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ANALYSIS By Mike Hudson

"My administration is scandal-free." -- Paul Dyster, April 25, 2011.

Agents from the Federal Bureau of Investigation, joined by retired FBI agents from the Inspector General's office of the Laborer's International Union of North America, are probing a contractor hired repeatedly by the Dyster administration in recent months to do demolition work for the city.

Rico Liberale, who was named as an unindicted co-conspirator in the government's 2005 racketeering case against the leadership of Laborers Local 91 here and subsequently served as an informant in that case, is at the center of the investigation. He is a co-owner of Regional Environmental Demolition (RED), a company that as recently as last month was not bonded.

In March, RED was awarded an emergency contract to demolish what remained of the Pierce Avenue Presbyterian Church, which had been destroyed by fire. The city was charged $128,000 for the job, which several contractors contacted by the Niagara Falls Reporter last week said shouldn't have cost more than $50,000 or $60,000. Arson was suspected in the fire. The building was uninsured.

RED has also demolished as many as 10 houses for the city, at an average cost of $18,000 apiece.

The company is a favorite of City Inspector Dennis Virtuoso, whose son, Vincent, has worked for RED in the past. Virtuoso, who also accepted $700 in campaign contributions from the local while Liberale was in charge of the union's political committee, has repeatedly chosen RED over interested insured contractors.

"Why would the city hire an uninsured, un-bonded contractor?" asked Local 91 Business Agent Dick Palladino last week. "If something went wrong, if somebody got hurt or, God forbid, killed, that would fall directly on the backs of the Niagara Falls taxpayers."

Federal agents and union officials are looking into allegations that Liberale threatened Local 91 members by telling them that his close ties to the FBI and the Department of Labor would allow him to get them into trouble for doing non-union side work, a practice common among construction workers during down time and seasonal slowdowns.

Five workers have discussed the alleged threats with investigators.

Liberale served as Local 91's secretary-treasurer until last May, when he was voted out of office along with former business manager Rob Connolly. But back in 2005, he was identified by the United States Justice Department as a member of the local's "Goon Squad," a select group of enforcers who sabotaged worksites, administered beatings and conducted violent pickets at non-union construction jobs.

According to the federal indictment, Liberale was involved in the destruction of property during the construction of the Target store and the Delta Sonic car wash on Military Road in 1996 and 1997. Later, he was in business with convicted embezzler Tony Fazzolari.

Late last year, Liberale formed Regional Environmental Demolition with partner Chuck Van Epps, and contracts issued by the Dyster administration began rolling in. The most lucrative part of the city work came in the form of emergency demolitions, which require no City Council approval.

"I've never heard of this company and I had no idea they were doing this amount of work for the city," said Councilman Bob Anderson.

Anderson pointed out that, since the city dropped its insurance coverage in favor of self-insuring shortly after Dyster was elected to office, the taxpayers are directly liable for any claims that might be made against a company like RED when it is doing work under a city contract.

The emergency demolitions are the purview of Dyster's revamped Code Enforcement Department, formerly known as the inspections department. The name change occurred after August 2009, when Dyster suspended former building commissioner Guy Bax and inspectors George Amendola and Pete Butry based on some nebulous allegations about their association with John Gross, a prominent and respected local contractor who had a brush with the law back in the 1990s.

"The way I would look at it, we're draining the swamp," Dyster said at the time. "When you drain the swamp, it gets easier to see the alligators. Then, as you drain the swamp, you find more alligators. You get rid of those alligators. You keep draining the swamp. You'll probably find some more alligators."

Although Dyster presented the trumped-up charges to the FBI, no charges were ever filed against Bax, Amendola or Butry. After getting rid of Bax, Dyster elevated Virtuoso, who is also the leader of the Democratic caucus in the county Legislature.

The bloodbath suffered by the Democratic Party here over the past two years, which claimed former state senator Antoine Thompson, state assemblywoman Francine Del Monte, former Lewiston supervisor Fred Newlin and former North Tonawanda mayor Larry Soos, has left Dyster and Virtuoso as the only prominent Democrats standing.

The two are joined at the hip and their political fortunes intertwined.

The current investigation centers on threats allegedly made by Liberale against Local 91 workers. In an interesting twist, the workers say they're being threatened with the FBI rather than property damage.

"Our guys are being told that this contractor is working with the FBI and the Department of Justice, and that they are going to have problems should they try and pursue any complaints against them," Palladino said. "I've got a big problem with that."

Why would Virtuoso, Dyster's closest political ally, repeatedly hire a new and relatively inexperienced non-union company with insurance issues to do emergency demolition work when any number of established and reputable firms are going begging?

Why would Dyster, who told a Buffalo News reporter just last week that the signal accomplishment of his nearly four-year reign is that it is "scandal free," continually sign off on contracts worth hundreds of thousands of dollars with a company run by a man named as an unindicted co-conspirator in a federal racketeering case?

Both men have six months before Election Day to explain themselves to city voters, who will judge them by their actions rather than their words. The hemming and hawing expected to ensue should prove interesting, if not downright hilarious.

Niagara Falls Reporter www.niagarafallsreporter.com May 3, 2011