‘A web of conflicts of interest, false statements and pay-offs’

Orange County District Attorney David M. Hoovler and New York State Comptroller Thomas P. DiNapoli announced at a press conference this week that three former officials of the Orange County Industrial Development Agency (IDA) have pleaded guilty to felonies in connection with engaging in, and concealing, prohibited conflicts of interests:

Former IDA Managing Director Vincent Cozzolino, 62, of Gardiner, pleaded guilty before Orange County Court Judge Robert J. Prisco to third-degree corrupting the government, a class D felony.

Former IDA Chief Executive Officer, Laurie Villasuso, 41, of Newburgh, pleaded guilty to fourth-degree corrupting the government, a class E felony.

Edward Diana, 72, of Wallkill, a former member of the IDA’s Board of Directors and a former three-term County Executive of Orange County, pleaded guilty to first-degree offering a false instrument for filing, a class E felony, and committing a prohibited conflict of interest.

None are expected to spend time in prison.

When they pleaded guilty, Cozzolino and Villasuso each admitted that they had acted in concert with each other in a scheme to defraud the IDA through payments that the IDA made to Cozzolino’s company, Galileo Technologies Group, Inc.

Villasuso admitted that she had been employed by both the IDA and Galileo Technologies Group, Inc. even as she signed contracts on behalf of the IDA with that corporation.

Diana admitted being employed by Galileo Technologies Group, Inc. while he was an IDA Board Member, and filing a false document to conceal that employment. As a member of the IDA’s Board of Directors, Diana voted on the contracts that the IDA had with Galileo Technologies Group, Inc., and chaired the committee which dealt most directly with that company.

Collectively, the three defendants have agreed to pay more than $1.2 million dollars to the IDA by the date that they are sentenced (Sept. 10) as part of their plea agreements.

‘Neither ... adequate, much less competent, oversight’

The investigation into the Orange County IDA was conducted jointly by the Orange County District Attorney’s Office, the New York State Comptroller’s Office and the Town of New Windsor Police Department. While the investigation did not reveal evidence that there had been direct theft of IDA monies, it did reveal a pattern of conflicts of interest, one-sided contracts, and negligent oversight that resulted in Galileo Technologies Groups, Inc. having virtually unfettered discretion to bill the IDA hundreds of thousands of dollars for services that were only vaguely described and overlapped with services they were required to provide under other existing contracts.

Both Villasuso, the CEO, and Diana, the board member who chaired the IDA’s Accelerator Committee, should have been the ones most directly involved in oversight of Galileo Technologies Group, Inc.’s work and billing practices. Both were literally on Galileo Technologies Group, Inc.’s payroll.

This situation was made even worse by the fact that neither the greater Board of Directors, nor the IDA’s attorney, exercised adequate, much less competent, oversight. As a result, Galileo Technologies Group, Inc. was paid more than it was entitled to for their services. Since the IDA willingly allowed Galileo Technologies Group, Inc. to submit invoices which did not contain detailed descriptions of the services they provided, it is impossible to properly audit the invoices to determine precisely what they were entitled to be paid.

The District Attorney’s Office required as part of the plea disposition, that Cozzolino, who is a fifty percent owner of Galileo Technologies Group, Inc., and its Managing Partner, reimburse the IDA one million dollars, for services for which the IDA unquestionably overpaid.

“Had the defendants in this case made the disclosures required by law, this never would have rose the level of criminal charges,” said Hoovler said. “There is no need to speculate as to what would have happened if these defendants, and the IDA Board, had acted in the transparent manner that the General Municipal Law mandates.

“IDA funds are public monies and those who accept appointment to the Board of Directors owe a duty to act diligently in exercising oversight over the operations to the public authority they serve and are required by the statutory fiduciary duty which all Board Member are bound by and swear an oath to uphold,” the district attorney added. “The sad fact is that these crimes could not have been committed had other officials at the IDA acted responsibly.”

‘Their motives were simple: Greed’

New York State Comptroller Thomas P. DiNapoli said: “Industrial Development Agencies exist to economically benefit their communities, not the officials running them. The defendants corrupted the Orange County IDA through a web of conflicts of interest, false statements and pay-offs,” said DiNapoli. “Although their scheme was complex, their motives were simple: Greed. We must have zero tolerance for public corruption.”

A public benefit corporation’

The Orange County IDA is a corporate governmental agency known as a “public benefit corporation.” Its purpose is to attract and promote commercial and industrial development within Orange County.

The “governing body” under whose auspices the Orange County Industrial Development Agency operates is the Orange County Legislature, which appoints members to the IDA’s Board of Directors, and retains the ability to replace board members. The money used to run an IDA are public funds.

The Orange County IDA has had a “Business Accelerator Program” and has operated “business incubators” which are programs to aid businesses.

The Orange County IDA operated two types of programs. One involves business “Accelerator Sites” which are commercial real estate locations that the IDA leases and fills with tenants who are generally start-up companies.

Since 2015, the IDA had contracted with Cozzolino and Galileo Technologies Group, Inc. to provide business consulting services to the businesses located within the Accelerator Site locations. A separate program, known as the “Accelerator Without Walls” (AWOW) offered the same type of aid and business consulting services to companies who are not tenants at the IDA’s Accelerator Sites but are rather, already existing Orange County companies, which are in need of funding, management services and or technical advice and assistance. Galileo Technologies Group, Inc. similarly had a contract to provide consulting services to AWOW clients.

Since Cozzolino became involved in the IDA’s Accelerator Program in 2015, he convinced the IDA’s Board of Directors to greatly increase the funds available to the Accelerator program and thereby increase the amount of money received by Galileo Technology Group, Inc. from various contracts with the IDA.

In 2020, Galileo Technology Group, Inc. was paid:

$70,000 as Managing Director of the Orange County IDA;

$80,000 as Managing Director of the Business Accelerator;

$72,000 as Managing Director of the IDA’s New Windsor/Newburgh Accelerator Site;

$72,000 as Managing Director of the IDA’s Middletown Accelerator Site;

$72,000 as Managing Director of the IDA’s Warwick Accelerator Site; and

$80,000 to establish the IDA’s Highland Falls Accelerator site (for which it was to receive $72,000 a year as Managing Director) and $333,906.75 in AWOW billings, for a total of $779,898.75.

The prior annual totals are as follows:

2019: $579,098.25:

2018: $475,562.50

2017: $374,864.75

2016: $335,293.75

2015: $35,000.

Restitution

Villasuso signed many of the contracts that the IDA had with Galileo Technology Group, Inc. Concurrently, the compensation that she received as an employee of Galileo Technologies Group, Inc., rose as the value of Galileo’s contracts increased.

As part of the plea agreement, Villasuso will pay the IDA $175,000, which represents the amount of money she received from Galileo Technologies Group, Inc. during her term of employment which conflicted with her role at the IDA.

Similarly, Diana will pay the IDA $90,000, which was the amount of money he took home from his employment at Galileo Technology Group, Inc. during the time of his conflicted tenure as an IDA Board member. As a condition of Diana’s plea, he must cooperate with the Orange County District Attorney’s office in connection with the preparation a report to be prepared and issued jointly with the Comptroller’s Office, setting forth, with particularity, the flaws in the operation of the IDA that led to the breakdown in oversight. His cooperation also requires he give testimony, as necessary in any future proceeding.

In the event Diana fully complies with his agreement to cooperate and pay full restitution, at the time of sentencing, his felony plea will be reduced to a misdemeanor.

The General Municipal Law prohibits certain conflicts of interest and the law requires that conflicts of interest be publicly disclosed and made part of the record of the agency. The investigation revealed that not only did the defendants fail to ever publicly disclose Villasuso’s and Diana’s employment with Galileo Technology Group, Inc., Diana filed at least two false statements denying there was a conflict, and Villasuso filed a statement with the State Senate Investigations Committee which also failed to disclose the conflicts, despite the Committee specifically requesting information concerning the existence of conflicts and The IDA’s policy for dealing with them.

The investigation also revealed that although the entire Board of Directors of the IDA would receive the minutes of every committee meeting held before their monthly meetings, Villasuso directed that the Board not be provided with minutes from the Accelerator Committee of which Diana was Chairman, and which most directly dealt with Cozzolino and Galileo’s Technology Groups, Inc.’s work and billing practices.

Consequences

The District Attorney’s Office became involved in the investigation after being notified by an Orange County Legislature that the IDA was not producing documents the County Legislature had been requesting pertaining to how the IDA was expending monies. On March 4, 2021, after the County Legislature became aware of some of the conflicts of interests at the IDA, and the existence of a criminal investigation, the entire Board of Directors of the IDA was removed and replaced.

The defendant are next scheduled to appear in court on Sept. 10.