Orange County District Attorney David Hoovler said Friday that his office served search warrants at three locations that morning to seize financial records and computers as part of its widening investigation into the county’s Industrial Development Agency.
Hoovler said the searches took place in Newburgh, Kingston, Gardiner at the homes or offices of employees of the IDA and Galileo Technology Group, the company that helped run the IDA until a new oversight board canceled Galileo’s contract last month.
Hoovler’s office opened its investigation in late February, pursuing what he said were claims of financial impropriety and conflicts at the independent agency. He said then that he hoped to release at least initial findings within 60 days, but on Friday he made no predictions about how long the probe would continue.
“It’s much larger than initially anticipated,” he said.
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No one from Galileo could be reached for comment on Friday. Vincent Cozzolino had been the consulting firm’s representative at the IDA, but statements since the investigation began have been issued by Galileo’s managing partner and CEO, Petra Klein, through a Galileo employee, James Rollins.
The IDA, which is separate from the county government but overseen by seven board members appointed by the county Legislature, approves tax breaks that companies seek as incentives to build or expand operations in the county. Its funding comes largely from the fees it collects from the businesses seeking those tax benefits.
County lawmakers, who had been pressing for an audit of the IDA before the criminal investigation began, replaced its entire board shortly afterward, saying they could no longer get information about the agency’s activities. The new board then canceled the IDA’s management contract with Galileo, which was set to make $738,000 this year.
Less than a week later, the agency’s CEO, Laurie Villasuso resigned after nearly 10 years at the IDA, saying the changes at the agency had cast uncertainty on her role. Her salary was $164,137.
In addition to awarding tax breaks, the IDA has been renting several buildings where new businesses can operate at low cost to help them get started. Galileo was paid to run that Accelerator program and a spinoff it called Accelerator Without Walls, which gave free assistance to companies wherever they were located.
The IDA hired Cozzolino as managing director in 2015 and had paying him through Galileo, rather than as a staff employee. An audit delivered to the Legislature in February showed that the IDA’s payments to Galileo ballooned from $35,000 for a half-year in 2015 to almost $780,000 last year.
That 2020 sum included $446,000 in managing director fees and $334,000 in accumulated charges for the Accelerator Without Walls. The audit listed 202 companies that had gotten help from 2017 to 2020.
A fraud expert hired by the IDA to conduct that study told lawmakers he found “no overt signs of material wrongdoing,” although he saw potential conflicts of interest and “blurred lines” between the agency and Galileo.
The Times Herald-Record reported on Monday that the IDA has spent nearly $300,000 so far in rent and fees on its stalled attempt to open an Accelerator site in the Village of Highland Falls. That included $98,000 in fees to Galileo and $160,000 in rent for a former bank building that has remained empty since the IDA signed a five-year lease for it eight months ago.