Crystal Run gets attention of feds
Posted June 18, 2018 7:11 a.m. EDT
FBI agents are actively investigating Crystal Run Healthcare, a Hudson Valley company whose officials have made $400,000 in political donations to Gov. Andrew Cuomo, the Times Union has learned.
The agents are being assisted by personnel from the Orange County district attorney's office, and have sought information about the political donations to Cuomo as well as $25 million in grants awarded to the company by the state Department of Health.
The competitively bid grants in March 2016 went to build two Crystal Run health care facilities, which had already broken ground six months earlier without the assistance of a taxpayer subsidy.
The Times Union reported in May that the Manhattan U.S. Attorney's office was investigating Crystal Run, and that company employees had received grand jury subpoenas seeking testimony.
On Friday, the Orange County district attorney's office declined to comment.
A Crystal Run spokesman told the Times Union in May that while the company had been subpoenaed for documents in 2017, company officials did not believe that Crystal Run was actively under investigation.
A spokesman for Gov. Andrew Cuomo says the administration has not been subpoenaed by law enforcement concerning Crystal Run.
But the administration has had an unusual response to Freedom of Information Law requests concerning the company.
The Times Union in April filed FOIL requests seeking any law enforcement subpoenas concerning Crystal Run issued to the governor's office and several state agencies.
Earlier this month, the Cuomo administration and those agencies stated that even if they had been subpoenaed, the agencies would not have to provide copies of subpoenas concerning Crystal Run.
Whether or not the agencies had actually been subpoenaed was not addressed in the FOIL responses.
The Cuomo administration argues that such records "would" be exempt from disclosure because they "would have been" compiled for law enforcement purposes and publicly releasing them "would" interfere with an investigation.
The apparent rationale: If the administration confirmed or denied the existence of subpoenas concerning Crystal Run, then in the future, state open records law could be used to ferret out whether or not the administration had been subpoenaed in other matters.
In justifying this determination, the Cuomo administration cites the precedent of the Court of Appeals' March decision in the case of Abdur-Rashid vs. New York City Police. The state's highest court concluded that the NYPD could simply decline to respond rather than acknowledge that records concerning police surveillance of Muslim groups existed.
Robert Freeman, executive director of the Committee on Open Government, disagreed with the Cuomo administration's logic.
"I would argue that it is not 'most evident that revealing the existence of records would damage a pending investigation,'" Freeman said, quoting from the administration's response. "Again, if a person or entity is the subject of the investigation and it possesses the records sought, how could the person or entity prove that disclosure would damage an investigation, unless the investigator indicates that would clearly be so?"
Of the $400,000 in Crystal Run donations to Cuomo, $250,000 came from a series of $25,000 donations handed over at a Cuomo fundraiser in October 2013.
Seven of the 10 donors had not given to a campaign in a New York election in at least a decade before their $25,000 contributions were made to Cuomo.
Cuomo's campaign has refused to answer questions about details of the fundraiser, including where it took place, who attended, whether it was an exclusive event for Crystal Run associates, and how the donations were arranged.
Among those subpoenaed by a federal grand jury are six Crystal Run doctors who filed a lawsuit against Crystal Run in December accusing the company's top management of "self-dealing." Their civil complaint referenced the donations to Cuomo.
An attorney for the physicians who filed the lawsuit told the Times Union in December that he would seek information about whether the $25,000 donations made by individual Crystal Run executives were paid using "pooled" company funds.
The Crystal Run spokesman, Loren Riegelhaupt, has declined comment on whether the Cuomo donations were made in that manner. It's illegal under state law to give a campaign donation using a "straw donor" to conceal the true origin of a contribution. The civil lawsuit has been settled.
A major contractor on both Crystal Run projects was Joe Nicolla of Albany-based Columbia Development. Nicolla recently agreed to a cooperation deal with the state attorney general's office in exchange for its dropping a bid-rigging charge unrelated to the Crystal Run projects.