Dive Brief:
- Three defendants were sentenced to federal prison last week in the "Buffalo Billion" corruption scandal. Syracuse, New York-based developers Joseph Gerardi and Steven Aiello, as well as former Buffalo general contractor Louis Ciminelli, were convicted of fraud and other charges earlier this year for their roles in a bid-rigging scheme that netted their companies hundreds of millions of dollars.
- U.S. District Court Judge Valerie Caproni sentenced all three in separate hearings, handing each one a $500,000 fine plus jail time. Caproni ordered Aiello to serve three years, Gerardi to serve 30 months and Ciminelli to serve 28 months. Ciminelli has up to one year to pursue an appeal before reporting to prison. Gerardi and Aiello also remain free, but Caproni has yet to decide how long they ultimately will be able to postpone incarceration, pending appeals.
- Prosecutors said Aiello’s and Gerardi’s company, Cor Development, netted $100 million in state construction work for a $14.4 million film soundstage in Syracuse and a $90 million LED lighting factory in Dewitt, New York, as part of a bid-rigging scheme. As LPCiminelli's former chief, authorities accused Ciminelli of paying a bribe to a former aide of New York Gov. Andrew Cuomo in order to score a $750 million contract to build a SolarCity plant in Buffalo.
Dive Insight:
Not long after Ciminelli was charged in the bid-rigging case, LPCiminelli reportedly lost $4 billion in contracts and was forced to lay off 10% of its staff after losing an estimated 14 projects. The company also sold off much of its equipment and tools and repositioned itself as a program manager and developer.
Two other former LPCiminelli executives were also indicted in the case, but prosecutors decided there wasn’t enough evidence against former company president Michael Laipple and dismissed the charges in June. Kevin Schuler pleaded guilty to fraud and conspiracy for his part in the scheme and testified against Ciminelli and others.
In an effort to circumvent the bid process and win a guarantee of work, some contractors are willing to bribe willing officials, a scenario that rarely ends well for those caught.
Gary Duff, the owner, CEO and former president of Texas contractor Herc Solutions, was sentenced this summer to 18 months in prison for conspiring with a former U.S. State Department senior contracts administrator to defraud the government out of more than $1.3 million. The U.S. Department of Justice said the two worked together to secure construction contracts in U.S. military zones in foreign countries by using confidential procurement information.
