By LOUIS FLORES
Joseph Percoco, the former deputy executive secretary to Gov. Andrew Cuomo (D-New York), is a reported focus of the Federal corruption investigation by the U.S. Attorney’s Office for New York’s southern district into the awarding of contracts that have comprised, in part, Gov. Cuomo’s Buffalo Billion economic development plan.
The revelation was first announced in a report filed by the journalist Kenneth Lovett for The New York Daily News.
Mr. Percoco has reportedly become a key target of investigators over allegations that he failed to each of accurately disclose outside income he may have earned from entities with business before the state and disclose potential conflicts of interest related to projects with which he was reportedly involved, according to The New York Daily News. Other individuals were identified in The New York Daily News’ report as also being reportedly of interest to investigators, including Alain Kaloyeros, the president of SUNY Polytechnic Institute.
The account published by The New York Daily News followed the reported serving of a subpoena by the U.S. Attorney’s Office on Gov. Cuomo’s office. The issuance of that subpoena followed other subpoenas that were issued by the U.S. Attorney’s Office in 2015, including upon SUNY Polytechnic Institute due to its role, through a unit named Fort Schuyler Management Corporation, in evaluating and awarding contracts related to the Buffalo Billion program, according to a report published by Progress Queens. The issuance of the 2015 subpoenas followed, in turn, the execution of search warrants by agents of the Federal Bureau of Investigation of significant political figures in Buffalo.
Individuals have yet to be charged with crimes in connection with either the reported Federal investigation of the Buffalo Billion program or the FBI search warrants.
Mr. Percoco’s attorney, Barry Bohrer, declined a request for an interview, but he issued a statement to Progress Queens stating that, “Mr. Percoco was a dedicated and effective public servant, who is proud of the service that he rendered to the people of the state of New York,” adding that Mr. Percoco “believed that he was acting appropriately at all times.”
One month after the serving of the 2015 subpoenas, including on SUNY Polytechnic Institute, Mr. Percoco announced that he was leaving the Cuomo administration. Two months after that, it was announced that Mr. Percoco would be joining the Madison Square Garden Company to develop, amongst other lines of business, new live events for the famed stadium. Despite having left Gov. Cuomo’s side, Mr. Percoco was later reported to have continued to appear at events featuring Gov. Cuomo as if Mr. Percoco were still the governor’s aide.
One of those new lines of business developed for Madison Square Garden has turned out to be mixed martial arts fighting. As noted in a report filed by the journalist Erica Orden for The Wall Street Journal, Gov. Cuomo has appeared to exhibit special attention on Madison Square Garden, where, last month, he “held a ceremony at the Garden in which he signed a bill to legalize professional mixed martial arts. It is a matter in which the Garden has a significant interest, in part because the arena is set to host New York’s first fight.”
Ms. Orden reported that Mr. Percoco represented Madison Square Garden in the bill signing ceremony.
Because of Mr. Percoco’s close relationship with Gov. Cuomo, news that Mr. Percoco was a reported focus of the Federal investigation of the Buffalo Billion program could become a source of serious legal concern for Gov. Cuomo, as was noted in a post published by the Perdido Street School blog.
A brief history on the importance of the selection of legal counsel for subordinates under investigation
Although it is not known how Mr. Percoco came to select Mr. Bohrer as his legal counsel, Gov. Cuomo’s potential legal vulnerability may be material to how Mr. Percoco came to be represented by Mr. Bohrer, given Mr. Bohrer’s links to Gov. Cuomo’s previous legal counsel.
Mr. Percoco’s lawyer, Mr. Bohrer, practises law as a partner with the Wall Street law firm Schulte Roth & Zabel LLP. Mr. Bohrer was formerly a name partner with the law firm that includes Elkan Abramowitz, who had represented Gov. Cuomo and some of his administration officials during the reported Federal investigation into the premature closure of the Moreland Commission.
In the past, Mr. Bohrer has represented defendants in high-profile white collar criminal trials, including Gerard Denault, the S.A.I.C. project manager for the fraud-riddled CityTime technology contract for which Mr. Denalt was sentenced 20 years in prison for his role in the corruption found to have taken place with that project.
In the past, whenever significant government officials reportedly became the targets of Federal corruption investigations, significant government officials have attempted to influence their subordinates’ choice for legal counsel.
It was reported that Gov. Cuomo had retained Mr. Abramowitz to represent his office after he had been reported to have received a warning letter from U.S Attorney Preet Bharara, the nation's top Federal prosecutor for New York's southern district. The warning letter had been issued after Mr. Percoco had reportedly been contacting commissioners to solicit statements to defend Gov. Cuomo against allegations that he had reportedly meddled in the activities of the now-shuttered Moreland Commission.
Despite the competing legal interests of different individuals within Gov. Cuomo’s office, Mr. Abramowitz had been expected to reportedly represent several administration individuals, including Gov. Cuomo. Such an arrangement withstood the test of time, more or less, although some administration officials had reportedly engaged their own outside counsel.
A conflict of interest has been noted to exist when a senior government official steers subordinates into engaging specific legal counsel, who, in turn, have some relationship with the senior government official.
After a member of the New York City Taxi and Limousine Commission, Herb Ryan, was secretly recorded making statements to undercover investigators that implicated then Borough President Donald Manes (D-Queens) in possible illegality, Mr. Ryan was asked by Federal prosecutors to coöperate in an investigation reportedly targeting Borough President Manes. Once Mr. Ryan panicked, he remembered that Borough President Manes had previously instructed Mr. Ryan to “go to Harold Harrison, a Queens Boulevard criminal lawyer who had once been Manes’ partner,” if Mr. Ryan ever encountered legal trouble, according to a recounting of the events at that time then in the 1988 book, “City For Sale,” by Jack Newfield and Wayne Barrett. Because it had been in Borough President Manes’ interest that Mr. Ryan pleaded guilty to contain the investigation, Mr. Harrison reportedly recommended that Mr. Ryan plead guilty -- and it worked. Mr. Ryan pleaded guilty, sparing Borough President Manes any unflattering trial headlines and, most importantly, any legal repercussions.
Helping to curtail that investigation was action taken by then Mayor Ed Koch (D-New York City), who ordered municipal investigators to focus on arresting Mr. Ryan instead of following any leads to Borough President Manes, a key source of political and electoral support for Mayor Koch, according to a recounting of events published in “City For Sale.” Because Mayor Koch was provided inside information about the investigation that almost focused on Borough President Manes, Mayor Koch was able to issue orders to contain that investigation.
Regarding reported controversy involving the Buffalo Billion program, Gov. Cuomo has reportedly launched his own internal investigation, potentially placing him in the place of Mayor Koch, namely, to be able to receive inside information from investigators about the individuals possibly involved in any alleged misconduct.
Borough President Manes later attempted to again steer a key political soldier to legal counsel favorable to Borough President Manes when his political follower, Geoffrey Lindenauer, the deputy director of the New York City Parking Violations Bureau, was ensnared in a separate Federal corruption investigation. However, that steering effort failed. Though Borough President Manes and his attorney at the time, Sid Davidoff, had reportedly hatched a plan to encourage Mr. Lindenauer to engage Harold Borg as legal counsel, Mr. Lindenauer ultimately selected his own independent counsel, Irving Seidman, according to a recounting of those events at that time then in “City For Sale.” Mr. Borg had been a friend of Mr. Davidoff’s for two decades, according to “City For Sale.”
Because Mr. Lindenauer and other individuals reportedly involved in the illegal activities allegedly taking place in connection with the Parking Violations Bureau began to coöperate with Federal prosecutors, Borough President Manes faced indictment, and to avoid such a fate, Borough President Manes attempted a failed suicide attempt before eventually taking his own life after a second suicide attempt succeeded, according to “City For Sale.”
Besides Gov. Cuomo and former Borough President Manes’ attempts to steer their subordinates into legal representation arrangements that were designed to benefit the senior government officials, Mayor Bill de Blasio (D-New York City) has also reportedly engaged in this pattern, when it was noted that legal counsel Barry Berke was representing multiple individuals in respect of the reported investigation by the offices of each of U.S. Attorney Bharara and District Attorney Cyrus Vance, Jr. (D-Manhattan) into Mayor de Blasio’s efforts to flip in 2014 the New York State Senate into Democratic Party control, again corralling multiple individuals under the engagement of one attorney with an existing relationship to a senior government official, in this case, Mayor de Blasio. Mr. Berke had in the past hosted or co-hosted fundraisers for Mayor de Blasio’s 2013 campaign committee, New Yorkers for de Blasio, according to a report published by DNAinfo New York.
The significance of Mr. Percoco’s employment with Madison Square Garden
Because Gov. Cuomo has been described as Machiavellian in his political machinations, it may be material that Mr. Percoco was installed in a post at Madison Square Garden after the U.S. Attorney’s Office began to investigate the Buffalo Billion program.
Madison Square Garden is represented by perhaps the most influential law firm in New York, if not the nation : Sullivan & Cromwell LLP. If Madison Square Garden were to ever be named, even tangentially, in any Federal investigation, operators of the stadium could be reasonably counted upon to activate the well-connected lawyers at Sullivan & Cromwell LLP to its defense.
Because of its reputation and influence, Sullivan & Cromwell LLP is one of the few law firms that could be counted on by Gov. Cuomo to vigorously stand up to the U.S. Attorney’s Office. With the potential of the work of Sullivan & Cromwell LLP added to efforts by Schulte Roth & Zabel LLP, the U.S. Attorney’s Office would potentially face two powerhouse law firms acting as defense counsel.
A request for an interview made by Progress Queens to an attorney at Sullivan & Cromwell LLP, who has been identified as outside counsel to Madison Square Garden, was not answered.
Furthermore, the possible involvement of Sullivan & Cromwell LLP on behalf of its client or an employee of its client comes at a time when U.S. Attorney Bharara is at a crossroads at the helm of the U.S. Attorney’s Office. Although he has earned the praise of the public for his crackdown on political and campaign corruption, he is not popular amongst establishment politicians, who would like to please big money donors by ending U.S. Attorney Bharara’s corruption prosecutions.
For example, former First Lady Hillary Rodham Clinton has been unwilling to commit to reappoint U.S. Attorney Bharara to head his office should she become president. Should it come to be that U.S. Attorney Bharara is not reappointed in 2017 to continue heading the Federal prosecutors’ office for New York’s southern district, he would undoubtedly seek a partnership at a major law firm in New York City, unless or until he decides to seek elected office, as many speculate. Given its size, reputation, and wealth, Sullivan & Cromwell LLP would be a natural fit for U.S. Attorney Bharara, an opportunity that could become encumbered by a significant conflict of interest should Sullivan & Cromwell LLP seek to defend the interests of Madison Square Garden and, tangentially, Mr. Percoco.
A spokesperson for the U.S. Attorney’s Office declined to answer several advance questions submitted to it by Progress Queens for this report.
The pattern of bagmen and the competition to control government contracts
Since the report published by The New York Daily News alleged that investigators were interested in Mr. Percoco for having failed to accurately report outside income he earned at the same time when investigators were reportedly investigating the awarding of government contracts, it begs the question whether investigators believe that the outside income earned by Mr. Percoco were made in connection with the awarding of government contracts.
However, Mr. Percoco did not appear to have authority to award government contracts.
In the past, investigators have probed whether subordinate political soldiers loyal to senior government officials have collected kickbacks on behalf of senior government officials, who have the authority to award government contracts.
For example, events were recounted in “City For Sale” that alleged that Mr. Lindenauer, the Koch administration official at the Parking Violations Bureau, had collected kickbacks, in part, on behalf of Borough President Manes in connection with contracts awarded to parking collection agencies. Separately, the same book alleged that some cable companies had to pay bribes in order to win the awarding of franchises in Queens.
Other allegations recounted in “City For Sale” implied that competition for government contracts may have inspired an effort to fabricate the predicate for the investigation, later validated, that was responsible for ousting Mr. Ryan from office, so that a taxi meter contract would be redirected to another company. The effort to specifically take down Mr. Ryan was referred by the authors of “City For Sale” as a “sanctioned hit” that had been the alleged work of the now late Meade Esposito, who was then the chair of the Brooklyn Democratic County Committee and a sometime-ally, sometime-rival of Borough President Manes.
The code that governed the alliances between the party bosses of New York City’s five boroughs were not lost on the authors of “City For Sale,” who wrote, that, “the regular party leaders were not unlike the five crime families -- they did business together, but each had his own piece of the action, which the others were supposed to respect.”
At times, the competition to determine which companies received government contracts may have inspired some county political committee chairs to violate their code, as may have happened in the taking down of Mr. Ryan, according to “City For Sale.”
Given past rivalries between significant political party leaders, the conflict between Gov. Cuomo and Mayor de Blasio over significant government agencies, such as the New York City Housing Authority and the public municipal school system of New York City ; and authorities given to government agencies, like the Public Authorities Control Board, which determine or apply land use, housing, or rent regulations, may be rooted in which official determines which companies receive government contracts or which regulations companies must face when dealing with the government.