LDC probe: Four arrested, including Robert Wiesner, Maggie Brooks' husband
A sweeping indictment unsealed Wednesday charges four men, including the husband of County Executive Maggie Brooks, in an alleged scheme to rig contracts for Monroe County projects for connected vendors, steal money through those agreements and use the cash to pay for everything from golf outings to campaign donations.
Criminally charged were Daniel Lynch, 50, of Chili, the president of Treadstone Development Corp.; John Maggio, 58, of Pittsford, the president of Navitech Services Corp.; Nelson Rivera, 37, of Hilton, a former information technology manager for the county; and Robert Wiesner, 66, of Webster, a retired Rochester police captain who is married to Brooks.
The charges vary widely. Lynch faces 25 counts, ranging from grand larceny to conspiracy to money laundering, more than any other defendant. Wiesner, by contrast, faces only two charges that deal with bid-rigging. In an arraignment Wednesday, the four men pleaded not guilty to all charges, all of which are felonies.
After a more limited indictment against Lynch last month, Wednesday's charges were the first major salvo to result from an investigation for well over a year by the state Attorney General's Office into the operations of local development corporations, or LDCs, which are nonprofit companies set up to handle county projects.
Contracts arranged through two LDCs are at the core of the allegations — Upstate Telecommunications Corp., known as UTC, and Monroe Safety and Security Systems, or M3S.
"The process for awarding contracts is supposed to be fair, competitive, and unbiased," Attorney General Eric Schneiderman, a Democrat, said in a statement. "Sadly, our investigation found that some local officials abused this crucial responsibility and rigged the process to steer county funds to favored corporations that spent money on country club golf outings, expensive sporting events, and political contributions."
Video: Reporter David Riley explains LDC charges
In a news conference hours after the arraignment, Brooks, a Republican, defended the county's use of the LDCs, calling them examples of public-private partnerships that are critical to the community.
"The merits of these projects are good," she said. "We have to preserve the good and ensure that the taxpayers are protected."
But she also distanced herself from the allegations of wrongdoing and appeared to cast blame on Navitech Services Corp., a company hired to manage both the LDCs' major contracts.
Dennis Vacco, a former New York attorney general hired by the county earlier this year to look into LDCs as the investigation intensified, joined Brooks and said his own "no-holds-barred" review turned up "irregularities" in Navitech's management of the contracts, though he offered no details. Brooks said that on Vacco's recommendation, she would order several improvements, including that the boards of both M3S and UTC sever ties with Navitech.
Vacco stressed that there is "not a scintilla of evidence" connecting Brooks to any wrongdoing. She declined to discuss her husband's alleged involvement.
Raw video: The long walk to court
State Comptroller Thomas DiNapoli and others have raised questions for years about whether LDCs can be abused in Monroe County and beyond to skirt oversight and laws that normally apply to local governments, including public bidding requirements.
"These officials laundered more than $2 million in taxpayer money through a complex bid-rigging scheme and thought they could get away with it," DiNapoli said in a statement.
The indictment paints a picture of the defendants using LDCs as vehicles to enrich connected vendors and themselves through contracts and subcontracts.
It says the four men worked with other, unnamed "insiders" to discuss ideas for future county projects, develop language in bidding materials that would give an advantage to their favored companies and share inside information that would give certain vendors a leg up in the bidding process.
The favored companies included Navitech, Treadstone and Siemens Building Technologies, according to the indictment. Bid-rigging allegedly affected three contracts:
• A contract through UTC, awarded to Siemens, to upgrade county computer systems, valued at $99 million over 16 years. Only Lynch and Rivera are charged in this case.
• A $175,000 contract through UTC awarded to Treadstone that dealt with replacing computers. Lynch, Rivera and Maggio are charged with rigging this bid.
• A contract through M3S, awarded to Navitech, to manage upgrades to the county's security systems and public safety radio systems, valued at $212 million. All four defendants are charged with bid rigging in this case.
Raw video: Four arrested in LDC investigation
Once those contracts were in place, Lynch is accused of using fake contracts, inflated subcontracts and false invoices to steal money through the agreements. In two cases, he and Maggio are accused of working with each other.
Among other benefits from the alleged scheme, Treadstone received payments from Navitech of more than $2 million and Maggio pulled in $1.3 million, the indictment says.
In one example, Lynch allegedly inflated the value of subcontracts among UTC, Siemens and Pittsford-based Catalog & Commerce Solutions, then used the proceeds for entertainment or payments to Maggio, Navitech or unnamed charities and political campaigns.
Lynch and Maggio also are charged with laundering some of the payments they received.
Rivera, Lynch and Maggio also are charged with falsifying business records.
During an arraignment of the four men, defense attorneys alerted Judge Robert C. Noonan to an advance notice given to the media by the Attorney General's Office about the unsealing of the indictments.
Noonan was clearly irate at the revelation, calling the alert "highly inappropriate."
William Schaeffer, the bureau chief for the Attorney General's public integrity bureau, agreed that the notice was inappropriate.
All four men were released without bail except Lynch, who must post $25,000 cash or $50,000 bond within 24 hours.
James Nobles, the attorney representing Wiesner, said the advance notice to the media of the unsealing of indictments is proof that the investigation has a political tone.
"This is a political indictment," Nobles said.
Lynch faces six counts each of third-degree grand larceny and first-degree falsification of business records, four counts of combination in restraint of free trade and competition, three counts of second-degree grand larceny, two counts each of fourth-degree conspiracy and second-degree money laundering, and one count each of third-degree money laundering and first-degree offering a false instrument in filing.
Maggio faces three charges of combination in restraint of trade and competition, two each of third-degree grand larceny and first-degree falsification of business records, and one each of fourth-degree conspiracy, first-degree offering a false instrument for filing in the first degree and second-degree money laundering.
Rivera is charged with four counts of combination in restraint of trade and competition and two counts of first-degree falsification of business records.
Wiesner is charged with two counts of combination in restraint of free trade and competition.
DRILEY@DemocratandChronicle.com
GCRAIG@DemocratandChronicle.com