United States v. Percoco
13 F.4th 158
2d Cir.2021Background
- In 2012 New York launched the "Buffalo Billion" program; Michael (Alain) Kaloyeros (head of CNSE/SUNY-affiliated entities) oversaw project development and used Fort Schuyler Management Corp. (FS) to issue RFPs for regional "preferred developers."
- Kaloyeros, consultant/lobbyist Todd Howe, and private developers (COR Development — Aiello/Gerardi; LPCiminelli — Ciminelli/Schuler) conspired to draft and influence two broad Syracuse and Buffalo RFPs by inserting requirements tailored to COR and LPCiminelli ("vitals") and then communicated secretly during the blackout period.
- The FS Board (formally responsible for awards) issued the two RFPs; COR was named preferred developer in Syracuse (was sole responder) and LPCiminelli (with McGuire) in Buffalo; subsequent contracts worth millions followed.
- Government evidence included emails, draft mark-ups, witness testimony (including cooperating witness Schuler), and proffer statements by Gerardi; defendants claimed the RFPs only conferred a negotiation right and produced no proven economic harm.
- Indictment charged conspiracy to commit wire fraud (18 U.S.C. § 1349), substantive wire frauds (18 U.S.C. §§ 1343, 2) for Syracuse and Buffalo, and a false-statement count (18 U.S.C. § 1001) against Gerardi. After trial, the jury convicted all defendants; sentences were imposed and appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for wire-fraud conspiracy and substantive counts (right‑to‑control theory) and venue for Syracuse count | Government: RFPs were secretly tailored to deprive Fort Schuyler of "potentially valuable economic information" (right‑to‑control); emails and communications show intent; venue supported by interstate wires into SDNY. | Defendants: No tangible economic harm shown — RFPs only conferred a right to negotiate/preferred status; no proof another bidder would have offered better terms; insufficient intent; venue improper. | Affirmed. Evidence and intent sufficient under right‑to‑control theory; venue in SDNY established by wires in furtherance of scheme. |
| Jury instructions (right‑to‑control definition; good‑faith / "no‑ultimate‑harm") | Government: Court properly defined intangible property/right‑to‑control, tangible economic harm, and intent; good‑faith instruction and "no‑ultimate‑harm" qualifier were warranted on the record. | Defendants: Instructions allowed conviction despite Fort Schuyler receiving full benefit; "no‑ultimate‑harm" undermined good‑faith defense and misstated law. | Affirmed. Instructions tracked Circuit precedent, included caution that mere entry into a transaction is insufficient, required intent, and did not cause confusion. |
| Evidentiary rulings (exclusion of project quality evidence; admission of competitor fee testimony) | Government: Evidence of competitors' typical fee ranges was relevant to economic-risk/ harm; evidence about later project quality was irrelevant to right‑to‑control theory. | Defendants: Excluding evidence that projects were high‑quality/"on time" and fees reasonable deprived defense; admitting fee‑range testimony was prejudicial. | Affirmed. Excluding post‑award quality/benefit evidence was not abuse (irrelevant to whether FS was deprived of information); admitting market‑fee testimony was within discretion and relevant to contemplated economic harm. |
| Denial of motion to dismiss Gerardi's false‑statement count for alleged prosecutorial misconduct at proffer | Government: No obligation to warn a proffer participant that he was a target; failure to warn does not compel dismissal; perjury is not excused. | Gerardi: Prosecutors misled him into thinking he was not a target (citing Jacobs I) and thus misconduct warranted dismissal of the count. | Affirmed. No constitutional right to target warning in proffer; alleged failure to warn did not rise to the extraordinary remedy of dismissal. |
Key Cases Cited
- United States v. Finazzo, 850 F.3d 94 (2d Cir.) (right‑to‑control requires misrepresentation/non‑disclosure that can result in tangible economic harm)
- United States v. Binday, 804 F.3d 558 (2d Cir.) (right‑to‑control theory; economic harm need only be contemplated, not realized)
- United States v. Gatto, 986 F.3d 104 (2d Cir.) (distinguishing regulatory‑power cases and applying right‑to‑control principles)
- United States v. Lebedev, 932 F.3d 40 (2d Cir.) (intangible property interests include right to control assets)
- United States v. Rosemond, 841 F.3d 95 (2d Cir.) (standard for viewing evidence after a jury conviction)
- United States v. Shellef, 507 F.3d 82 (2d Cir.) (distinguishing mere inducement to negotiate from fraud that misrepresents an essential element of the bargain)
- Jackson v. Virginia, 443 U.S. 307 (1979) (any rational trier of fact standard for sufficiency review)
- Neder v. United States, 527 U.S. 1 (1999) (harmless‑error standard for constitutional instructional errors)
- United States v. Rossomando, 144 F.3d 197 (2d Cir.) (limits on "no‑ultimate‑harm" instructions)
- Kelly v. United States, 140 S. Ct. 1565 (2020) (Supreme Court decision on property right/regulatory exercise—distinguished)
- United States v. Greenberg, 835 F.3d 295 (2d Cir.) (wire/mail fraud statutory framework)
- United States v. Schwartz, 924 F.2d 410 (2d Cir.) (intent need not show actual harm, only that defendants contemplated actual harm)