Governor calls verdict 'personally painful,' but critics hold him partially responsible
ALBANY — In a split verdict, Gov. Andrew Cuomo's former top aide Joe Percoco was found guilty of three corruption counts on Tuesday, two months after the start of a federal trial that cast a cold light on pay-to-play culture in state government.
The governor's former executive deputy secretary — a man Cuomo once called "my father's third son and my brother" — was found guilty of honest services fraud, conspiracy to commit honest services, and solicitation of bribes and gratuities. Percoco was acquitted of three other counts against him, including extortion.
Outside the courthouse, Percoco told reporters he was "disappointed" in the verdict and would consider his legal options.
Two executives from the Syracuse-area firm COR Development, Steven Aiello and Joseph Gerardi, were acquitted of most of the charges they faced connected to allegations that they bribed Percoco, though Aiello was convicted of conspiracy to commit honest services wire fraud. In a statement, COR said Aiello planned to appeal.
Sentencing will be held in June — the same month Aiello and Gerardi will return to Manhattan to join another set of defendants, including former SUNY Polytechnic Institute President Alain Kaloyeros, to stand trial for their alleged roles in bid-rigging schemes connected to upstate development projects.
The jury, which had been deliberating since March 1, remained deadlocked on charges against a fourth defendant, former power plant executive Peter Galbraith "Braith" Kelly Jr. of Competitive Power Ventures. U.S. District Judge Valerie Caproni declared a mistrial on those charges and dismissed the jury.
Percoco was accused of taking more than $300,000 in bribes in exchange for performing state government favors.
Aiello and Girardi had been charged with playing Percoco $35,000 funneled through Todd Howe, a former consultant with the Albany-based firm Whiteman Osterman & Hanna who served as the prosecution's star witness.
The performance of Howe, who in September 2016 pleaded guilty to multiple felonies, proved to be the government's greatest liability: His testimony was interrupted by Howe's being taken into federal custody after he admitted under cross-examination to attempting to bilk his credit card company out of the $600 cost of a night's stay at the Waldorf Astoria Hotel in Manhattan just weeks after signing a cooperation agreement that required him to stop committing crimes.
Kelly, whose company is building a controversial gas-fired power plant in Orange County, was charged with providing Percoco's wife, Lisa Toscano Percoco, with a $90,000-per-year job with a CPV educational program. Prosecutors called it a "low-show" job, and noted that she was paid through an obscure Connecticut-based firm in order to conceal her employment from public view.
During Joe Percoco's years of service for Cuomo — including work at the U.S. Department of Housing and Urban Renewal during the Clinton administration, at the state Attorney General's office and finally in the Executive Chamber — he was the governor's backstage fixer, whether the task at hand was a late-night call to a recalcitrant lawmaker or arranging the dignitaries sitting behind the governor at a bill signing.
Prosecutors, however, presented a portrait of a man desperate for cash to shore up a household that tipped into debt after the Percocos' 2012 move from a humble home on Staten Island to a more elegant house in South Salem, Westchester County.
Using Howe's testimony and an extensive record of emails, prosecutors showed Percoco's increasingly urgent pleas to Howe — another longtime confidant of the Cuomos — for "ziti," a term for cash payments that Percoco borrowed from HBO's mafia drama "The Sopranos."
U.S. Attorney Geoffrey S. Berman said in a statement that Percoco was found guilty of "selling something priceless that was not his to sell – the sacred obligation to honestly and faithfully serve the citizens of New York.
"As every schoolchild knows, but (Percoco) corruptly chose to disregard, government officials who sell their influence to select insiders violate the basic tenets of a democracy," Berman continued.
The case was one of the most high-profile prosecutions brought by the Manhattan federal prosecutor's office under the leadership of Preet Bharara, who was fired by President Donald Trump a year ago this week.
It remains to be seen how the trial will affect Cuomo, a Democrat seeking a third term. The governor and his campaign have so far refused to respond to reporters' questions emerging from the trial, including queries about Percoco's apparently open use of his Executive Chamber office during an eight-month period in 2014 when he had ostensibly resigned from his official post to run Cuomo's first re-election campaign.
The use of public resources to benefit a political campaign is a violation of state public officers law.
In a statement Tuesday afternoon, Cuomo said that he respected the jury's decision. "While I am sad for Joe Percoco's young daughters who will have to deal with this pain, I echo the message of the verdict — there is no tolerance for any violation of the public trust," he said. "There is no higher calling than public service and integrity is paramount — principles that have guided my work during the last 40 years."
"The verdict demonstrated that these ideals have been violated by someone I knew for a long time," the governor continued. "That is personally painful; however, we must learn from what happened and put additional safeguards in place to secure the public trust. Anything less is unacceptable."
Even before the verdicts were announced, good government groups were using the revelations from the trial to press for ethics reforms that have so far eluded Cuomo, who was elected governor in 2010 on a promise to renew trust in state government.
Instead, the trial served as a gallery of bad behavior, from the use of limited liability companies or LLCs to conceal the true identities of political donors to administration officials' extensive use of private emails accounts to conduct public business in an apparent effort to avoid transparency.
In the wake of the convictions on Tuesday, a group of five government reform organizations released a statement arguing that the real headline from the trial was that in New York, "state laws are so weak that what is unethical is legal."
"Percoco's trial spotlighted a state government riddled with pay to play, influence peddling and unethical behavior," said the statement from leaders of Citizens Union, Common Cause, the New York Public Interest Research Group, the League of Women Voters and Reinvent Albany.
The groups called for the closure of the "LLC loophole" in state election law, limits on campaign contributions for those seeking state government contracts, more effective ethics oversight watchdogs, and more contracting and budget transparency and accountability measures.
Separately, 10 civic organizations — including several of the same good-government groups — called for the state's ethics agency, the Joint Commission on Public Ethics, to be abolished and replaced with a "single, clearly independent entity" though a constitutional amendment. JCOPE has faced criticism for not flagging conflicts of interest that were disclosed in Percoco's personal income filings.
State Sen. John DeFrancisco, a Republican who is seeking the 2018 Republican nomination for governor, called on Twitter for Cuomo to answer questions about Percoco and his conviction.
"It's over. Speak up Andrew. New Yorkers deserve an answer as to why their state government has been up for sale under your administration," DeFrancisco wrote.