized the process that led to a delay in payments for contractors working on the RiverBend manufacturing hub.

FanDuel, DraftKings Reach Settlement With AG To Stop Taking NY Bets

The daily fantasy sports websites DraftKings and FanDuel agreed on Monday to stop taking bets in New York state after reaching a settlement with Attorney General Eric Schneiderman.

The agreement comes after Schneiderman’s office last year initiated a legal challenge to the operations of both companies, arguing their business essentially unregulated gambling prohibited by state law.

“I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter,” Schneiderman said.

“As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. Today’s agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.”

The development likely opens up the Legislature to regulating fantasy sports in New York and receive a portion of the popular activity’s revenue. Other states have sought to clamp down fantasy sports.

In a statement, DraftKings signaled it was hopeful for that possibility of being allowed back into the New York market through legislation.

“We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.

Gov. Andrew Cuomo’s office, meanwhile, was open as well to any proposed regulatory scheme.

“We look forward to reviewing the settlement and any proposed legislation,” said Cuomo spokesman Rich Azzopardi.

Schneiderman And Fellow AGs Push Senate On SCOTUS Confirmation

Democratic attorneys general from 19 states, the District of Columbia and Puerto Rico called on the U.S. Senate Thursday to consider President Obama’s upcoming nomination to the U.S. Supreme Court.

Senate Republicans in Washington have said they will refuse to consider Obama’s nominee to replace the late Justice Antonin Scalia, who died unexpectedly last month, given that he is in the final year of his second term.

But Democrats have argued the Senate has plenty of time to consider the merits of Obama’s nominee, given the vacancy occurred with 10 months to go in office.

“We’re looking at an unprecedented delay not for any good reason, but simply because the Senate is refusing to do its job,” Schneiderman said in a conference call with reporters on Thursday.

The AGs released a letter to the Senate’s Republican and Democratic leadership urging them to consider the nomination.

But in the conference call, Schneiderman and his attorneys general aimed their criticism at Republican Majority Leader Mitch McConnell and Senate Judiciary Committee Chairman Charles Grasely.

“The Senate is not a group of elected for life aristocrats,” Schneiderman said. “It is not advise and consent if you refuse to give advise on. The public has a right to know what the qualifications of a Supreme Court nominee are.”

Schneiderman, meanwhile, said he did not have a specific person in mind for Obama to nominate to the court.

“There are a lot of great jurists on the bench,” Schneiderman said. “I think the president should nominate someone whose qualifications and intellect can be readily examined. There are a lot of great jurists out there that the president can pick from.”

AGs Letter to Senate FINAL by Nick Reisman