To justify tax breaks in one instance, he sold a dozen vacant lots he owned to himself and claimed hundreds of thousands of dollars in "real property investments." Seven years later, these "investments" remain what they were - vacant lots.

His Empire Zone investments consisted mostly of renovating his own buildings - $19 million worth. He completed no new construction and brought no new businesses in any of his Empire Zone projects.

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That's because they pay the rent for many of his Empire Zone buildings tenants: state agencies, from the Department of Transportation to the state controller to the Erie County Department of Social Services. There are 20 publicly funded leases in all. Caputo did not answer any questions regarding what percentage of Paladino's rent comes from the government.