By Carl Campanile and Bruce Golding, Additional reporting by Josh Saul
September 18, 2015 | 3:43am
Manhattan US Attorney Preet Bharara has expanded his anti-corruption crusade to the far western edge of the state — investigating Gov. Cuomo’s controversial Buffalo Billion revitalization project, The Post has learned.
The probe of Cuomo’s pet project is the first to touch his office beyond Bharara’s investigation of thegovernor’s shutdown of the Moreland Commission to Investigate Public Corruption last year.
The new investigation is focused on the multimillion-dollar contracts awarded to build facilities for high-tech, drug-development and clean-energy businesses, a source familiar with the probe told The Post.
Bharara’s office has slapped several firms with subpoenas in recent months, the source said.
“It’s a comprehensive look at the bidding process,” the source said.
“They’re looking at communications between contractors and state officials.”
Bharara’s probe extends some 250 miles beyond the boundaries of his district, the Southern District of New York, which is headquartered in Manhattan and includes The Bronx and six suburbs north of the city.
It also infringes on the jurisdiction of Buffalo US Attorney Bill Hochul, whose wife, Kathy, is Cuomo’s lieutenant governor.
Last month, Kathy Hochul touted Cuomo’s pricey plan during an Upstate Revitalization Conference at the Buffalo Niagara Convention Center.
Before Buffalo Billion, “people had given up hope,” she said “That’s a statement of fact.”
But since the taxpayer cash began flowing, millennials have begun moving to the Buffalo area, reversing decades of declining population, Hochul said.
“This is the most positive indicator I have seen,” she said. “It happened because the governor believed in us.”
A spokeswoman for Bill Hochul declined to comment. It was unclear whether he recused himself from the Buffalo Billion probe over the potential conflict of interest — or if he was even aware of Bharara’s investigation.
In May, the Buffalo News revealed Hochul recused himself from an investigation of former Erie County Democratic Chair Steve Pigeon, a Cuomo political adviser, but said his top assistant was overseeing it and coordinating with state prosecutors.
Legal experts said the US Attorneys’ Manual does not cover a scenario in which a prosecutor keeps a probe secret from another who could lay claim to the case.
“That’s a sensitive issue . . . I would want to advise DOJ,” a former prosecutor said, referring to the US Department of Justice. “Under those circumstances, the likelihood is DOJ would approve it and deal with the fallout later.”
Cuomo announced the 10-year Buffalo Billion program in his 2012 State of the State speech, saying it would be modeled on the $1 billion-plus program to spur nanotech research and draw semiconductor manufacturers to the Albany region.
One of the plan’s key projects is construction of a $750 million solar-panel factory along the Buffalo River. It will be run by SolarCity, a power provider chaired by Elon Musk, a co-founder of PayPal and CEO of the Tesla Motors electric-car company.
Other elements of Cuomo’s plan include construction of the Buffalo Medical Innovation and Commercialization Hub facility at the Buffalo Niagara Medical Campus, and redevelopment of a downtown Buffalo office tower into a headquarters for IBM and other high-tech firms.
Sheldon SilverPhoto: WireImage
A report this year by the nonprofit Investigative Post blasted Buffalo Billion as a “costly experiment in economic development that is beset by secrecy and politics.” The report said that requests for records under the state Freedom of Information Law were ignored until a lawsuit was filed and that the documents released were stripped of “key information,” including payments to developers.
The report also revealed the developer of two Buffalo Billion buildings is Louis Ciminelli, who contributed $96,500 to Cuomo’s two campaigns for governor.
At one point, the request for proposals to build SolarCity required applicants to have “over 50 years of proven experience” in construction in around Buffalo, which, the report said, excluded any company except Ciminelli’s.
The requirement was changed to 15 years, but his company, LPCiminelli, got the job anyway.
The report also said McGuire Development donated $25,000 to Cuomo’s campaign three months after scoring the technology-hub construction job.
Bharara has already secured the indictments or convictions of 17 New York politicians.
This year, he brought charges against Assemblyman Sheldon Silver (D-Manhattan) and state Sen. Dean Skelos(R-LI) that forced them to resign leadership positions. He wonconvictions of state Sen. Malcolm Smith (D-Queens) and former Deputy Senate Majority Leader Tom Libous (R-Binghamton).
LPCiminelli and McGuire did not respond to requests for comment. A Bharara spokesman declined to comment.
A Cuomo official said that the awarding of the Buffalo Billion contracts was done by SUNY and its nonprofit arm and that the governor had no role in the selection process.
A spokeswoman for the Empire State Development Corp., which helps run Buffalo Billion said, “We administer a wide range of grant programs, and we have policies and procedures in place to ensure accountability in connection with these programs.”
Buffalo Billion Under Cuomo Control Spawns Twin Progeny of Crony Capitalism and Corrupt Contracting
Following Governor Cuomo’s remarks at the New York State Business Council’s annual conference in Bolton Landing, reporters raised questions with State Republican Chairman Ed Cox about the correlation between the Governor’s campaign donations and the Buffalo Billion projects.
Chairman Cox subsequently put out the following statement:
"The $750 million spent on the Buffalo Riverbend project, built entirely using taxpayer money, is the epitome of Cuomo’s crony capitalism. Now press stories are revealing the project is mired in corruption, sole-sourced contracting and obfuscation of the facts. Crony capitalism and corrupt contracting are the inevitable twin progeny of Cuomo’s control of billions of dollars of development funds."
Read more from Watchdog.org here:
Elon Musk wheels and deals to save Cuomo
By Tori Richards / December 17, 2014
Andrew Cuomo: A friend to Tesla and its sister company
It’s easy to see why Barbara Walters named billionaire Elon Musk one of 2014’s most fascinating people.
In the waning days of his 2014 reelection campaign, Gov. Andrew Cuomo turned to Musk to bail him out of a $1 billion economic development deal that was going down in flames – and could very well take Cuomo’s political ambitions with it.
Cuomo had already done Musk a favor, successfully working with the state Legislature to grandfather in five service centers owned by Musk’s Tesla Motors when a bill was in the works to outlaw car sales that take place outside of traditional dealerships. The legislative director for Cuomo’s dad, former Gov. Mario Cuomo, helped Tesla’s lobbying efforts.
Months later, Cuomo and Musk were together again, this time to announce that Musk would move another high-tech firm, SolarCity, into beleaguered Buffalo, New York.
That news did more than support Cuomo’s claim that he would make New York business-friendly. And It did more than make Cuomo look technologically savvy. It rescued Cuomo from a high-profile disaster that began when he promised Buffalo voters – who had voted overwhelmingly for his opponent in the 2010 election – that he could single-handedly halt their city’s decline.
In the end, Cuomo won re-election this year. Musk’s SolarCity gets a $750-million factory for $1 a year in rent. And New York residents? They’ll pay the bill.
"It just shows that Elon Musk knows how to operate politically to get major grants," said Ed Cox, son-in-law of President Nixon and chairman of the New York Republican State Committee. "He is an absolute pro at getting political money."
Once a thriving city, Buffalo is the second most populous in the state, but residents have been moving out, driven by a decades-long industrial slowdown. About a third of the area’s residents live below poverty.
"Four years ago, Cuomo lost big in Buffalo; he knew that was where he was vulnerable," said Cox. Since the 2010 election, Cox said, Cuomo "has pampered Buffalo and showered it with projects."
On Nov. 21, 2013, Cuomo announced an ambitious plan to revitalize the third-poorest major city in America. Dubbed the "Buffalo Billion," it included construction of two green-energy plants on the site of an abandoned steel mill on the shores of Lake Erie – 275,000 square feet turned into high-tech manufacturing creating 850 permanent jobs and 500 more in construction. Each of the two companies would, Cuomo said, spend $750,000 to help retrofit the buildings in the start-up phase.
The two key tenants were Soraa, an LED light manufacturer, and Silevo, a solar manufacturer. Both would relocate from California’s Silicon Valley.
The cost to taxpayers: $225 million.
Cuomo announced the deal in 2013 but came back with updates in a March 28 press release – the same day he announced that Tesla could still sell its luxury electric cars in New York.
"When I first heard about this, it seemed strange," Cox said. "I had never heard of these companies, so we researched them. They were both small, young companies and neither had raised more than $100 million in the private market."
But three months later, in the thick of a governor’s race against Republican Rob Astorino, Cuomo abruptly declared that another Musk company, SolarCity, would be buying Silevo and constructing a solar factory on the site. Silevo’s price tag was $200 million with the potential of a $150 million payout pertaining to company performance in allowing it to run as a subsidiary.
"This announcement was flawed from the start," Cox contended. "How could a company that was purchased for $200 million put out $750 million in costs? Cuomo had to have known this never would have come to fruition. He needed to get bailed out of this or it would have been a failure before the election. We were about to disprove it."
And instead of a $225-million incentive, taxpayers would be paying three times that much to build a much larger facility – 1 million square feet, almost four times the original size. And the state would technically own the building, saving SolarCity property taxes.
What do taxpayers get for their investment? SolarCity agreed to spend $5 billion in the state over the next 10 years. The company’s promise to create 4,900 jobs means taxpayers are paying $153,061 per job. If all goes according to plan, SolarCity can sign on for another 10 years with the same deal.
It’s not clear why Cuomo’s office bet on companies that would ultimately bail on the Buffalo project. Cuomo’s office did not return calls seeking comment.
Clues to how the Silevo are contained in a SolarCity SEC filing dated Sept. 23, a document filed to announce major events to shareholders.
"Silevo has historically incurred net operating losses, generated a net loss of approximately $18.8 million for its fiscal year ended Dec. 28, 2013, and had an accumulated deficit of approximately $61.2 million," the report stated.
SolarCity spokesman Jonathan Bass said any speculation that Musk did Cuomo a favor is false but refused to elaborate on why Musk wanted to open a facility in Buffalo when their business is located in California and Nevada.
"SolarCity acquired Silevo, a company that already had a deal in place with New York to locate its manufacturing facility in Buffalo prior to the acquisition," Bass said in an email. "SolarCity honored Silevo’s commitment to keep the facility there."
SolarCity has financial challenges of its own. Its 2013 year-end SEC filing shows the company posted $55 million in losses and in 2012 lost $99 million. For the first nine months of this year, it lost $52 million. The firm is backed by various investors and relies on decreasing government tax breaks designed to boost green-energy projects.
With this new venture, SolarCity will take Silveo’s technology from a small-scale Chinese plant to develop a U.S.-made and more efficient solar panel. The plant will manufacture 1 gigawatt worth of product annually – one billion watts or the amount of solar energy generated in the entire state of New Jersey.
Critics point out that Musk’s new factory – on paper, the largest factory of its kind in the Western hemisphere – will also benefit from U.S. tariffs on cheaper Chinese solar panels.
"So basically, Cuomo is using $750 million of taxpayer supplied funds to build a factory for a company largely owned by a billionaire," Cox said. "In addition, this enterprise is very risky because this new technology is untested in a factory of this size. That is a huge and dangerous investment for New York. It’s a Solyndra waiting to happen. In fact it is worse than Solyndra, they only defaulted on $535 million of U.S. government loan."