N.Y. governor confirms $1 bln economic project is subject of U.S. probe

NEW YORK (Reuters) - New York Governor Andrew Cuomo’s administration on Friday confirmed the existence of a federal investigation into one of his signature projects, a $1 billion economic development plan for the Buffalo area known as “Buffalo Billion,” and ordered a full internal review.

Cuomo announced the development plan in January 2012, saying the state would give $1 billion of incentives, including tax credits and state grants, to national and global companies to come to the Buffalo area in an effort to revitalize the struggling region.

“The U.S. Attorney for the Southern District has an ongoing investigation” into Buffalo Billion, Alphonso David, the counsel to the governor, said in a statement.

He added that the probe “has recently raised questions of improper lobbying and undisclosed conflicts of interest by some individuals which may have deceived state employees involved in the respective programs and may have defrauded the state.”

The investigation is led by Preet Bharara, the U.S. Attorney in Manhattan, and has focused on potential bid-rigging and other possible irregularities in connection with the awarding of state money to private developers, according to previous reports in several New York media outlets.

David said Cuomo had ordered an independent review of all the project’s grants and tapped Bart Schwartz, the former chief of the criminal division for the U.S. Attorney’s office in Manhattan, to oversee the effort.

In a statement, Schwartz said, “The state has reason to believe that in certain programs and regulatory approvals they may have been defrauded by improper bidding and failures to disclose potential conflicts of interest by lobbyists and former state employees.”

Schwartz said he would share any findings with federal prosecutors.

A source with knowledge of the matter but not authorized to speak publicly said Cuomo’s office received a subpoena from prosecutors on Friday seeking documents related to the program. The source said no member of the administration, including Cuomo, was personally subpoenaed.

A spokesman for Bharara’s office had no immediate comment. (Additional reporting by Hilary Russ)