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June 25, 2011

How Pubic-Private partnerships work and why they are one of the main avenues for fraud intentionally left unchecked by both the State and Federal Government to

The biggest taxpayer racket is public-private partnerships


In broad terms, all the UB 2020 bills have focused on changing the rules of state oversight at UB to make it easier for the university to buy and sell state property and to enter into public-private-partnerships exempt from Freedom of Information Law and other state laws. Another major element of the plan is granting the university the freedom to raise tuition as it sees fit, without approval of the Legislature, and to keep this money for itself. Bill supporters argue that in years past, tuition money went into the overall state budget, even as state funding for SUNY was cut. So, in addition, the bill requires the state to continue funding UB at present levels in perpetuity.

This year, SUNY Chancellor Nancy Zimpher has been pursuing negotiations with Cuomo’s office and the Legislature to craft a plan that would call for “rational” and “predictable” tuition increases for New York State resident students for the next five years. The increased income to SUNY, advocates argue, would be an antidote to state funding cuts to the system

The invisible money machine

It would have been impossible for UB 2020 legislation to have gone anywhere without the generous support of various UB foundations that bankrolled lobbying efforts in Albany in support of it over the last few years, outspending all other SUNY schools by far. The UB foundations control nearly half a billion dollars and operate beyond the reach of the press and public. There are at least seven and perhaps a dozen or more of these UB-affiliated entities.

In 2008, the New York State Commission of Public Integrity listed more than 40 university employees as UB 2020 lobbyists—compensated for that role by the foundation, in addition to their state salaries.

The law firm that represents the UB Foundation, Hodgson Russ, provided us a list that is 34 pages long, listing more than 1,400 names of people compensated by the foundation. It’s undated, and many of the job titles are cut off. Names and salaries do appear, and it’s relatively easy to see that more than 260 people are paid $30,000 or more by the foundation alone. Seventeen are paid over $100,000

The 2008 990 tax form filed by UB Foundation Activities shows that it spent more than $28 million on various forms of employee compensation, including millions in salary top-ups to upper-level UB employees, and $18,923,891 on travel, advertising and promotions, conferences, and conventions, and payments to various affiliated corporations. The chart on the next page enumerates some of those salary top-ups.

Meanwhile, the foundation spent $3,348,300 on scholarships to UB students

David Dunn  2010 SUNY Compensation = $383,804, UB Foundation Compensation = $381.625.  Total 2010 Compensation = $765,429 (more than the U.S. President)

John B. Simpson  2010 SUNY Compensation = $265,000, UB Foundation & Other Compensation = $474,118.  Total 2010 Compensation = $739,118 (more than the U.S. President)

Michael E. Cain 2010 SUNY Compensation = $225,000, UB Foundation & Other Compensation = $256,625.  Total 2010 Compensation = $595,425 (more than the U.S. President)

Scott D. Nostaja 2010 SUNY Compensation = $175,000, UB Foundation & Other Compensation = $332,307.  Total 2010 Compensation = $507,307 (more than the U.S. President)


Let’s take a look at how public-private partnerships work today at UB, even before the passage of any “UB 2020 Flexibility and Economic Growth Act.”

The membership of the UB Council, the UB Foundation, and the various affiliate corporations reads like a Who’s Who of Western New York government, law firms, and corporations, many of them with substantial UB business. Their dealings with UB and the State of New York are overseen by themselves, their family members, and their friends and associates

For example, Frank L. Ciminelli is an owner of Ciminelli Development and senior vice president of LP Ciminelli Inc., the largest construction group in Western New York. He is also an emeritus trustee of the UB Foundation and an active member of its Properties Committee. Frank and his three sons (Louis, Paul, and John) have had a long and profitable relationship with UB. In 2004, Louis and Paul formed non-union GPS Construction Services LLC. Louis named his cousin, Robert Savarino, as its president and CEO. UB named GPS the general contractor for the Alfiero Center at UB’s School of Management, on the North Campus. At the building’s dedication, UB’s Simpson said, “In important ways, the Alfiero Center is the visible manifestation of the dynamic partnerships that have contributed to its construction.”

Foit-Albert Associates was the building’s architect. Beverly Foit-Albert is also a director of the UB Foundation and a member of its Properties Committee. Her firm also drew up the plans for relocating over 150 families from McCarley Gardens, the moderate-income housing development that occupies a piece of land coveted for development in the downtown medical corridor. In 2010, the UB Foundation offered $15 million to buy the property, relocating the residents over several city blocks in new builds.

UB also picked GPS as the contractor for two off-campus UB housing projects. Frank’s son John became president and COO of GPS in 2008. The following year, LP Ciminelli Inc. reabsorbed GPS, and John planned to “come over to LPCiminelli as senior vice president in charge of the housing business,” according to an April 4, 2009 story in the Buffalo News.

Frank’s son Louis is a director of the Buffalo Niagara Partnership—which has once again made passage of UB 2020 its number one legislative priority this year—and chairman and CEO of LP Ciminelli, Inc., where his son Frank L. Ciminelli II is senior vice president. Frank’s brother Paul is president and CEO of Ciminelli Development Company, Inc., a director of the Empire State Development Corporation, a director of the UB Foundation, and a member of its Properties Committee

The bond for the residence hall, dated May 20, 2010, is valued at $82,865,000, and lists LPCiminelli Inc. as the construction manager.

The UB entity that drew up and authorized the bond is the UB Faculty-Student Housing Corporation. Tax forms show that at least as far back as 2007, Frank Ciminelli and his son Paul have both been directors of this corporation, along with the UBF Corporation, FNUB, Inc., and the UBF Incubator, Inc. According to the UB website, they still hold these positions today. They were there when the construction contracts were okayed and remain on right through construction.

So when UB, through the UB Faculty-Student Housing Corporation, contracted for this enormous and lucrative project, there were Ciminellis on both sides of the table. The only person missing was a disinterested steward of the money’s true owner: the people of New York State

This sort of thing goes on all the time in the corporate world, but the money-handlers are not usually helping themselves to public money quietly transferred to a private corporation. We call it “nepotism” when an ordinary person gives a job to a family member. What do we call it when a UB corporation director gives his company, or a family member, or himself a multi-million-dollar contract? Was there even a show of competitive bidding? Because the UB Faculty-Student Housing Corporation—along with the other myriad related organizations—claim to be private entities, the public and press can’t find out. If someone recused himself, then he may have been standing outside the door, but we can’t know this until we get access to meeting minutes. Already UB’s foundations argue that they are immune to Freedom of Information Law. If the UB2020 legislation ever passes, that immunity will be codified.

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