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Posted on: June 21, 2021

DA Hoovler Announces Felony Guilty Pleas In Orange County Industrial Development Agency Case

Orange County News
 
For Immediate Release                                                   Contacts: Christopher Borek
 June 21, 2021                                                               845.291.3276, 845.238.4245c

NYS Comptroller’s Office Deputy Press Secretary Tania Lopez 518-474-4015 

                                                                                                                                                                                                                                                                               

 

District Attorney Hoovler and New York State Comptroller DiNapoli Announces Felony Guilty Pleas In 

Orange County Industrial Development Agency Case

 

Three former officials of the Orange County Industrial Development Agency plead

 guilty to felonies in connection with concealing conflicts of interests

 

IDA to Receive over One Million Dollars in Restitution 

 

Orange County District Attorney David M. Hoovler and New York State Comptroller Thomas P. DiNapoli announced at a press conference on Monday, June 21, 2021, 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 Corrupting the Government in the Third Degree, a class D felony.  The IDA’s former Chief Executive Officer, Laurie Villasuso, 41, of Newburgh, pleaded guilty to Corrupting the Government in the Fourth Degree, a class E felony.  Edward Diana, 72, of Wallkill, a former member of the IDA’s Board of Directors, and a former County Executive of Orange County, pleaded guilty to Offering a False Instrument for Filing in the First Degree, a class E felony, and Committing a Prohibited Conflict of Interest. 

At the time that 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 one million two hundred thousand dollars to the IDA by the date that they are sentenced as part of their plea agreements.

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 Chief Executive Officer of the IDA, 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 ($1,000,000.00) 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 District Attorney David M. Hoovler. “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. Once the existence of these conflicts became apparent, the misconduct was forced to stop. Once disclosure of these conflicts was seen as inevitable, the IDA for the first time, changed their contracts to clearly specify what services Galileo Technology Group, Inc. had to provide and put controls in place to ensure proper oversight.   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 sad fact is that these crimes could not have been committed had other officials at the IDA acted responsibly. I thank State Comptroller DiNapoli for all the work his office did in this investigation, as well as the Town of New Windsor Police Department who aided in the investigation, including aiding in the execution of search warrants in the case.

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. Thanks to our partnership with Orange County District Attorney David M. Hoovler and the New Windsor Police, we were able to bring their crimes to light and recover their ill-gotten gains.”

Chief Robert Doss of the Town of New Windsor Police Department said, “The IDA’s main office and one of its Accelerator Sites are located in the Town of New Windsor.  I think it is important we acknowledge the individuals who came forward to the New Windsor Police Department very early on to report possible conflicts of interest that were occurring within the IDA by Mr. Cozzolino and Ms. Villasuso.  Coming forward is not always an easy thing to do.  This is especially true when you are talking about an organization, such as the IDA, where there are so many intertwined and complex relationships of a political, business and personal nature.  So, I personally commend the individuals who bravely came forward to us for help and refused to turn a blind eye or complacently do nothing.  I also want to acknowledge the highly skilled investigative efforts of New Windsor Police Detective Sergeant Christopher J. Sager, the NYS Comptroller’s Office and the Orange County District Attorney’s Office in what was certainly a complicated and challenging investigation.”

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. An IDA is established by special act of the State Legislature, created for the benefit of a municipality. 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. The main difference in the contracts between the two programs is that they were paid a set fee by the IDA for services rendered to businesses in the Accelerator Sites regardless of the amount of services provided but were paid by the hour for services rendered to AWOW clients.  The investigation revealed over $150,000 in billings Galileo Technology Group, Inc. made under the AWOW program for services provided to businesses in the Accelerator Sites for which they were paid a set annual amount.  This resulted in Galileo Technology Group, Inc. being paid more than it should have, although it became evident during the investigation that the IDA’s attorney, and some Board Members, were aware of this billing practice and at least tacitly approved it.

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; and 2015-$35,000.

Laurie Villasuso signed many of the contracts that the IDA had with Galileo Technology Group, Inc. as both Chief Operating Officer and Chief Executive Officer of the IDA.  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, Edward 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.

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 September 10, 2021.

The cases are being prosecuted by Special Counsel to the District Attorney Stewart Rosenwasser and Chief Assistant District Attorney Christopher Borek. 

The Orange County District Attorney’s and New York State Comptroller’s Office will be issuing a joint report on the results of the investigation.

A criminal charge is merely an allegation that a defendant has committed a violation of the criminal law, and it is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the State of New York’s burden to prove guilt beyond a reasonable doubt.

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