United States v. Aiello

1

United States of America, Appellee, v. Steven Aiello, Joseph Gerardi, Louis Ciminelli, Alain Kaloyeros, AKA Dr. K., Defendants-Appellants, Joseph Percoco, Peter Galbraith Kelly, Jr., Michael Laipple, Kevin Schuler, Defendants.

Nos. 18-2990-cr (L)^[*], 18-3710-cr, 18-3712-cr, 18-3715-cr, 18-3850-cr

United States Court of Appeals, Second Circuit

September 23, 2024

Argued: March 12, 2020

Originally Decided: September 8, 2021

Reversed and Remanded: May 11, 2023, May 22, 2023

ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES, NOS 21-1161, 21-1169, 21-1170

Defendants-appellants Steven Aiello, Joseph Gerardi, Louis Ciminelli, and Alain Kaloyeros appeal from judgments of the United States District Court for the Southern District of New York (Caproni, J.) convicting them of wire fraud and wire fraud conspiracy. Aiello also appeals his conspiracy to commit honest-services wire fraud conviction, and Gerardi also appeals his false statement conviction. After we affirmed the judgments of the district court, Aiello, Gerardi, Ciminelli, and Kaloyeros petitioned the Supreme Court for review. After granting certiorari and issuing opinions in this case and the related case, see Ciminelli v. United States, 598 U.S. 306 (2023), and Percoco v. United States, 598 U.S. 319 (2023), the Supreme Court remanded for further proceedings. In light of those opinions, we vacate the convictions for wire fraud and wire fraud conspiracy, we vacate Aiello's conviction for conspiracy to commit honest-services wire fraud, we affirm Gerardi's false statement conviction, and we remand for further proceedings.

VACATED IN PART, AFFIRMED IN PART, AND REMANDED IN PART.

Alexandra A.E. Shapiro, Daniel J. O'Neill, Fabien M. Thayamballi, Shapiro Arato Bach LLP, New York, NY, for Defendants-Appellants Steven Aiello and Joseph Gerardi.

Timothy W. Hoover, Spencer L. Durland, Hoover & Durland LLP, Buffalo, NY; Herbert L. Greenman, Lipsitz Green Scime Cambria LLP, Buffalo, NY, for Defendant-Appellant Louis Ciminelli.

Michael C. Miller, Reid H. Weingarten, Michael G. Scavelli, Bruce C. Bishop, Steptoe &Johnson LLP, New York, NY and Washington, D.C., for Defendant-Appellant Alain Kaloyeros.

Matthew D. Podolsky, Derek Wikstrom, Won S. Shin, Assistant United States Attorneys, for Damian Williams, United States Attorney for the Southern District of New York, New York, NY, for the United States.

Before RAGGI, CHIN, and SULLIVAN, Circuit Judges.

CHIN CIRCUIT JUDGE

In 2018, a jury found defendants-appellants Steven Aiello, Joseph Gerardi, Louis Ciminelli, and Alain Kaloyeros (collectively, the "Appellants") guilty of wire fraud and wire-fraud conspiracy in connection with a New York State initiative to use taxpayer dollars to develop the greater Buffalo region. The government obtained those convictions by proceeding on a right-to-control theory of wire fraud, which under this Court's longstanding precedents permitted conviction based on the deprivation of valuable information necessary to make economic decisions rather than the deprivation of traditional property interests. The jury also found Gerardi guilty of making a false statement to federal officers. In a separate trial also in 2018 stemming from the same indictment, the jury found Aiello guilty of conspiracy to commit honest-services wire fraud based on actions taken by a co-defendant who was, at the time, a private individual rather than a state official.

Appellants appealed from judgments of the United States District Court for the Southern District of New York (Caproni, J.) convicting them of the above crimes. We affirmed. See United States v. Percoco, 13 F.4th 158 (2d Cir. 2021) ("Percoco I") (addressing the wire fraud, wire fraud conspiracy, and false statement counts); United States v. Percoco, 13 F.4th 180, 184 (2d Cir. 2021) ("Percoco II") (addressing the conspiracy to commit honest-services wire fraud count). Appellants then petitioned the Supreme Court for review.

After granting certiorari, the Supreme Court held, in a pair of opinions, that (1) the right-to-control theory of wire fraud does not support liability under the federal wire fraud statute, and (2) the instructions given to the jury for honest-services wire fraud were erroneous with respect to when a private person may be convicted under the statute. See Ciminelli v. United States, 598 U.S. 306, 311-12 (2023) (addressing wire fraud); Percoco v. United States, 598 U.S. 319, 322, 330-31 (2023) (addressing honest-services wire fraud). Accordingly, the Supreme Court remanded the cases for further proceedings. See Ciminelli, 598 U.S. at 317 (reversing and remanding with respect to Ciminelli); Aiello v. United States, 143 S.Ct. 2491 (2023) (vacating and remanding with respect to Aiello and Gerardi); Kaloyeros v. United States, 143 S.Ct. 2490 (2023) (vacating and remanding with respect to Kaloyeros).

For the reasons set forth below, we VACATE Appellants' convictions for wire fraud and wire fraud conspiracy, we VACATE Aiello's conviction for conspiracy to commit honest-services wire fraud, we AFFIRM Gerardi's false statement conviction, and we REMAND for further proceedings.

BACKGROUND

I. The Facts

The facts are set forth in detail in our prior opinion in this case and are summarized here as relevant to this appeal. See Percoco I, 13 F.4th at 164-68.

A. The Bid-Rigging Scheme

In 2012, then-Governor Andrew Cuomo launched the "Buffalo Billion" initiative, which aimed to develop the greater Buffalo area with a $1 billion investment of taxpayer funds. The evidence at trial established that Aiello, Gerardi, Ciminelli, and Kaloyeros entered into a scheme to secure state-funded construction projects in Buffalo, New York, and Syracuse, New York, for their businesses, COR Development Company (Aiello and Gerardi's company) and LPCiminelli (Ciminelli's company), through the Buffalo Billion initiative.

Also in 2012, after hiring consultant and lobbyist Todd Howe to improve his relationship with the governor's office, Kaloyeros was put in charge of developing project proposals for the Buffalo Billion initiative. Because of his board position at the Fort Schuyler Management Corporation ("Fort Schuyler"), Kaloyeros had a position of influence and control in the selection process for Buffalo Billion development projects. Although the Fort Schuyler board of directors had ultimate authority to award the contracts, Kaloyeros was in charge of designing and drafting the documents for the request-for-proposal ("RFP") process, which he did for one RFP for the Buffalo project (the "Buffalo RFP") and one RFP for the Syracuse project (the "Syracuse RFP").

Unbeknownst to others at Fort Schuyler, Kaloyeros and Howe conspired to deliver the Buffalo Billion contracts to Howe's other clients: Aiello, Gerardi, and Ciminelli. Because Kaloyeros was able to manipulate the bid process, Aiello, Gerardi, and Ciminelli were able to gain an unfair advantage. For example, Kaloyeros incorporated requirements into the RFPs that were tailored to match the qualifications or attributes of their companies, COR Development and LPCiminelli.

In December 2013 and January 2014, Fort Schuyler's board announced that COR Development won the Syracuse RFP and that LPCiminelli and another firm won the Buffalo RFP. Pursuant to those announcements, Kaloyeros awarded two construction projects totaling approximately $105 million to COR Development and another construction project ultimately worth $750 million to LPCiminelli.

B. Gerardi's Proffer Session

On June 21, 2016, as the government investigated the rigging of the Buffalo and Syracuse RFPs, it held a proffer session with Gerardi. There, Gerardi told federal officers that "he did not ask for the [Syracuse] RFP to be tailored to COR, nor did he feel as though it was tailored to COR." App. at 1330.

Gerardi also told federal officers that he made handwritten notes on a document titled "Fort Schuyler Management Corporation request for proposal." Gov't App. at 903. A special agent, who was at the proffer session, testified that Gerardi told him that he reviewed the draft RFP as a favor to Howe because he was Howe's friend and an attorney, rather than because of his affiliation with COR Development. Gerardi asserted that he was trying to broaden the RFP to permit more companies to compete. Gerardi also sought to explain specific handwritten comments, like his comment that the inclusion of COR Development's software as a qualification in the Syracuse RFP was "too telegraphed" and his recommendation to "leave out the specific programs." App. at 1328. Gerardi stated that he really meant that the language used was "too telescoped" and would not be broad enough to permit other companies to apply. Id.

Gerardi also told federal officers that his request to remove a requirement for audited financials from the Syracuse RFP was not to help COR Development, which did not have audited financials. Instead, he claimed that he made the request to remove a barrier to entry for other private companies, which he asserted typically lacked audited financial statements. And he told officers that he did not know why Howe emailed Gerardi to confirm that Kaloyeros made an adjustment to the RFP permitting the submission of a reference letter from a financial institution in lieu of audited financials, and that he responded "[g]reat" and "[t]hank you" merely to be polite. Id. at 1329.

Gerardi was arrested about three months after his proffer session.

II. Procedural History

On September 19, 2017, a superseding indictment charged Appellants and others with eighteen counts related to alleged corruption and abuse of power. The district court severed the counts into two trials. The first trial involved the counts alleging bribes taken by Joseph Percoco...