Joseph Percoco and Andrew Cuomo in happier days. Photo: AP

On Thursday, federal prosecutors announced corruption charges against nine members of Governor Andrew Cuomo’s inner circle in connection with an alleged bribery and kickback scheme involving the much-lauded upstate New York economic development program known as the “Buffalo Billion.”

According to the 79-page criminal complaint, the long-running federal investigation identified “two overlapping criminal schemes involving bribery, corruption and fraud in the awarding of hundreds of millions of dollars in state contracts and other official state benefits.” The highest-profile defendants charged are Joseph Percoco, a close ally of the governor’s since they both worked in Mario Cuomo’s administration; Todd R. Howe, a lobbyist and longtime Cuomo family loyalist; and Alain Kaloyeros, the president and CEO of the SUNY Polytechnic Institute.

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The complaint also reveals that Howe is cooperating with the federal investigation.

Percoco—once described by the governor as “my father’s third son, who sometimes I think he loved the most”—left state government in January for a job at Madison Square Garden, and his impending arrest was first reported by the Wall Street Journal early on Thursday.

As executive deputy secretary to the governor, prosecutors allege, Percoco abused “his official position and extensive influence within the executive branch by seeking and accepting bribe payments from executives at companies that were seeking benefits and business from the state in exchange for use of Percoco’s official authority and influence to benefit those companies.” From the Journal:

The Buffalo Billion program has given millions of dollars in state funding and contracts to companies for various building projects, in part through contracts administered by the State University of New York Polytechnic Institute and affiliated nonprofits.

Mr. Howe worked as a consultant to SUNY Polytechnic while its affiliated nonprofits awarded contracts and funding to companies that paid tens of thousands of dollars in income to Mr. Percoco, according to Mr. Percoco’s financial disclosure statements. During that period, Mr. Percoco served in the governor’s administration or worked as Mr. Cuomo’s campaign manager.

Federal prosecutors have been examining whether Mr. Percoco took any steps that resulted in favorable official state action for these companies while they were paying him, according to people familiar with the matter.

According to the New York Times, Cuomo was “blindsided” by the news. “If it turns out that his closest adviser was gaming the system for his personal enrichment, it strikes at the heart of how the governor describes his own administration,” Blair Horner, the executive director of the New York Public Interest Research Group, said. “If it plays out badly for Percoco, it plays out badly for the governor.”

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In a statement on Thursday, Percoco’s attorney called the case “an overreach of classic proportions,” and said that his client would plead not guilty.

“This prosecution, based on information provided by someone of utterly unreliable credibility, seeks to criminalize conduct that the Supreme Court of the United States recently found to be not unlawful,” the statement reads. Percoco “will enter a plea of not guilty because he is not guilty.”