Three ex-IDA officials plead guilty

Ex-County Executive Diana accused of concealing conflict if interest

Posted 6/21/21

Orange County District Attorney David M. Hoovler and New York State Comptroller Thomas P. DiNapoli announced at a press conference on Monday, June 21, that three former officials of the Orange County …

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Three ex-IDA officials plead guilty

Ex-County Executive Diana accused of concealing conflict if interest

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            Orange County District Attorney David Hoovler and New York State Comptroller Thomas DiNapoli announced at a press conference on Monday 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 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 Technology Group, Inc. Villasuso admitted that she had been employed by both the IDA and Galileo Technology Group, Inc. even as she signed contracts on behalf of the IDA with that corporation. Diana admitted being employed by Galileo Technology 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 Technology 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 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 Technology Group, Inc. having unrestrained 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.

            Hoovler noted that 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 the oversight of Galileo Technology Group, Inc.’s payroll.

Hoovler added that the situation was made even worse by the fact that neither the county IDA’s board of directors, nor the county IDA’s attorney exercised adequate oversight. As a result, Galileo Technology Group, Inc. was paid more than it was entitled to for their services. Since the IDA willingly allowed Galileo Technology 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 50 percent owner of Galileo Technology Group, Inc. and its managing partner, reimburse the IDA $1 million for services which the IDA unquestionably overpaid. He will also serve five years probation. Villasuso must pay $175,000 to the county IDA in restitution while Diana must pay $90,000. None of the three defendants will serve jail time.

“Had the defendants in this case made the disclosures required by law, this never would have risen to the level of criminal charges,” 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. Once the existence of these conflicts became apparent, the misconduct was forced to stop. Once the 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 members 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.”

New York State Comptroller Thomas DiNapoli was also disappointed in the defendants’ conduct that led to their charges.

            “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,” he said. “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.”

            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 Technology 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 Technology 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 Technology Group, Inc., rose as the value of Galileo’s contracts increased. As a condition of Diana’s plea, he must cooperate with the Orange County District Attorney’s Office to prepare and issue a joint report 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 him to 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 Technology Group, Inc.’s work and billing practices.

The District Attorney’s Office became involved in the investigation after being notified by the 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. 

One of those IDA members was Steve Brescia, chairman of the Orange County Legislature and mayor of the Village of Montgomery.  He did not respond to a request for comment this week from the Wallkill Valley Times.

Fran Fox-Pizzonia, who is challenging Brescia for his legislative seat, did issue a statement.

The defendants 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.

“I applaud New York State Comptroller Tom DiNapoli and Orange County District Attorney David Hoovler for their diligent investigation of crimes and gross incompetence that plagued the Orange County IDA,” Fox-Pizzonia said in a prepared statement. “Local taxpayers have every right to feel cheated out of their hard-earned tax money and the public trust they put into the County Legislature responsible for IDA Board Member appointments.

“As one of the recently removed IDA Board Officers involved in this shameful behavior, County Legislator Steve Brescia, representing parts of Montgomery and Wallkill, must be held accountable for the incompetence that resulted in these fraudulent, criminal activities. “

County residents, especially those in District 9 (parts of Town of Wallkill and Town of Montgomery) deserve honest, transparent, competent representation.”

Mike Martucci, State Senator for the 42nd district, spoke against corruption in the county IDA, noting that the residents of Orange County deserve better.

“Corruption at any level of government and by members of any political party cannot be tolerated. One of the reasons I was elected to the State Senate was to fight exactly this kind of moral decay in Albany, so I certainly won’t put up with it at home,” he said. “I applaud District Attorney David Hoovler and County Executive Steve Neuhaus for taking swift action when these troubling allegations came to light. I’ve also been proud to work side by side with my colleague Senator Skoufis to pass a series of bills to reform Industrial Development Agencies both here at home and across our state. Whether it’s in the halls of the Governor’s mansion or the board rooms of a local IDA, citizens deserve honest and accountable government. Those who violate that trust must be prosecuted to the fullest extent of the law. I have every confidence that the District Attorney will deliver justice for Orange County residents and make an example out of those who have abused their positions for personal gain. Today's announcement was a bold and necessary first step.”

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