By ADAM SICHKO
The Albany Business Review

The head of the state Office of General Services has asked gubernatorial candidate Carl Paladino to forfeit a pending state lease following a scandal involving explicit e-mails.

Paladino is owner of Ellicott Development Co. The Buffalo company has almost 30 leases with the state, and dominates the downtown Buffalo commercial real estate market.

Paladino is vying for the Republican and Conservative party nominations for governor; he also draws support from some in the Tea Party. Paladino said he will spend at least $10 million of his own money to fund his campaign.

Paladino's company was the low bidder for a 10-year lease of 22,000 square feet for the state Workers' Compensation Board. Paladino won a lawsuit against the state last year over a prevailing-wage clause in the lease.

But OGS Commissioner John Egan has asked Paladino to withdraw from the pending lease, which has not been finalized and remains under review by OGS.

In an April 14 letter, Egan said he was "very disturbed" by reports last week from WNYMedia.net revealing a series of racy, graphic e-mails Paladino had forwarded to friends and associates over the past couple years.

Examples posted on the Web site include videos of pornography and purported bestiality, and a clip of African tribesmen dancing with the title "Obama Inauguration Rehearsal." Another e-mail included racial slurs against blacks.

"As a landlord doing business with the State of New York, I expect you to conduct yourself in a professional manner," Egan wrote to Paladino. "The lack of respect these e-mails show for the rights of minorities and women is of great concern to me, both as commissioner and as a citizen of this state."

Paladino's companies receive $5 million a year in lease payments from OGS alone. Paladino is the landlord for half of the state's 50 leases in Erie and Niagara counties.

Paladino, a lawyer, believes Egan is "a consummate professional," said Michael Caputo, a spokesman for Paladino. Caputo accused Gov. David Paterson and "his cronies" of politicizing the state leasing process.

"Carl Paladino's companies won that lease the way they do all their leases, by bidding lowest and providing the highest-quality services," Caputo said. "Carl will not voluntarily walk away from any agreement he has, for any reason, especially a politicized one. There is no way.

"If the governor wants to inject politics into the leasing process, we will see him in court. And he will lose, again," Caputo said. "When it comes to awarding contracts to cronies, he is willing to bend, or even break, a law. This is more politics as usual in Albany."

Caputo said the e-mails were a smear campaign orchestrated by Democrats.

On his campaign Web site, Paladino added these comments about the e-mails: "I'm not a racist. I'm not a sexist. I am average. I'm not proud of everything I've done in my life - who is? - but I sure as hell don't run from anything I've done in my life."