NEW YORK – Attorney General Eric T. Schneiderman and State Comptroller Thomas P. DiNapoli today announced the guilty plea of Thomas Capuano, the former Commissioner of the Department of Public Works of the City of Renssealer Department of Public Works, for teaming with two DPW employees to divert $46,000 from the city by pocketing the cash from scrap metals acquired as part of their jobs with the city.

Capuano pleaded guilty today in Rensselaer County Court to Grand Larceny in the Fourth Degree (a Class E felony), which carries a potential prison sentence of one and a third to four years. Capuano sold the scrap metal for his personal benefit between 2009 and 2013.

“Those who serve the public must be held to high ethical standards, and that is why my office has partnered with Comptroller DiNapoli on Operation Integrity to root out corruption and misuse of taxpayer dollars across our state,” said Attorney General Schneiderman. “Today’s guilty plea ensures accountability for the theft of $46,000 and is the latest in over 60 public corruption cases against we have brought against state and local officials and their cronies since 2011.”

"Scrap metal can be a valuable commodity and the public rightly should have expected these employees weren’t pocketing the cash from it for themselves. Using public office for personal gain is a violation of the public trust and will not be tolerated," said State Comptroller DiNapoli. "My office will continue to partner with Attorney General Schneiderman to root out public corruption and hold those who abuse their position accountable." 

According to documents filed in court, Thomas Capuano was the Commissioner of the Rensselaer Department of Public Works, and the supervisor of his two co-defendants, Ronald Foust and Jeffrey Clark. Surveillance videos from a local scrap yard showed Foust and Clark cashing in items discarded by city residents. Foust and Clark later implicated Capuano, their supervisor, in the scheme. Both Foust and Clark have pleaded guilty for their roles in the scheme and are awaiting sentencing.

The Sanitation Division within the City’s Department of Public Works collects the city’s metals, including refrigerators, stoves, and copper coil that city residents leave on their curbs for home pick-up. The Sanitation Division then takes collected items to Rensselaer Iron, a scrap yard in Rensselaer County where the city has an account. In exchange, Rensselaer Iron writes a check to the city for the value of the metal turned in.

Court documents indicate that Foust, who was the Foreman of the sanitation crew, told investigators that at some point prior to 2010, he had the idea that rather than take both the bulk metal and scrap metal to Rensselaer Iron, he could separate the scrap metal from the bulk metal, and take the scrap metal to another scrap yard in Albany, Capitol Scrap, that paid out in cash. In doing so, he could pocket some extra money without the bulk metal even appearing to have been stripped of its parts. Foust took this idea to his supervisor, Mr. Capuano, who approved of the idea and allowed him to use a city truck to make the trips during business hours. According to the felony complaint filed in court, Foust and Clark shared part of the proceeds with Mr. Capuano.  This scheme involved at least $46,000 in theft from the city during the four year period.

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.

Prosecuting the case is Assistant Attorney General Christopher Baynes of the Attorney General’s Public Integrity Bureau, assisted by Assistant Attorney General Rachel Doft and former Assistant Attorney General Colleen Glavin. The Public Integrity Bureau is led by Bureau Chief Daniel Cort and Deputy Bureau Chief Stacy Aronowitz. The Public Integrity Bureau is part of the Division of Criminal Justice led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The investigation was handled by Investigator Dennis Tomasone, with support from Deputy Chief Investigator Antoine Karam and Chief Investigator Dominick Zarrella of the Attorney General's Investigations Bureau.

The joint investigation was conducted with the Comptroller’s Division of Investigations.

NEW YORK – Attorney General Eric T. Schneiderman today released the following statement in response to reports that Radio Shack may sell private customer data as part of its bankruptcy sale. The company’s privacy policy says that the company will not sell or rent personal information.

“When a company collects private customer data on the condition that it will not be resold, it is the company’s responsibility to uphold their end of the bargain,” said Attorney General Schneiderman. “My office will continue to monitor Radio Shack’s bankruptcy sale and whether it includes auctioning off private customer data. We are committed to taking appropriate action to protect New York consumers.”

As Radio Shack faces a bankruptcy sale, reports suggest the company may attempt to sell customer data. The company’s privacy policy currently states that:

• “We will not sell or rent your personally identifiable information to anyone at any time.
• We will not use any personal information beyond what is necessary to assist us in delivering to you the services you have requested.
• We may send personally identifiable information about you to other organizations when: We have your consent to share the information (you will be provided the opportunity to opt-out if you desire).”  - RadioShack Privacy Policy, 3/25/2015

PEARL RIVER – Attorney General Eric T. Schneiderman today announced the arrest of Terri Stephens-Traverse for allegedly stealing several pills containing oxycodone from an Orange County nursing facility’s emergency pain medication supply. Stephens-Traverse was formerly employed at Campbell Hall Rehabilitation Center located in Campbell Hall, a hamlet in the Town of Hamptonburgh in Orange County.

“Resident safety is jeopardized when those responsible for their care are under the influence of dangerous narcotics,” Attorney General Schneiderman said. “Opioid medications are highly addictive, and they must be closely monitored. My office will continue to prosecute unscrupulous medical professionals who steal patient medication and compromise the care they receive.”

On six separate occasions between January 23, 2013 and February 2, 2013, Stephens-Traverse, while working as a supervising nurse, allegedly stole powerful pain medication containing the narcotic oxycodone from an emergency supply kept on hand by the Center to fill new pain medication prescriptions for its residents. To conceal her theft, Stephens-Traverse allegedly falsified Center records and forged the signatures of assigned medication nurses, to indicate that the medications were administered to residents in her care when, in fact, she kept the pills for personal use.

Stephens-Traverse, 46, was charged in Hamptonburgh Town Justice Court with Falsifying Business Records in the First Degree (a class E felony), Forgery in the Third Degree (a class A misdemeanor), Criminal Possession of a Controlled Substance in the Seventh Degree (a class A misdemeanor) and Petit Larceny (a class A misdemeanor). Class E felonies carry a maximum penalty of four years in prison, while class A misdemeanors carry a maximum penalty of one year in jail.

Stephens-Traverse, of Inverness, Florida, was arraigned before Judge Edward Souto and released on her own recognizance. She is due back in court on May 27, 2015.

The charges brought today are accusations, and the defendant is presumed innocent until and unless proven guilty.

The case was investigated by Medicaid Fraud Control Unit (MFCU) Senior Investigator Frank Bluszcz with the assistance of Supervising Investigator Peter Markiewicz.

The case is being prosecuted by Special Assistant Attorney General Susan Bloom of the MFCU Pearl River Regional Office with the assistance of Regional Director Anne Jardine. Thomas O’Hanlon is the Chief of Criminal Investigations-Downstate. The MFCU is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced the indictment of 13 individuals charged with conspiring to distribute heroin from New York City across state and county lines into Orange, Sullivan, and Nassau Counties, as well as Pittsburgh, Pennsylvania. Starting in June 2014, law enforcement agents from the New York Attorney General’s Organized Crime Task Force (OCTF) and the New York State Police’s Community Narcotics Enforcement Team (CNET) conducted a joint investigation, code-named “Operation Iron Horse,” that included covert physical surveillance and hundreds of hours of wiretaps that identified this alleged multicounty and multistate heroin distribution network. The indictment charges 13 people with a combined 179 counts related to the trafficking and possession of heroin. One defendant – who called himself “The Prime Minister” – is charged with Operating as a Major Trafficker, the only felony narcotics charge in the state that carries as possible life sentence.

“For the third time in as many weeks, we have dismantled a large heroin ring that allegedly crossed county and state lines, stretching from Pittsburgh to Long Island,” said Attorney General Schneiderman. “The tragic reality is that we are in the midst of a heroin epidemic in New York State – and the conventional wisdom that these drugs are confined to inner cities is clearly wrong. Using every tool and resources at my office’s disposal, we will continue our efforts to root out drug abuse in every New York community suffering from the blight of illegal narcotics.”

“With today's arrests, law enforcement is once again sending a strong message that this type of crime will not be tolerated in New York State,” said New York State Police Superintendent Joseph A. D'Amico. “These individuals are accused of carrying heroin on public transportation and putting innocent lives at risk. I commend the members of the New York State Police Community Narcotics Enforcement team and our law enforcement partners for the inter-agency cooperation and coordination it takes to get drugs off our streets.”

As outlined in the indictment unsealed today by the Orange County Court, evidence gathered by state investigators showed that Brian Bacon – a.k.a. “The Prime Minister” – was the alleged kingpin behind a major heroin distribution network based in New York State. This network allegedly stretched from Harlem and the Bronx, where Bacon lives and works, to Nassau, Orange, and Sullivan Counties in New York and Allegheny County in Pennsylvania.

As alleged, Bacon sold up to a kilogram of heroin per month with assistance from his son, Tamar Dillard, and his girlfriend, Donna Marie Haggans, who were integral to the packaging and delivery of the heroin to customers and resellers, as well as the handling of money. Bacon was also allegedly assisted by Wallace Walker – the self-styled “quality control officer” – who distributed heroin to third parties, who would test and then rate the quality, thereby permitting Bacon to gauge how much he could “cut” the heroin and the price he should charge.

As detailed in the indictment, Bacon had two suppliers: an as-yet unidentified male and Raymos Bertrand. The main resellers allegedly supplied by Bacon were: Jerome Turnbough, from Newburgh; Roderick Copeland, from upper Manhattan; Jamaul Aziz, who currently resides in Sullivan County, New York; and Kenneth Parris, from Uniondale.

As alleged, Bacon regularly sent his son, Dillard, to take the Metro-North train from the 125th Street station in Harlem to deliver drugs to Turnbough in Newburgh. Turnbough also allegedly traveled by train to New York City, where he would buy heroin to take back up to Newburgh.

Another one of the main resellers, Roderick Copeland, allegedly acquired heroin from Bacon every two weeks and gave it to a co-conspirator, William Thomas, who regularly traveled by bus between the Port Authority Bus Terminal in Manhattan and Pittsburgh, where the heroin was then distributed.

Those charged in the indictment are:

• BRIAN BACON, a.k.a. Prime Minister, 52, Bronx, NY
• JEROME TURNBOUGH, 55, Newburgh, NY
• DEVONNA BARRERAS, a.k.a. Creechbarreras, 22, Newburgh, NY
• TAMAR DILLARD, a.k.a. Young Buck, 37, Bronx, NY
• KENNETH PARRIS, 42, Uniondale, NY
• JAMAUL AZIZ, 34, Monticello, NY
• RODERICK COPELAND, 51, Manhattan, NY
• DONNA MARIE HAGGANS, 49, Bronx, NY
• WALLACE WALKER, Bronx, NY
• WILLIAM THOMAS, JR., 50, Pittsburgh, PA
• EDDIE L. CULLINS, 44, Newburgh, NY
• GILBERT MAXI, 22, Monticello, NY
• RAYMOS BERTRAND, 43, Bronx, NY

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

This is the third major take down of a narcotics distribution network by the New York Attorney General’s office in the last three weeks, totaling more than sixty arrests. Including this case, OCTF has busted 24 large drug trafficking gangs, made more than 560 felony narcotics arrests, and seized more than $1.5 million, 80 guns, and more than 2,000 pounds of illegal drugs in the last four years.

The New York Attorney General’s office has undertaken a comprehensive approach toward reducing opioid drug abuse in New York State. In October 2014, Attorney General Schneiderman initiated the Northeast and Mid-Atlantic Heroin Task Force (NEMA-HTF), which brings together state attorneys general from New York, Pennsylvania, New Jersey, Massachusetts, Maine, and Maryland to collaborate, coordinate, and share information to combat large-scale distribution operations spanning multiple states. I-STOP, the nation’s first real-time prescription tracking system for the most addictive prescription drugs, reduced doctor shopping in New York by 75 percent in just the first 8 months of the program. The Community Overdose Prevention (COP) program has supplied law enforcement departments across the state with naloxone, which has been used to save more than 100 lives from opioid overdoses in less than a year.

The investigation that led to today’s indictment was conducted by NYSP-CNET Investigators Christopher Fox, Gary Mazzacano, Senior Investigators Charles Kelly and Robert D’Angelo, Lieutenant Francis Kealty, and Captain William McEvoy. The commanding officer of NYSP-CNET is Major David Krause. They were joined by NYAG-OCTF Investigators Brad Farrell and Edwin Margenat, Supervising Investigator Kevin McCann, and Deputy Chief Christopher Vasta.

The case is being prosecuted by Assistant Deputy Attorney General Jonathan Sennett and Assistant Deputy Attorney General Cristina A. Villani. The Organized Crime Task Force is led by Deputy Attorney General Peri Alyse Kadanoff. The Executive Deputy Attorney General for Criminal Prosecutions is Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman and New York City Police Department (NYPD) Commissioner William J. Bratton today announced three guilty pleas in a worldwide khat trafficking ring that flooded New York City, as well as other parts of New York, Massachusetts, and Ohio, with several tons of khat, a plant containing controlled substances similar to amphetamines. Today’s guilty pleas by the drug ring’s three leaders mark the first time in New York that khat dealers will serve time in New York state prison.

Last summer, Attorney General Schneiderman and Commissioner Bratton announced the indictment of 17 members of a khat trafficking ring. The 215-count Brooklyn indictment charged that the defendants operated as Major Traffickers who worked together to obtain khat from Yemen, Kenya and Ethiopia; ship it to the United States through countries including the United Kingdom, China, The Netherlands, and Belgium; and trafficked it in the New York, Syracuse, Rochester and Buffalo metropolitan areas, as well as communities in Massachusetts and Ohio. The ring then laundered the illicit proceeds through operatives in Minnesota and wired the money to various locations abroad, including Dubai and England.

“Khat is a dangerous and illegal drug with worldwide reach. As a result of this international takedown, a sophisticated operation accused of bringing drugs into the United States and sending the illicit profits overseas, has been shut down and the ringleaders are headed to prison,” said Attorney General Schneiderman. “Today’s guilty pleas demonstrate that those who flood our national and state borders with drugs will be brought to justice.”

"I want to thank all of the agencies involved in this complex investigation for their unwavering commitment in targeting criminal networks like these, and in doing so, stopping the flow of illegal drugs from hitting our streets and compromising the safety and well-being of our communities," said Police Commissioner William J. Bratton.

As part of the plea agreements, Yadeta Berki (a.k.a. “Murad”), 24, of the United Kingdom, will be sentenced to three years in state prison and will forfeit $150,000; Bayan Yusuf, 32, of Rochester, will be sentenced to two years in state prison; and Ahmed Adem, 32, of Rochester, will be sentenced to two years in state prison. All three defendants pleaded guilty to Attempted Operating as a Major Trafficker.

Khat is a plant cultivated largely in Kenya and Ethiopia. Among its active ingredients are cathinone, a stimulant classified as a Schedule I controlled substance under the New York State Public Health Law, and cathine, which is classified as a Schedule IV controlled substance. Users of khat chew the leaves and stems of the plant and swallow the juice to create a high.

As part of the investigation, state and local law enforcement agents led by the New York State Attorney General's Organized Crime Task Force (OCTF) and the NYPD’s Intelligence Division conducted a nearly year-long investigation. The indictment alleges that England-based defendant Yadeta Bekri, known to his co-conspirators as “Murad,” systematically shipped large quantities of khat to his U.S.-based partners, Bayan Yusuf and Ahmed Adem, through multiple U.P.S. stores located in Manhattan. Yusuf and Adem, both of Rochester, NY, would then allegedly deliver the khat to their distributors and direct customers based in Brooklyn, Rochester, Syracuse, and Buffalo, as well as Everett, Massachusetts.

Surveillance conducted as part of the investigation revealed that the defendants used public storage facilities in Rochester, Queens and Brooklyn to store large quantities of khat until they were able to distribute the drugs.

At Bekri’s direction, Yusuf and Adem allegedly transported the proceeds of these illegal sales by car to Bekri’s fiancée and co-conspirator Ibsitu Hashi in Minnesota who, in turn, sent the money back to Bekri via Dubai and other countries.

In addition to the Attorney General’s Office and the New York City Police Department, the New York State Police, ICE Homeland Security Investigations, and United States Customs and Border Protection all assisted in the investigation.

The indictment charged 17 co-conspirators with crimes including Operating as a Major Trafficker and various counts of Criminal Sale and Criminal Possession of a Controlled Substance, Money Laundering and Conspiracy to commit those crimes. The indictment represents the first time that the controlled substances found in khat have been the subject of the Operating as a Major Trafficker statute (§220.77(1) of the Penal Law of the State of New York), authored by Attorney General Schneiderman as part of changes to the Rockefeller-era drug laws.

The defendants charged last year included:

• Yadeta Bekri (a.k.a. “Murad”), 24, of the United Kingdom
• Bayan Yusuf, 32, of Rochester
• Ahmed Adem, 32, of Rochester
• Mustafa Sadeq Ali, 22, of Brooklyn
• Sadeq Hassan Ali, 46, of Brooklyn
• Noman Saleh Almoflehi, 22, of Brooklyn
• Ahmed Khader Sulaiman, 25, of Brooklyn
• Al Khader Sulaiman, 29, of Brooklyn
• Wail Seidi, 22, of Queens
• Nabil Seidi, 36, of Queens
• Mohamed Seidi, 26, of Queens
• Abubaker Seidi, 39, of Queens
• Ali Saleh, 40, of Rochester
• Mohamed Mohamed, 43, of Rochester
• Rumiya Osman, 31, of Rochester
• Malyun Ibrahim, 46, of Everett, Massachusetts
• Ibsitu Hashi, 35, of Blaine, Minnesota

The investigation was directed by OCTF Investigator Brian Fleming and Supervising Investigator Arthur Schwartz, OCTF Deputy Chief Christopher Vasta and Investigations Bureau Chief Dominick Zarrella in the Attorney General’s office, and by NYPD Detective Milton Lopez, Sergeant Scott Mackay and Lieutenant Joseph Sullivan of the Intelligence Division and Deputy Inspector Paul Mauro. The case is being prosecuted by OCTF Deputy Bureau Chief Tarek Rahman, with the assistance of OCTF Analyst Nicole Accurso, under the supervision of OCTF Deputy Attorney General Peri Alyse Kadanoff. The Executive Deputy Attorney General for Criminal Justice is Kelly Donovan.

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

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with the National Junior College Athletic Association (“NJCAA”), to eliminate an eligibility rule that limited the participation of students who attended fewer than three years of high school in the United States in their member colleges’ athletic programs. As part of the settlement, the NJCAA has agreed to eliminate the rule nationally, engage in outreach to junior colleges and students about the change, and submit any future eligibility rules concerning students’ national origin to the Attorney General for review.

“My office is committed to ensuring equal educational access to all students in New York State, regardless of national origin,” Attorney General Schneiderman said. “Our state remains one of the most thriving in the nation because of the millions of immigrants that, for centuries, have come here seeking opportunity through their own hard work. New York is committed to the principle that such opportunity is best realized through an educational system open to all students, regardless of where they were born or attended high school. Our agreement with the NJCAA will help ensure that the valuable, character-building athletic programs they organize for junior colleges in New York and across the country are open to all students.”

CUNY Vice Chancellor for Student Affairs Frank Sanchez said, "These rule changes will provide undocumented students access to the full array of CUNY programs and activities that make up our distinctive collegiate experience, including intercollegiate athletics." 

The NJCAA is the second-largest national intercollegiate sports association, after the NCAA, with a membership of 525 public and private junior and two-year colleges across the country, including 41 member colleges in New York State. Its stated mission is to “foster a national program of athletic participation in an environment that supports equitable opportunities consistent with the educational objectives of member colleges.”

In 2012, the NJCAA adopted a national eligibility rule that had the effect of limiting participation in the athletic programs of its member colleges to students who had attended at least three years of high school in the U.S. In the fall of 2014, several public junior colleges in New York State brought the rule to the Attorney General’s attention, citing the importance of athletic programs to the academic and general success of their students. The rule had a particularly negative impact upon urban junior college systems that serve a large number of immigrant students. For example, in fall 2013, 39% of students enrolled at junior colleges within the City University of New York system were born outside the mainland United States. And among CUNY’s first-time junior college freshmen, 7.2% attended high school for some period outside the United States.

In response to these concerns, and the possibility that the NJCAA’s eligibility rule violated state and local non-discrimination laws concerning national origin, the Attorney General’s Civil Rights Bureau opened an inquiry into the NJCAA eligibility rules in February 2015. As a result of the Attorney General’s inquiry, the Association immediately suspended the eligibility rule and ultimately agreed to eliminate it on a permanent basis.

Under the terms of the agreement, the NJCAA will:

• Permanently eliminate the eligibility rule for member colleges nationwide;
• Develop an outreach campaign to member colleges and their students concerning elimination of the rule and the opportunities available for all student-athletes. The campaign will include notices on the NJCAA website; fact sheets for distribution by athletic directors at member colleges; and quarterly posts to the Association’s various social media accounts, through January 2016;
• Submit for the Attorney General’s review any proposed eligibility rule concerning a student’s citizenship status, national origin, or residency in the U.S., through 2017; and
• Report to the Attorney General complaints made by any member college, student, or prospective student in New York State, alleging discrimination on the basis of citizenship status or national origin.

This matter is being handled by Assistant Attorneys General Anjana Samant and Justin Deabler, and Civil Rights Bureau Chief Kristen Clarke. The Bureau is part of the Division of Social Justice, which is led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

NEW YORK – Attorney General Eric T. Schneiderman today announced a landmark agreement with Pennsylvania-based retail giant GNC to implement new standards in authenticating herbal supplements, ensuring their purity, and educating consumers about their chemical content. Under today’s agreement, GNC will perform DNA barcoding on the “active” plant ingredients used in its products; implement testing for contamination with allergens, both before and after production; and post prominent signage advising consumers of the processed, chemical nature of extracts. GNC will be required to implement these new procedures in all of its more than 6,000 stores nationwide, making this agreement the first in the nation to require testing standards for herbal supplements that exceed current FDA requirements.

“When consumers take an herbal supplement, they should be able to do so with full knowledge of what is in that product and confidence that every precaution was taken to ensure its authenticity and purity,” said Attorney General Schneiderman. “When it comes to consumer health, we expect companies to reach a high safety bar. Without tests and safeguards, including those that rule out dangerous allergens, these supplements pose unacceptable risks to New York families. I urge all herbal supplements manufacturers and retailers to join GNC in working with my office to increase transparency and put the safety of their customers first.”

Last month, Attorney General Schneiderman sent cease-and-desist letters to GNC, Target, Walgreens and Walmart, after a study commissioned by his office failed to detect identifiable genetic material for the plants depicted on the labels in most of the four retailers’ herbal supplement products. The study further detected DNA associated with plants not listed on the labels, as well as the presence of potential allergens. In launching his investigation, the Attorney General raised concerns about the measures put in place by manufacturers and retailers to ensure the authenticity and purity of herbal supplements – which are taken by more than half of all American adults – and the sufficiency of federal standards regulating this $60 billion worldwide industry. Earlier this month, joined by the Connecticut and Indiana state attorneys general and the Puerto Rico Secretary of Consumer Affairs, Attorney General Schneiderman formed a coalition to further investigate the business practices of the herbal supplement industry.

“This agreement provides stronger consumer protections for these GNC supplements and highlights the relative weak federal standards," said Indiana Attorney General Greg Zoeller, whose office is not party to today's agreement but is part of the multistate coalition. "Hopefully this will lead others in the supplement industry to follow suit and encourage the FDA to review the existing national standards that are currently in place that has resulted in attorneys general making efforts to ensure better consumer protections for dietary and herbal supplements."

"Consumers should be able to expect that the product they are purchasing actually contains the ingredients that are listed on the label," said Connecticut Attorney General George Jepsen. "GNC has taken a laudable step toward ensuring the highest level of transparency in the products it offers to consumers. The testing and disclosures included in this agreement are truly landmark and will provide important information about these products to consumers in New York, Connecticut and across the country so that they can make educated decisions when choosing to use a supplement. I commend Attorney General Schneiderman for his continued leadership on this issue."

"GNC and the NY Attorney General’s office are to be congratulated for so promptly reaching agreement on the means of providing monitoring of herbal supplements so as to more effectively ensure safety of consumers who purchase these products," said Arthur P. Grollman, M.D., Professor of Pharmacological Sciences at Stony Brook University. "This agreement should serve as a model for other companies and, hopefully, for the federal government to enact similar regulations. Adoption of DNA barcoding to confirm the authenticity of all plants prior to processing is a major step forward in the regulation of herbs."

New York State Assembly Assistant Speaker Felix W. Ortiz said, "The health & safety of New Yorkers is always important. This agreement insures that consumers know what they are buying and that the product quality is guaranteed. I applaud the Attorney General for his initiative."

David Schardt, Senior Nutritionist, Center for Science in the Public Interest said, "The agreement GNC reached with New York State represents important progress in ensuring that supplements contain what they claim to. But Congress should pass reform that would allow the FDA to police this marketplace and remove products that are dishonestly marketed or potentially dangerous.

Jane L. Delgado, President and CEO of the National Alliance for Hispanic Health said, "All consumers deserve to know that what is on the label is actually in the supplements they are using. It is time for all manufacturers to adopt higher standards of DNA technologies to ensure authenticity of components and strict testing for contaminants."

David S. Seres, M.D., Director of Medical Nutrition at Columbia University Medical Center said, “When federal law prohibits the kind of regulation that we demand on all other products used for health benefits, the Attorney General’s actions represent an important step in reining in the supplement industry and assuring that the consumer can trust what is in the bottle.”

Tod Cooperman, M.D., President of ConsumerLab.com said, “FDA’s rules focus on making sure a supplement is produced the same way each time, but not necessarily with high-quality, authentic ingredients. Companies are allowed to choose their own tests and set their own standards. The additional tests outlined by this agreement are a positive step toward making sure that herbal supplements are actually made from the plants on their labels.”

Josh Bloom, Director of Chemical and Pharmaceutical Science, American Council on Science and Health said, “Although this agreement is certainly an improvement from the standards that have been in place, and Attorney General Schneiderman should be applauded for his work in this area, this is only the first step. Congress has stripped the FDA of the ability to approve or reject these products, which are essentially unregulated drugs."

While the Attorney General’s Office found that GNC’s herbal supplements were produced in compliance with FDA regulations requiring the use of current good manufacturing practices, the investigation raised questions regarding the sufficiency of those requirements in relation to state consumer protection laws.

For instance, the FDA does not mandate the use of DNA-based technologies, like barcoding, to authenticate herbal supplements. Instead, the FDA allows companies to support their claims through other methodologies. Given the existence of chemically-similar natural or synthetic substitutes, the Attorney General’s Office remains concerned that these alternate methodologies do not provide adequate assurances of the authenticity of herbal supplements. Current FDA regulations allow for low levels of inadvertent contamination, including from allergens, and there is no federal testing required to confirm that contamination falls below relevant safety thresholds.

Contamination in herbal supplements could pose a significant danger to those who have food allergies or take medication – and there have been a number of examples of supplements endangering consumer safety. A 2013 outbreak of hepatitis that struck at least 72 people in 16 states was traced to a tainted supplement. Last October, an infant at a Connecticut hospital died when doctors gave the child a popular probiotic supplement that was later found to be contaminated with yeast.

DNA barcoding is a technique used to authenticate organic materials using unique reference sequences of DNA, which holds great promise as a scientific technique for the verification of plant species. GNC will commit to implementing this procedure during herbal supplement production, enhancing other aspects of its operations, and leading the industry to adopt the same standards, as follows:

Authentication: Within 18 months, GNC will begin utilizing DNA barcoding to confirm the authenticity of all plants used as sources for its herbal supplements products prior to processing. This will ensure the presence of a biological connection between the source plant and the extract that is eventually included in GNC’s supplements. In cases where no DNA barcode is yet available for the relevant species, GNC has committed to perform its own sample collection – DNA isolation and sequencing – to create a DNA barcode for that plant ingredient. GNC will contribute any new barcodes, and the scientific methods used to identify them, to a publicly accessible database within 24 months. 
GNC will also require that all herbal ingredients used in its products are manufactured in facilities that are certified as good manufacturing compliant by a third-party accreditation body, such as ISO, USP, or NSF.

Broad Testing For Contaminants: GNC will implement a sweeping, randomized testing protocol for the eight most common allergens – defined by the FDA as milk, eggs, peanuts, tree nuts, fish, shellfish, soy and wheat. This will include testing certain raw ingredients for contamination and, after production, ensuring that those allergens are not present in its products. In order to do this, GNC will not only require its suppliers to implement this testing protocol, but will also perform testing themselves on finished products, using a scientifically-validated technique. In addition, GNC will also conduct testing to confirm any affirmative representations on its labels that particular ingredients are absent from certain products (e.g. “No sugar.”)

Consumer Transparency: GNC will prominently display signs in stores across the country and include language on its website indicating whether a supplement product is derived from whole herbs or extracts and explaining the difference between those two processes. In particular, these signs will highlight that extracts are chemicals derived from plants after applying solvents, like liquid carbon dioxide. GNC will list all ingredients used in its products on its labels, per existing FDA rules.

Reporting: GNC will provide semiannual reports to the Attorney General’s Office, detailing all plant species sourced after authentication using DNA barcoding; the name and address of all facilities in which DNA barcode authentication was performed; a list of materials rejected as a consequence of the results of the barcoding and the results of the randomized testing for common allergens. GNC will provide additional documentation and information necessary for the Attorney General’s Office to verify compliance with this agreement without the necessity for a subpoena. 

In response to the Attorney General’s cease-and-desist letter, GNC removed from its shelves all products that the office’s testing found to contain contaminants not identified on their labels. As described in the agreement, those products remain off of store shelves.

The case is being handled by Executive Deputy Attorney General Marty Mack, Senior Adviser and Special Counsel Simon Brandler and Assistant Attorney General Deanna Nelson, Assistant Attorney General Alicia Lendon, Assistant Attorney General Richard Yorke and Environmental Scientist John Davis.

The broader investigation into the herbal supplements industry is being handled by Assistant Attorney General Dorothea Caldwell-Brown, Research Analyst John Ferrara, Research Director Lacey Keller, Chief of the Environmental Protection Bureau Lemuel Srolovic and Executive Deputy Attorney General for Economic Justice Karla Sanchez.

To see the copy of the agreement, click here.

NEW YORK — As part of a coordinated law enforcement action, Attorney General Eric T. Schneiderman today announced that his office and the Attorneys General of Oregon, Minnesota, Missouri and Texas filed lawsuits against Orbital Publishing Group, Inc. and a ring of interrelated New York and Oregon companies for mailing millions of unauthorized and allegedly misleading magazine and newspaper subscription notices to consumers nationwide. The solicitations were sent without the permission of the publishers and stated that consumers were receiving “one of the lowest available rates,” when, in fact, they were being charged, in some cases, more than double the publication price. The companies then pocketed the difference.

“It is illegal under New York law to trade on the name of reputable publications and use deceptive advertising to trick consumers into overpaying for goods and services,” said Attorney General Schneiderman. “New York is home to the largest media market in the country and serves as headquarters to many of our nation’s most important newspapers and magazines. My office will work hard to protect New Yorkers from swindlers and to protect the business of reputable companies who play by the rules.”

“This sophisticated mail scam ripped off thousands of Oregonians and others across the country,” said Oregon Attorney General Ellen Rosenblum. “Consumers thought they were dealing with legitimate companies, and that they were paying the lowest available price. Instead, they sent payments to a dishonest third-party, who pocketed the money. As Attorney General, I will not tolerate dishonest or fraudulent business practices in Oregon.”

“They used deceptive ‘renewal’ notices to get people to unwittingly pay significantly more for their newspaper or magazine subscriptions,” said Minnesota Attorney General Lori Swanson.

Attorney General Schneiderman’s lawsuit, which charges violations of New York State law, alleges that, from at least 2010 to the present, the interrelated companies sent consumers unlawful solicitation notices designed to look like they came directly from at least 44 publications. The victimized publications include some of the nation’s leading periodicals, including Consumer Reports, National Geographic, the New York Times, the Wall Street Journal and the Washington Post.

The New York suit, filed today in Manhattan Supreme Court, seeks to stop the alleged illegal business practices, return money to consumers, disgorge any profits related to these alleged illegal activities, and penalties.

Attorney General Schneiderman’s lawsuit charges the companies violated Sections 349 and 350 of New York’s General Business Law, which prohibits deceptive business practices and false advertising, and Section 335-a of the General Business Law, which requires magazine renewal solicitations to disclose the month and year that the consumer’s subscription expires. The companies’ solicitations failed to provide this information. As a result, some consumers sent money to the companies to renew their subscriptions, not realizing that their current subscription had not yet expired. Other consumers complain that they sent payments to the companies but never received their subscriptions. Many of the consumers affected by the scam appear to be elderly.

The New York Attorney General’s office has received dozens of complaints from consumers across New York, including on Long Island, in New York City, the Hudson Valley, the Capital Region and Erie, Niagara and St. Lawrence counties, about misleading subscription solicitations from the companies named in the lawsuit. Thousands of complaints have been received by the Federal Trade Commission and the Better Business Bureau and the offices of the Attorneys General in the four other states filing suit today.

In an effort to stop the alleged abuse, many of the publishers – who complained to law enforcement and filed lawsuits in an effort to stop the alleged abuse – have issued cease and desist letters to the solicitation companies demanding that they stop sending unauthorized solicitations. Some of these publishers ran alerts on their websites and full page advertisements in their publications in an effort to warn their readers about scam solicitations. Dow Jones, in an affidavit filed as part of New York lawsuit, stated that it has spent $3.5 million in responding to the unauthorized notices, including by offering free subscriptions. American City Business Journals estimates that its subscribers, who were charged double the publication’s real subscription price, have lost as much as $120,000 as a result of the companies’ allegedly deceptive practices.

According to the New York lawsuit, the solicitation scams were operated by a labyrinth of corporate entities, which were allegedly created to disguise the scheme. The solicitation companies have used dozens of different names to solicit consumers, including Magazine Payment Services, Associated Publishers Network, Publishers Periodical Service, United Publishers Service, Publishers Billing Exchange, Publishers Billing Association, Publishers Billing Center, Magazine Billing Network, Publishers Distribution Services, Magazine Distribution Service and Subscription Billing Service. The solicitations generally contained a return address in White City, Oregon, Henderson, Nevada, or Reno, Nevada.

According to the court papers, once the companies received orders from consumers, typically at exorbitant prices, the companies sent a check to the publishers for the actual subscription price, so that the consumer’s subscriptions were started or renewed, and then pocketed the difference. For example, the companies charged consumers as much as $59.95 for annual subscriptions to Consumer Reports that cost $29.95. They charged Wall Street Journal consumers $599.95 for a one-year subscription that cost $413 at retail. The New York Times estimated that the companies charged consumers a price that is 30 to 40 percent higher than the actual subscription cost of The Times. Many publishers are no longer accepting orders from the companies.

In addition to Orbital, the Attorney General sued the following entities and individuals: Liberty Publishers Service, Inc., Express Publishers Service, Inc., Associated Publishers Network, Inc., Publishers Payment Processing, Inc., Adept Management, Inc., Customer Access Services, Inc., Consolidated Publishers Exchange, Inc., Magazine Clearing Exchange, Inc., Henry Cricket Group, LLC, Laura Lovrien, and Lydia Pugsley. Laura Lovrien is the alleged Chief Operating Officer of Orbital and president and secretary of Liberty Publisher. Lydia Pugsley is the alleged owner of Adept Management, Inc. Both Lovrien and Pugsley are alleged to have participated in the operations of the companies, including sending solicitations, receiving consumers’ payment and handling consumer complaints. Orbital Publishing Group, Inc., Liberty Publishers Service, Inc., Publishers Payment Processing, Inc. and Henry Cricket Group, LLC are incorporated in New York, but appear to be operating out of Oregon.

If you believe you were a victim of a magazine or newspaper subscription scam, please file a complaint with the Attorney General’s Office. Complaint forms are available here. You may also call the Attorney General’s Consumer Hotline at 1-800-771-7755.

This case is being handled by Special Counsel Mary Alestra, Volunteer Assistant Attorney General Daniel Park, Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Attorney General’s Bureau of Consumer Frauds and Protection, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

PEARL RIVER – Attorney General Eric T. Schneiderman today announced an agreement with Keli House Community Services, Inc., a Fishkill-based nonprofit serving New Yorkers with disabilities and their families, that used unqualified individuals to provide services to Medicaid recipients who participated in the Home and Community Based Services Program offered by the New York State Office of Persons with Developmental Disabilities (OPWDD). The settlement calls for Keli House to reimburse Medicaid $363,643.

“People suffering from disabilities deserve the best assistance available when exploring the option to stay in their homes,” said Attorney General Schneiderman. “Service providers that employ inexperienced staff deprive New Yorkers of the expertise needed to navigate and maximize all opportunities. We will crack down on anyone who shortchanges not only the most vulnerable members of our community but also our Medicaid program.”

Keli House Community Services provides a variety of services intended to decrease the risk of institutionalization for Medicaid recipients with developmental disabilities. These services include service coordination, which assesses the needs of the individual and connects them to programs designed to prevent their institutionalization.

OPWDD rules require individuals providing service coordination for organizations to meet certain minimum educational and experience requirements to ensure the quality of services provided to persons with special needs. Each coordinator must have at least an associate’s degree in a health or human services field and, either one year experience working with people with developmental disabilities or one year of service coordination experience. They must also complete a training program approved by OPWDD. During a three and a half year period ending in November 2009, Keli House employed ten persons to provide service coordination in the program, but only one was fully qualified to provide this service. Some of the coordinators had no experience while others held degrees in unrelated fields.

Keli House will reimburse the Medicaid program $363,643, which was the amount paid to the nonprofit for services provided by unqualified employees.

The Attorney General would like to thank the former Commission on Quality of Care and Advocacy for Persons with Disabilities, now part of the Justice Center for the Protection of Persons with Special Needs, for its assistance in conducting the investigation.

The case was investigated by Special Assistant Attorney General William McClarnon of the Medicaid Fraud Control Unit, Principal Special Auditor Investigator Jean Moss, Associate Auditor Investigator Sandra Alvarez, Investigator Timothy Connolly, with the assistance of Regional Director Anne Jardine, Supervising Investigator Peter Markiewicz and Assistant Chief Auditor Investigator John Regan. The Medicaid Fraud Control Unit is led by Acting Director Amy Held and is within the Division of Criminal Justice, which is led by Deputy Attorney General Kelly Donovan.

A copy of the settlement is available here.

NEW YORK – Attorney General Eric T. Schneiderman and Mayor Bill de Blasio today announced the formation of a new joint task force to target those who prey on immigrants, while encouraging victims of fraud to come forward without fear.

The task force, led by the Mayor’s Office of Immigrant Affairs and the NYC Department of Consumer Affairs, together with the Office of Attorney General, will dedicate enforcement resources and conduct a public awareness campaign to stop predators from taking advantage of immigrant communities in advance of the full implementation of President Obama’s executive actions on immigration.

“Together we are sending a powerful message that New York has zero tolerance for anyone who seeks to prey on immigrants and their families,” said Attorney General Schneiderman. “As the president’s executive action goes into effect, New York is taking the lead to root out fraud against those looking for a better life. Through this strategic partnership, we will hold accountable those who take advantage of vulnerable immigrants and help make the goals of the president’s action a reality for thousands of New Yorkers.”

“The president’s immigration reforms will initiate an economic, political and social transformation of our cities and our country, but unfortunately, this progress also brings new opportunities for criminals who prey on the most vulnerable among us,” said Mayor Bill de Blasio. “Our joint city-state anti-fraud task force will stop fraudsters in their tracks and provide a safe place for immigrant fraud victims to come forward. While New York is taking bold action, we are also working in collaboration with cities and states across the country to prevent fraud and protect families nationwide.”

“The president’s bold action gives thousands of New Yorkers a path toward security and stability, but that promise can be threatened by fraudsters looking to profit from immigrant vulnerability,” said Immigrant Affairs Commissioner Nisha Agarwal. “Immigrants should be careful to avoid fraud by going to high-quality trusted services, including those supported by the city. By committing the resources of our city and state agencies as part of this task force, New York is taking a leading role to ensure the new process is enacted with integrity.”

“Too many immigrant New Yorkers have been victims of predatory immigration service providers who fleece consumers of thousands of dollars while failing to provide bona fide services. These providers often leave immigrants more vulnerable than they were before,” said DCA Commissioner Julie Menin. “Mayor de Blasio has committed to protecting all of New York City’s immigrants, and DCA is proud to be partnering with the Mayor’s Office of Immigrant Affairs and New York State Attorney General Eric Schneiderman to engage in public outreach and appropriate enforcement actions to ensure that our City’s immigrants are protected.”

"For too long, scam artists have taken advantage of the vulnerability of new immigrants," said Assemblyman Francisco Moya. "This new anti-fraud task force sends a strong message that New York is prepared for the President's immigration reforms and that we will not tolerate immigration-related fraud. As a lawmaker who has spent many years advocating for anti-fraud measures that protect new immigrants from predatory employment agencies, I am intimately aware of how fraudsters seek to exploit immigrants. I commend Mayor Bill de Blasio and Attorney General Eric Schneiderman for taking this innovative and pro-active approach to combating fraud. This initiative helps demonstrate that New York is a welcome home for immigrants."

“Immigrants across New York will welcome this new Task Force as a much-needed effort to bring new energy to this issue throughout New York City and State,” said Javier H. Valdés, co-Executive Director of Make the Road New York. “As New Yorkers prepare for the administrative relief that President Obama announced last November, it’s critical that New York steps up its enforcement of unscrupulous notarios who take advantage of our communities. Make the Road New York applauds the Mayor and Attorney General for this new effort, and we are eager to work with the Task Force to ensure its success.”

“For organizations like La Fuente, the fight against fraudulent legal service providers who target immigrants aspiring to legal status has been daunting,” said Lucia Gomez, Executive Director, La Fuente. “The announcement that Mayor de Blasio and State Attorney General Schneiderman will launch a joint Anti-Immigration Fraud Task Force demonstrates a commitment to addressing head-on an issue that has plagued our immigrant communities for decades. This laudable effort will provide immigrant communities across the state a more robust effort to ensure predators are reported and dealt with by the proper authorities. With this announcement, New York has once again demonstrated its commitment to advancing immigrant rights and recognizing the value of its diverse population.”

“New York City truly stands as example of inclusion for our immigrant residents, yet too often newly arrived New Yorkers stay in the shadows despite being victims of fraud that threaten their well-being and financial stability,” said Grace Bonilla, President for The Committee for Hispanic Children and Families. “CHCF whole heartedly supports and congratulates Mayor de Blasio and Attorney General Schneiderman for addressing these injustices and providing communities that give so much to this city an avenue to come forward, stop these abuses and advocate for themselves.”

“We applaud Mayor de Blasio and Attorney General Schneiderman for their bold leadership in protecting immigrants from fraudulent actors, by the creation of this very important task force. We at Northern Manhattan Coalition for Immigrant Rights have seen the life-shattering damage that unscrupulous immigration providers have wreaked on our community members,” said Angela Fernandez, Esq., Executive Director of Northern Manhattan Coalition for Immigrant Rights. “We look forward to working closely with the task force on behalf of all immigrants throughout New York State.”

"Without any pity for those who desperately seek the safety of legal residency for themselves and their families, agents of exploitation have for too long reigned with impunity,” said Luis Garden Acosta, Founder and President of El Puente. “We welcome Mayor De Blasio's defense of our community's defenseless and join with our Attorney General and President Obama in declaring, once and for all, Basta Ya!"

The joint task force will focus on rooting out a variety of abuses targeting immigrants, but particularly the unauthorized practice of law, commonly known as “notario fraud,” or “immigrant service provider fraud.”

New York State’s Immigration Assistance Service Enforcement Act establishes protections for immigrants who use the services of individuals or businesses that falsely represent themselves as certified legal advisors for citizenship and other issues. The law, which went into effect on February 6, 2015, stiffens penalties and adds new penalties, both criminal and civil, for violations of the Act.

The president’s recent executive action will lead many immigrants to search for legal assistance to navigate the new rules, potentially creating an opportunity for service providers or scam artists to take advantage of immigrants. Unauthorized immigration consultants can create delays in the application process, cost applicants unnecessary fees and possibly even lead to removal proceedings.

The task force is committed to undertaking the following actions:

• Targeted enforcement and/or investigations against immigrant service providers who may be engaging in the unauthorized practice of law. These investigations could occur in partnership, where feasible, or independently by each agency.
• Improved information-sharing to identify illegal activity and coordinate enforcement efforts. In collaboration with community organizations, the task force will establish an information pipeline to connect on-the-ground reports of immigration fraud hotspots to city agencies and the Attorney General’s Office to stop problematic service providers or practices.
• Increased public awareness outreach to engage vulnerable communities and encourage victims to come forward. City agencies and the Attorney General’s Office will collaborate on public education campaigns to bring attention to potential abuses wherever they exist.
• Continual expansion to include other relevant governmental entities and provide a blueprint for cities and states across the country to adopt best practices. As part of Cities United for Immigration Action, New York City is working in close collaboration with partner cities to develop a national model to combat immigration services fraud.

Attorney General Schneiderman has a strong track record for combating immigration services fraud and other actions that ensure equal opportunity for immigrant communities. Recent examples of actions taken by his Civil Rights Bureau include the establishment of a $2.2 million restitution fund for victims of one of the nation’s largest immigration services schemes, action to combat fraud perpetrated by employment agencies that target vulnerable immigrant communities; and efforts to ensure equal educational opportunity for unaccompanied minors and undocumented youth regardless of immigration status. 

The de Blasio administration has a proven track record for welcoming immigrant New Yorkers. From access to federal immigration benefits, citizenship and U-visa application assistance, to the city’s response to the unaccompanied child migrant crisis and new Immigration and Customs Enforcement detainer legislation to dramatically reduce deportations, the city has led a movement that cements the notion that a city’s prosperity and strength depends upon its new American residents having ample opportunities to reach their fullest potential and contribute to the well-being of our communities. 

On April 12th, the Mayor’s Office of Immigrant Affairs will co-host an executive action legal screening for immigrant New Yorkers who might be eligible for the DACA/DAPA programs. While implementation of these programs is temporarily on hold, providing reliable information and combatting abuse is more important than ever. This legal screening event will mark an important citywide collaboration between the city’s largest legal service providers and immigration advocacy groups to create a large-scale legal clinic.

The event will be held on April 12th, from 11 a.m. to 5 p.m. at Temple Emanu-El, located at East 65th Street, Manhattan. For more information: nyc.gov/deferredaction.

To report complaints regarding immigration services, contact the Attorney General’s Immigration Services Fraud Unit Hotline at (866) 390-2992 or Civil.Rights@ag.ny.gov.

NEW YORK – Attorney General Eric T. Schneiderman of New York and Attorney General Greg Zoeller of Indiana today announced that they are leading a bipartisan group of 14 attorneys general calling on Congressional leaders to launch a comprehensive inquiry into the herbal supplements industry. The group has sent a letter asking for Congress to consider a more robust oversight role for the U.S. Food and Drug Administration with respect to herbal supplements. The letter follows New York State’s investigation that raised serious concerns about the marketing and safety of these products, which are regularly consumed by millions of Americans.

“When consumers take an herbal supplement, they should be able to do so with full knowledge of what is in that product and confidence that every precaution was taken to ensure its authenticity and purity,” said Attorney General Schneiderman. “I am proud to stand with a bipartisan group of attorneys general calling for a Congressional inquiry into whether stronger FDA oversight of the herbal supplements industry is needed. My office’s investigation reaffirmed long-standing concerns about the herbal supplements industry. The millions of consumers who take herbal supplements deserve to know whether they are getting what they pay for, and that these products are properly labeled and safe.”

“My focus is on ensuring the best consumer protections for dietary and herbal supplements, and eliminating potential false or deceptive labeling that could be harmful to consumers,” said Indiana Attorney General Greg Zoeller. “My fellow attorneys general and I are urging Congress to consider stronger federal oversight of the herbal supplements industry so that members of the public have full information about a product they are ingesting.”

The multibillion dollar herbal supplement industry is built on the promise that its products will improve the health and well-being of those who use them. Yet, the New York investigation has raised serious concerns about the marketing and safety these products. Recent tests conducted by the New York Attorney General’s Office of popular herbal supplements showed that products were contaminated with allergens, off-label plant species, and other potentially dangerous substances. Some products were so thoroughly processed that the genetic material of the original natural plant source was unrecognizable. Other research has suggested that some herbal supplements have been found to contain high levels of heavy metals like lead, mercury, and arsenic. One study even found that a popular herbal supplement designed to reduce menopause symptoms may have caused severe liver damage in certain women.

The letter to Congressional leaders is co-signed by Attorneys General George Jepsen (D-CT), Karl Racine (D-DC), David M. Louie (D-HI), Lawrence Wasden (R-ID), Greg Zoeller (R-IN), Tom Miller (D-IA), Jack Conway (D-KY), Maura Healey (D-MA), Jim Hood (D-MS), Joseph Foster (D-NH), Eric Schneiderman (D-NY), Joey P. San Nicolas (D-MP), Kathleen Kane (D-PA), and Peter Kilmartin (D-RI) and urges Congressional subcommittees to act in concert with the FDA to address the following issues:

• The adequacy and effectiveness of existing quality assurance measures for verifying the source, identity, purity, potency, and quality of ingredients and fillers;
• The adequacy and effectiveness of existing regimes for verifying the identity, composition, purity, potency, and quality of the finished products sold by domestic manufacturers and retailers;
• The degree to which product labels and marketing, including the use of the terms ‘natural,’ ‘herbal,’ and ‘extract,’ mislead consumers about the contents of herbal and dietary supplements, and whether the FDA should develop standards and restrictions governing their use;
• The extent to which Congress should mandate, or direct the FDA to develop enhanced, uniform, industry-wide quality assurance and verification regimes to guarantee the source, identity, purity, and potency of materials incorporated into herbal and dietary supplements; and,
• The extent to which Congress should mandate, or direct the FDA to develop, enhanced manufacturing and supply chain management requirements for the industry to guarantee the safety and efficacy of the finished herbal and dietary supplements.

In February of 2015, New York Attorney General Eric Schneiderman asked major retailers to halt the sale of certain herbal supplements following DNA tests that failed to detect plant materials listed on the labels of the majority of products tested. Earlier this month, Attorney General Schneiderman announced the formation of a multi-state coalition as part of an expanded probe of the herbal supplement industry.

Earlier this week Attorney General Eric Schneiderman announced a historic agreement with GNC to implement landmark reforms for herbal supplements. Under the agreement, GNC, one of the nation’s largest supplement retailers, will use DNA barcoding to authenticate plants used in supplements and adopt new testing standards to prevent contamination. The move is designed to improve transparency for consumers and is a first step towards ensuring greater consumer safety.

A copy of the letter sent to Congressional leaders today can be found HERE.

WESTCHESTER -- Attorney General Eric T. Schneiderman today announced prison sentences for Tyrone “Reece” Lee, 28, and Anthony “Sug” Davis, 29, both of the Bronx, who had previously pleaded guilty to participating in a brazen identity-theft ring that targeted customers of local banks. The ring stole over $850,000 by using bank tellers to fraudulently obtain the personal information of hundreds of unsuspecting customers, and then creating fake identification cards to withdraw money from the accounts.

“Today’s prison sentences show that those who steal New Yorkers’ personal financial information will pay a steep price,” said Attorney General Schneiderman. “We will do all we can to protect innocent businesses and their customers from the growing threat of identity theft.”

Lee, who was the scheme’s ringleader, was sentenced today by the Honorable Justice Barry E. Warhit in Westchester County Criminal Court, to four and a half to nine years in state prison. Lee previously pleaded guilty before Justice Warhit to the entire 37-count indictment against him, including two counts of Grand Larceny in the Second Degree (a class C felony), 11 counts of Grand Larceny in the Third Degree (a Class D felony), 18 counts of Identity Theft in the First Degree (a Class D felony), three counts of Criminal Possession of a Forged Instrument in the Second Degree (a Class D felony), and three counts of Scheme to Defraud in the First Degree (a Class E felony).

Davis, who was the scheme’s fraudulent document maker, was sentenced by Justice Warhit to two to six years in state prison. Davis had also previously pleaded guilty before Justice Warhit to one count of Identity Theft in the First Degree (a Class D felony) and one count of Scheme to Defraud in the First Degree (a Class E felony). Davis is currently serving a 10-year sentence in federal prison on a federal identify theft case.

This identify-theft ring operated between July 2010 and June 2014. Corrupt bank tellers fraudulently accessed and stole personal information, including account numbers and Social Security numbers, from hundreds of customers at Bank of America, JP Morgan Chase, HSBC, TD Bank and Wachovia in Westchester and New York City.

Lee orchestrated the hiring of corrupt bank tellers at Westchester and New York City-area banks. He directed the bank tellers to target customers with common names and over $50,000 in their accounts. After the customer information was smuggled to him, Lee conspired with Davis to create fraudulent checks and identification documents using the stolen customer information. Lee arranged for other ring members to impersonate bank account holders to withdraw money at area banks.

Davis created an array of fake documents using the stolen personal and financial data, including forged checks and driver’s licenses that contained victims’ personal information, but displayed the photographs of other ring members. These fake documents were then used to impersonate the account holders and to withdraw money at bank branches in Westchester County, New York City and Long Island, as well as Connecticut and Massachusetts.

This prosecution was the culmination of a long-term investigation by the Attorney General’s Crime Proceeds Strike Force, including court-authorized wiretaps and search warrants. In intercepted telephone calls and text messages, co-conspirators spoke in code about customer accounts, which they referred to as “joints,” and to the “bands” of money they would steal, referring to $1000 stacks of cash. They also used code names to refer to the banks they targeted, including “touchdown” for TD Bank and “Yase” for JP Morgan Chase.

The three bank tellers who conspired with Davis and Lee in this scheme have also been convicted. Kalika Arline, Venise Cole and Nadia Figueroa have all pleaded guilty to their roles in the ring.

Among the New York bank branches whose customers were victimized by this identify theft ring are:

• Bank of America: 206 Main Street, White Plains, NY;
• JP Morgan Chase: 235 Main Street, White Plains, NY; 
• JP Morgan Chase: 410 South Broadway, Yonkers, NY; 
• JP Morgan Chase: 5 West Burnside Avenue, Bronx, NY; 
• HSBC: 1 East Fordham Road, Bronx, NY; 
• Bank of America: 50 West Fordham Road, Bronx, NY; 
• Bank of America: 479 North Broadway, Jericho, NY; and
• Wachovia (now Wells Fargo): 43 North Plank Road, Newburgh, NY

Attorney General Schneiderman thanks the New York State Department of Financial Services and the White Plains Police Department for their assistance in this matter.

The case was prosecuted by Assistant Attorneys General Tyler Reynolds and Rhonda Greenstein of the Attorney General’s Criminal Enforcement and Financial Crime Bureau. The bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Meryl Lutsky and Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The investigation was conducted by Legal Support Analyst Theo Davidson, Investigators Steve Pratt, Vincent Gisonti, Sylvia Rivera, Israel Hernandez, Ryan Fannon and Dave Negron and Larry Riccio, Senior Investigator Dennis Maddalone, Supervising Investigator John Sullivan, and Deputy Chief Investigators John McManus and Greg Stasiuk. The Investigations Division is led by Chief Investigator Dominick Zarrella.

NEW YORK – Attorney General Eric T. Schneiderman today announced the arrest of certified nurse aide Marie Jeanty on felony charges that she assaulted an 80-year-old, bedridden resident of West Lawrence Care Center, a nursing home located at 1410 Seagirt Boulevard in Far Rockaway, N.Y. If convicted on the top count, the defendant faces up to seven years in state prison.

“When New Yorkers place those who mean the most to them in a nursing home, they should have confidence that their loved ones are not in danger of severe physical abuse,” Attorney General Schneiderman said. “My office will bring criminal charges against nurses who violate the trust of the residents in their care and their family members.”

Court documents filed in the case allege that, on or about August 15, 2014, Jeanty, 59, of Far Rockaway, N.Y., instructed the resident to move so that she could change the resident’s clothing and bed linens. Jeanty then allegedly pushed and hit the resident multiple times in the arm and shoulder with a closed fist and forcibly pushed her into the side of the bed rail, causing her face to hit the bed rail. As a result, the resident suffered a black eye and significant bruising and swelling to her left arm, right temporal area, and right orbital area, which required treatment at St. John’s Episcopal Hospital. Jeanty no longer works at the facility.

A felony complaint filed in Queens County Criminal Court by the Attorney General’s Office charges Jeanty with Assault in the Second Degree, a class D violent felony offense, for intent to cause physical injury, being ten years younger than such person and assaulting a person who is 65 years or older; Endangering the Welfare of a Vulnerable Elderly Person, or an Incompetent or Physically Disabled Person in the Second Degree; Endangering the Welfare of an Incompetent or Physically Disabled Person, class E felonies; and Wilful Violation of Health Laws, a misdemeanor.

The defendant, who pleaded not guilty, was arraigned today in Queens County Criminal Court before the Honorable Judge David Hawkins and released on her own recognizance.

The case was investigated by Special Investigator Kimara Bradley of the Attorney General’s Medicaid Fraud Control Unit (MFCU) with the assistance of Supervising Special Investigator Mitchell Scher and Deputy Chief Investigator Kenneth Morgan.

The case is being prosecuted by Special Assistant Attorney General Travis Hill of the MFCU’s New York City Regional Office, with the assistance of New York City Deputy Regional Director Larissa Payne and Regional Director Christopher M. Shaw. Thomas O’Hanlon is the MFCU Chief of Criminal Prosecutions–Downstate. MFCU is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The charges in the criminal complaint are merely accusations and the defendant is presumed innocent until and unless proven guilty in a court of law.

NEW YORK – Attorney General Eric T. Schneiderman today announced that Daniel Dominguez, a volunteer emergency medical technician who stole over $300,000 from the Corona Community Volunteer Ambulance Corps (CCAC) in Queens, has been sentenced to serve four months in jail and five years probation, and to pay full restitution. In the event that Dominguez fails to pay the full restitution amount, he faces up to seven years in prison.

“Daniel Dominguez used this charity dedicated to providing medical services to New Yorkers as his own personal piggy bank,” Attorney General Schneiderman said. "This defendant is not only headed to jail, but also must repay every dollar that he stole from the nonprofit. Our message is clear: Crime doesn’t pay."

Dominguez pleaded guilty on January 14, 2015 to Grand Larceny in the Third Degree, a Class D felony. Dominguez was sentenced today before the Honorable Justice Joel Blumenfeld in Queens County Supreme Court.

According to the Attorney General's felony complaint filed in September 2013, from March 2009 to May 2011, Dominguez used his position as a board member and treasurer of CCAC to steal more than $300,000 from CCAC bank accounts. Dominguez used his access to CCAC bank accounts to transfer funds directly into his own personal accounts. He then used that money for extravagant jaunts to Walt Disney World and Niagara Falls, as well as purchases of luxury car service trips, theater tickets, rent, car payments and fancy meals.

Founded in 1960, CCAC is a non-profit volunteer ambulance organization whose EMTs and paramedics provide basic medical care to patients and transport them to hospitals. CCAC responds to 911 calls as well as community requests to transport patients to hospital and medical appointments.

The Attorney General's investigation commenced with a complaint from CCAC board members to the Attorney General's Charities Bureau about possible missing or misappropriated funds from CCAC bank accounts. An investigation conducted by attorneys and an accountant in the Charities Bureau uncovered hundreds of thousands of dollars embezzled from the not-for-profit.

Separate felony complaints filed by the Attorney General’s Office in September 2013 alleged that two other CCAC board members, Daryl Adeva and David Moretti--who served as a board member and President of CCAC--also stole thousands of dollars from CCAC between September 2008 and May 2011. Adeva and Moretti were each convicted of Attempted Grand Larceny in the Fourth Degree (a Class A Misdemeanor).

The Attorney General thanked the New York State Police and Commissioner Joseph D'Amico for their assistance in the case.

The case was handled by Assistant Attorney General Lee Bergstein 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.

This case was investigated by Supervising Investigator Michael Ward, Deputy Chief of Investigations John McManus. The Investigations Division is led by Chief Investigator Dominick Zarrella.

NEW YORK – With this year’s tax deadline looming and April marking Financial Literacy Month, Attorney General Eric T. Schneiderman today offered New Yorkers tips to avoid falling victim to reported tax prep scams. The Attorney General also asked taxpayers to notify his office of any suspected fraudulent schemes designed to steal personal and financial information from consumers.

“Unfortunately, there are scammers who will shamelessly take advantage of vulnerable consumers as they try to file their taxes on time,” said Attorney General Schneiderman. “My office wants to ensure that consumers have the information they need to avoid these scams and report them to the appropriate authorities.”

Each year, the Office of the Attorney General receives complaints from consumers about various tax preparation schemes. This year, the Attorney General’s Office has received numerous complaints about scammers who are impersonating IRS officials and attempting to collect bogus tax debts. The scammers often threaten lawsuits or arrest if consumers fail to turn over money or provide sensitive personal information. Often the scammers claim consumers owe past tax debts and insist that consumers pay using a pre-paid credit card. Pre-paid credit cards are generally difficult to trace and that is why many scammers insist that would-be scam victims pay using these products.

In an effort to help New Yorkers avoid tax-themed scams, the Attorney General’s Office offers the following tips:

• The IRS and legitimate government agencies never demand payment by phone;
• If you owe money, you will receive a legitimate notice in writing that identifies the agency and the reason you owe money;
• Do not give out personal information, including your Social Security number or bank account information, to telephone callers;
• Legitimate government organizations will never threaten arrest or deportation for failure to pay a debt;
• Legitimate government agencies will never insist that consumers pay a debt only via a pre-paid credit card.

The following suggestions will help consumers file their tax returns safely and keep more of their return:

• If you use a tax-preparation service, use only established and recognizable companies;
• Check the tax preparer's qualifications and history through the Better Business Bureau (www.bbb.org);
• Ask for a written estimate of all fees; avoid those who base their fees on a percentage of your refund;
• Make sure the tax preparer is accessible, even after the April due date;
• Never sign a blank return;
• Review entire return before signing;
• Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number (PTIN);
• Consult New York's “Consumer Bill of Rights Regarding Tax Preparers.”

Consumers should also beware of refund anticipation loans (RALs) and refund anticipation checks (RACs). RALs are often marketed as "instant" or "24-hour" refunds but are actually high-cost loans that come with fees and interest that reduce the amount of any refund. New York State’s General Business Law section 372 (known as the Consumer Bill of Rights regarding Tax Preparers), requires RALs to be marketed as loans – not refunds. RACs are temporary bank accounts established on behalf of a taxpayer into which a direct-deposit refund can be received –but these also come with fees that will reduce the consumer’s refund. The tax preparer must give the consumer a written disclosure that explains:

• That consumers are not required to take out a refund anticipation loan or refund anticipation check in order to receive your tax refund;
• The amount of fees and interest consumers will have to pay for a refund anticipation loan or refund anticipation check;
• The amount consumers will receive after the fees and interest are deducted;
• The annual percentage rate of interest that consumers will be charged;
• The amount the refund will be without a refund anticipation loan.

Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds mailed or directly deposited into their own bank accounts.

Consumers may report suspected instances of consumer fraud by calling Attorney General Schneiderman’s Office at 1-800-771-7755 or by visiting www.ag.ny.gov.

The Attorney General also reminds New Yorkers that there are Volunteer Income Tax Assistance (VITA) sites where consumers can get their tax returns prepared free of charge. For more information about how to qualify and identify VITA location sites, go to www.irs.gov.

Consumers whose income is $60,000 or less may qualify for FreeFile and can use free tax preparation and e-filing software. Information on free e-filing is available at: www.tax.ny.gov.

Some additional websites with helpful information include:

Internal Revenue Service
www.irs.gov/taxtopics/tc254.html

NYS Consumer Bill of Rights Regarding Tax Preparers
www.tax.ny.gov/pdf/memos/income/m08_7i.pdf

NYC Department of Consumer Affairs
www.nyc.gov/html/dca/html/home/home.shtml

Attorney General Schneiderman is urging New Yorkers to be vigilant consumers and to report instances of fraud to his Office. Consumers who feel they've been victims of any tax preparation scams are urged to file complaints by visiting the Office’s website or calling 1-800-771-7755. Consumers can also file an online complaint with the United States Treasury Inspector General at http://www.treasury.gov/tigta/contact_report_scam.shtml.

ROCHESTER – Attorney General Eric T. Schneiderman today announced that Assembly Majority Leader Joseph Morelle and Senator Patrick Gallivan will sponsor the Attorney General’s program bill regulating the use of payroll cards to increase protections for workers, clarify ambiguities in the law, and ensure that payroll cards offer a convenient and beneficial method for workers to access their pay. Several Rochester area labor and community organizations also announced their support for the bill, including the Rochester & Genesee Valley Area Labor Federation, the Rochester Building & Construction Trades, the Rochester Legal Aid Society, Metro Justice, the Worker Justice Center of New York, and Empire Justice. The Attorney General’s Payroll Card Act requires clear disclosure of payroll card fees, and restricts certain fees. The legislation was first proposed last year, following recommendations made in a report released by the Attorney General’s Labor Bureau.

“Workers shouldn’t have to pay to get their pay,” Attorney General Schneiderman said. “While payroll cards can be helpful for employees without bank accounts, too often workers see their hard-earned wages chipped away by fees. The Payroll Card Act will ensure that workers have free and clear access to their wages, and provide clarity to employers about how to offer payroll cards in compliance with the law.”

“As public officials we have an obligation to protect the interests of New York State’s hard working men and women and ensure that employers are doing the same,” said Assembly Majority Leader Joseph D. Morelle. “The Payroll Card Act delivers meaningful protections for workers by eliminating unreasonable fees, ensuring that they receive every dollar they have rightfully earned, and establishes clear guidelines for employers to follow when distributing payroll cards. I thank Attorney General Schneiderman for his leadership on this issue and I look forward to working with my colleagues in the legislature toward the passage of this bill.”

“We want to ensure that hard working New Yorkers have easy access to their wages and are protected from excessive fees. We also need to protect employers from overly burdensome regulations. We can achieve both by clarifying the rules regarding the use of payroll cards and the options available to workers and businesses,” said Senator Patrick Gallivan.

“I commend Attorney General Schneiderman for leading the fight to protect the hard earned wages of working New Yorkers,” said Assembly Member Harry Bronson. “As more employers continue to adopt payroll card programs, it is critical to give employees an informed choice in how they are paid, provide clear disclosure of any fees associated with payroll cards, and make it easy to avoid those fees.”

“Payroll Cards have grown increasingly common across New York State, but our laws have not kept up with this trend," said Jim Bertolone, President of the Rochester & Genesee Valley Labor Federation. "That has left low wage workers exposed to unexpected and costly fees. By updating the law, Attorney General Schneiderman's Payroll Card Act will ensure that workers have a fair chance to receive all of the wages they earn.”

Stuart Appelbaum, President of the RWDSUsaid, “For low-wage workers, unregulated payroll card fees can bring their earnings below the minimum wage. There must be clear language on fees, and workers must be provided in writing the terms and conditions of the card, including all fees that may be assessed. This bill will require that the card has access to at least one network of ATMs providing no-cost cash withdrawals, balance inquiries, and other fee-free services. We stand with Attorney General Eric Schneiderman in calling for passage of this bill that will regulate employer use of payroll cards.”

“For workers who are living paycheck to paycheck, a surprise fee taken out of their pay can leave them short on the rent at the end of the month. That’s just not fair,” said Carla Palumbo, President & CEO of the Legal Aid Society of Rochester. “The legislature should pass Attorney General Schneiderman’s Payroll Card Act, so that every worker will be clearly informed of how they can receive their wages without paying any fees.”

“Both workers and employers deserve clear guidelines for how payroll cards can be used fairly,” said Lewis Papenfuse, Executive Director of the Worker Justice Center of New York. “Attorney General Schneiderman’s Payroll Card Act will ensure that employers can enjoy greater efficiency without saddling workers with unfair fees.”

“Lower-wage workers are increasingly receiving their wages on payroll cards, and can ill afford to see their hard-earned pay drained by unfair fees and charges that benefit the big financial institutions that issue these cards. It is vital that New York implement strong protections to ensure that workers have fair and unobstructed access to their wages,” said Liz Fusco, staff attorney at New Economy Project.

“This bill would go a long way toward ensuring that workers have a choice in how to be paid, and that they won't be nickel-and-dimed out of their wages,” said Chuck Bell, programs director for Consumers Union, the public policy and advocacy division of Consumer Reports. “These reforms would help promote fair, safe, and effective methods for workers to access their pay.”

A payroll card is a prepaid debit card used by employers to pay wages to employees, typically as an alternative to direct deposit or a paper check. Each payday, a cardholder employee’s wages are deposited electronically into an account at a bank selected by the employer or by the payroll card vendor. The employee can obtain access to the funds in the account by using the payroll card. Similar to a bank-issued debit card, the payroll card can be used to withdraw funds from an ATM, make point-of-sale purchases, and electronically transfer funds, among other functions.

Use of payroll cards has increased significantly in recent years. Nationally, an estimated 5.8 million workers received their wages via payroll cards in 2013, and that number is expected to increase to 10.8 million by 2017, according to research reported in Forbes. Often cited benefits of payroll cards include cost savings for employers; payroll cards' usefulness in weather-related disasters when paper checks are hard to deliver to employees; payroll cards’ limited environmental impact, compared with paper checks, and the lower transactional cost to employees of payroll cards, when compared with check-cashing outlets. These benefits however cannot be used as an excuse to charge onerous fees or withhold basic information to participant wage earners.

The Attorney General's office began looking into payroll card programs utilized in New York State in 2013 after receiving complaints from employees and other information indicating that certain payroll card programs were potentially in violation of state labor law, or did not provide adequate disclosures regarding the terms and conditions of the card. In response to requests from the Attorney General's Office, 38 national and regional employers submitted information on their use of payroll cards. Last year, the Attorney General released a report detailing the findings of his office's review of the information provided.

The Attorney General Labor Bureau Report revealed the following:

• Cardholder employees were often given insufficient information about how to obtain their wages without incurring a fee and, where the employer provided detailed fee data, approximately 75% of cardholder employees incurred some kind of fee while attempting to access their wages.
• In some programs, fees reached as high as $20 per employee per month, on average. Workers were steered or required to be paid by payroll card: 40% of employers surveyed did not provide employees with the option of receiving their wages by a traditional paper check, and an additional 31% discouraged the selection of a paper check.
• Many programs failed to provide sufficient means for workers to withdraw wages without incurring fees. One employer’s payroll card vendor brought in almost $70,000 in fees for fewer than 5,000 cardholder employees during a one year period, of which over $60,000 were for ATM transactions alone, the majority of them to access wages or check account balances.
• More than one-third of employers used payroll card programs that included overdraft fees. One payroll card vendor received over $200,000 in overdraft fees from August 2012 to July 2013, with an average of 2,570 accounts open each month.

The report recommended a range of reforms, some of which have subsequently been adopted by a number of the surveyed employers as a result of the Attorney General’s inquiry and report. These reforms are included in the Payroll Card Act to address these problems more broadly and ensure that payroll cards can be a convenient and beneficial method of payment for workers to access their pay. Its provisions would protect the rights of workers and prevent the unfair reduction of their wages through fees, including:

• Requiring employers to allow employees to elect whether to be paid through a payroll card, direct deposit, or to receive a paper check;
• Mandating that employees receive clear and appropriate notice of payroll card program terms and conditions, including potential fees and how to avoid them; and
• Prohibiting employers from using payroll card programs that charge certain types of fees, and requiring employers to use payroll card programs with at least one network of ATMs where employees can obtain access to their wages without paying a fee.

NEW YORK – As part of an ongoing focus on widespread allegations of wage theft at public works projects in New York City, Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters today announced the arrests of five subcontractors on charges they underpaid wages and benefits to workers at three publicly-funded New York City construction projects.

The arrests stem from an investigation into underpayment and kickback schemes that allegedly took place at P.S. 7X, an elementary school in the Bronx, the New York City Department of Housing Preservation and Development’s (HPD) Sugar Hill Houses in Harlem, and the New York City Housing Authority’s (NYCHA) Pomonok Houses project in Fresh Meadows, Queens, between January 2012 and November 2014. The Manhattan case includes a top count felony of Falsifying Business Records in the First Degree against Sergio Raymundo and his New Paltz-based construction company for allegedly cheating eight workers at the Sugar Hill housing project out of approximately $800,000 in wages during a 17-month period.

“Employers who cheat workers out of the wages and benefits they deserve are breaking the law and will face the consequences, including criminal charges,” said Attorney General Schneiderman. “Like all workers across America, New York City’s construction workers do not deserve to be cheated out the wages they earned from building schools for our children and affordable housing for our families. My office will continue to take aggressive action with our law enforcement partners against employers who ignore their legal obligation to pay workers proper prevailing wages on taxpayer-funded projects.”

Today’s arrests are part of an ongoing effort to root out prevailing wage underpayment practices in New York City. In December, three other subcontractors were arrested for allegedly violating prevailing wage laws. Those arrests involved work done at P.S. 196K in Williamsburg, Brooklyn, and the NYCHA Pomonok Houses development in Fresh Meadows, Queens.

NYC Department of Investigation Commissioner Mark G. Peters said, “Prevailing wage theft steals paychecks from honest workers' pockets and compromises the integrity of construction sites on City-funded projects. I look forward to continuing to work together with the Attorney General and our partner agencies to expose and prosecute this pernicious crime.”

NYC Department of Housing Preservation and Development Commissioner Vicki Been said, “After months of hard work I am pleased to see this case moving forward, and I thank the Attorney General, the Department of Investigation, and their teams for their continued partnership on this investigation.”

Federal and state prevailing wage laws seek to ensure that government contractors pay wages and benefits that are comparable to the local norms for a given trade, typically well above the state and federal minimum wage, and hold general contractors responsible for underpayments by their subcontractors. Today’s arrests covered three separate projects spanning three New York City boroughs that were subject to prevailing wage requirements.

One of the cases, which spans three indictments filed in Bronx Supreme Court, charges three business owners and their respective companies for allegedly underpaying masonry workers on an exterior renovation project at P.S. 7X in the Bronx during different time periods between January 2012 and November 2012. The defendants are Shamas Mian, 51, and his company, United Construction Field, Inc., located in Brooklyn; Tariq Mahmood, 56, and his company, Peral General Contractor LLC, located in Fresh Meadows, Queens; and Baldev Singh, 39.

Mian is accused of underpaying workers by more than $25,000 and covering up the underpayments by allegedly submitting falsified payroll records to New York City’s School Construction Authority. He is charged with Failure to Pay Prevailing Wages and Benefits in Excess of $25,000, Offering a False Instrument for Filing in the First Degree, and Falsifying Business Records in the First Degree.

Mahmood and Singh are accused of underpaying workers by more than $100,000. They are charged with Failure to Pay Prevailing Wages and Benefits in Excess of $100,000. They each face seven years in prison if convicted.

The second case, filed in Manhattan Criminal Court, charges a subcontractor for allegedly underpaying eight carpentry workers approximately $800,000 for work done at the NYC HPD’s Sugar Hill Houses, a mixed-use, commercial and low-income residential project in Harlem, from April 2013 through August 2014. The defendants are Sergio Raymundo, 28, and his company Lalo Drywall, Inc., located in New Paltz.

Raymundo is accused of underpaying eight workers by approximately $800,000 and attempting to conceal the underpayments by signing false checks drawn on his company’s account indicating that employees on the job were paid properly under the law. According to court papers, those checks were never given to the workers.

Raymundo is charged with counts of Falsifying Business Records in the First Degree and Failure to Pay Wages. Raymundo faces four years in prison if convicted.

The third case, lodged in Queens Criminal Court, charges a subcontractor and his company with allegedly demanding kick-backs and underpaying workers for scaffolding work done at the NYCHA Pomonok Houses in Fresh Meadows between August 2014 and November 2014. The defendants are Jagdish Singh, 57, and his company, Navico B & S Construction Corp., located in Jamaica, Queens. Navico has multiple contracts with NYCHA to provide scaffolding at various construction projects across New York City.

Singh is accused of demanding $6,000 in kick-backs from two workers. The alleged kickbacks were required by Singh in exchange for the workers keeping their jobs. One employee returned $5,785 of his wages, another $1,006. A third worker was allegedly underpaid by $2,520. Singh is charged with Grand Larceny in the Fourth Degree, Offering a False Instrument for Filing in the First Degree, Falsifying Business Records in the First Degree, Kick-Back of Wages Prohibited, and Failure to Pay Wages. He faces up to four years in prison if convicted.

In addition to the criminal actions announced today, OAG and the New York City School Construction Authority (SCA) Inspector General’s Office have also pursued civil recovery of the back wages related to the December indictments. Under the civil provisions of the New York State prevailing wage law, a general contractor is financially responsible for any underpayment of wages and benefits by its subcontractors.

The general contractor on the Brooklyn exterior renovation at P.S. 196K, Pro-Metal Construction, Inc. of Brooklyn, New York, entered into an Assurance of Discontinuance with the Office of the Attorney General on December 16, 2014 guaranteeing payment to eight of the subcontractor’s workers. Pro-Metal has paid $323,000 to cover the alleged underpayment of wages and benefits for work performed by its subcontractors at the Brooklyn school. One of the laborers on the job is being paid over $70,000, while another five are being made whole with payments in excess of $35,000.

The alleged underpayments for the school projects at P.S. 7X in the Bronx and P.S. 235K in Brooklyn will be paid by general contractor Dean Builders Group, Inc. of Great Neck, New York. Dean entered a settlement agreement with the New York City School Construction Authority on January 14th, 2015 wherein it agreed to assign $201,946.00 in funds to the SCA to cover the underpayment in wages and benefits. As to benefits, Dean has paid over an additional $90,000.00 to the Mason Tenders Benefit Fund for benefits owed to the workers on the two jobs.

The Attorney General thanks the Inspectors General for the School Construction Authority, the New York City Housing Authority and Housing Preservation and Development, all of whom report to the Department of Investigation, and their staffs for their assistance on this investigation.

The SCA cases were investigated by William O’Brien and Lee Callier of the School Construction Authority, Office of the Inspector General under the supervision of First Assistant Inspector General Gerard McEnroe and Inspector General Maria Mostajo. The HPD case was investigated by Deputy Inspector General David Jordan and Assistant Inspector General Ondie Frederick under the supervision of Inspector General Jessica Heegan. The NYCHA case was investigated by Special Investigator Robert Diienno of the New York City Housing Authority, Office of the Inspector General under the supervision of Inspector General Ralph Ianuzzi. The Department Investigation’s effort to combat prevailing wage violations was overseen by Senior Associate Commissioner Michael Carroll and Associate Commissioner William Jorgenson.

Attorney General investigators working on these cases are Elsa Rojas, Sixto Santiago, Edward Ortiz, Ismael Hernandez, Brian Metz, Michael Leahy, Naomi Jimenez, Michael Yun and Senior Investigators Salvatore Ventola and Lawrence Riccio with assistance by Supervising Investigators John M. Sullivan and Michael Ward. The investigation was conducted under the supervision of Supervising Investigators Luis Carter, under the direction of Deputy Chief Investigator John McManus. The Attorney General’s Investigations Bureau is led by Chief Investigator Dominic Zarrella.

The criminal cases are being prosecuted by Assistant Attorney General Matthew Ross, Assistant Attorney General Benjamin Holt and Richard Balletta, the Attorney General Labor Bureau’s criminal section chief, with assistance from Stephanie Swenton, the Deputy Bureau Chief of the Criminal Enforcement and Financial Crimes Bureau.

The Labor Bureau Chief is Terri Gerstein. The Executive Deputy Attorney General for Social Justice is Alvin Bragg and Kelly Donovan is the Executive Deputy Attorney General For Criminal Justice.

All charges are accusations, and the defendants are presumed innocent unless and until proven guilty in a court of law.

NEW YORK – Attorney General Eric T. Schneiderman today announced a lawsuit against the board of directors of two Brooklyn-based nonprofits, Brooklyn Child & Family Services, Inc. and Project Teen Aid Housing Development Fund Corp., for alleged gross negligence and failed management of the organizations – and of two converted townhouses in the Bedford-Stuyvesant section of Brooklyn. The Rose F. Kennedy Family Center, located at 178 Halsey Street, and the Rosa Parks Apartments, located at 243 Hancock Street, have been owned by the jointly operated nonprofits since the 1990s. The charitable organizations were intended to provide housing and support services for pregnant women, young mothers and their children. As set forth in the lawsuit, an investigation by the Attorney General’s Charities Bureau found that several board members listed the townhouses for sale without necessary approval. Supreme Court Justice Genine D. Edwards granted the Attorney General’s Office a temporary restraining order earlier this week that freezes the organization’s assets.

“Lured by a lucrative real-estate market in Brooklyn, the board members of these two charitable organizations allegedly attempted to illegally sell two brownstones that belonged to the charities and were meant to serve as housing for single mothers – kicking out their vulnerable residents along the way,” said Attorney General Schneiderman. “There is simply no excuse for a charitable board using its organizations’ valuable assets for the personal gain of board members. We will continue to hold New York’s entire nonprofit sector to its responsibilities, especially when those obligations are to underprivileged families.”

According to a lawsuit filed in Brooklyn Supreme Court on Monday, the Attorney General’s investigation, which began in February, found that the board of directors of the two organizations ignored the long-standing charitable mission of the groups and led the organizations to financial ruin, resulting in their loss of public funding. The board members who are being sued by the Attorney General’s Office include directors and officers Thomas McKinney and Amuel Renard Hilliard; Gene Baynes, the organizations’ financial manager, whose certification as a financial planner was revoked in 2010 in California; Vivian Munsey-Thomasson, the vice-chair of both boards; and Reggie Wells, a resident of Chicago.

According to the Attorney General’s petition, in August 2013 and at the board’s direction, the organizations evicted the young women who resided at the Rose Kennedy Center and the Rosa Parks Apartments –who the nonprofits were supposed to serve. The board then allegedly attempted to profit personally by marketing the buildings for private sale: The Rose F. Kennedy Family Center was listed by Halstead for $3.6 million in December 2014, and Rosa Parks Apartments was listed by Halstead for $2.1 million in May 2014. According to the allegations, the board also enlisted Vice Chair Munsey-Thomasson’s son, who is a real estate broker, to market both properties, with the prospect of earning six percent commissions.

The complaint also details evidence of several other alleged improprieties by the organizations’ board and its officers, including:

• pilfering $80,000 from a charitable bank account directly into the personal account of financial manager Gene Baynes;
• taking out two high-fee loans totaling $600,000, secured by the Rose Kennedy Center’s property on Halsey Street, currently with an annual interest rate of 12 percent and a default rate of 24 percent;
• forging the signature of the secretary of the board to authorize the high-fee loan on Rose Kennedy Center’s property, without the board member’s permission;
• failing to pay the wages of their employees; and
• neglecting corporate filings, including tax returns.

The Asset Management Division of the New York City Department of Housing Preservation and Development noticed suspicious behavior concerning the management of the properties and notified the appropriate authorities in the Attorney General’s Charities Bureau. Upon receiving complaints from the public and from the New York City Department of Housing Preservation and Development, the Attorney General’s Charities Bureau worked with Halstead in February 2015 to remove the listings of the two properties and put a stop to the organizations’ attempt to sell the buildings.

“I am grateful that through the diligence and initiative of HPD Assistant Commissioner Allred and his team in the Office of Asset Management and Property Management, this wrongdoing was brought to light,” said HPD Commissioner Vicki Been. “Our partnership with the Attorney General’s office is a great asset in the fight to protect tenants and preserve the stock of affordable housing. I am pleased to learn that this court order was put in place to protect these buildings and look forward to seeing them return to use as much-needed affordable housing.”

The sale of the charities’ two key assets without prior approval by the Charities Bureau or a state court is illegal under state law. New York’s Not-for-Profit Corporation Law requires that such sales include advance approval by either the appropriate court or the Attorney General’s Charities Bureau. In addition, proceeds of such sales must return to the nonprofit to further its charitable purposes or to another charity with similar purposes. The Attorney General’s lawsuit alleges that the attempted sales were intended to personally benefit the board members, and not the charities.

Both the Rose Kennedy Center and the Rosa Parks Apartments buildings accumulated numerous buildings code violations and fines, notwithstanding the millions of public dollars invested in them over the course of many years.

Under the temporary restraining order secured by the Attorney General’s Office on Monday, the court directed that certain bank accounts and other assets of the organizations be frozen. In addition, the Attorney General’s lawsuit is asking the court to remove the board of directors and put a temporary receiver in place to manage the organizations. The five directors must appear in Brooklyn Supreme Court on April 22 to explain why they should not permanently be removed from their positions as officers and directors of the organizations.

The Attorney General’s investigation into Brooklyn Child & Family Services, Inc. and Project Teen Aid Housing Development is continuing.

The Attorney General thanked the New York City Department of Housing Preservation and Development, in particular, Assistant Commissioner Christopher Allred of HPD’s Division of Asset Management, for assisting in the investigation.

The Charities Bureau’s civil case is being prosecuted by Assistant Attorney General Elizabeth Fitzwater. Assistance was provided by Legal Assistants Carolyn Fleishman and Jacqueline Sanchez. The Bureau’s Enforcement Section is led by Assistant Attorney General Sean Courtney. The Charities Bureau is led by Deputy Bureau Chief Karin Kunstler Goldman and Bureau Chief James G. Sheehan. The Attorney General’s Division of Social Justice, of which the Charities Bureau is a part, is led by Executive Deputy Attorney General Alvin Bragg.

The Attorney General’s Charities Bureau regulates nonprofit organizations, and is charged with protecting them and the public from unscrupulous practices in the management of charitable assets and in the solicitation of donations. The Charities Bureau also ensures that funds and other assets of charitable organizations are properly used in accordance with their charitable purposes.

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

NEW YORK – Attorney General Eric T. Schneiderman today announced settlements totaling $970,000 with four current Domino’s Pizza franchisees, who together own 29 stores across New York State, as well as with one former franchisee who owned 6 stores. With stores located in Cortland, Dutchess, Erie, Genesee, Monroe, Nassau, New York, Onondaga, Ontario, Orange, Rockland, Suffolk, and Westchester counties, the franchisees admitted to a number of labor violations, including minimum wage, overtime or other basic labor law protections. In light of today’s agreements – which follow similar settlements last year with the owners of 26 other Domino’s stores statewide – Attorney General Schneiderman also called on the Domino’s Pizza corporation and Chief Executive Officer Patrick Doyle to exercise increased oversight of Domino’s franchisees’ pay practices.

“In the past two years, the owners of over fifty New York Domino’s franchise locations have admitted to violations of some of the most basic labor law protections – an appalling record of ongoing disregard for workers’ rights,” Attorney General Schneiderman said. “Franchisors like Domino’s need to step up to the plate and fix this problem. Franchisors routinely visit franchise stores to monitor operations – down to the number of pepperonis on each pizza – to protect their brand, and yet they turn a blind eye to illegal working conditions. My message for Domino’s CEO Patrick Doyle is this: To protect the Domino’s brand, protect the basic rights of the people who wear the Domino’s uniform, who make and deliver your pizzas.”

Today’s agreements followed investigations by the Attorney General’s Office into the franchisees, covering the time period from 2008 through 2014. All investigated franchisees admitted to the violations of law outlined in the settlement agreements. The admitted violations varied by location and time period, and included the following:

• Some stores paid delivery workers below the tipped minimum wage applicable to delivery workers under New York law. 
• Some stores failed to pay overtime to employees who worked over 40 hours in a week, and others under-paid overtime, because they did not combine all hours worked at multiple stores owned by the same franchisee, or because they used the wrong formula to calculate overtime for tipped workers, unlawfully reducing workers’ pay.
• Delivery workers who used their own cars to make deliveries were not fully reimbursed for their job-related vehicle expenses. 
• Delivery workers who used their own bicycles to make deliveries were typically not reimbursed for any expenses related to maintaining their bicycles, nor were they provided with protective gear as required by New York City law.
• Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours. 
• Some stores also violated a state requirement that employers must pay restaurant workers for at least three hours of work when those employees report to work for a longer shift but are ultimately sent home early because of slow business or other reasons.
• Some stores took a "tip credit" without tracking tips, and assigned delivery workers to kitchen or other untipped work for more time than legally permitted. Employers may only take a “tip credit” and pay a lower minimum wage to tipped restaurant employees if those employees earn enough in tips and spend most of their time – at least 80 percent –performing tipped work.

A list of all of the Domino’s franchisees and the restaurant locations that have reached settlements with the Attorney General’s Office can be found here.

In addition to payment of $970,000 in restitution funds, the franchisees must also institute complaint procedures, provide written handbooks to employees, train supervisors on the labor law, post a statement of employees’ rights, and designate an officer to submit quarterly reports to the Attorney General's Office regarding ongoing compliance for three years.

The largest franchisee to reach an agreement today, Robert Cookston, is paying $675,000 to settle the charges against him. In 2013, his Washington Heights store was the subject of a separate investigation for retaliatory discharge, which was ultimately resolved when all 25 discharged employees were reinstated pursuant to an agreement with the Attorney General’s Office. In today’s agreement, in addition to paying restitution to these and other workers, Mr. Cookston agreed to pay for independent monitoring of all of his stores for three years.

Today’s five agreements follow settlements announced last year with six Domino’s pizza franchisees, who together owned 23 stores and agreed to pay a total of $448,000 in restitution, as well as an additional settlement last year with a franchisee, Abdil Karaborklu, who paid $40,000 to resolve a case involving his three stores. Some of the stores investigated by the Attorney General in today’s announcement and last year changed hands among franchisees during the period of the investigation.

In total, franchisees investigated by the Attorney General have admitted violations of basic labor law protections in a total of 57 distinct Domino’s store locations in New York. Collectively, the Attorney General’s agreements have required franchisees to pay nearly $1.5 million in restitution to underpaid employees in Domino’s stores.

There were approximately 130 total Domino’s franchisee store locations statewide in 2014, according to Domino’s disclosure documents. Nationally, over 90 percent of Domino’s locations are franchisee-owned.

The Attorney General continues to investigate additional Domino’s franchisees in New York.

In addition to investigations involving Domino’s restaurants, the Attorney General’s office has brought a number of additional cases in the fast food industry.

• In February, a judge awarded a judgment of over $2 million in unpaid wages and penalties to the Attorney General against New Majority Holdings, LLC, a New York City-based Papa John’s franchisee, and its owner Ronald Johnson.
• In January, the Attorney General obtained a judgment for nearly $800,000 against Emmanuel Onuaguluchi, the operator of Emstar Pizza Inc., another New York City-based Papa John’s franchisee.
• In June 2014, the Attorney General obtained $10,000 in restitution for an employee unlawfully discharged after reporting a gas leak at a McDonald’s franchise located in Lyons, in upstate New York.
• In March 2014, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of a group of seven New York City-based McDonald’s franchises.

The cases were handled by Labor Bureau Section Chief Andrew Elmore and Assistant Attorneys General Claudia Henriquez, Kevin Lynch and Haeya Yim, assisted by Assistant Attorney General Justin Deabler of the Civil Rights Bureau.  Terri Gerstein is the Labor Bureau Chief and Alvin Bragg is the Executive Deputy Attorney General for Social Justice.

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has reached a settlement with 39 Lispenard Project, LLC and its former principal Peter Moore – the architect and prolific real estate developer of properties in lower Manhattan – for failing to register numerous real estate investments known as syndications under the Martin Act. The settlement brings to a close a lengthy investigation into Moore’s unlawful public offering of real estate investments in three offerings, including the unlawful offer of condominium units involving 39 Lispenard Street, a luxury loft development in TriBeCa.

“Promoters of real estate investments need to follow the rules and if they don’t, they will be held accountable,” Attorney General Schneiderman said. “The Martin Act provides necessary protections to all investors, including homebuyers seeking to purchase a condominium unit. Thanks to our settlement, Mr. Moore will take steps to ensure this important law is upheld, or face permanent consequences.”

The Attorney General’s investigation initially uncovered that Moore solicited and offered investments known as syndications in his company, 39 Lispenard Project, LLC, to members of the public – which would ultimately lead to ownership of a condominium unit – without making necessary filings with the Attorney General’s Office. Under the Martin Act, New York’s blue sky law that regulates securities, both syndications and the offer of condominium units require the filing of prospectuses, which must be provided to investors and purchasers before they decide to invest or buy a condominium unit.

Without making any attempt to comply with the Martin Act, Moore took blatant steps to procure investors in an unregistered syndication. He went so far as to hire a prominent New York luxury real estate brokerage firm – Town Residential – to assist in the public marketing and advertising of the project. Town Residential separately agreed to pay $7,500 in investigation costs and educate its brokers on the requirements of the Martin Act.

Under the settlement obtained by Attorney General Schneiderman, Moore has agreed to a six-month bar from offering or selling securities in the State of New York, in addition to making the required syndication filings with the office. Moore also agreed to conduct his business affairs legally in the future. If Moore violates any term of the settlement agreement, he will be barred from offering or selling securities permanently. In addition, Moore will pay a fine totaling $50,000.

During the course of the initial investigation into 39 Lispenard Project, LLC, it was revealed that Moore was involved in two other unregistered syndication offerings as well. As a part of the settlement, Moore has registered all of these projects with the Real Estate Finance Bureau.

39 Lispenard Project, LLC will also pay a fine of $5,000 and file an offering plan with the Attorney General before delivering condominium unit deeds to existing investors or offering for sale any other units to the public.

A copy of the settlement agreement with Mr. Moore is available here.

A copy of the settlement agreement with 39 Lispenard Project LLC is available here.

The investigation of this matter was conducted by Assistant Attorney General Nicholas J. Minella, Deputy Bureau Chief Andrew H. Meier, and Bureau Chief Erica F. Buckley, all of the Real Estate Finance Bureau, as well as Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.