Kaloyeros wire fraud case to be heard by Supreme Court later this month

Kaloyeros was set free from federal prison over the summer after the Supreme Court agreed to hear his case – popularly known as the “Buffalo Billion” case because it involved more than $900 million in construction contracts awarded by Albany Nanotech affiliates to build semiconductor factories for private companies in both Buffalo and Syracuse using state money.

Although Kaloyeros was never accused of taking kickbacks or bribes, federal prosecutors convinced a Manhattan jury that he had worked to deceive the nonprofit board in charge of awarding the contracts to ultimately steer the contracts to two upstate developers who also had been major donors to the election campaign of former Gov. Andrew Cuomo. 

In 2016, Kaloyeros and several executives from the two companies were convicted of wire fraud and sentenced to federal prison sentences. Kaloyeros received a sentence of three-and-a-half years.

While traditional wire fraud cases usually depend on some sort of monetary compensation for a defendant to be convicted, the Second Circuit where Kaloyeros and his co-defendants were tried and convicted allows prosecution of wire fraud using the so-called right-to-control theory. That theory allows for convictions on the basis that the defendant withheld important financial information from their victims. In this case, federal prosecutors alleged that Kaloyeros manipulated the bidding process to keep other potential developers and construction firms from submitting bids for the projects under the assumption they did not have the qualifications to participate.

In reality, federal prosecutors allege, Kaloyeros tailored the construction bids in such a way that the two developers – COR Development Co. of Fayetteville (a Syracuse suburb) and LP Ciminelli of Buffalo – were the only two companies that appeared to qualify for the projects. The two companies were eventually awarded nearly $1 billion in state construction contracts.

Michael Dreeben, a Washington D.C. attorney for one of the defendants, Louis Ciminelli, will argue the case in front of the Supreme Court. The decision will impact not just Ciminelli but also his co-defendants, including Kaloyeros.

Federal prosecutors have written in their latest brief in the appeal that Kaloyeros should have been convicted regardless of the “right-to-control” theory.

“Whether viewed through the lens of the right-to-control theory or not, the evidence was plainly sufficient to satisfy each of the elements of wire fraud,” the U.S. Solicitor General wrote in a filing last month. “Petitioner’s scheme sought and obtained hundreds of millions of dollars; it did so by materially misrepresenting that a rigged selection process had been open, fair, and competitive; and it did so with intent to defraud…”