After Schwartz probe announcement, Research Foundation hired outside counsel

After Schwartz probe announcement, Research Foundation hired outside counsel

The SUNY Research Foundation, a nonprofit affiliated with the vast state university system, retained law firm Hinckley, Allen & Snyder LLP in May 2016, weeks after Gov. Andrew Cuomo ordered a review of certain state-sponsored economic development deals, including the Buffalo Billion, by private investigator Bart Schwartz.

The agreement, obtained by The Alt under a Freedom of Information Law request, notes that “fees and costs relating to this litigation are not predictable”; accordingly, it has no maximum value. The hourly rate of lead attorney Michael Koenig was redacted. Asked the amount of money the foundation has spent so far on the contract, spokesman Peter Taubkin, who is also the records access officer, wrote in an email, “I’ll treat your request as one made under FOIL, and respond that the amount is 58K.”

What appears to be a description of what the contract is in “regard to” was also redacted. A separate description of the engagement’s scope mentions “preparing for and attending” meetings with Schwartz and, if necessary, “litigation-related tasks” like “discovery, hearings, depositions, potential grand jury matters, and trial.” (We have administratively appealed all redactions.)

Taubkin did not respond to an email asking about the precise funding source of the $58,000. SUNY RF has a billion-dollar annual budget that draws from state, federal, and private sources. Attorney Michael Koenig of Hinckley Allen confirmed that he continued to represent the foundation but declined to comment further. 

While the agreement’s existence does not appear to have been previously reported, it may not come as a surprise. In early July, The Alt reported, based on public records and other media accounts, that public and quasi-public entities’ spending on outside counsel related to state and federal investigations that led to corruption charges against a total of ten former state officials and business executives could approach $7 million.

The foundation itself is not accused of any wrongdoing, but former RF employee Alain Kaloyeros, who the foundation paid nearly $800,000 in the fiscal year that ended mid-2016, is accused of secretly crafting requests for proposals (RFPs) to favor certain upstate companies with help from former $25,000-per-month RF consultant Todd Howe, who has already pled guilty. (Kaloyeros’ federal trial will be held no earlier than May 15, 2018; he has not yet been indicted in the state case.)

Kaloyeros, who has pled not guilty and maintains his innocence, is perhaps better known as the former president and CEO of SUNY Polytechnic Institute, but the charges against him center around his alleged rigging of RFPs issued by the school’s nonprofit affiliates, Fuller Road Management Corp. and Fort Schuyler Management Corp., over which SUNY RF and the SUNY Poly Foundation essentially enjoyed joint custodianship. (In November, Empire State Development assumed control of the nonprofits’ real-estate portfolios.)

Howe and Kaloyeros have both retained private counsel; the latter has sought—unsuccessfully, to date—to compel the SUNY Poly nonprofit affiliates to cover his legal fees.

Hinckley Allen previously represented Gov. Andrew Cuomo’s Moreland Commission during then-U.S. Attorney Preet Bharara’s investigation into whether the anti-corruption panel’s sudden shutdown amounted to a criminal offense. (It did not, Bharara announced in early 2016.) The state spent $329,000 on that contract, comptroller Thomas DiNapoli’s online database shows. Michael Koenig’s hourly rate as lead attorney was reportedly $550.

A former federal prosecutor of white-collar crimes with the Department of Justice, Koenig now “represents, defends and advises corporate and individual clients in all aspects of white collar criminal matters, government investigations, corporate internal investigations and complex civil litigation,” his biography on Hinckley Allen’s website states.

At a SUNY RF educational event in March 2014, speaking generally on the topic of internal investigations, Koenig stressed the importance of companies having “robust” policies in place.

“[P]rosecutorial agencies – they’re going to look at, if they’re looking at your company, did they have a policy? Was the policy followed? Is the policy taken seriously?” Koenig said, according to a transcript. “And if all those things happened, the company may be able to work itself out of whatever problem it’s in. Now, there may be some individual wrongdoers, but one of the factors that every single government agency that I’ve ever dealt with looks at is is there a policy? Is it followed? Has the organization done its very best to adhere to its policies? And that’s really important from the company standpoint.”

Read the contract below.


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