JOHNSTOWN - The Fulton County Center for Regional Growth's two subsidiaries last month dropped their joint civil lawsuit against fired, former local economic development executives Jeff Bray and Peter A. Sciocchetti.
The pair were accused by the Crossroads Incubator Corp. and Fulton County Economic Development Corp. of taking millions of dollars in bonuses not approved by the agencies' boards of directors. Bonuses were uncovered in a May 2010 scandal.
The EDC and CIC filed a civil lawsuit Sept. 29, 2011, in state Supreme Court in Johnstown against Schenectady resident Bray and Niskayuna resident Sciocchetti to try to recover the money.
But CRG board Chairman Dustin Swanger said Thursday the CIC and EDC have actually been paying out "tens of thousands of dollars" in legal costs for almost three years. He said the board voted in October to end the litigation.
"We don't want to throw good money against bad," Swanger said.
U.S. Internal Revenue Service 990 forms indicated Bray, EDC senior vice president at the time, and Sciocchetti, then-executive vice president of the CIC, were paid more than $3 million in bonuses until 2009. Payments were made without the approval of the agencies' boards of directors. Both executives were later fired.
Current CRG President and Chief Executive Officer Michael Reese assumed administrative control over both agencies.
Bray in legal papers, in response to the original lawsuit, denied the "performance bonuses" he and Sciocchetti received were "unauthorized" by the EDC and CIC and received in violation of the agencies' bylaws. The filing also asserted the EDC and CIC "have not suffered any actual harm or damages" by Bray.
Swanger said the CRG - parent company of the CIC and EDC - have tried a number of ways to recover the bonus money and been unsuccessful. They include going through the state Attorney General's Office, the IRS and a pending civil suit against the corporations' former auditing firm.
"We've just had every door shut in front of us," Swanger said.
The Fulton County Board of Supervisors in November 2010 asked then-Attorney General Andrew Cuomo to investigate excessive bonuses.
The office of state Attorney General Eric Schneiderman in March 2012 concluded the investigation. Jennifer Givner, Schneiderman's Albany-based upstate press secretary, issued a brief statement at the time indicating the probe was over, although it potentially could be reviewed later.
"The Office of the Attorney General has concluded its review and will continue to monitor developments to determine whether future action is warranted," the statement read. Other than that statement, Givner wouldn't say whether the investigation resulted in any criminal wrongdoing.
Swanger responded Thursday that "we hope so," when asked if the CRG is still hoping to recover the money pending the outcome of an IRS investigation of Bray and Sciocchetti that remains ongoing.
In a one-page filing with state Supreme Court dated Oct. 24, the CIC and EDC filed a "stipulation of discontinuance" in their legal fight against Bray and Sciocchetti. The document states "all causes of actions against defendants are, discontinued without prejudice, all without costs to any party as against another."
The document was signed by CRG attorney Daniel S. Cahill, who didn't return phone calls Thursday and today seeking comment. Reese this week had no comment, referring questions to Cahill. The document was also signed by Bray's attorney, attorney Michael L. Koenig of Albany, and Sciocchetti's attorney, Peter Moschetti of Latham.
Fulton County government has in recent years strengthened its ties with the CRG, with two supervisors now on the CRG board.
The Fulton County Board of Supervisors in March voted to allocate $40,000 in an effort to recoup the $3 million in bonuses. The resolution - sponsored by the board's Economic Development and Environment Committee - called for appropriation of funds to the CRG for attorney's fees and forensic accounting services to "pursue recovery of monies taken by former EDC/CIC executives."
Swanger said the CRG has not spent all of the $40,000 at this point.
Gloversville 3rd Ward Supervisor Michael F. Gendron, chairman of the Economic Development and Environment Committee, was asked about the CRG's dismissal of its lawsuit against Bray and Sciocchetti.
"I'm not going to comment on pending litigation," Gendron responded.
Reminded that the CRG's litigation against Bray and Sciocchetti is no longer pending, he responded that he hadn't yet seen the "stipulation of discontinuance."
Fulton County Board of Supervisors Chairman William Waldron didn't return a phone call seeking comment Thursday or today.
Michael Anich covers Johnstown and Fulton County news. He can be reached at firstname.lastname@example.org.