Byron Brown was in trouble.
Federal prosecutors were weighing the possibility of pressing the then-Mayor of Buffalo with wire fraud charges.
Investigators from the FBI and other federal agencies found that Brown had declined to give final approval to an affordable housing project on Buffalo’s East Side, allegedly because the project’s developers refused to give a Brown ally a five-figure consulting contract.
It was this investigation that directly led federal agents to raid City Hall in 2019. But, the probe into the former mayor didn’t end there, documents newly obtained by BTPM News from the Department of Housing and Urban Development Office of Inspector General show.
Then the U.S. Supreme Court nipped any potential prosecution of Brown in the bud.
In a 9-0 decision, the high court overturned the conviction of Louis Ciminelli, a contractor convicted of bid rigging Gov. Andrew Cuomo’s Buffalo Billion initiative, ruling that “depriving a victim of economically valuable information” by rigging a bidding process didn’t constitute wire fraud — for Ciminelli or anyone else.
Citing that decision, prosecutors decided in July 2024 not to charge Brown with wire fraud, according to documents obtained by BTPM News.
The documents also show that:
- The FBI had investigated Brown — as many had speculated — since at least 2012 and had “conducted surveillance” of the then-mayor;
- Brown was one of the targets of a court-ordered raid on City Hall carried out by the FBI, HUD OIG and IRS;
- Federal prosecutors and HUD OIG opened a separate criminal probe — which appears to be ongoing — into allegations that Brown and other city officials misused federal housing money and “steered” lucrative contracts to Brown administration allies.
Brown declined to comment through a spokesperson.
Brown resigned as mayor in September 2024 after winning an unprecedented fifth term as mayor in 2021 as a write-in candidate. He now earns north of $300,000 a year heading Western Regional Off-Track Betting, a public benefit corporation with a checkered past.
A State Comptroller’s Office audit of WROTB released in April found “poor oversight of operations by the board of directors, cost overruns and significant estimation errors,” as well as declining gambling revenue. Previous audits in 2021 found that WROTB gave away 547 sports and concert tickets worth at least $121,000 to its own officials, employees, and other individuals, as well as “lax oversight” from the corporation’s board. That board drew the ire of some state lawmakers — including now-Buffalo Mayor Sean Ryan — in 2024 for approving “golden parachute” severance packages collectively worth nearly $500,000 for three outgoing executives. The lawmakers say those buyouts violate state law.
‘That’s not something the FBI is gonna take lightly’
The FBI’s probe of Brown stems from the “East Side Housing Opportunities II” project, which would’ve created 50 single-family homes and a community center on city-owned vacant lots in Buffalo’s Masten Park and Cold Springs neighborhoods with the help of $1.6 million in federal anti-poverty dollars.
By mid-2009, the project’s developer was “prepared to begin construction as soon as Mayor Brown signed off on certain final matters,” according to a panel of federal appellate judges ruling in an eventual civil case. Brown himself testified that he and the city “were trying to move this project forward” and that he “had every intention of supporting this project.”
Brown never put the proposal before the Common Council.
According to the fact pattern laid out in HUD OIG’s investigative file, Brown administration officials told the project’s developers that Brown and the Common Council wouldn’t sign off on the project unless they contracted a firm run by Brown ally and Bethel African Methodist Episcopal Church Pastor Richard Stenhouse for minority representation and property management.
The project developers — Belmont Housing Resources for Western New York and Cleveland-based developer NRP — issued a request for proposal and ultimately selected a 12-page, $40,000 bid from the University at Buffalo’s Center for Urban Studies over Stenhouse’s three-page, $80,000 proposal.
The developers chose UB’s bid. Steven Weiss, a Buffalo-based lawyer who represented NRP in its dealings with the city, testified in civil court that Brown told him, among other things, “I told you what you had to do, and you hired the wrong company.” Weiss declined to comment for this story.
Brown was in a position to block the project due to his joint positions as mayor and Chairman of BURA’s board, an arrangement that HUD investigators called “a conflict of interest” that allowed Brown “to approve grants for his supporters.”
“That’s a very sensitive investigation when you’re searching an area in city hall,” Brian Burns, a special agent with the FBI Field Office in Buffalo, said when asked about how much weight should be given to the fact pattern laid out in the investigative report. “That’s not something the FBI is gonna take lightly. We obviously have a lot of strict guidelines regarding that.”
Brown previously maintained that he vetoed the affordable housing project late in the process over concerns about the project’s rent-to-own structure, its scattered building sites and the fact that many housing projects were built by “out-of-town white developers,” according to court documents and media reports.
In the course of their investigation, HUD OIG and the FBI interviewed city insiders and others, seized evidence during several searches including their raid of city hall, “obtained information from city executives who became cooperative with the investigation” and from their surveillance of Brown.
Even if the allegations were true, Brown’s actions wouldn’t constitute wire fraud under the Supreme Court’s 2023 decision in Ciminelli v. U.S.
“Anytime you get a ruling from the Supreme Court, it will impact other cases, and I think in this case it happened,” Peter Ahearn, a former special agent in charge of the FBI’s Buffalo Field Office who had no insider knowledge of the investigation, said in an interview.
Stenhouse was the only person charged as a result of the criminal investigation. He ultimately pleaded guilty to one felony count of filing a false tax return in 2021 for failing to declare nearly $400,000 in income from the Bethel African Methodist Episcopal Church from 2014 to 2018.
“In all cases, you might cast a wide net, but then if your charging theory kind of falls apart, there’s always gonna be some — you know, not collateral — but you’re looking at different schemes,” Burns said. “You might not get the whole scheme and all the co-conspirators, but still, if you find a specific crime that’s kind of carved out, you’re certainly gonna charge that out.”
Stenhouse paid about $95,000 in back taxes without interest and was sentenced to pay a $5,500 fine and a $100 fee, according to court documents. He served no time, despite prosecutors’ recommendation in a plea agreement that he serve 10-16 months in prison.
Stenhouse declined to comment.
Dr. Henry Louis Taylor, Jr., the director of UB’s Center for Urban Studies and a co-author of the bid that NRP selected over Stenhouse’s, said the reverend did have “something good” in him even though “he got in trouble later.” Taylor and Stenhouse discussed the project at the time — and they both shared a mistrust of Cleveland-based NRP.
“It was nobody interested in how you build and grow and develop the Black community,” Taylor said. “It was a market, a commodity, profit making, wealth accumulation — and that was all it was.”
Stenhouse also settled a federal civil suit brought by NRP for $200,000 in 2012, according to The Buffalo News. An appeals court ruled in 2019 that NRP could not sue Brown and other city officials because of legislative immunity, but the judges noted that NRP’s claims were backed by “substantial evidence.”
“It can reasonably be inferred that the City would have approved the Project had NRP only agreed to pay the Mayor’s ally for services in an amount that might be subject to question,” the judges wrote in their opinion.
Had the project gone forward, it would’ve built 50 single family homes and a community center on 51 lots on the East Side.
Today, 18 years later, 47 of those 51 lots are still vacant, according to tax assessment rolls and a review of the lots by BTPM News.
An open investigation into the former mayor?
Federal prosecutors might’ve declined to charge Brown in the Stenhouse case, but Buffalo’s longest serving mayor might not be out of the woods just yet.
BTPM News’ FOIA document request asked for “the investigative field notes and conclusions of any HUD OIG investigations that ended between Nov. 5, 2019 and May 18, 2026 [emphasis added] of Buffalo city government, BURA, or any employee thereof.”
That request turned up the civil investigative file, but not the file for the criminal probe.
A spokesperson for HUD OIG said the agency has a policy “to neither confirm nor deny any investigative actions that may or may not be underway.” A spokesperson for the U.S. Attorney’s Office did not respond to a request for comment in time for publication.
In 2019, the U.S. Attorney’s Office and HUD OIG opened parallel civil and criminal investigations into BURA, Brown and other subjects whose names were redacted, according to a report of investigation for the civil probe. Federal agents opened the cases to examine allegations brought by former BURA Executive Director Nona Watson, who had sued the city for retaliating against her when she spoke up about her concerns. Watson’s lawsuit said that BURA misused HUD funds on city expenses and that Brown and then-Executive Director of the city’s Office of Strategic Planning Brendan Mehaffy were “steering” contracts to Brown allies, chiefly David Pawlik.
(Watson, Mehaffy and Pawlik’s names were both redacted in the investigative report. BTPM News identified them using unredacted details and related court filings.)
Federal investigators also interviewed another former BURA employee (whose name was redacted) who “alleged BURA did not follow the required guidelines for selecting developers and noticed CSS [Pawlik’s company] was frequently selected as the developer for BURA projects.”
Pawlik and his company, Creative Structures Services, had donated $17,530 to Brown’s campaign by the time Watson left BURA in late 2019. A 2021 Buffalo News analysis found that BURA doled out $20 million in housing funds to contributors to Brown’s reelection campaigns — including Pawlik — over the course of eight years.
“If true,” civil investigators wrote of Watson’s allegations, “this is a clear conflict of interest in the least.”
Watson, Mehaffy and Pawlik all did not respond to requests for comment.
The civil investigation didn’t get very far. Investigators in the USAO’s Civil Division requested documents from the joint criminal investigation in 2021 and never got a response.
With just two witness interviews, no documents and a “lack of investigative resources,” investigators closed the civil probe in 2023 and declined to intervene on behalf of Watson in a civil suit against the City of Buffalo.
Without backing from the federal government, Watson dropped her lawsuit days later, resulting in its unsealing and a slew of headlines.
“They seemed to take the allegations seriously, and they just chose to not move forward with them,” Harvey Sanders, the attorney who represented Watson, said in an interview. “You can lead a horse to water, you can’t make it drink, right?”
But investigators never closed their criminal probe, which appears to be open to this day.
Investigators on the civil case noted in March 2023 that they closed the probe in part because “the criminal investigation of BURA takes precedence over this civil litigation.”
Sanders said he had no knowledge of the criminal probe, but he said its existence “didn’t surprise” him.
“All I can say is that based on my interactions with my client, I thought there was some inappropriate conduct going on there,” Sanders said. “I’d be happy to hear if they did have some findings with that.”
HUD OIG’s investigative file for the parallel civil case noted in March 2023 that there was no “indication that the criminal investigation will come to fruition soon.”
The investigation was “administratively closed” by HUD OIG, meaning it could be brought back in response to any new evidence, according to Ahearn and Burns.