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Court to review agency’s status

Local economic group contends it’s private

September 27, 2012
By MICHAEL ANICH , The Leader Herald

JOHNSTOWN - The state Supreme Court's Appellate Division will hear arguments Oct. 10 on whether the Fulton County Center for Regional Growth should remain private or be deemed a public agency.

A clerk in the Third Department of the Supreme Court, Appellate Division, said Wednesday appellate judges will hear the case at 1 p.m. that day in Albany. She said a final decision by the court is expected about six to eight weeks after the Oct. 10 proceeding.

"We were formed by a group of private business people, with no government involvement, and we feel we should stay that way," CRG President and Chief Executive Officer Michael Reese said Wednesday.

CRG officials say a ruling that the agency is public would add to the cost of projects and put it at a competitive disadvantage trying to bring businesses to Fulton County.

As an outgrowth of a 2010 bonus scandal that affected two of the CRG's corporations - the Fulton County Economic Development Corp. and the Crossroads Incubator Corp. - the state judicial system is trying to determine whether the parent CRG corporation is private or public.

In the original litigation, the state Authorities Budget Office took the EDC to court, maintaining it should be public. The local agencies have since restructured and the CRG is the parent company of both the EDC and CIC.

The CRG is being represented in next month's proceeding by attorney Michelle Merola of the Albany-based firm Hodgson Russ, LLP.

The state Authorities Budget Office will be represented by the state attorney general's office.

The state's interest in the CRG in having its status changed to a public agency came after the May 2010 bonus scandal.

The ABO in fall 2010 began seeking more transparency in EDC and CIC records after the disclosure of $3 million in bonuses that were paid to former EDC and CRG executives Jeff Bray and Peter Sciocchetti.

The CRG is still trying to recover the bonus money, which was never approved by the EDC or CIC boards of directors.

The scandal broke after the U.S. Internal Revenue Service filed EDC and CIC tax returns indicating the bonuses.

In March, the state attorney general's office issued a statement indicating the separate attorney general's investigation was over, with no action being taken.

Reese said Wednesday the original litigation was filed in 2010 in state Supreme Court before Justice Richard T. Aulisi, but by August 2011, the judge had moved the venue to Albany. He said the litigation should be moved there because the ABO, with its attorney general's office lawyers, is located in that city.

In his ruling, Aulisi also noted the ABO is "charged with the responsibility of determining which organizations within the state of New York are subject to the provisions of the Public Authorities Accountability Act."

Reese said the court system is still trying to decide whether an Article 78 proceeding is pertinent to this litigation.

He said the CRG previously had requested a declaratory judgment in the matter from Aulisi.

ABO Director David Kidera said Wednesday his office started the Article 78 proceeding in state Supreme Court in Johnstown and still thinks it fits the litigation.

He said a precedent was set in a December 2009 case in which the Griffiss Local Development Corp. of Rome, Oneida County, sued the ABO. The state Supreme Court in Albany County in that case ruled the not-for-profit development corporation was subject to the provisions of the Public Authorities Accountability Act of 2005.

He said the Fulton County CRG litigation is similar, and the state attorney general's lawyers will argue that Oct. 10.

"I don't see that there's any reason to treat this differently," Kidera said. "This is on Fulton County."

Michael Anich covers Johnstown and Fulton County news. He can be reached at



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