It's interesting that two people can look at the same exact set of facts and come to different conclusions. I feel that option 1 is more likely, given Ralph's unshaken loyalty to WNY in the past, and the fact that JK has no reason to lie -- what would that gain him?
I agree, though, that something is definitely going on here... and wouldn't doubt for a second that the uncertain tax laws might have something to do about it.