BUFFALO – Attorney General Eric T. Schneiderman today announced that his office has filed two lawsuits and has reached one settlement against contractors accused of price gouging during last November’s massive snowstorm in Greater Buffalo. The contractors are accused of inflating the price for goods and services during the snow storm. In some areas, the storm resulted in up to 7 feet of snow and the declaration of a state of emergency. Under New York State’s price gouging law (General Business Law 396-r), merchants are prohibited from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during an “abnormal disruption of the market,” including severe weather events.

“The people of Western New York pull together during tough times, and that spirit was on full display when the vast majority of neighbors were helping neighbors during the Buffalo snowstorm last November,” said Attorney General Schneiderman. “Unfortunately, there are people who attempted to exploit this emergency to take advantage of those in need, and today we are taking the first step towards holding people accountable.”

The Attorney General’s Office first issued a warning to contractors against price gouging when a state of emergency was declared following the November storm and encouraged consumers to file complaints about suspected cases of price gouging. The action taken today stems from approximately a dozen complaints received against the three contractors.

The lawsuits and settlement announced today by Attorney General Scheiderman’s Office include the following:

Collingwood Construction

The Attorney General’s Office received complaints against this company for charging $2,000 or more for the company to remove snow from consumers’ roofs in the Town of Cheektowaga and the Lexington Green neighborhood in the Town of West Seneca. The Attorney General’s investigation confirmed that consumers were allegedly charged $2,000 or more to have snow removed from their roofs, and, in several other cases, consumers were allegedly charged between $1,400 - $1,900. The Attorney General's lawsuit alleges that, in most cases, the company failed to remove all snow from roofs, as it only agreed to remove 4 feet of snow from the gutter upward, leaving a significant amount of snow left on the roofs. The investigation further revealed that some of the jobs appeared to take less than an hour for the crew to complete. The average going rate for roof snow removal was in the $500-$600 range and the Attorney General’s office believes that the rates charged during the storm were unconscionably excessive and constitute price-gouging under New York law. 

In addition to the alleged snow removal issues, the Lexington Green neighborhood was devastated by flooding back in January of 2014. As a result of the flooding, approximately 70 homes were damaged. Neighbors are still working to recover all they lost, and as the warmer weather approaches, the potential for additional flooding is a very real concern. In an effort to prevent future flooding, the Army Corp of Engineers and town officials are teaming up for a study of the ice jam flooding problem.

Action: A lawsuit has been filed against Collingwood Construction seeking restitution for consumers, a civil penalty of $25,000, and an injunction against Collingwood Construction prohibiting it from offering any consumer services at an unconscionably high price.

Buffalo and Orchard Park Topsoil

The Attorney General’s Office and the company reached a settlement after the office received several complaints against this company for charging up to $650 to remove snow from consumers’ driveways during the November 2014 storm. The Attorney General’s investigation revealed $650 was at least double what other contractors were charging for the same service. The company agreed to pay restitution to each consumer in the amount it paid in excess of $300, and a fine in the amount of $150 per occurrence.

Action: The Attorney General’s Office reached a settlement with Buffalo and Orchard Park Topsoil. The company agreed to pay restitution to each consumer in the amount it paid in excess of $300, and a fine in the amount of $150 per occurrence.

Charles Cooper

The Attorney General’s Office filed suit against Charles Cooper, an individual from Lodi, NY (Central NY) who holds himself out as the owner of C & C Construction. The Attorney General’s Office received a complaint against Cooper for charging a homeowner in the Town of Alden $2,000 to remove snow from his roof. Cooper had initially demanded that the consumer pay $4,000, which the consumer refused. The suit alleges that Charles Cooper charged the homeowner an unconscionable price for snow removal services and engaged in price-gouging under New York Law.  The suit seeks restitution for the consumer, fines, a penalty in the amount of $25,000, and in injunction prohibiting Cooper from engaging in future price-gouging activity

Action: The Attorney General’s Office has filed a lawsuit against Charles Cooper seeking restitution for consumers, a civil penalty of $25,000, and an injunction against Cooper prohibiting him from offering any consumer services at an unconscionably high price.

The claims made in the lawsuits are allegations until proven in court.

ALBANY - Attorney General Eric T. Schneiderman and New York State Comptroller Thomas P. DiNapoli today announced the conviction and sentence of Graycelia Cizik, 64, a resident of Polk County, Florida. Cizik pleaded guilty on January 21, 2015 to a one-count Indictment charging her with the crime of Grand Larceny in the Second Degree, a class C felony. Today, she was sentenced to 2 to 6 years in state prison by Supreme Court Judge Roger D. McDonough in Albany County Court. Cizik also agreed to a judgment in favor of the New York State and Local Employees Retirement System in the amount of $121,772.72.

Under the plea agreement, Cizik admitted to stealing $121,772.72 in pension benefits issued by the Office of the New York State Comptroller, on behalf of the New York State and Local Employees Retirement System, to her deceased uncle, David Wynn. Wynn was a New York State pensioner who retired from the Port Authority of New York & New Jersey and died in 1988.

“We will aggressively pursue stiff penalties for those who rip off our retirement system and steal from retirees across our state who count on that money,” said Attorney General Schneiderman. “We will protect taxpayer dollars and prosecute those who misuse public funds.”

“Ms. Cizik scammed the New York State Retirement System and is now on her way to state prison for several years," Comptroller Thomas P. DiNapoli said. "We will continue to safeguard the state pension system and work with Attorney General Eric Schneiderman to punish those who defraud the pension fund.”

A joint investigation by the New York State Attorney General’s Office and the Office of the New York State Comptroller revealed that Cizik witnessed a cremation authorization form for Wynn when he died, but failed to notify the Retirement System of Wynn’s death. Instead, Cizik submitted false information to Wynn’s bank indicating that he was still alive, and utilized a power of attorney to access his account and withdraw pension benefits paid on his behalf during a twelve year period between June 30, 1997 and October 30, 2009.

The case is the latest joint investigation under the Operation Integrity partnership between the Attorney General and Comptroller, which has resulted in dozens of convictions and more than $6 million in restitution. Cizik was arrested in August 2014 by agents of the Polk County Sheriff’s Office in Florida, and extradited to Albany County to face the Indictment.

Attorney General Schneiderman and Comptroller DiNapoli thank the Polk County Sheriff’s Office in Florida for their assistance.

The Attorney General’s investigation was conducted by Investigator Dennis Churns and Deputy Chief Investigator Antoine J. Karam. The Investigations Division is led by Chief Investigator Dominick Zarrella.

The case was prosecuted by Assistant Attorney General Benjamin Clark of the Criminal Enforcement and Financial Crimes Bureau. The bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General T. Eric Schneiderman today announced that he has joined a coalition of states in filing an amicus brief in a federal Court of Appeals, asking that the court allow President Obama’s recent executive actions on immigration policy to take effect immediately, despite an injunction imposed by a federal district court judge in Texas.

“President’s Obama executive actions would give millions of undocumented immigrants the opportunity to come out of the shadows and stop living in fear,” Attorney General Schneiderman said. “By giving work authorization to people who are already living here, we can increase the states’ tax revenue and reduce demand for social services. And states benefit immeasurably when thousands of their citizens and legal residents are given relief from the threat of seeing a parent deported.”

It is estimated that the President’s executive actions will impact an estimated five million individuals. One executive action would expand the population eligible for the Deferred Action for Childhood Arrivals (DACA) program, which gives beneficiaries the right to work, to include all young people who came to this country before turning 16 years old and have been present since January 1, 2010. Another executive action would create a new Deferred Action for Parental Accountability program, which would make eligible for deferred action and work authorization individuals who are parents of U.S. citizens and lawful permanent residents, who have been in the country since January 1, 2010, and who pass background checks.

The brief was filed in Texas v. United States, a legal challenge by Texas and other states to the President’s authority to take executive action on immigration. The Washington State Attorney’s General Office authored the brief, which was joined by the attorneys general of California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, New Mexico, New York, Oregon, Rhode Island, and Vermont.

For more information on the president’s executive action, including guidelines, forms and timelines, please click here.

NEW YORK - Attorney General Eric T. Schneiderman and New York City Department of Investigation (DOI) Commissioner Mark G. Peters today announced the sentencing of Chan Jamoona and Veda Jamoona convicted of conspiring to steal more than $50,000 from a lunch program for senior citizens run by the nonprofit United Hindu Cultural Council of USA North America Inc. (UHCC)  by falsifying documents related to the lunch program with another defendant, the caterer for the lunch program who admitted to giving kickbacks to the Jamoonas.  Chan Jamoona was sentenced by the Honorable John B. Latella in New York State Supreme Court for Queens County to five years probation and a $45,000 fine; Veda Jamoona was sentenced to three years probation and a $5,000 fine.

The defendants were convicted on November 21, 2014 after a jury trial for crimes related to their scheme to steal money from the New York City Department for the Aging (“DFTA”) by submitting false monthly Contract and Service Invoice Reports to DFTA containing inflated numbers of seniors receiving lunches at the United Hindu Cultural Council (“UHCC”) senior center and inflated costs of the lunches provided by Sonny’s Roti Shop (hereinafter referred to as the “Roti Shop”).  Defendant Chan Jamoona was convicted of eleven Class E felony counts, including Conspiracy in the Fourth Degree, Grand Larceny in the Fourth Degree, seven counts of Falsifying Business Records in the First Degree, and two counts of Offering a False Instrument for Filing in the First Degree.  Defendant Veda Jamoona was convicted of a Class E felony count, Conspiracy in the Fourth Degree.  Prior to the trial, on June 20, 2013, the Roti Shop owner, Steven Rajkumar, pleaded guilty to Falsifying Business Records in the First Degree and was sentenced to a conditional discharge and restitution of $25,000.

“These defendants stole from the senior center lunch program, putting personal greed ahead of the basic needs of New York seniors,” Attorney General Schneiderman said. “When it comes to services vital for our seniors, we cannot accept fraud as a cost of doing business. My office will prosecute fraud in critical New York programs to the fullest extent of the law.”

DOI Commissioner Peters said,“UHCC executives deliberately and cynically stole funds that should have been used to provide food and services for elderly clients. Not-for-profit organizations that take advantage of our seniors ‎have no business receiving public funds."

The indictment charged the two former UHCC executive directors—Chan Jamoona, 68, of Queens and her daughter, Veda Jamoona, 30, of Manhattan and Queens—of perpetrating a long-running scheme in which the senior center operator inflated bills submitted to New York City’s Department for the Aging (DFTA). To carry out the scheme, the indictment alleges that the defendants directed UHCC workers to falsify invoices from the senior center’s caterer, Sonny's Roti Shop in Queens, and provide fake signatures on sign-in sheets.  The indictment also alleged that the owner of Sonny's Roti Shop, Steven Rajkumar, 57, of Queens, then kicked a portion of the inflated payments back to Chan Jamoona.  

The case was prosecuted by Assistant Attorney General Jihee G. Suh and Senior Counsel Wanda Perez Maldonado. The Public Integrity Deputy Bureau Chief is Stacy Aronowitz. The Chief is Daniel Cort.  Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice. The joint investigation between the Attorney General's Office and DOI began after referrals from DFTA and the New York State Office for the Aging.

Attorney General Schneiderman and DOI Commissioner Peters thanked DFTA and the New York State Office for the Aging for their assistance provided during the investigation. They also recognize the diligent work of OAG staff, including Legal Support Analysts Casey Lasda, Morgan McCollum, and Kerry Ann Rodriguez, and, from the Investigations Bureau, Investigators Sixto Santiago, Gerard Matheson, Sal Ventola, Anna Ospanova, and Elsa Rojas, Supervising Investigator Michael Ward, Deputy Chief John McManus and Chief Dominick Zarrella; and DOI staff, including  Chief Forensic Auditor Ivette Morales and Special Investigator Nicole Clyne. 

Anyone with additional information on this matter or any other public corruption is encouraged to contact the Attorney General’s Office at 1-800-996-4630.

HAUPPAUGE – Attorney General Eric T. Schneiderman announced today that two individuals responsible for illegally reselling or “flipping” puppies through their Suffolk County-based nonprofit, Precious Pups Rescue, Inc., have been permanently barred from engaging in any for-profit or not-for-profit activity relating to animals in any way. The respondents, who sold sick dogs to unsuspecting consumers, are also ordered to pay more than $24,000 in restitution and penalties for their deceptive business practices.

“Pets are companions and important members of many New York families. Consumers deserve to know that their puppies were healthy and raised in a safe place,” said Attorney General Schneiderman. “Through our Animal Protection Initiative, my office is committed to ensuring the humane treatment of dogs and cats by all sellers. We will take aggressive action against anyone who endangers innocent animals and, in turn, the New York consumers to whom those pets are sold.”

LauraZambito, 43, of Lake Ronkonkoma, N.Y., and Rose Torrillo-Hooghkirk, 61, of Calverton, N.Y., obtained, or “pulled” puppies from both in-state and out-of-state shelters, sold them to consumers, and pocketed the so-called “adoption fees” or “donations” of $200 to $600 per dog. Zambito and Torrillo-Hooghkirk, who were not licensed pet dealers, initially kept the puppies in Torrillo-Hooghkirk’s home, and then expanded their Precious Pups operation to a commercial storefront located at 4466 Middle Country Road in Calverton.

Zambito and Torrillo-Hooghkirk sold consumers dogs that they claimed were healthy, vaccinated, spayed or neutered, and evaluated by a veterinarian, when in fact, they were not. In fact, the dogs had visible signs of illness, such as coughing, scratching, matting and sores. Afterwards, consumers learned that their dogs suffered from a variety of illnesses, including distemper, heartworm, pneumonia, sarcoptic mange (scabies), and tick infestation. Some of these illnesses not only caused other dogs in consumers’ households to become sick, but have caused the consumers themselves to become ill, requiring medical treatment. In addition, many of these pets required prolonged veterinary care, causing consumers to incur thousands of dollars in veterinary bills.  Several dogs died, and some suffered such severe medical or aggression issues that they had to be euthanized. 

In the past year, the Attorney General’s Office has received approximately fifty complaints from consumers about Precious Pups’ business practices. 

As a result of a court order, Zambito and Torrillo-Hooghkirk are permanently barred from selling, rescuing or fostering animals or becoming pet dealers in New York State. In addition, they are prohibited from soliciting, receiving or holding any funds for any charitable organization, or act in a managerial capacity of any charitable organization for a period of ten years, and must dissolve Precious Pups Rescue, Inc. Furthermore, Zambito and Torrillo-Hooghkirk are ordered to pay $14,090 in restitution and a $10,000 penalty. Zambito was also required to sign a $20,000 confession of judgment, which can be docketed in the event that she is found to be in violation of the consent order.

Pursuant to the court order, consumers who purchased sick dogs from Precious Pups Rescue, Inc. and would like to be considered to receive restitution have 30 days to file a complaint with the Office of the Attorney General, Suffolk Regional Office, 300 Motor Parkway, Suite 230, Hauppauge, New York 11788.

In May 2013, Attorney General Schneiderman was the first state attorney general to launch an Animal Protection Initiative, which is committed to ensuring the humane treatment of dogs and cats by requiring pet dealers to guarantee the good health of any such animal sold by a pet dealer to a consumer. Consumers who suspect animal cruelty can file a complaint or give an anonymous tip to the Attorney General’s Helpline at 1-866-697-3444.

This case was handled by Rachael C. Anello, Assistant Attorney General, Suffolk Regional Office, with the assistance of Lori L. Pack, Assistant Attorney General, Suffolk Regional Office, and Debra K. Siegler, Paralegal, under the supervision of Kimberly A. Kinirons, Assistant Attorney General-In-Charge, Suffolk Regional Office, and Marty Mack, Executive Deputy Attorney General for Regional Affairs.  This case was investigated by Paul Matthews, Attorney General Senior Law Department Investigator and Andre Job, Law Department Investigator.

A copy of the consent order and judgment can be read here.

NEW YORK – Attorney General Eric T. Schneiderman today announced that New York, along with 49 other states and the District of Columbia have reached a settlement with Daiichi Sankyo, Inc. (Daiichi), a global pharmaceutical company with US headquarters in New Jersey. The settlement resolves allegations that Daiichi violated the False Claims Act by using lavish meals and speaker programs to improperly induce physicians to prescribe the drugs Azor, Benicar, Tribenzor and Welchol. Under the agreement, Daiichi agrees to pay the United States and the state Medicaid programs 39 million dollars, 10 million dollars to the state Medicaid Programs and 19 million to other Federal programs. Under this agreement, the New York State Medicaid program will receive $2,339,671.

“This settlement sends the message loud and clear: My office will hold accountable companies that attempt to improperly influence physicians for the benefit of their bottom line,” Attorney General Schneiderman said. “A physician’s decision concerning what drugs to prescribe should be based on what is best for the patient, not what perks they may get from a drug company.”

The settlement resolves allegations that Daiichi caused the submission of false claims for reimbursement by the Medicaid program (and other federal programs) for Azor, Benicar, Tribenzor and Welchol. The claims were false because they resulted from kickbacks that Daiichi provided to prescribing physicians. Specifically, the agreement alleges that the kickbacks took the form of honoraria payments, meals and other remuneration to physicians who participated or supposedly participated in physician opinion & discussion programs from January 1, 2005 through March 31, 2011 and other speaker programs from January 1, 2004 through February 4, 2011.

It is contended that the programs were in fact kickbacks because the physicians were paid by Daiichi even if the physician spoke only to members of his or her own staff in their office; physician participants took turns accepting “speaker” honoraria for duplicative discussions; the audience included the honoraria physician’s spouse; the speaker was paid even if the event was cancelled beforehand; and/or the dinners were lavish and even exceeded Daiichi’s own internal cost limitations of $140 per person.

The Federal Anti-Kickback Statute was enacted so that physicians’ medical judgment was not influenced by improper payment or gifts. The statute prohibits anyone from offering, paying, soliciting or receiving such remuneration to induce referrals of services covered by federal health care programs including Medicaid.

The New York State Medicaid Fraud Control Unit led a national team from California, Massachusetts and Maryland working with the Department of Justice and the United States Attorney’s Office for the District of Massachusetts in investigating this matter. The US Attorney’s office for the District of Massachusetts announced the federal settlement in January.

The settlement stems from a complaint filed by whistleblower, Kathy Fragoules, a former Daiichi sales representative, under the Federal and New York State False Claims Act, which authorize private individuals to sue on behalf of the State of New York and the Federal Government. The Attorney General would like to thank Ms. Fragoules for her efforts in bringing this matter to light.

The national team was led by Jay Speers, Counsel to the Medicaid Fraud Control Unit (MFCU), also part of the national team from New York were Senior Auditor/Investigator Matthew Tandle and Supervising Auditor/Investigator Michael Beers. The MFCU is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman tonight offered a sharp critique of Albany's long history of ethical lapses and past claims of reform, and made comprehensive proposals to fundamentally change New York State government by striking at the root causes of corruption.  

During remarks delivered at a forum hosted by the nonpartisan good government group Citizens Union, the Attorney General outlined what he believes is required to help “cure the disease” of public corruption, including a total ban on outside employment income for legislators, an end to per diems, rules reform to empower individual legislators, and a constitutional amendment to extend legislators’ terms from two to four years. The Attorney General also proposed a comprehensive overhaul of New York’s campaign finance system.  

The Attorney General’s proposed legislative changes go further than any package previously proposed by a statewide elected official or legislative leader.

“We have more vigorous cops on the beat, defending the public trust, than ever before – but prosecutors can only respond to the symptoms of a system that is very, very ill,” said Attorney General Schneiderman. “To cure the disease, we must break a pattern in which scandal is followed by outrage, which is followed by reforms that largely tinker at the margins, and a press conference declaring that the problem has been solved, which is ultimately followed by another scandal. It looks to the people of New York like one charade after another.”

Attorney General Schneidermancontinued, “The people of this great State demand comprehensive, fundamental reforms. They deserve nothing less.”

Attorney General Schneiderman praised Governor Andrew M. Cuomo for pushing ethics reform as part of the State budget process, but called for more dramatic changes, even if doing so delayed enactment of the budget.
 
“The Governor has proposed to enact some reforms through this year’s State budget,” said Attorney General Schneiderman.“We should support his leadership in using this perfectly constitutional mechanism.  In fact, I would urge the Governor to hold out for even bolder reforms, including the proposals I have outlined.  In doing so, he would have the support of both the Constitution and the people of the State of New York.  A late budget would be a small price to pay.”

“Citizens Union applauds Attorney General Schneiderman for his aggressive and full-throated proposals to end the corrosive culture of corruption in Albany that has put too many elected officials behind bars and taints the many good lawmakers who serve well the public interest,” said Dick Dadey, executive director of Citizens Union, which hosted tonight’s public forum on ethics. “Our ethics laws need to be further strengthened to reduce conflicts and bolster enforcement.  Our campaign finance laws need to be reformed to reduce the influence of money on our political system. And legislators’ compensation needs to be overhauled so we can attract the best to Albany.  Attorney General Schneiderman’s bold proposals adds his strong voice to a crescendoing effort to not only change our state’s laws, but to change how the people’s business is done in our state capitol.”

"The Attorney General has proposed a comprehensive set of reforms which, if adopted, would go far to reduce conflicts of interest and transform the ethical climate in Albany,” said Richard Briffault, a Columbia Law professor and panelist at tonight’s public forum.

"New Yorkers can no longer afford a state government that is being bought by billionaires and their campaign cash,” said Karen Scharff, executive director of Citizen Action of New York.“We applaud Attorney General Schneiderman's far-reaching proposals for campaign finance reforms, including public matching funds, that are what's needed to finally reduce pay to play politics and corruption in Albany. AG Schneiderman is providing the kind of statewide leadership New York State needs."

“Attorney General Schneiderman is right – for years in Albany there has been too much patting ourselves on the back for passing piecemeal reforms, while the problem of corruption only grows worse,” said Lawrence Norden,deputy director of the Brennan Center's Democracy Program. “The nexus of big money, lack of enforcement, and some unscrupulous elected officials has entrenched a political system constantly beset by scandal. The only answer is comprehensive campaign finance reform, starting with a statewide public financing system to elevate the voices of average voters, who are too often forgotten amidst the search for big money. If coupled with other changes to address the conflicts of interest that pervade Albany and corrupt public policy, a cleaner, more representative New York State government is attainable.”

"The scandals of the last few years have shown that incremental steps are not enough," said Daniel R. Alonso, a former federal prosecutor who recently served as Manhattan Chief Assistant District Attorney."Attorney General Schneiderman's comprehensive set of reforms wisely focuses on preventing corruption before it happens, and puts New York State front and center in the fight against corruption in our midst."

Former United States Attorney for the Southern District of New York Benito Romano said, “Attorney General Schneiderman understands that New Yorkers not only need stronger enforcement  tools for fighting corruption, but also systemic reforms that make public service more transparent and ethical, allowing  honest, hard-working public servants to thrive.  I applaud his boldness and initiative here.”

In 2011, Attorney General Schneiderman and  State Comptroller Tom DiNapoli formed “Operation Integrity,” a first-of-its-kind joint task force using the State Comptroller’s power to refer cases involving the abuse of public funds to the Attorney General’s office to investigate and prosecute public corruption. This effort has led to more than sixty cases against state and local officials and their cronies, including the conviction of a sitting State Senator and indictments against members of the State Assembly and the New York City Council. But despite the efforts of the Attorney General’s Public Integrity Bureau and those of U.S. Attorneys across the State, the cycle of corruption persists, in part due to the negligible impact of marginal reforms previously enacted in the wake of public corruption scandals.

In order to end the ‘rinse-and-repeat’ cycle of scandal followed by public outrage, Attorney General Schneiderman proposed a sweeping package of reforms that would bring a meaningful transformation of the culture of Albany.  The Attorney General’s plan includes:

·         Ban Outside Employment Income For Lawmakers: Banning outside employment income for legislators – rather than simply introducing stricter disclosure requirements – would rescind a clear invitation for corruption. “In the 21st Century, it is impossible to avoid conflicts—or the appearance of conflicts—if legislators have outside employment,” said Attorney General Schneiderman.

·         Increase Salary For Legislators: In order to attract the best and brightest talent into public service, Attorney General Schneiderman proposed a significant salary increase for legislators. The Attorney General proposes a salary for State Legislators that is between what members of the New York City Council and members of Congress are paid, along with automatic cost of living increases going forward. 

·         End Per Diem Payments: Attorney General Schneiderman proposed ending per diem payments – which provide a daily allowance for legislators while in the Capitol – and replacing them with reimbursements for the actual costs of travel, with a cap on reimbursements.

·         Empower Individual Legislators:Attorney General Schneiderman also proposed reforms to the way the State Senate and Assembly operate that would empower rank-and-file lawmakers, as a means of attracting more talented people to legislative service.  He proposed making standing committees a more meaningful part of an open legislative process, and more equitable funding for legislative staff and offices.

·         A Four-Year Term For The Legislature: Calling it a “a game changer,” Attorney General Schneiderman proposed a constitutional amendment to change the length of legislators’ terms to four years, in order to end the two-year cycle of non-stop re-election fundraising and campaigning.

·         Amend The Penal Law To Prohibit Undisclosed Self-Dealing By Public Officials:  To address the Supreme Court’s decision in Skilling, which severely hampered the federal government’s ability to prosecute cases involving deprivation of “honest services” by public officials, New York State should enact a felony-level crime of “Undisclosed Self-Dealing” to target public officials who further their own financial self-interest while purporting to be acting on behalf of their constituents or government employer.

·         Provide The Attorney General’s Office With Concurrent Jurisdiction Over Public Corruption Crimes:  Through a “standing” order from the Governor, under Executive Law §63, the Attorney General should be empowered to investigate and prosecute public corruption crimes.

To address what he called “the stranglehold that political contributions have on our government,” the Attorney General’s plan also includes fundamental changes to New York State’s campaign finance system:

·         Public Matching Funds: A voluntary public matching funds and disclosure system should be enacted for state elections, modeled on the system that has been successfully implemented in New York City.

·         Dramatically Reduced Contribution Limits:  Campaign contribution limits should be dramatically reduced, including and especially for statewide officeholders, who are currently subject to the highest limits in the nation (excluding states without contribution limits).

·         Close The LLC Loophole: The loophole that allows limited liability corporations to funnel virtually limitless amounts of cash to campaigns must be closed.

·         Eliminate “Housekeeping Committees”: Housekeeping committees now operate as barely regulated slush funds for political parties and legislative campaign committees and must be eliminated.

·         Limit “Pay-To-Play” Contributions: Pay-to-play contributions must be limited in State campaigns as they are now in New York City elections.  Entities that do business with the State, their executives, and those who are paid to lobby state officials should be limited to making extremely modest campaign contributions.

·         Strengthen Enforcement Of Election Laws:  New York State should increase funding and support for the Enforcement Counsel at the Board of Elections, including increasing the number of auditors and investigators. 

To read the Attorney General’s full address, click here.

NEW YORK –Attorney General Eric T. Schneiderman and the U.S. Department of Justice today announced that they have reached a settlement with Coach USA Inc., CitySights LLC, and their joint venture, Twin America, LLC, to remedy the loss in competition in the New York City hop-on, hop-off bus tour market that occurred when the defendants combined to form an illegal monopoly. The settlement requires the defendants to relinquish approximately fifty bus stops across Manhattan controlled by City Sights, including highly coveted locations in Times Square and near the Empire State Building. They are also required to disgorge $7.5 million in profits obtained by operating their joint venture in violation of the antitrust laws between 2009 and 2015.

Attorney General Schneiderman and the Justice Department’s Antitrust Division filed a lawsuit in the U.S. District Court for the Southern District of New York in 2012 alleging that the March 2009 formation of Twin America violated the antitrust laws and resulted in higher prices for hop-on, hop-off bus tours in New York City. Today’s settlement, if approved by a court, resolves the claims alleged in the complaint filed in this case.

“By eliminating the competition between them, the largest operators of New York City’s iconic double-decker tour buses were able to raise prices and deprive city visitors of the benefits of a free and fair market,” said Attorney General Schneiderman. “This settlement allows competition to thrive once again, and ensures that these companies did not profit from operating an unlawful and anticompetitive joint venture. I thank the Justice Department’s Antitrust Division for partnering with my office to achieve this resolution for consumers in New York.”

“The formation of Twin America gave Coach and City Sights an unlawful monopoly over the New York City hop-on, hop-off bus tour market and allowed them to immediately increase prices to consumers,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “As a result of the joint efforts of the Antitrust Division and the New York Attorney General, Coach and City Sights will forfeit key bus stop authorizations throughout Manhattan to restore competition and surrender illegal profits they obtained from violating the antitrust laws.”

As alleged in the complaint, prior to the formation of Twin America, Coach, the long-standing market leader through its “Gray Line New York” brand, and City Sights, a firm that launched the “CitySights NY” brand in 2005, accounted for approximately 99 percent of the hop-on, hop-off bus tour market in New York City. Between 2005 and early 2009, the two companies engaged in vigorous head-to-head competition on price and product offerings that directly benefited consumers.

That competition ended in 2009 when Coach and City Sights joined to form a new entity, called “Twin America.” The formation of this joint venture provided Twin America with control over substantially all of the competitively-meaningful bus stops throughout Manhattan, and enabled them to increase hop-on, hop-off bus tour prices by approximately 10 percent. According to the complaint, Coach and its corporate parent, Stagecoach Group plc, had long assumed that combining with Coach’s only meaningful competitor would allow the merged firm to raise prices and communicated this assumption to City Sights during joint venture negotiations. In early 2009, over a period of approximately two months, Coach and City Sights did just that, implementing the joint venture and raising prices. The joint venture continues to operate both the Gray Line New York and City Sights NY brands today.

For more than three years following Twin America’s formation, there was no new entry or expansion in the market, and Twin America sustained the early 2009 price increases. Since 2012, although several firms have entered the market, they have been unable to obtain bus stop authorizations from the New York City Department of Transportation (“NYC DOT”) at, or sufficiently close to, top attractions and neighborhoods to meaningfully compete with Twin America. Bus stop authorizations are required for hop-on, hop-off operators legally to load and unload passengers. Both Coach and City Sights hold large portfolios of bus stop authorizations covering virtually all of Manhattan’s key attractions that the firms received from NYC DOT years ago, and before many locations were at capacity. The formation of Twin America gave them a dominant share of the competitively-meaningful bus stop authorizations in Manhattan.

The settlement with New York and the Department of Justice requires Twin America to divest all of City Sights’ Manhattan bus stop authorizations (roughly half of those held by Twin America) by relinquishing them to NYC DOT, the agency in charge of managing bus stop authorizations in New York City. The relinquished stops include highly-coveted locations such as the areas surrounding Times Square, the Empire State Building, and Battery Park, where rival firms have been chronically unable to obtain competitive bus stop authorizations. By increasing the NYC DOT’s inventory of bus stops and freeing up capacity at approximately 50 locations throughout Manhattan, the settlement will significantly ease the most intractable barrier to rivals being able to compete meaningfully with Twin America. The defendants will continue to compete in the market and hold Gray Line New York’s bus stop authorizations for its own hop-on, hop-off service.

The settlement also requires the defendants to disgorge $7.5 million in profits they obtained from the operation of their illegal joint venture, and as a result of their several year effort to forestall antitrust enforcement. This amount is in addition to $19 million that the defendants had already agreed to pay to a class of consumers to settle related private litigation brought after the filing of the government complaint. The New York Attorney General and the United States determined that the defendants earned profits in excess of $19 million from their unlawful monopoly and that disgorgement was particularly appropriate on the facts of this case – a consummated merger involving an anticompetitive price increase and deliberate attempts to evade antitrust enforcement. The payment of $7.5 million in disgorgement will deprive the defendants of ill-gotten profits they retained even after the class settlement, and deter future antitrust law violations.

Defendants took steps that led to the delay of this action and prolonged their unlawful monopoly position. Shortly after learning about the joint venture in the summer of 2009, the New York Attorney General’s office issued subpoenas to investigate the transaction. After receiving the subpoenas, the defendants delayed New York’s antitrust investigation by belatedly filing the Twin America transaction with the federal Surface Transportation Board (STB) and asserting, among other things, that as a result of certain minimal interstate operations held by the joint venture, the STB had exclusive jurisdiction to review the transaction. STB approval of the transaction would have precluded antitrust review.

During several years of litigation before the STB, New York submitted filings strongly objecting to the transaction on the basis that it was anticompetitive and that the STB process was being used by the defendants to interfere with antitrust enforcement. The STB ultimately agreed with New York’s position, rejecting the joint venture in early 2011 as not in the “public interest,” and expressing concern that the STB’s “processes may have been manipulated to avoid” antitrust review. The STB affirmed its ruling in early 2012, directing that Coach and City Sights either dissolve the joint venture or terminate the minimal interstate operations that provided the purported basis for exclusive STB jurisdiction. Later that year, the defendants chose to terminate the venture’s interstate operations. The New York State Attorney General and the Department of Justice filed their joint lawsuit challenging the transaction in December 2012.

The settlement also requires the defendants to establish antitrust training programs and that defendants will provide the government with advance notice of any future acquisition in the New York City hop-on hop-off bus tour market that is not otherwise reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act).

The New York Attorney General’s office conducted the investigation and litigation of this matter in close coordination with the Antitrust Division of the U.S. Department of Justice, and views the matter as an exemplary case of successful federal and state cooperation.

For the New York Attorney General’s office, the investigation and litigation of this matter were handled by Assistant Attorneys General James Yoon, Matthew Siegel, Jeremy Kasha, and Bureau Chief Eric J. Stock, all of the Antitrust Bureau, as well as Chief Economist Guy Ben-Ishai, Research Director Sumanta Ray, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

• Stipulation of Settlement
• Proposed Final Judgment

In 1882, 23-year-old Theodore Roosevelt arrived in Albany as a new Assemblyman, representing Manhattan, ethical but determined to get things done. In his first session, he sponsored legislation he thought was critical. It also happened to be important to the powerful Manhattan Elevated Railroad and its executive, Jay Gould.

The bill, to expand railway terminal facilities, faced inexplicable delays, held up by corrupt legislators, who withheld their support until copious campaign contributions began to flow to them and their party organizations. Roosevelt was sidelined, and in the end, the bill was slipped into the pile of legislation passed during the middle of the night in the last hours of the legislative session.

The system worked for everyone involved -- except for the public it was meant to serve, and the public interest in good government.

Today it may seem that we are living in a golden age of graft, and that corruption in Albany is worse than ever. That is not true. It feels that way because we have more vigorous prosecutors on the job than ever before, uncovering acts of corruption that benefit the few at the expense of the rest of us.

But we must ensure that the recent wave of public scandals leads to dramatic, uncompromising reform that finally allows the people's voice to be heard over the powerful whispers of special interests.

Allowing legislators to earn outside income invites corruption. Past tweaks to disclosure requirements have failed to stop corruption and more tweaks now will fail, too. We must ban outside income altogether. And we should replace the existing "per diem" system with actual reimbursement for actual expenses.

This must go hand-in-hand with a substantial salary increase for legislators, so that we may attract more of the brightest to the legislature.

In the same vein, if we move power from legislative leaders to individual legislators, more good people will want to run for the legislature. A decade ago, the Brennan Center for Justice found that New York's legislature was the most dysfunctional in the nation, in large part as a result of rules that provided for an almost dictatorial leadership structure. It's past time to loosen that grip.

New York State is also overdue for an overhaul of our campaign finance system: we need a statewide public matching funds system like the one that has worked well in New York City. And there are four rules changes that must be part of any package: dramatically reducing campaign contribution limits; closing the loophole that allows virtually unlimited contributions to flow through limited liability corporations; ending the lightly regulated party slush funds known as "housekeeping committees"; and tightening restrictions on campaign contributions made by entities and individuals with business before the state.

Finally, I propose a constitutional amendment that would be a game-changer: each legislative term should be four years, instead of two. Legislators should spend more time on governing and less on politicking.

Gov. Andrew M. Cuomo has proposed some reforms through the budget process. We should support his leadership in using this constitutional mechanism. In fact, I would urge the governor to hold out for bolder reforms, including the proposals mentioned earlier. In doing so, he would have the support of both the Constitution and the people of New York. A late budget would be a small price to pay, in the long term, if it delivers transformational change.

We must seize this moment, and think, speak and act more boldly. We must, right now, demand a state government that truly serves the public interest.

NEW YORK – Attorney General Eric T. Schneiderman today announced the fifth settlement since last year in an unprecedented enforcement effort of mental health parity laws. The settlement, reached with Rochester-based Excellus Health Plan, requires the health insurer to cover residential treatment for behavioral health conditions and reform its procedures for evaluating behavioral health treatment claims. The settlement also requires Excellus to provide notice of a new appeal right to 3,300 members whose requests for inpatient substance use disorder rehabilitation and eating disorder residential treatment Excellus denied from 2011 through 2014. The estimated value of Excellus’s denial of these individuals’ requests is up to $9 million.

Excellus, which is part of the Blue Cross Blue Shield Association, has 1.5 million members and is upstate New York’s largest health plan. An investigation by Attorney General Schneiderman’s Health Care Bureau found that Excellus denied inpatient substance use disorder rehabilitation recovery services seven times as often as inpatient medical services.

“My office has taken an aggressive approach to enforcing mental health parity laws that I hope can serve as a national model,” said Attorney General Scheiderman.“Mental health and addiction recovery treatments must be regarded the same as other health insurance claims under the law. We will continue to take on those who ignore the law and reinforce the false and painful stigma often associated with these ailments.”

Today’s settlement with Excellus is the Attorney General’s fifth enforcing the mental health parity laws since last year. Insurers Cigna, MVP Health Care, and EmblemHealth have already entered into settlements, and last week, the Attorney General entered into a settlement with ValueOptions, the behavioral health vendor for MVP and Emblem.
New York’s mental health parity law, known as Timothy’s Law, was enacted in New York in 2006, and requires that insurers provide mental health coverage at least equal to coverage provided for other health conditions. The federal Mental Health Parity and Addiction Equity Act, enacted in 2008, prohibits health plans from imposing greater financial requirements or treatment limitations on mental health or substance use disorder benefits than on medical or surgical benefits.

Excellus, based in Rochester, is part of a community that, like many parts of New York State, is experiencing an opioid overdose epidemic with deadly consequences. Heroin overdoses in Monroe County have doubled in recent years, and have increased fivefold since 2011. In 2013 alone, there were 65 heroin-related deaths in Monroe County. Access to substance use disorder treatment – in particular inpatient rehabilitation treatment – is vital to addressing this scourge.

The Attorney General’s investigation revealed that many of Excellus’s inpatient substance use disorder rehabilitation denials were the result of its requirement that members fail outpatient treatment multiple times before accessing such care, which conflicts with New York State guidelines and is not applied by Excellus to medical care. The investigation also showed that some of these denials appear arbitrary and wrongly decided, and that Excellus did not cover residential treatment for behavioral health conditions in its standard contract. In one case, Excellus denied residential treatment coverage, due to lack of a benefit, for a 16-year old girl suffering from the eating disorder anorexia nervosa, even though she was at 83% of ideal body weight, had amenorrhea (the absence of menstruation), malnutrition, unstable vital signs, and bradycardia (a dangerously slow heart rate). The girl later attempted suicide and had to be hospitalized in a medical unit.

Under today’s agreement, Excellus will provide notice of a new appeal right to 3,300 members whose requests for inpatient substance use disorder rehabilitation and residential treatment it denied from 2011 through 2014. These members will get an opportunity to file an independent appeal, if they paid out of pocket for the treatment that Excellus denied, and did not previously file an external appeal. The estimated value of Excellus’s denial of these individuals’ requests is up to $9 million.

Excellus has agreed to cover residential treatment and will make available lists of facilities at which individuals may receive such care, subject to a determination of medical necessity and applicable in-network requirements. Excellus has also agreed to reform its claims process for behavioral health coverage, in particular for substance use disorders, by:

• Not imposing any preauthorization or concurrent review requirements for routine outpatient behavioral health services (i.e., psychotherapy and medication management);
• Covering partial hospitalization and intensive outpatient (“IOP”) treatment for behavioral health conditions;
• Not requiring that members demonstrate a substantial impairment in their ability to function in a major life activity in order to receive coverage for behavioral health care;
• Removing the requirement that members “fail” outpatient substance use disorder treatment before qualifying for inpatient rehabilitation treatment;
• Conducting full and fair reviews for services that require preauthorization, such as inpatient substance use disorder rehabilitation;
• Posting its behavioral health medical necessity criteria on a website, to improve the transparency of the review process;
• Applying the primary care co-payment amount to all routine outpatient behavioral services for all standard individual and small group products offered on the New York Health Benefit Exchange, the New York State of Health (the “Exchange”);
• Providing detailed, accurate oral and written explanations for denied claims, so that members can exercise their appeal rights;
• Employing in-house Behavioral Health Advocates, who can supply members and providers with assistance and information regarding claims denials, appeals, and in-network treatment facilities and providers in the member’s service area;
• Excellus will also post parity disclosures on its website, provide additional training to its staff, file regular compliance reports with the Attorney General, and pay $500,000 in fees and costs.

State Senator Phil Boyle, Chairman of the Senate Committee on Alcoholism and Drug Abuse,said, “One of the most pressing issues which surfaced during last year’s State Senate Heroin Task Force forums was the lack of adequate insurance coverage for addiction treatment. I applaud Attorney General Schneiderman for his continuing leadership through these settlements, ensuring that New Yorkers who suffer from addiction can obtain they treatment the need without having to spend their life savings to pay for it.”

State Senator Robert Ortt, Chair of the Senate Committee on Mental Health and Developmental Disabilities,said, “This settlement is another important step to ensure that individuals suffering from mental illness receive equitable and sufficient coverage. It will help those who were denied equal treatment. Perhaps just as significantly, this can help serve as a guide to better care moving forward. This is especially critical as the state expands and consolidates insurance while transitioning to managed care.”

“One of the biggest barriers to treatment of mental health and substance abuse disorders is stigma,” said Assemblywoman Aileen Gunther, Chair of the Assembly Mental Health Committee.“Insurance companies perpetuate stigma and delay treatment by improperly denying claims and putting up roadblocks. We would be horrified if somebody with heart disease were told they needed to ‘fail first’ before they got the care they needed. I applaud Attorney General Schneiderman for his dogged enforcement of Timothy’s Law and for being a champion to people whose lives are changed by substance abuse and mental illness.”

“I applaud Attorney General Schneiderman’s work to guarantee that New Yorkers in need of treatment for mental health or substance abuse issues can receive timely and effective care and treatment, as is the case for any other medical condition,” said Assemblymember Linda B. Rosenthal, Chair of the New York State Assembly Alcoholism & Substance Abuse Committee. “While I am disappointed that nearly 10 years after its passage, insurers in New York State are still not complying with the requirements of Timothy’s Law and are instead continuing to vilify and single out certain consumers for substandard treatment, I know that the Attorney General will continue to be the watchdog for the people of New York State.”

“We commend Attorney General Schneiderman and his staff for fighting to ensure mental health parity,” said Glenn Liebman, CEO of the Mental Health Association of New York State.“The tenets of mental health parity are to ensure access to services, expand networks of care, eliminate barriers that don’t currently exist for physical health benefits and create a strong right to appeal. These settlement agreements address many of these concerns. These agreements also send a strong message to the community that people are entitled to quality behavioral health care”

“LICADD is hopeful with these changes in healthcare policies more New Yorkers will have greater access to concrete treatment services for substance use disorders," said Steve Chassman, LCSW, CASAC, Executive Director of the Long Island Council on Alcoholism and Drug Dependence, Inc."The full recognition of substance use disorders by insurance companies as a progressive, and potentially fatal, disease is long overdue. As with most diseases, assessment, diagnosis and treatment planning should be conducted by qualified healthcare professionals where the primary focus is with recovery and wellness. As this national substance use crisis continues to rage, causing devastation and loss to entirely too many New York families, LICADD commends Attorney General Eric Schneiderman and our Long Island elected officials for leading the efforts to preserve families, save lives and provide individuals with greater opportunity to engage the miracle of recovery.”

“The Legal Action Center applauds Attorney General Schneiderman for standing up for New Yorkers in need of substance use and mental health treatment," said Paul N. Samuels, Director and President of the Legal Action Center."For too long, individuals with these disorders have faced barriers to treatment due to discriminatory practices by many health insurers. AG Schneiderman continues to lead the country in enforcing the groundbreaking federal parity law that prohibits such discrimination and helps people access health care. As New York and the country face a growing opioid addiction epidemic, and access to treatment is often a matter of life or death, enforcement of the parity law could not come at a more critical moment.”

“NAMI-NYS wholeheartedly supports the Attorney General’s active enforcement of Timothy’s Law,” said Wendy Burch, Executive Director of the National Alliance of Mental Illness New York State.“By not treating mental health claims in the same manner as other physical illnesses, insurance companies are guilty of blatant discrimination and place those suffering at increased risk while hampering their chance at recovery.”

Consumers with questions or concerns about this settlement or other health care matters may call the Attorney General’s Health Care Bureau Helpline at 1-800-428-9071.

The agreement with Excellus stems from a broader and ongoing investigation into health insurance companies’ compliance with mental health parity laws.

The investigation of this matter was conducted by Assistant Attorney General Michael D. Reisman, of the Attorney General’s Health Care Bureau, which is led by Bureau Chief Lisa Landau. The Health Care Bureau is a part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

A copy of the settlement can be read here.

NEW YORK – Attorney General Eric T. Schneiderman today announced the arrest and indictment of the top four executives of the charity Narco Freedom Inc., including its present and former chief executive officers, its controller, and a son of the former chief executive for allegedly participating in a criminal enterprise. Narco Freedom, a Bronx-based nonprofit that provides substance abuse treatment and other services to thousands of New York City residents at ten locations, was also indicted.

“Criminal enterprises that use nonprofits to steals millions in public funds poison New York’s charitable sector, which is one of the greatest in the nation,” said Attorney General Schneiderman.“We entrust the leaders of nonprofits to perform their duties with their organization’s mission at heart. My office will not stop in our efforts to prosecute those who abuse that trust and rip off taxpayers.”

Today’s indictment supersedes and expands upon an indictment secured by the Attorney General’s Office last October charging former chief executive Alan Brand and his son Jason Brand with looting the charity. Today, Alan and Jason Brand were indicted for making Narco Freedom a vehicle to defraud Medicaid and syphon off Narco Freedom’s revenue for the enrichment of their criminal organization. Also indicted for participating in this crime ring were Narco Freedom’s current chief executive Gerald Bethea and its controller Richard Gross. In a separate indictment, Jonathan Brand, another son of Alan Brand, and John Cornachio, the brother of a business partner of Alan Brand, were also charged.

Narco Freedom is registered as a tax-exempt, not-for-profit corporation with its headquarters in the Bronx. Narco Freedom’s present Board of Directors includes clinicians within the field, members of the community, a member of the Nassau County Board of Elections, and at least one member of the faculty at Columbia University. Narco Freedom is also an enrolled Medicaid provider that receives nearly $40 million annually in taxpayer-funded Medicaid reimbursement. In addition to substance abuse treatment facilities, the organization provides medical, mental health and other support programs to thousands of people across New York City, including housing. State law requires that substance abuse treatment programs, such as Narco Freedom, provide its patients with individualized treatment plans, tailored to the clinical needs of each patient and to offer the least restrictive treatment plan possible, and that the patients be free of coercion.

The indictments unsealed today allege that, by submitting claims for excessive services, operating an unregulated residential treatment program and violating patients’ right, Narc0 Freedom stole at least $27 million from the Medicaid program:

• Providing Excessive Services:Narco Freedom provides outpatient substance abuse treatment programs as well as opioid treatment programs (OTP). Patients within these programs under state law are entitled to clinically appropriate treatment in the least restrictive environment possible. Instead, during their respective periods as chief executive, Alan Brand and Gerald Bethea allegedly controlled and managed those programs to maximize Narco Freedom’s Medicaid reimbursement, without regard to the clinical needs of its patients. For instance, medical rules and regulations permit OTP patients to attend treatment and pick up their medication at regular intervals and to obtain take home medication, assisting them to lead productive lives. Narco Freedom, however, has required that its patients attend treatment five days a week to pick up their medication, billing Medicaid for each of these visits. Treatment decisions were predicated on the amount of reimbursement from Medicaid and the amount of services that could be billed.
• Operating An Unregulated Residential Treatment Program:Narco Freedom also provides transitional housing, called Freedom Houses, to over 1,500 indigent –and often homeless – New Yorkers. In a practice started by Alan Brand and continued by Gerald Bethea, Narco Freedom has linked eligibility to reside in its Freedom Houses to participation in its treatment programs, as a coercive inducement for needy New Yorkers to attend its program. In effect, Narco Freedom has allegedly been operating unregulated residential treatment programs, in violation of various Medicaid rules.
• Violating Patient Rights:Narco Freedom has allegedly violated patient rights by employing exploitative and coercive practices in order to ensure that patients residing in Freedom Houses – who might otherwise be homeless— remain in treatment. For example, if a patient fails to attend treatment as dictated, they are removed – essentially evicted – from their home, without legal process. While court cases have cited Narco Freedom for this practice, it has nevertheless continued. In addition, the Freedom Houses are poorly maintained, making for difficult living conditions. Bed bug infestations are common as are drug dealing and violence.

Having illegally obtained criminal proceeds from Medicaid, members of the Brand Criminal Enterprise then allegedly enriched themselves by syphoning monies from the charity they were duty bound to serve. In fact, prosecutors estimate that the Brand Criminal Enterprise annually syphoned 10 percent of Narco Freedom’s annual Medicaid billings for themselves through a number of scams. These included:

• Shell Companies:Jason Brand allegedly owned and operated a management company, B&C Management, which billed Narco Freedom hundreds of thousands of dollars for services it never provided. B&C Management, prosecutors allege, was a shell company. Alan Brand and Jason Brand additionally owned a number of vendors who exclusively provided services to Narco Freedom. The existence of these related entities was not disclosed, as required, to a number of State agencies, including the Attorney General’s Charities Bureau, which regulates charities in New York State.
• No-Show Jobs:Jonathan Brand and John Cornachio were allegedly paid hundreds of thousands of dollars for not showing up to work. In addition to their no-show jobs, they drove luxury vehicles, such as a Porsche 911 Carrera and a Range Rover, paid for and maintained by Narco Freedom, although they did no work for the charity.
• Kickbacks:Alan Brand allegedly demanded and received $13,000 monthly in personal kickbacks for his own use for basing some Narco Freedom’s facilities in buildings of a particular real estate developer. This money, which was provided as a discount on Narco Freedom’s rent payments, rightfully belonged to the charity – not Alan Brand – to be used to fund its programs and advance its mission.
• Insurance Fraud:Alan Brand and Jason Brand allegedly defrauded Arch Insurance Company (Arch) by filing a false insurance claim in connection with the restoration of 217 Court Street in Brooklyn, New York, the location of a former Narco Freedom treatment facility. According to prosecutors, that location suffered substantial damage following a storm in 2009. During settlement negotiations with Arch, Jason Brand allegedly falsely represented to Arch that restoration work would be completed by union employees. In fact, day laborers mostly completed the work. In addition, Narco Freedom and Jason Brand failed to disclose that the company it hired to complete the restoration, DASO Development Corp, was wholly owned by Jason Brand. These intentional misrepresentations and material omissions resulted in a significant loss to Arch, which would have proceeded differently and settled Narco Freedom’s insurance claim for substantially less money.

Under State law, corporate members, board members, and directors of nonprofits owe their organizations the fiduciary duties of loyalty, care and obedience, which mandate that they place their organization’s interests above their own, abide by all rules and regulations applicable to that organization, and operate the organization in furtherance of its core mission. Prosecutors allege that all of the defendants arrested today, but particularly Alan Brand and Gerald Bethea, violated all three of these duties by belonging to and participating in the operation of this criminal enterprise.

Today’s indictments charge the defendants with a host of crimes.

Alan Brand, 65, of Melville, N.Y.– Enterprise Corruption; Grand Larceny in the First Degree (3 counts); Grand Larceny in the Second Degree (5 counts); Insurance Fraud in the First Degree, Conspiracy in the Fourth Degree, Commercial Bribe Receiving in the First Degree, Money Laundering in the Second Degree, Offering False Instrument for Filing in the First Degree (5 counts); Social Services Law §366-f (Kickbacks); and Election Law §14-120(1)(Campaign Contribution To Be Under True Name Of Contributor) (6 counts);

Gerald Bethea, 56, of Inwood, N.Y.– Enterprise Corruption; Grand Larceny in the First Degree (3 counts); and Social Services Law §366-f (Kickbacks);

Richard Gross, 61, of Yonkers, N.Y.– Enterprise Corruption; Grand Larceny in the Second Degree (3 counts); and Offering False Instrument for Filing in the First Degree (10 counts);

Jason Brand, 36, of Melville, N.Y.– Enterprise Corruption; Grand Larceny in the Second Degree (2 counts); Insurance Fraud in the First Degree; and Conspiracy in the Fourth Degree;

Narco Freedom – Enterprise Corruption; Grand Larceny in the First Degree (3 counts); Insurance Fraud in the First Degree; Grand Larceny in the Second Degree; Conspiracy in the Fourth Degree; Offering False Instrument for Filing in the First Degree (10 counts); and Social Services Law §366-d (Kickbacks);

Daso Development— Enterprise Corruption; Insurance Fraud in the First Degree, Grand Larceny in the Second Degree; and Conspiracy in the Fourth Degree;

Jonathon Brand, 33, of Huntington, N.Y.– Grand Larceny in the Second Degree; and

John Cornachio, 60, of Huntington, N.Y.– Grand Larceny in the Second Degree.

Enterprise Corruption, Grand Larceny in the First Degree and Insurance Fraud in the First Degree are each class B felonies and carry a maximum term of incarceration of 25 years. Grand Larceny in the Second Degree and Money Laundering in the Second Degree are class C felonies and carry a maximum term of incarceration of 15 years in state prison. The remaining crimes in the indictments are E felonies or misdemeanors and carry lesser terms of incarceration.

In addition to the today’s indictments, the Attorney General amended its earlier forfeiture action, seeking to increase the amount of assets subject to a freezing order and to add defendants and claims. The Attorney General’s prior request to freeze of up to $4 million in assets was granted. Yesterday, the Attorney General was granted court permission to freeze an additional $29 million in assets. The Attorney General further expanded its previously obtained temporary restraining order to preclude all of the defendants indicted today from transferring assets.

Throughout this investigation, the Attorney General’s office has worked closely with those state agencies that regulate Narco Freedom’s substance abuse treatment programs. The goal of this coordinated effort has been to ensure the continuity of care for all patients that use Narco Freedom’s services. In particular, the Attorney General would like to thank the Office of Alcoholism and Substance Abuse Services, the Office of the Medicaid Inspector General, the New York State Department of Health, and the New York City Human Resources Administration.

The criminal case is being prosecuted by Assistant Attorneys General Kristen Conklin, Megan Friedland, and Jihee Suh. The civil case, including this week’s amended forfeiture action, is being handled by Assistant Attorneys General Carolyn T. Ellis, Alee N. Scott and David Abrams. The investigation was led by Supervising Investigator Michael Casado, Senior Investigator Albert Maiorano and Investigators Dominic DiGennaro, Steven Broomer, Dave Ryan, Julie Clancy, Valerie Patrick, Sixto Santiago and Angel LaPorte. Forensic analysis was provided by Principal Auditor Investigator Manny Archer, and by Special Audit Investigators Patricia Iemma, Giovanni Liotine and Nick Thottam. Christopher M. Shaw is MFCU New York City Regional Director, Thomas O’Hanlon is MFCU Chief of Criminal Investigations – Downstate, Kenneth Morgan is MFCU Deputy Chief Investigator, and Thomasina Smith is MFCU Chief Auditor. MFCU is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

The charges filed in this case are accusations. The defendants are presumed innocent until proven guilty in a court of law.

NEW YORK—Attorney General Eric T. Schneiderman announced today that his office will be introducing an application-programming interface (API) that will allow application developers to access and use data from its NYOpenGovernment.com database. NYOpenGovernment.com is an effort by the Attorney General’s office to promote the public’s right to know and monitor governmental decision-making; it is the only statewide resource that aggregates a range of sources for state government information – including data on campaign finance, lobbying, charities, state contracts, member items, corporate registrations, elected officials, and legislation – which is otherwise scattered or difficult to retrieve. The NY Open Government API will allow developers easier access to this data, which they can use in the creation of applications. Currently, the database is used by good government groups, reporters, and law enforcement agencies for analysis, general information, and even investigations.

“Giving the public direct access to this data will help shine a much-needed light on our state government,” Attorney General Schneiderman said. “In an effort to make government more transparent and responsive, we are providing the public access to these tools. It’s long past time we brought transparency into the 21st century, and I look forward to seeing what analysis and applications are developed from the data."

Today’s announcement was made during Sunshine Week, a national initiative to promote a dialogue about the importance of open government and freedom of information. The introduction of an API for NY’s Open Government website will begin with testing by students at NYU’s Center for Urban Science and Progress (CUSP) program. Eventually, the API will be open to the public and all interested developers.

An API is a set of programming instructions and standards for accessing a web-based software application or tool. API’s allow app developers to query databases and build applications that rely on that data.

Currently, the NY Open Government databases can only be accessed through a simple search tool bar. The API will allow developers to build new graphical interfaces, devise algorithms for mining the data in innovative ways, create applications that join the Open Government information with other publicly available data, and a host of other potentially useful approaches. Other government agencies have begun to see the benefit of APIs, including the New York State Senate, New York State’s Open NY, and NYC OpenData. The Metropolitan Transit Authority’s API currently powers numerous apps that make navigating public transportation easier than ever before. Many popular media sites also offer APIs, including Facebook, Twitter, and Amazon. 

This initiative is being led for the Attorney General's Office by Special Counsel Simon Brandler, Research Director Lacey Keller, Confidential Assistant Liam Arbetman, Information Technology Specialist Namita Mishra and Information Technology Specialist Kevin Ryan.

CORTLAND – Attorney General Eric T. Schneiderman today announced the conviction of Joseph Fezza, the owner of a car dealership in Cortlandville, on five felony charges stemming from his collection and retention of sales taxes on vehicles he sold over a period of more than five years, and his failure to file sales tax and personal income tax returns.

“With Tax Day around the corner, today’s conviction shows that my office has no tolerance for business owners who cheat on their taxes,” Attorney General Schneiderman said. “When an unscrupulous few fail to pay their taxes, other hardworking New Yorkers have to shoulder the burden. If you rip off honest taxpayers, you will face time in prison.”

Fezza, 47, of Cortland, pleaded guilty to the five-count indictment lodged against him in Cortland County Court before the Honorable Julie A. Campbell, including one count of Grand Larceny in the Second Degree (a Class C felony), two counts of Criminal Tax Fraud in the Third Degree (a class D felony), and two counts of Repeated Failure to File Personal Income Tax Returns (a class E felony).

In exchange for his plea, Justice Campbell promised Fezza a sentence of up to one year in jail. Fezza is required to pay $50,000 in restitution on or before the date of his sentence. The balance of the restitution will either be agreed upon by the parties by June 15, 2015 or the Court will hold a restitution hearing on the matter.

Fezza’s sentencing is scheduled before Justice Campbell on October 1, 2015.

According to the indictment and statements made by prosecutors, Fezza, in his position as the owner and sole proprietor of JF Auto World, also known as Auto World, located at 991 Tompkins Street, Town of Cortlandville, New York, collected more than $175,000 in sales taxes from consumers between March 1, 2004 through September 20, 2009, but failed to remit those taxes to New York State. Fezza also failed to file quarterly sales tax returns, as well as several years' worth of personal income tax returns during this period.

The case stems from an investigation initiated in 2011 by the New York State Department of Taxation and Finance and the Attorney General’s Criminal Enforcement and Financial Crimes Bureau.

The Attorney General thanks the New York State Department of Taxation and Finance for their valuable assistance in the case.

The New York State Department of Taxation and Finance’s case is supervised by Director of Investigations Michael Szrama. 

The investigation was conducted by Investigator Mitch Paurowski and Deputy Chief Investigator Tony Karam. The Investigations Division is led by Chief Investigator Dominick Zarrella.

The case is being handled by Assistant Attorney General Joshua Vinciguerra of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced the unsealing of three indictments charging 22 individuals with 159 criminal counts for their alleged roles in two loosely-related narcotics rings that distributed cocaine and heroin throughout the Capital Region. The indictments were unsealed in Albany County Court before the Honorable Peter Lynch. State and local law enforcement agents, led by the New York State Attorney General’s Organized Crime Task Force (OCTF), the Albany Police Department, and the New York State Police have been investigating the drug rings for ten months. The case was code-named “Operation June Bug” after Gerard “June” Carter, an alleged central figure in the heroin distribution network.

One ring, led by Carter, allegedly trafficked heroin purchased in New Jersey to Albany, Rensselaer, Saratoga, Schenectady, and Washington Counties in the Capital Region. Carter had at least five re-sellers who are alleged to have been dealing the heroin in these counties. The second ring, led by Latasha “Tasha” Gause, and loosely affiliated with the ring led by Carter, allegedly trafficked cocaine obtained from suppliers in Brooklyn, Queens and Connecticut. Gause had at least nine re-sellers who are alleged to have been dealing cocaine in the Capital District.

"A heroin epidemic is devastating families in every community across our state, from New York City to the smallest towns and villages,” said Attorney General Schneiderman.“Today’s indictments strikes a blow against those who are fueling this cycle of addiction and inflicting harm on far too many New Yorkers. My office and our law enforcement partners will not rest until we see an end to this scourge of illegal drugs".

During the arrests of the defendants this morning, investigators seized two ounces of crack cocaine, three guns and 100 bundles heroin.

According to the indictments unsealed today, Carter, of Albany, allegedly purchased heroin from a supplier in New Jersey for $30 per bundle (a term that refers to a package of 10 individually-packaged hits of heroin). Carter and his associates allegedly met their heroin supplier, Quaddir Moss, at the Woodbury Commons Premium Outlet Mall in Orange County. Carter and the supplier allegedly used the many parking lots surrounding the outlet mall for their meetings, at which thousands of dollars were allegedly exchanged for heroin.

According to the court papers, Carter had dealers operating in several counties and selling the heroin bundles for $150, a 500 percent profit. One of Carter’s main re-sellers in the Hudson Falls area was defendant Eric Ladd, who allegedly re-sold heroin to addicts throughout Washington County. In an apparent attempt to minimize the effectiveness of law enforcement wiretapping, Carter and his associates spoke in a complex coded language associated with the Nation of Gods and Earth—a splinter organization from the Nation of Islam, with which Carter is believed to be affiliated.

Gause, the alleged central figure in the cocaine distribution ring, allegedly involved her family in drug trafficking activities. Gause’s son, Javar Malloy, 20, is charged as part of this conspiracy and with distributing cocaine in the Capital District. Her live-in boyfriend, Bu’Quan Galloway, is charged with distributing cocaine and heroin. Wiretap evidence showed that Gause, who also faces child endangerment charges because she allegedly brought her younger kids with her on drug deals, allegedly sold cocaine to other members her family on a regular basis as well.

Gause allegedly got the cocaine she trafficked from two relatives, Marklen Hay and Gary Chambers, who delivered drugs to her from the New York City area. According to the court papers, wiretap evidence showed that Chambers purchasing hundreds of grams of cocaine from a defendant listed in the indictment as John Doe near the historic Belmont horse racing track on Long Island.

The indictments, which were unsealed today, charge each of the 22 defendants with a top charge of Conspiracy In The Second Degree, which carries a maximum penalty of 25 years in prison. Other top felony charges include Criminal Sale of a Controlled Substance in the First Degree, which carries a maximum penalty of 20 years incarceration. If convicted of all the offenses charged, defendants Gerard Carter, Gary Chambers, Bu’Quan Galloway, Latasha Gause, Dontray Lunday, Quaddir Moss, and James Patterson each face more than 75 years behind bars.

Since 2011, the Attorney General’s Organized Crime Task Force has taken down 23 large drug and gun trafficking rings New York State. And, in the course of over 550 felony narcotics arrests, OCTF has seized over $1.5 million and 80 guns and more than 2,000 pounds of illegal drugs off our streets.

“This case is in direct response to street level gun violence that occurred in 2014,” said Albany Police Deputy Chief Brendan Cox. “Working with our law enforcement partners and the members of our community, the Albany Police Department continues to prevent violence from occurring on our streets. I thank the New York State Attorney General’s Office, the New York State Police and the United States Marshals Service for their unwavering commitment to working together and keeping the residents of Albany safe.”

The following 22 people are charged in the indictments handed up today:

• Shaquel Brown, 22, Albany, NY
• Keith Campbell, 44, Westbrook, CT
• Gerard Carter, 26, Albany, NY
• Tariq Clark, 36, Troy, NY
• Gary Chambers, 41, Rensselaer, NY
• Marcina Dean, 43, Albany, NY
• Miriam Edmunds, 26, Albany, NY
• Bu’Quan Galloway, 26, Albany, NY
• Latasha Gause, 37, Albany, NY
• Marklen Hay, 45, Queens, NY
• Eric Ladd, 36, Hudson Falls, NY
• Dontray Lunday, 34, Schenectady, NY
• Javar Malloy, 21, Albany, NY
• Ramar Milner, 30, Albany, NY
• Quaddir Moss, 35, Troy, NY
• Ernest Muller, 22, Albany, NY
• James Patterson, 43, Albany, NY
• Obar Robinson, 21, Albany, NY
• Naseir Simmons, 16, Albany, NY
• Elijah Thorpe, 35, Belleville, NJ
• Robert Tufano, 27, North Greenbush, NY
• John Doe, Queens, NY

The charges contained in the indictment are the result of an ten-month joint investigation by the OCTF and the City of Albany Police Department, with the assistance of the New York State Police, the NY National Guard Counterdrug Task Force, the New Jersey Attorney General’s Office and the United States Marshalls Service.

The investigation was directed by OCTF Special Investigator John Monte, with assistance from Special Investigator William Charles, and Deputy Chief Investigator Gene Black, with assistance from Chief of Investigations Dominick Zarrella. The Albany Police Department’s involvement was directed by Sergeant Brian Quinn, Sergeant Richard Gorleski and Detective James Wood, under the supervision of Lt. Ed O'Leary, Commander Bob Sears, and Chief of Police Steven Krokoff. The New York State Police Community Narcotics Enforcement Team (CNET) and was directed by CNET Lt. Carla DiRienzo and Senior Investigator Dan Kiley.

The case is being prosecuted by OCTF Assistant Deputy Attorney General Andrew McElwee. Peri Alyse Kadanoff is the OCTF Deputy Attorney General, and Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice.

The charges against the defendants are merely accusations and the defendants are presumed innocent until and unless proven guilty in a court of law. 

GREENWICH– Attorney General Eric T. Schneiderman today announced the arrest and arraignment of Suzanne Shumway, former Executive Director of Battenkill Community Services, Inc. (BCS), a not-for-profit agency servicing developmentally disabled individuals, for allegedly defrauding Medicaid for services rendered to BCS consumers and theft of funds of a developmentally disabled person under her care. If convicted, she could face 1 1/3 to 4 years in prison.

“Stealing from a developmentally disabled person who relies on a caregiver to act in his or her best interests is the ultimate breach of trust,” Attorney General Schneiderman said. “My office will continue to vigorously pursue the unscrupulous individuals who line their pockets at the expense of those who depend on them.”

Suzanne Shumway was the Executive Director of BCS and was responsible for coordinating and providing care to developmentally disabled individuals, referred to as BCS consumers. In addition to her role as Executive Director, from March 2010 through April 2012, Shumway was also employed by Community, Work & Independence, Inc. (CWI) as a personal assistant through the Consumer Directed Personal Assistance Program (CDPAP). The felony complaint alleges that Shumway submitted false timesheets to CWI claiming that she provided care to two BCS consumers for dates and times that Shumway authorized Medicaid billings for simultaneous care through BCS. Specifically, the investigation revealed that Shumway falsely claimed to CWI that she provided one-on-one care to consumers. However, Shumway personally provided group services to the same consumers through BCS on overlapping dates and times. As a result, Medicaid paid CWI a total of $2,207.79 for services claimed by Shumway. 

Further, the felony complaint alleges that from on or about January 2009 through April 2012, Shumway maintained joint accounts with several BCS consumers and was responsible for the management of monthly funds of supplemental security income. Shumway sought permission from family members of consumers to manage their funds. During this time, Shumway used funds from the bank account of a consumer identified as “A.R.” for payment of personal expenses, including satisfaction of her school taxes and pet and farm supplies, totaling over one thousand dollars.

Shumway, 49, of Greenwich, was charged with two counts of Grand Larceny in the Fourth Degree, E Felony, and 10 counts of Offering a False Instrument for Filing in the First Degree, E Felony, before Honorable William Blake, Greenwich Town Justice. Shumway was released on her own recognizance.

Attorney General Schneiderman thanks New York State Police Investigator Joseph Bearor and the Office for People with Developmental Disabilities (OPWDD) for their assistance with the investigation.

The charges against the defendant are accusations and the defendant is presumed innocent unless and until proven guilty.

The investigation was led by Senior Investigator Julie Clancy with the assistance of Supervising Investigator Dianne Tuffey, Deputy Chief Investigator Upstate William Falk, and Associate Special Auditor/Investigators Megan Mastrianni and Sarah Finning.

Special Assistant Attorney General Erin Lynch of the Medicaid Fraud Control Unit’s Albany Regional Office is prosecuting the case with MFCU Albany Office Regional Director Kathleen Boland. Catherine Wagner is MFCU's Upstate Chief of Criminal Investigations. The Medicaid Fraud Control Unit is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK –Attorney General Eric T. Schneiderman and United States Attorney for the Southern District of New York Preet Bharara today announced a settlement with the Bank of New York Mellon (“BNYM”) that resolves cases brought by the New York State Office of the Attorney General and the U.S. Attorney’s Office regarding BNYM’s fraudulent foreign exchange (“FX”) practices.  BNYM has agreed to pay $714 million to resolve the federal and state governments’ cases, certain private cases that arose as a result of the same fraud, and investigations by the Securities and Exchange Commission and the U.S. Department of Labor.  In addition to the significant monetary recovery, Attorney General Schneiderman and U.S. Attorney Bharara obtained additional key settlement terms:  namely, BNYM has admitted the factual details of its fraud, will end the employment of certain executives involved in the fraud, will reform its practices to improve and increase the information it provides to its customers, and will waive the deductibility of New York State and local taxes with respect to the New York State portion of the settlement.

“Investors count on financial institutions to tell them the truth about how their investments are being managed. But Bank of New York Mellon misled customers and traded at their expense,” said Attorney General Schneiderman.  “Today’s settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and face serious consequences for their wrongdoing. The outcome also shows what can be achieved when law enforcement agencies collaborate on an important matter such as this one.”

Manhattan U.S. Attorney Preet Bharara said: “The Bank of New York Mellon’s custody clients, many of whom are public pension funds and non-profit organizations, trusted the Bank to be honest about the financial services it was providing and to deal with them fairly.  BNYM and its executives, motivated by outsized profits and bonuses, breached this trust and repeatedly misled clients to believe that the pricing they were getting on foreign exchange was far better than it actually was.  The Bank, after three years of litigation, has finally admitted what was always clear from the evidence – contrary to its various representations, including a claim of ‘best rates,’ the bank in fact gave clients prices at or near the worst interbank rates reported during the trading day.  The bank repeatedly deceived its customers and is paying a heavy penalty for it.  We will not hesitate to pursue and punish financial institutions and their executives who exploit their customer base to improve their bottom lines.”

Of the $714 million in settlement funds announced today, New York State and the Department of Justice will each be allocated $167.5 million, and Attorney General Schneiderman will direct nearly the entire New York State amount to compensate BNYM’s customers who were victims of BNYM’s fraud.  Two New York State agencies – the New York State Deferred Compensation Plan and SUNY – were among the customers BNYM defrauded and will be fully compensated for their losses.  

As alleged in this case, BNYM systematically misrepresented how it handled its customers’ FX transactions.  BNYM told customers that its Standing Instruction FX program was an automated service that allowed a client to rely upon BNYM to obtain an FX rate and execute FX trades on the customer’s behalf without any supervision or direct involvement by the customer, and that BNYM would obtain the “best rates” available for its customers.  Senior BNYM executives knew that BNYM’s representations about FX pricing were false.  In fact, BNYM obtained the best FX rates for itself, gave its customers the worst or close to the worst rates, and kept the difference for itself.  

BNYM is a custody and trust bank that provides a variety of custodial services to large investors, including public pension funds, states, colleges, charities, and foundations.  BNYM’s customers use its FX services when purchasing or selling foreign securities or converting income from foreign investments to U.S. dollars.  

As outlined in the state and federal complaints, BNYM widely disseminated numerous misrepresentations about its Standing Instruction FX service, including that BNYM would conduct Standing Instruction transactions pursuant to “best execution” standards, in a manner designed to “maximize the proceeds of each trade,” that it would obtain the “best rates” available or rates pursuant to “the prevailing global interbank market,” and that the Standing Instruction FX service was “free of charge.”  In truth, BNYM never offered clients “best execution” or the “best rates,” the service was far from free, and certain senior BNYM FX executives knew that BNYM’s representations about the pricing of the Standing Instruction FX service were false.  Instead of the service they promised, BNYM monitored FX rate fluctuations throughout the trading day or session and at the end of each trading day or session, assigned customers the worst or close to the worst rates from that day or session.  At the same time, BNYM was obtaining more favorable rates for itself, and profiting on the difference or “spread” between the two rates.

The New York case began when a whistleblower filed a complaint with the Attorney General’s office in 2009 under the New York False Claims Act.  The New York False Claims Act provides incentives for whistleblowers to report matters where governmental entities, such as pension funds, have been defrauded.  As a state senator, Attorney General Schneiderman authored amendments to strengthen the New York False Claims Act.  Those enhancements, known as the Fraud Enforcement and Recovery Act, expanded the state’s ability to collect damages and penalties from corporations or people who defraud the government, or violate their obligations to pay government entities.  The New York False Claims Act also allows a whistleblower to receive a percentage of any recovery made on behalf of the State of New York.  The Attorney General expresses his thanks to the whistleblower in this case for helping to bring BNYM’s conduct to light.

The settlement announced today is the product of a joint effort by the New York Attorney General’s office and the United States Attorney’s office.  After each office separately investigated BNYM’s fraudulent practices and each filed lawsuits against BNYM in 2011, the two offices worked together on discovery and on negotiating this significant settlement.  Attorney General Schneiderman appreciates the successful collaboration with the U.S. Attorney’s Office on this matter, which has produced an outstanding result for the public.

The state’s case was handled by Karla G. Sanchez, Executive Deputy Attorney General for the Division of Economic Justice, Roger Waldman, Senior Enforcement Counsel, Katherine Milgram, Deputy Chief of the Investor Protection Bureau, Assistant Attorneys General David Castleman, Brian Whitehurst, and Melissa Gable, and Chad Johnson, Chief of the Investor Protection Bureau.

The False Claims Act aspects of the case were handled by Assistant Attorneys General Bryan Kessler and Gregory Krakower and Deputy Bureau Chief Scott Spiegelman, of the Taxpayer Protection Bureau in the Criminal Justice Division.  Kelly Donovan is Executive Deputy Attorney General for Criminal Justice, and Thomas Teige Carroll is Chief of the Taxpayer Protection Bureau. Attorney General Schneiderman created the Taxpayer Protection Bureau in January 2011 specifically to handle cases where the government itself has been defrauded. 

NEW YORK – Attorney General Eric T. Schneiderman sent a letter on March 13th to Senate Majority Leader Mitch McConnell and Senate Minority Leader Harry Reid urging the Senate to confirm Loretta Lynch as U.S. Attorney General. The following are excerpts from the letter:

ON HER POTENTIAL CONFIRMATION: As the Attorney General for the State of New York, I am confident that Ms. Lynch will provide the strong leadership necessary to fully enforce the law and defend the rights of Americans living in my state and across the nation.

ON HER PREVIOUS RECORD: During her tenure as the United States Attorney for the Eastern District of New York, Ms. Lynch has developed a long record of achievements, and she enjoys a reputation for fairly and even-handedly enforcing the law. She demonstrates extraordinary character, sound judgment and clear commitment to the principle of equal justice under the law.

ON HER QUALIFICATIONS: Moreover, the breadth and range of her experience handling some of our nation’s most challenging federal law enforcement matters, her commitment to public service and strong management skills, make her well-suited to serve in this position.

The full letter can be read here. 

NEW YORK – Attorney General Eric T. Schneiderman today announced the appointment of Assistant Attorney General Roberto Lebron as Assistant Attorney General In Charge of the Harlem Regional Office. In his new role, AAGIC Lebron will oversee an office that serves a large constituency in Upper Manhattan and the Bronx, covering issues from consumer frauds to public advocacy litigation.

“For the past 14 years, Roberto Lebron has served New Yorkers in Upper Manhattan and the Bronx with dedication, successfully defending the public interest in cases ranging from fraud against new immigrants to actions against tax scammers.” said Attorney General Schneiderman.“His strong commitment to legal excellence and equal justice for all will be an even greater asset to the people of our state in his new leadership role.”

“My years as Assistant Attorney General have been rewarded by many accomplishments in legal battles to defend hardworking New Yorkers from bad actors. I thank Attorney General Schneiderman for giving me the opportunity to continue to serve the constituency of the Harlem Regional office and bringing justice to a community with pressing needs of legal services." 

Roberto Lebron’s appointment follows the departure of former Assistant Attorney General Guy Mitchell, who was recently appointed as Criminal Court Judge in New York City. Lebron was appointed Acting Assistant Attorney General in Charge of the Harlem Regional Office on February 13, 2015. He also served as Public Integrity Officer.

As Assistant Attorney General, Roberto Lebron investigated and prosecuted affirmative cases. Previously, Lebron worked as an enforcement litigation attorney with the New York City Department of Housing, Preservation and Development. A former president of the Puerto Rican Bar Association, Lebron is a graduate of St. John's University School of Law.

The Harlem Regional office is located at 163 West 125th Street. The Regional Affairs Division is led by Executive Attorney General for Regional Offices Martin J. Mack. 

NEW YORK – Attorney General Eric T. Schneiderman and Comptroller Thomas P. DiNapoli today announced the guilty plea of Roger Burlew, former Highway Superintendent for the Town of Erin, in a public corruption case involving the theft of more than $65,000 in goods and services from the town. Burlew today entered a guilty plea before The Honorable James Hayden in Chemung County Court to the charge of Grand Larceny in the Second Degree, a Class C Felony. As part of a plea agreement, Burlew will be sentenced to six months of incarceration and a period of five years of probation. Burlew will also pay $65,000 in restitution to cover the cost of what was stolen.

“Today’s guilty plea is the latest in my office’s joint partnership with Comptroller DiNapoli to root out public corruption whenever and wherever we find it in the Empire State,” said Attorney General Schneiderman. “Corruption undermines the public’s faith in government and that is why we have taken on more than sixty public corruption cases against state and local officials and their cronies, including securing the conviction of a sitting State Senator and indictments against members of the State Assembly and the New York City Council.”

“Mr. Burlew plundered the public’s town garage for more than $60,000 in equipment for his private mechanic’s business,” said State Comptroller Thomas P. DiNapoli.“This prosecution is a warning to those who blur the line between public and private property. I thank Attorney General Schneiderman and his staff for their diligent work on this case. Together, our Operation Integrity partnership has led to more than 60 arrests and more than $7 million in restitution. We will continue to expose public corruption, prosecute those responsible and seek restitution for New York taxpayers.”

Today’s guilty plea follows charges brought against Burlew, who was appointed Highway Superintendent in 1998, detailing a systematic course of conduct wherein he stole property valued at over $65,000 from the Town of Erin. The thefts of products and equipment were for Burlew’s personal use or the use of a third person. According to his signed plea agreement, Burlew admitted making personal purchases and then fraudulently filling out and submitting Town vouchers for the Town Board’s approval and payment. In the vouchers, he falsely indicated that the purchases were for legitimate Town Highway Department purposes, when they were actually for personal use.

The Joint Task Force on Public Integrity is a cooperative effort between Attorney General Schneiderman's and Comptroller DiNapoli's offices to root out public corruption and maximize the resources of each office. Attorney General Schneiderman thanks the staff at Comptroller DiNapoli’s Office for their invaluable cooperation and assistance in this investigation.

Assistant Attorney General Mary Gorman of the Public Integrity Bureau is prosecuting the case, with support from Deputy Bureau Chief Stacy Aronowitz, Bureau Chief Daniel Cort, and Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The prosecutors were assisted by Investigations Bureau Investigator Joel Cordone and Investigator David Buske, with support from Supervising Investigator Richard Doyle, Deputy Bureau Chief Antoine Karam, and Bureau Chief Dominick Zarrella.

The joint investigation was conducted with the Comptroller’s Division of Investigations and the Division of Local Government and School Accountability.

NEW YORK – Attorney General Eric T. Schneiderman, Mayor Bill de Blasio, and Dominican elected officials and community leaders, today announced new leadership for the Dominican Day Parade following the agreement his office obtained from the Parade’s long-time organizer, Nelson Peña.  For years, the organizations Peña purported to run had no functioning boards of directors, failed to maintain proper books and records, and failed to file the annual reports nonprofits are required to file under State law.  Under the terms of this agreement, Mr. Peña has relinquished all of his positions with the Dominican Day Parade, which is traditionally held in Manhattan on the second Sunday in August.  In addition, he has agreed to a minimum three-year ban against assuming any official or leadership role – as a director, officer, employee, agent or otherwise – in the Parade or in any other New York City parade that celebrates the culture and heritage of the Dominican community.  He has further agreed to the dissolution of the various not-for-profit entities that he used over the years to operate and raise monies for the Parade, and has withdrawn the application he filed for a City permit to run the Parade in 2015.

Following Peña’s agreement to resign,  a new not-for-profit organization, Dominican Day Parade, Inc., with a new board of distinguished individuals drawn from diverse sectors of the Dominican-American community, has applied for the City’s permit for the Dominican Day Parade. Under the leadership of the new organization, the Parade this year is scheduled to be held on Manhattan’s Avenue of the Americas on August 9, 2015.
 
“The Dominican Day Parade is a key institution for the celebration of Dominican culture and heritage in New York and throughout the nation,” said Attorney General Schneiderman. “Whatever nonprofit organization is responsible for its operation must be properly constituted, comply with New York law, and be accountable and transparent.  For years, Nelson Peña has run the Parade without regard to these requirements.  The Dominican community deserves better, and with the steps announced today, it will receive what it deserves – strong, accountable leadership for the Dominican Day Parade.”
 
“The Dominican Parade is an important cultural institution in the city, and we are pleased to have worked with the community on a resolution to ensure it continues to be a source of pride, and fulfills its mission of celebrating the contributions of Dominicans to New York City,” said Mayor de Blasio. “The new board will ensure that the desfile will be as strong and vibrant as it should be, and I look forward to joining this year’s festivities.”
 
“On behalf of the Board, we are absolutely committed to give our beloved Dominican community a Parade of which we can all be proud,” said Angela Fernández, Chair of Dominican Day Parade, Inc.“Our culture and heritage are an integral part of the American story, and deserve to be recognized and celebrated appropriately. We look forward to a great Parade this August and in many years to come.”
 
New York State Senator Adriano Espaillat said, "Entering its 34th year, the Dominican Day Parade is a mainstay of the Dominican-American community,  attracting hundreds of thousands of spectators who line up to enjoy the annual celebration of Dominican pride and culture every year. I am confident that the newly formed Dominican Day Parade, Inc., and its impressive board of directors which includes business, cultural, and community leaders, can carry on the tradition of creating a great celebration that shares Dominican culture with attendees from across the city and around the country."

“The Dominican Day Parade is part of our culture, of our city. We must make sure all Dominicans and New Yorkers keep enjoying this traditional celebration for the years to come. We cannot afford to lose such a wonderful event in our city as hundreds of thousands of parade-goers celebrate Dominican heritage," New York State Senator Jose Peralta said. I welcome the new leadership and I would like to thank Attorney General Eric Schneiderman for his work and efforts to make the Dominican Day Parade a better institution.”     

New York State Assemblymember Guillermo Linares said, "What is most important is that the parade highlights Dominican-American linguistic traditions, cultural values, and reaffirms the contributions of both the diaspora in the United States and the Dominican Republic. Congratulations to the new board and I look forward to a great Dominican parade in August."

"This is a new day for the Dominican Day parade," said New York State Assemblymember Victor Pichardo. "On behalf of the Dominican community that I represent in the Bronx, I look forward to working with the new board to make sure our heritage and culture is well represented throughout New York State and around the world."
 
New York City Councilmember Julissa Ferreras said, “Like all Dominicanos, I am proud of my heritage and the lives we have built for ourselves in New York City. Our community deserves a celebration that reflects our honest, hardworking, family-oriented and festive spirit.  I am convinced that under this new leadership, the Dominican Day Parade will thrive once again as a symbol of how far our community has come.”

New York City Councilmember Ydanis Rodríguez said, “Today marks a new chapter for the Dominican Day Parade. Under the leadership of Angela Fernandez, I am sure that we will see a parade that not only effusively celebrates our heritage and culture but abides by the rules and regulations that protect our communities. With increased accountability we can ensure that the Dominican Day Parade is the best it can be in 2015. Congratulations to Angela, the new Dominican Day Parade board and the entire community on today’s announcement!”

"As a son of Dominican Immigrants and one of the youngest Dominicans elected into office, I have dreamt of marching in the Dominican Parade, but under the previous leadership, I was not allowed to walk because I was branded by Mr. Nelson Peña as not being 'Dominican' enough," said New York City Councilmember Rafael Espinal. "I am proud to be part of a coalition that was able to build a team that would make the parade stronger and more inclusive than it has ever been. I look forward to finally being able to proudly march and celebrate my heritage with thousands of my Dominican brothers and sisters."

New York City Councilmember Antonio Reynoso said, "I am happy to know the Dominican Day Parade will continue to exist under the leadership of the new board. This board is a true reflection of our heritage and talent, they will make our communities proud. We will continue to celebrate the contributions of the Dominican people to the City of New York and this great country. My colleagues in office and I thank the A.G.’s office for its vigilance and assistance in maintaining the staple that is the Parade to Dominicans in New York."

Julissa Reynoso, Former US Ambassador and Attorney said, "As a New Yorker and Dominican-American, I celebrate this important day for all New Yorkers. The Dominican Day Parade belongs to all of us, and should represent the best of us. I am deeply grateful to Mayor de Blasio, Attorney General Schneiderman and our elected leaders for helping to assemble such a high-quality and inclusive board to carry out this wonderful event."

Junot Díaz, Dominican-American writer, MIT Professor and Pulitzer Prize Winner said, “I am elated to see the DDP in such extraordinarily capable hands; the Dominican community deserves institutions dedicated to the principles of integrity, transparency, accountability and civic-mindedness and this is precisely what this new board will provide us—with a community organization worth celebrating."

Under the Attorney General’s agreement with Mr. Peña, the organizations to be dissolved are Desfile y Festival Nacional Dominicano, Inc., Comite del Desfile y Festival Dominicano, Inc., Desfile Nacional Dominicano USA, Inc. and Festival Popular Domincano, Inc. Mr Peña has resigned his positions with all of these groups, and has relinquished all control over any of their intellectual property and ownership rights. The organizations are not believed to have any financial assets.
 
Concurrent with the Attorney General’s agreement with Mr. Peña, the City of New York, working with the elected leaders of the Dominican community throughout the City and the Attorney General’s Office, identified a diverse group of community, business, labor and academic volunteers to form a nonprofit organization capable of leading the Parade consistent with the legitimate expectations of the community.  The directors of Dominican Day Parade, Inc., the newly-created nonprofit corporation established for this purpose, include:
 
Leonardo Ivan Domínguez
Musician, Dancer and Agricultural Scientist
 
Dr. Bienvenido Fajardo
Physician, affiliated with New York Presbyterian Hospital/Columbia University Medical Center and NYU Langone Medical Center
 
Angela Fernández
Executive Director, Northern Manhattan Coalition for Immigrant Rights
 
Rudy Fuertes
CEO, Fine Fare Supermarkets and President, National Supermarkets Association
 
Henry Garrido
Executive Director, District Council 37
 
Prof. Ramona Hernández, Ph.D.
Director, CUNY Dominican Studies Institute, Professor of Sociology, City College of New York
 
Maria Khury
President, Khury Tours, Travel & Insurance Inc.
 
Maria Lizardo
Executive Director, Northern Manhattan Improvement Corp.
 
Benny Lorenzo
General Partner, B.L. Capital Partners, L.P.
 
Dr. Silvio Torres Saillant
Professor of English, College of Arts and Sciences at Syracuse University
 
Luis Tejada
Executive Director, Mirabal Sisters Cultural and Community Center
 
Estela Vazquez
Executive Vice President, SEIU 1199
 
The officers of the corporation are Angela Fernandez (Chair); Luis Tejada (1st Vice Chair); Maria Lizardo (2nd Vice Chair); Rudy Fuertes (Treasurer); and Benny Lorenzo (Secretary). Together, the 12 directors of the new nonprofit organization will bring a much broader range of competencies and perspectives to the leadership of the Dominican Day Parade than it has ever enjoyed before.
 
This matter was handled by Executive Division Senior Enforcement Counsel David Nachman, Assistant Attorney General Jennifer Michael of the Charities Bureau and Charities Bureau Enforcement Section Chief Sean Courtney.  The Charities Bureau is led by James Sheehan and the Division of Social Justice by Alvin Bragg.