Economic development agencies facing federal inquiry

Fulton County’s twin economic development agencies, the subject of several state investigations and

Fulton County’s twin economic development agencies, the subject of several state investigations and inquiries over the past year, are now under scrutiny from U.S. Department of Housing and Urban Development.

HUD served subpoenas Friday on both the Fulton County Economic Development Corp. and its real estate subsidiary, Crossroads Incubator Corp. The subpoenas seek a variety of financial records and other documents dating from Jan. 1, 2007, to the present, EDC President Michael Reese confirmed Tuesday.

Among the various functions conducted by EDC is the administration of multimillion-dollar loan pools generated from grant money awarded over the years by HUD.

An EDC/CIC official said it is apparent HUD is interested in whether the proceeds from grants were used to pay bonuses, including large payments made to staff after the 2007 sale of $31 million worth of properties in the local industrial parks.

HUD officials did not return calls Tuesday.

The two economic development agencies were given until June 24 to comply, and Reese said he expects to meet the deadline. HUD’s inspector general’s office issued the subpoenas.

Reese said HUD contacted the agencies last year after disclosures that two former agency executives, Jeff Bray and Peter Sciocchetti, were awarded multiyear bonuses through 2009 totalling about $1.5 million each. Officials of the two boards testified last June at a state Assembly committee hearing on the matter that they were unaware of the bonus payments.

Since then, the state Authorities Budget Office has also examined the practice of local development corporations and other quasi-public agencies paying bonuses, and the office of state Attorney General Eric T. Schneiderman summoned the agencies’ financial officer to Albany for an interview.

Fulton County District Attorney Louise K. Sira asked then-Attorney General Andrew Cuomo to commence a criminal investigation into the bonus payments last year, but despite requesting various documents and conducting the interview in April, spokespeople for both Cuomo and Schneiderman have declined to characterize their efforts as an investigation.

Reese, who replaced Bray, said he expects HUD is seeking to ensure “that everything that was done was done correctly.”

In a related matter, the EDC has filed suit against Bray and former agency attorney J. Paul Kolodziej in an attempt to recover $200,000 paid to Kolodziej following the 2007 sale of the properties.

Categories: Schenectady County

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