NEW YORK – Attorney General Eric T. Schneiderman today announced that his office reached an agreement in principle to settle kickback claims against Novartis Pharmaceuticals Corporation ("Novartis").  The settlement will resolve allegations that Novartis paid kickbacks to three specialty pharmacies to incentivize them to push Medicaid patients to order refills of the drug Exjade.  Under the settlement, Novartis has agreed to pay $390 million to the United States, New York, and over forty other states.  About $18.5 million of the settlement will resolve claims relating to New York's Medicaid program.

"Pharmaceutical companies cannot pay specialty pharmacies to provide one-sided information about prescription drugs to patients,"Attorney General Schneiderman said. "My office will work to make sure patients are given all relevant information, including where the funding is coming from, before agreeing to partake in any allegedly educational program that is offered to them."

Since early 2014, New York has led a group of states that sued Novartis under their respective False Claims Act statutes.  The agreement with Novartis is the third settlement in connection with the case.  In January 2014, one of the pharmacies, BioScrip, Inc., agreed to pay $15 million, and in May 2015, another pharmacy, Accredo Health Group, Inc., agreed to pay $60 million.  About $4.3 million of those settlements resolved claims relating to New York's Medicaid program.

In late 2005, Exjade was approved by the U.S. Food and Drug Administration ("FDA") for the treatment of chronic iron overload due to blood transfusions.  After launching the drug, Novartis marketed Exjade as a treatment for patients with a variety of conditions that affect blood cells or bone marrow, including beta-thalassemia, sickle cell disease, and myelodysplastic syndromes. 

The settlement resolves allegations that between 2007 and 2012 Novartis paid kickbacks to three specialty pharmacies – BioScrip, Accredo, and US Bioservices.  The pharmacies were selected by Novartis to be part of a closed distribution network through which most Exjade prescriptions in the United States were filled.  Novartis created the distribution network, which it called EPASS, and therefore had significant control over how many patient referrals each pharmacy received.  The pharmacies shipped most Exjade prescriptions to patients by mail and were supposed to call patients to set up the shipments and obtain consent for refills.  The pharmacies billed themselves as specialty pharmacies that could arrange for these shipments and run educational programs for patients. 

In their court filings, the government plaintiffs alleged that Novartis paid kickbacks to the pharmacies to corrupt the pharmacies' interactions with patients by inducing the pharmacies to exaggerate the dangers of not taking Exjade, emphasize Exjade's benefits, and downplay the severity of Exjade's side effects.  The scheme began after Exjade failed to meet Novartis' internal sales goals and Novartis discovered that refill rates for Exjade were lower than anticipated.

In the course of the scheme, Novartis pressured the specialty pharmacies by threatening to exclude them from the EPASS network or to reduce the number of patient referrals they received from EPASS.  In addition, Novartis set up a contest in which the pharmacy that kept patients on Exjade the longest would receive additional patient referrals from EPASS.  The contest winner was determined by scorecards created by Novartis that were sent to each of the three pharmacies.  Novartis also paid rebates to the specialty pharmacies, which made each patient referral valuable and incentivized the specialty pharmacies to encourage patients to stay on Exjade.  The contest and the rebates were not disclosed to Exjade patients or their caregivers. 

In their filings, the government plaintiffs also alleged that lawyers for Novartis raised concerns about the contest for nearly a year before it was implemented.  According to the filings, Novartis went forward with the contest anyway after one senior executive was brought in to challenge the legal advice and another determined that the benefits of the scheme to Novartis outweighed the risk of violating the federal Anti-Kickback Statute.

To appease Novartis, all of the pharmacies put together plans to increase refill rates that included nurses placing phone calls to patients or caregivers.  One pharmacy, BioScrip, told Novartis that BioScrip would make claims about Exjade preventing organ damage that the FDA had told Novartis it should not make in Novartis' promotional materials.  Another pharmacy, Accredo, showed Novartis a call protocol that directed nurses to tell patients it was "extremely important" to take Exjade and to tell patients about the common side effects of the drug but not the more severe side effects, such as kidney and liver problems. 

Novartis admitted many aspects of the scheme in a stipulation filed in federal court in connection with the settlement.  Among other things, Novartis admitted that it told BioScrip that it might terminate its distribution agreement or reduce the number of patient referrals it received from EPASS.  Similarly, Novartis admitted that it told Accredo and US Bioservices that Novartis might reduce the number of patient referrals that they received from EPASS and that Novartis "pushed" Accredo and US Bioservices to implement plans in which nurses would call patients and encourage them to stay on Exjade.  Novartis also admitted that it used the scorecard results to allocate EPASS patients among the specialty pharmacies.

The case against Novartis was initiated by a whistleblower, David Kester, who used to work for Novartis and will receive a portion of the settlement.  Novartis, which is headquartered in East Hanover, New Jersey, is a subsidiary of the Swiss pharmaceutical company Novartis AG.  The case is captioned U.S. ex rel. Kester, et al. v. Novartis Pharmaceuticals Corporation, et al., No. 11-CIV-8196 and was filed in the United States District Court for the Southern District of New York. 

The case was handled by the Medicaid Fraud Control Unit, which worked closely with the U.S. Attorney's Office for the Southern District of New York and a multi-state team that included representatives of California, Indiana, Oklahoma, Washington, and Wisconsin.  Of the $18.5 million related to the New York Medicaid program, about $10.2 million will go to New York and $8.3 million will go to the federal government. 

Special Assistant Attorney General Christopher Y. Miller led a multi-state team that litigated the case and negotiated the settlement with Novartis.  Special Auditor-Investigator Colin Ware and Chief Auditor Michael LaCasse served as members of the state team.  The case was also handled by Special Assistant Attorney General Diana Elkind, and the investigation was conducted by Investigators Lisa McDonald and Kenneth Deis, Investigator Peter Markiewicz and Deputy Chief of Downstate Investigations Kenneth Morgan.  Electronic Investigative Support Group Deputy Director Carolyn Hart, Systems Analyst Linda Ault, and Legal Assistants Geoffrey Gund and Sam Chen provided support to all of the states that litigated the case.  The Medicaid Fraud Control Unit is led by Acting Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.  The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.     

NEW YORK – Attorney General Eric T. Schneiderman and New Jersey’s Acting Attorney General John J. Hoffman announced that an alleged Paterson drug dealer was arrested today on a first-degree charge of strict liability for drug-induced death for allegedly selling the heroin laced with fentanyl that killed a man in Warwick, N.Y., in October.

Shawn Flemmings, 33, of Paterson, was arrested without incident today on a warrant by members of the New Jersey Division of Criminal Justice and the Passaic County Sheriff’s Office, who stopped him in a car in Paterson.  He is being held in the Passaic County Jail with bail set at $100,000 full cash.  The first-degree charge carries a sentence of 10 to 20 years in state prison.  Flemmings is charged in connection with the death of Stephen Ference, 27, of Warwick, N.Y.  Ference was found dead inside his home on Oct. 17 as a result of an overdose.

The arrest was the result of a joint investigation conducted by the New York Attorney General’s Office and the Warwick (New York) Police Department.  The New York Attorney General’s Office enlisted the aid of the New Jersey Attorney General’s Office in the investigation as a result of their existing partnership on the Northeast and Mid-Atlantic Heroin Task Force (NEMA-HTF), a task force of state attorneys general that is promoting collaboration to fight heroin trafficking.  Through prior task force discussions, the New York prosecutors were aware of New Jersey’s strict liability statute and the potential to prosecute a drug dealer for a first-degree crime in connection with an overdose death.

New York State Attorney General Eric T. Schneiderman said, “The heroin crisis doesn’t stop at state lines – and neither can our fight against it. Cooperation and coordination among states and law enforcement agencies is critical to finally put an end to this deadly crisis. This investigation is a prime example of the innovative work being done by many states in the Northeast and Mid-Atlantic that will lead to larger and stronger criminal cases against kingpins and dealers. My office will continue to work with our partners throughout the region to leverage the best practices and best technology available to finally end this epidemic.”

“This case demonstrates our resolve to hold heroin dealers accountable for their conscienceless infliction of addiction, misery and death upon our communities,” said Acting New Jersey Attorney General Hoffman. “New Jersey law enables us to hold drug dealers criminally responsible for the deaths they cause by sending them to prison for up to 20 years. Through our partnership with the New York Attorney General’s Office, we’re seeking justice for the family of the young man allegedly killed by this drug dealer’s heroin, as well as the many others who undoubtedly have suffered because of his poison.”  

“A year ago we issued a directive to police in New Jersey to investigate all overdose deaths with a view to potentially charging the dealers responsible under our strict liability law,” said Director Elie Honig of the New Jersey Division of Criminal Justice. “Our efforts to make use of this important law even led to discussions with our task force partners in New York, who responded with this investigation. This is exactly the type of collaboration we need to tackle the epidemic of heroin abuse in our states.”

Warwick police officers initiated the investigation on the evening of Oct. 17 when they responded to Ference’s home on an emergency call after he was found unresponsive.  Ference was pronounced dead at the scene by emergency medical personnel.  Officers found syringes and empty glassine envelopes on the bed next to the body and on the floor.  In total, police seized 23 single-dose glassine envelopes of heroin and four empty ones, all stamped “Ball Room” in black ink.  The Orange County (N.Y.) Medical Examiner determined that Ference had opiates in his system and died of acute fentanyl intoxication.

Warwick officers seized Ference’s iPhone, which revealed potential communications with his heroin supplier in Paterson, N.J., who was identified with the street name “S.”  The phone was turned over to the New York Attorney General’s Office for further investigation.  Examination of the phone’s call log, text messages and other data revealed that Ference traveled on Oct. 16 to a location on Vreeland Avenue in Paterson, where he obtained heroin.  The New York Attorney General’s Office enlisted the New Jersey Attorney General’s Office in the investigation, and detectives of the New Jersey Division of Criminal Justice Gangs & Organized Crime Bureau began working with detectives of the Passaic County Sheriff’s Office to identify the drug dealer who sold heroin to Ference.

Sheriff’s detectives already were familiar with Flemmings as an alleged drug dealer called “S” who was dealing in the block where Ference obtained heroin.  The Passaic County Sheriff’s Office, in fact, arrested Flemmings on Oct. 27 on drug charges, including a charge that on Oct. 26, while under surveillance, he distributed a “brick” of roughly 50 glassine envelopes of heroin stamped with “Ball Room” on the same block where Ference obtained the heroin immediately prior to his death.  Through further investigation, the Division of Criminal Justice, the Passaic County Sheriff’s Office, the New York Attorney General’s Office and the Warwick Police obtained extensive additional evidence that Flemmings allegedly is the dealer who supplied the heroin laced with fentanyl that killed Ference.

In addition to the first-degree charge of strict liability for drug-induced death, Flemmings is charged with distribution of heroin.  The charges are merely accusations and the defendant is presumed innocent until proven guilty.

Acting New Jersey Attorney General Hoffman and New York Attorney General Schneiderman commended all of the officers, investigators and detectives who investigated the case for the Warwick Police Department, New York Attorney General’s Office, New Jersey Division of Criminal Justice and Passaic County Sheriff’s Office.

As part of the Comprehensive Drug Reform Act of 1987, New Jersey enacted a provision making it a first-degree crime to unlawfully distribute a controlled dangerous substance that results in death.  The statute prescribes strict liability, and it is no defense that the drug user contributed to his or her own death by voluntarily ingesting the substance that caused death.  The statute applies to every person along the drug distribution chain, not just the dealer who may have personally interacted with the decedent.

The Northeast and Mid-Atlantic Heroin Task Force operates under the auspices of the National Association of Attorneys General.  The primary goal of the task force is collaboration, coordination and information-sharing between the attorneys general and other law enforcement agencies to combat organized narcotics enterprises that are supplying people with heroin.

NEW YORK – In advance of the holiday shopping season, Attorney General Eric T. Schneiderman issued tips for consumers who plan to shop on Black Friday and Cyber Monday.

“As the holiday shopping season kicks off and New Yorkers look to take advantage of sales and bargains, they must be aware of deals that are too good to be true and online fraudsters scheming to make a quick buck,” said Attorney General Schneiderman. “By following our tips and guidelines, consumers will be able to spend their money wisely and safely this holiday season.”

Attorney General Schneiderman issued the following tips for consumers shopping on Black Friday and Cyber Monday: 

• Beware of misleading bargains and added fees: The “sale” price may have been marked up before it was marked down, nullifying the impact of the sale. Often, the touted “sale” price may, in fact, be significantly higher than the price for that same item later in the season. Delivery charges and/or other added costs such as assembly fees are often not reflected in the “sale price.” In many cases, hidden costs like these may negate the value of the sale.  
• Compare warranty terms. Not all warranties are the same. Make sure you read the terms of any warranty to learn what protections you get and the duration of those protections. This could significantly affect that cost of an item over the long-run.   
• Know the terms of a layaway plan. The law requires merchants to give a detailed description of the merchandise to be purchased on layaway plans, the total cost of the items, including all charges, the duration of the plan, the required payment schedule, the consequences of missing payments, the refund policy and the location, if other than the place of purchase, where the merchandise is being stored.
• Check return and refund policies. The law requires all merchants to post their refund policies. A store that fails to do so must give consumers 30 days to get a refund in the manner that the purchase was made. Be especially vigilant of “final sales” or “cash-only – final sale” notices, as you will have little or no recourse if the merchandise proves to be defective. Some stores will require the original packaging and charge a hefty restocking fee for returned items.  
• Beware of restricted gift cards.Be sure to read the terms and conditions of gift cards before purchasing. It is illegal to deduct any fees for non-use within one year of purchase or to have an expiration date of less than five years from issuance. Use your card as soon as you can. If it later appears that your card has expired, or that fees have been deducted, contact the company that issued the card. It may still honor the card or withdraw the fees. 
• Shop only on secure Internet connections: Do not conduct any transaction that involves personal, financial or credit card information while using an open and unsecured Wi-Fi connection. Be careful not to shop, conduct business, or send sensitive or personal information out on these networks because identity thieves often stake out open networks seeking victims. When entering payment information online you should verify that HTTPS is in your address bar to protect yourself from identity thieves and cyber criminals. URLs that begin with https:// instead of the standard http:// are secured by SSL, an internet security protocol.  
• Do not be tricked by confusingly similar website and domain names: Pay particular attention to your retailer’s URL when shopping online. Scammers use variants of a known company’s Internet address to try and lure users into visiting fake websites. They often target users through email or social media.  Avoid clicking on links from email or social media sites.  Watch out for websites with URLs that differ slightly from those of legitimate online retailers, and also links that appear genuine but direct your browser to a completely different URL. To ensure safe shopping online type the URL of your desired retailer directly into your web browser — and watch for typos.    
• Protect yourself by using credit cards: With the advent of point-of-sale malware and rampant data breaches, identity thieves are now more sophisticated and dangerous than ever. If you are going to make purchases online, you can best protect yourself from the risks of identity theft and fraud by using credit cards. Credit cards generally offer better purchase protection and fraud dispute resolution than other methods of payment. 
• Be wary of too-good-to-be-true contests and prize promotions: Consumers should be suspicious of any email, messages, or posts on social networks promoting giveaways or contests that seem too good to be true, g., free high-value gift cards, tablets, and smartphones. These “contests” are often scams designed to bilk consumers out of money and/or to collect consumers’ personal information for resale. Genuine sweepstakes and contests are commonplace on the Internet; however, you should avoid any contest or promotion that requires you to pay money or to perform any sort of financial transaction. Also, think twice before participating in promotions that require entrants to register with multiple third-party websites; often these are ploys to build marketing lists. Promotions that require users to provide more than simple contact information may even be phony or run by scammers who resell consumer information to collect referral fees!  
• Read the fine print: Broadly worded promotional offers and advertisements often mislead consumers into paying full price for items they believed were on sale.  Consumers should carefully examine Internet deals by reading any and all fine print in the promotional materials, identifying the exact brand and model number on sale. Consumers should also avoid bait-and-switch advertisements or promotions that lure consumers with basement prices that are not guaranteed to be in stock. Fine print stating that quantities are limited is a tell-tale sign of this bait-and-switch tactic. 

NEW YORK - Attorney General Eric T. Schneiderman today announced that his office has reached an agreement with Planet Fitness Holdings LLC, and its subsidiaries, Pla-Fit Franchise, LLC, franchisor of Planet Fitness brand fitness facilities and Planet Fitness National Advertising Fund, LLC, (collectively “Planet Fitness”) requiring that they not offer “unlimited” tanning as part of premier Black Card level memberships and that they provide adequate training to employees who oversee indoor tanning services at Planet Fitness gym locations.  Planet Fitness also agreed not to make health-related claims to promote red lamp devices and to comply with all New York State tanning regulations.   Planet Fitness paid $50,000 in costs and penalties.

“Under today’s agreement with Planet Fitness, the company will no longer offer unlimited tanning as part of its health club benefits and will not make any claims regarding the health or safety of indoor tanning,” said Attorney General Schneiderman. “This agreement is part of a continuing effort to protect consumers from the documented skin cancer risks of indoor tanning. I am especially concerned with rising cancer rates associated with indoor tanning, particularly for young people, and businesses that offer indoor tanning should market their services truthfully.”

Indoor tanning increases the risk of melanoma, the deadliest form of skin cancer – which is responsible for 9,000 deaths in the United States each year.  Indoor tanning also increases the risk of other skin cancers such as basal cell carcinoma and squamous cell carcinoma.  While usually not fatal, these cancers can cause noticeable disfigurement.  In addition to increasing the risk of skin cancer, UV exposure can also harm the immune system and cause premature skin aging.  New York State tanning law currently prohibits tanning for children under 17 and requires parental consent for children between the ages of 17 and 18.  Additionally, New York law requires that current tanning hazards information sheets and acknowledgement forms be distributed to tanning patrons and that free protective eyewear be made available to tanning patrons.

Investigators visited a number of Planet Fitness franchise locations that offer tanning services and found numerous violations of New York State tanning laws, including failure to provide required warnings and acknowledgment forms to consumers and failure to provide protective eyewear at no additional cost, a public health hazard. There are approximately 98 Planet Fitness locations currently operating in New York State, with some under corporate ownership and the majority owned by independent franchisees.  

Some Planet Fitness locations offered LED or red light Beauty Angel treatments that were advertised as providing various health related benefits.  However, these red lamp devices are approved by FDA only for cosmetic purposes.  Planet Fitness and its franchised locations ceased promoting red lights for medical or health benefits upon notice by the Attorney General of its potentially false and misleading advertising of these services.

Planet Fitness also ceased the promotion of Black Card trial membership upgrades and Black Card memberships to include unlimited use of “free” and “unlimited” tanning services to members of legal tanning age during the course of this investigation.  These promotions may imply that frequent indoor tanning is safe and may encourage more frequent indoor tanning

While Planet Fitness does not advertise or promote health-related benefits of indoor tanning, the investigation uncovered that Planet Fitness did not require or provide training of its employees in any Planet Fitness locations beyond the operation of UV devices and sanitizing procedures for tanning beds. Nor did Planet Fitness provide independent third-party training programs regarding safety precautions and procedures to employees of corporately owned locations.  Under the settlement, Planet Fitness will adopt written training procedures for employees of corporate locations that emphasize, among other requirements, the operation of tanning equipment in a manner adequate to protect consumers from potential overexposure and other hazards related to indoor tanning and making any representations about the safety of indoor tanning.  Planet Fitness will emphasize to franchisees the importance of their compliance with these employee training procedures.

The action announced today is one of a number of steps taken by the Attorney General to help educate the public and raise awareness of the harms associated with indoor tanning. The Attorney General’s office has released a brochure on indoor tanning safety  that provides important information on the risks and harms associated with UV tanning.  In August 2013, the Attorney General submitted comments to the Food and Drug Administration supporting a proposed agency order that would provide important protections for consumers and new warnings on UV radiation tanning beds and other sunlamp devices. A copy of the FDA letter is available here. The FDA’s final order became effective in September 2014, strengthening protections for consumers by requiring manufacturers to place additional performance and safety controls on sunlamp products, and to include contraindication statements and warnings.

In 2013, the Attorney General launched an investigation into suspected misleading advertising in the indoor tanning salon industry.  The Attorney General reached settlements in March 2014 with HT Franchising Management LLC, the franchisor of the Hollywood Tans salons, and Hollywood Tans NYC, a Manhattan-based franchise of the national chain, requiring them to stop making health-related representations to promote tanning services.  The Attorney General also has two  lawsuits  currently pending against Portofino Spas, LLC (“Portofino”) and Total Tan, Inc., alleging that both franchises engaged in false advertising by denying or minimizing scientific evidence linking tanning to an increased cancer risk; promoting indoor tanning as a safe way to reap the benefits of vitamin D and other purported health benefits; and asserting that indoor tanning is safer than tanning outdoors.  In addition, Total Tan is accused of violating New York indoor tanning laws. 

The Planet Fitness settlement was handled by Assistant Attorney General Ellen Fried and Bureau Chief Jane M. Azia, of the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.  The tanning salon investigations and litigation are being handled by the Consumer Frauds Bureau, the Health Care Bureau and the Environmental Protection Bureau.  The Health Care Bureau is led by Lisa Landau and the Environmental Protection Bureau is led by Lemuel Srolovic.  The Health Care and Environmental Protection Bureaus are in the Division of Social Justice led by Executive Deputy Attorney General Alvin Bragg.

Consumers with questions or concerns about health care matters may call the Attorney General’s Health Care Bureau Helpline at 1-800-428-9071.  Consumers with complaints about other consumer matters can file a complaint online or call the Attorney General’s consumer helpline at 1-800-771-7755.

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has resolved the antitrust lawsuit it brought in September 2014, which has successfully prevented pharmaceutical manufacturer Allergan plc (previously named Actavis plc) from forcing Alzheimer’s patients to switch medications as part of an anticompetitive strategy designed to maintain high drug prices.  In December 2014, a federal judge granted New York’s request for an injunction and prohibited Allergan from engaging in the controversial tactic – sometimes called a “forced switch” – which would have needlessly disrupted the treatment plans of these patients solely to protect corporate profits.  Because the injunction protected competition and allowed low cost generic drugs to enter the market unimpeded, the Attorney General’s office has determined that it is no longer necessary to continue legal action.

“Our lawsuit prevented Allergan from pursuing its plan to block competition, thus preserving patient choice for hundreds of thousands of Alzheimer’s patients, and protecting the public from bearing hundreds of millions’ of dollars in unnecessary drug costs,” said Attorney General Schneiderman.  “Excessive drug prices are a major problem in this country.  My office will continue to protect patients and the public from anticompetitive practices that result in artificially inflated drug prices.”

In February 2014, Allergan’s subsidiary Forest Laboratories announced a plan designed to impede competition from low cost generic drugs for its blockbuster Alzheimer’s drug Namenda IR.  Forest’s plan was to withdraw Namenda IR from the market a few months before generic versions became available, in order to force Alzheimer’s patients to switch to a very similar drug manufactured by Forest that had a longer lasting patent – Namenda XR.  Forest knew that once patients were forced to switch to the new drug, they would likely remain on that medication even after generics for Namenda IR entered the market, due to the practical difficulties of switching back.  The tactic was expected to dramatically curtail the ability of generics to compete in the market, and to cost the public hundreds of millions – if not billions – of dollars in unnecessary drug costs. 

In September 2014, the New York Attorney General’s office filed its groundbreaking lawsuit seeking to stop the “forced switch,” and sought a preliminary injunction from the federal court in New York.  After a five day evidentiary hearing, in December 2014 the Honorable Robert W. Sweet granted New York the requested injunction, and ordered Forest to preserve patient choice by continuing to make Namenda IR available to Alzheimer’s patients until the summer of 2015, when generics were expected to enter the market.  In May 2015, a three judge panel from the United States Court of Appeals for the Second Circuit unanimously affirmed Judge Sweet’s decision in favor of the Attorney General.

As a result of the injunction, Alzheimer’s patients have not been forced to switch from Namenda IR to Namenda XR, and instead have been able to select which drug to use based on their and their physicians’ views of which drug is best for them.  By summer 2015, low cost generic versions of Namenda IR became widely available in the market.  Accordingly, as a result of the Attorney General’s lawsuit, patients who wished to remain on Namenda IR during early 2015 and then switch to the generic version when it became available over the summer were able to do so without any disruption in their medical treatment.  In addition, Alzheimer’s patients who wish to take Namenda XR instead of Namenda IR are also free to do so.  The injunction expired by its own terms in August 2015.

A recent study by the federal Department of Health and Human Services indicates that New York’s lawsuit may save U.S. taxpayers billions of dollars over the next several years.  That study is available here. 

As a result of the success of the Attorney General’s lawsuit, the case may now be dismissed.  Pursuant to a settlement agreement entered into by the parties, the lawsuit will be dismissed, and Allergan will withdraw its request for U.S. Supreme Court review of the decisions issued in favor of the Attorney General. 

This matter was led by Antitrust Bureau Chief Eric J. Stock, Deputy Bureau Chief Elinor R. Hoffmann, Executive Deputy Attorney General for Economic Justice Karla G. Sanchez, and Assistant Attorneys General Saami Zain, Jeremy R. Kasha, and Zachary W. Biesanz.

NEW YORK – Attorney General Eric T. Schneiderman today released the following statement in honor of Thanksgiving:

“I wish all families in New York and across the country a joyous Thanksgiving holiday. Let this be a time to give thanks for this year’s blessings, and to reflect on the challenges we have confronted. But we must also remember that too many of our neighbors are struggling and in need. While we celebrate with friends and family today, let us also remember to use this holiday as an opportunity to give back and show compassion to those who are less fortunate, including those who flee conflict and persecution across the globe.”

NEW YORK – Attorney General Eric T. Schneiderman issued charitable giving tips for “Giving Tuesday,” a day that encourages charitable donations and giving in communities worldwide.

“Giving Tuesday is a fantastic opportunity for New Yorkers to continue their traditional generosity by giving back and supporting those in need right in our neighborhoods and across the globe,” Attorney General Schneiderman said. “If you plan on giving, follow our tips to ensure that your money is going to a worthy cause, and that the charity will use your money wisely.” 

The Attorney General’s tips include:

• Take Time To Research The Organization. Make sure you are familiar with the organization, its mission, and its effectiveness before giving. Always ask for information in writing – be wary if an organization will not provide information about charitable programs and finances upon request. Any legitimate organization will be happy to send you information. Consult charitiesnys.com to ensure that it is registered, and to learn more about its mission and finances.
• Know Where Your Money Will Go. Find out from the charity what it will do with your money. Review the charity’s financial reports for information about how it spends donations. If you have been contacted by a telemarketer, review Pennies for Charity, the New York Attorney General’s annual report of telemarketing campaigns in New York, to see how much is spent on fundraising costs and how much has been kept by the charity.
• Don’t Be Pressured by Telemarketers. If you receive a telephone call asking you to contribute to a charity, you have the right to hang up. Often the caller is a professional fundraiser who is being paid to call you. If you choose not to end the call, ask how much of your donation will go to charity and how much the telemarketer is being paid. Many telemarketing companies receive most of the money they raise. Be wary of claims such as “all proceeds will go to charity.” Telemarketers are required to respond truthfully to your questions. Don’t fall for pressure tactics such as repeated phone calls, or threats. These are signs that the organization may not be legitimate. And always remember you have the right to say no to any charitable request.
• Ask To Be Put On A Do Not Call List. You also have the right to request that you be placed on the telemarketer’s “Do Not Call” list. It is not illegal for telemarketers  for charities  to call telephone numbers on the FTC’s Do Not Call Registry, but consumers can stop such calls by telling telemarketers not to call them on behalf of specific charities – telemarketers are required to honor such requests.  You may also ask a charity to take you off its solicitation list.
• Be Wary of Deceptive Tactics and Emotional Appeals. Watch out for charities with names that resemble those of prominent or established organizations—especially on days designated to charitable giving. Some charities use names similar to well-known charities in order to confuse donors. Be wary of emotional appeals that talk about problems but are vague on how donations will be spent. Also be careful about charities that are created immediately following a natural disaster or other current event.
• Don’t Disclose Personal Information. Never give your social security number or other personal information in response to a charitable solicitation. Never give out credit card information over the phone or to an organization you are not familiar with.
• If you Donate Online or by Text, Donate Securely.  Always make sure that you are using secure methods of payment. When donating online, make sure the website is secure and includes ‘https’ in the web address.

Never Give Cash. Give your contribution by check made payable to the charity.

NEW YORK—Attorney General Eric T. Schneiderman sent a letter to reproductive health clinics in New York to underscore his office’s continued commitment to enforcement of the federal, state and local laws that ensure patient and staff access to facilities that provide reproductive health services across New York State.

The Attorney General’s office has taken action to protect reproductive rights in several areas. In 2012, the Attorney General secured a new court order which expanded a buffer zone against protesters at Utica Planned Parenthood facility.  In October, the Attorney General announced he is leading a coalition of a dozen states in filing a friend-of-the-court brief urging the U.S. Supreme Court to grant certiorari to review a federal appellate court decision upholding two provisions of Texas law that significantly restrict access to abortion services in that state.

“In light of last week’s horrific tragedy at a Planned Parenthood clinic in Colorado, we are committed to ensuring that all New Yorkers have full and safe access to necessary reproductive health care services,” Attorney General Schneiderman said. “I urge health care providers, their staff and community members to immediately report any potential violations of the law to my office.”

The letter urges those who become aware of potential violations of the state’s clinic protection laws or believe that clinic staff, patients, or other persons are victims of unlawful harassment, to contact the Civil Rights Bureau at (212) 416-8250 or send an email to Civil.Rights@ag.ny.gov.

NEW YORK—Attorney General Eric T. Schneiderman issued the following statement on the appointment of Janet DiFiore as the next Chief Judge of the New York State Court of Appeals:

“I want to congratulate Janet DiFiore on her appointment by Governor Cuomo to be the state’s next Chief Judge. Ms. DiFiore’s wide-ranging experience as both a judge and a prosecutor has prepared her well for this role, and her impressive record demonstrates a strong commitment to justice and equality under the law. Having personally worked with Ms. DiFiore over the years, I know that the people of New York will greatly benefit from her appointment, and I commend Governor Cuomo for his excellent choice.”   

NEW YORK - Attorney General Eric T. Schneiderman today called on the federal agency responsible for regulating the transportation of hazardous materials to close a loophole that currently allows highly flammable crude oil to be shipped by rail through communities in New York and across the country.  Specifically, the Attorney General filed a petition for rulemaking to the Pipeline and Hazardous Materials Safety Administration (PHMSA) that would require all crude oil transported by rail in the U.S. to achieve a vapor pressure – a key driver of the oil’s explosiveness and flammability– of less than 9.0 pounds per square inch (psi).

Despite several recent derailments of trains carrying crude that have resulted in extraordinary explosions and uncontrollable fires – including the horrific Lac-Mégantic, Quebec accident where a derailed train burst into flames, destroyed the downtown area, and killed 47 people – there is no federal limit on the vapor pressure of crude oil transported by rail.  The Attorney General’s petition argues that reducing crude oil vapor pressures to levels below 9.0 psi is not only practical, but is necessary for minimizing the risks and severity of accidents involving railroad tank cars.

“Recent catastrophic rail accidents send a clear warning that we need to do whatever we can to reduce the dangers that crude oil shipments pose to communities across New York State,” said Attorney General Schneiderman.  “In New York, trains carrying millions of gallons of crude oil routinely travel through our cities and towns without any limit on its explosiveness or flammability – which makes crude oil more likely to catch fire and explode in train accidents.  The federal government needs to close this extremely dangerous loophole, and ensure that residents of the communities in harm’s way of oil trains receive the greatest possible protection.”  

According to the Association of American Railroads, crude oil shipments by rail increased from 9,500 carloads in 2008 to 493,126 carloads in 2014, representing an increase of over 5,000 percent.  It has been reported that up to 44 “unit trains” – chains of 70 to 120 tank cars – travel on rail routes that bisect New York each week, each carrying from 2 to 3.5 million gallons of crude oil.  These trains traverse approximately 700 miles of the state, passing through the heart of population centers such as Buffalo, Syracuse, Rochester, Plattsburgh, Saratoga Springs, Albany, Kingston and Newburgh, and within a few miles of New York City.  An oil train accident along these routes of the size and intensity of those seen in Quebec and other locations, could imperil the safety of thousands of New York State residents who live, work, travel, and recreate along the way. 

PHMSA’s stated mission is to protect people and the environment from the risks of the transportation of hazardous materials, including crude oil.  In July 2015, in response to concerns raised by a number of rail accidents involving crude oil shipments, the agency adopted a new rule that sought to enhance the structural integrity of train cars that ship crude oil, and lessen the chances of train derailments.  Although the new rule imposed new regulations on the design and operation of train cars, it did nothing to increase the safety of the highly combustible liquids carried by these cars.  Because of this, under federal law, crude oil can still be shipped through some of New York’s most densely populated communities without any limit on its explosiveness or flammability.

Attorney General Schneiderman’s petition seeks to close this dangerous loophole by requiring all crude oil transported by rail to achieve a vapor pressure of less than 9.0 psi.  Vapor pressure is a key contributor to crude oil’s explosiveness and flammability.  Crude oils with the highest vapor pressures – such as crude produced from the Bakken Shale formations in North Dakota – have the highest concentrations of propane, butane, ethane, and other highly volatile gases.  While the vapor pressure of the crude involved in train accidents is frequently not disclosed, in the limited number of instances it is known – including the La-Mégantic accident – vapor pressures have exceeded 9.0 psi. 

“I am pleased Attorney General Schneiderman filed this petition, because no one should have to live with dangerously explosive materials rumbling through their back yards,” said Congresswoman Nita Lowey. “That’s why I introduced legislation in the House of Representatives (HR 2379) that would immediately ban interstate shipment of the most volatile forms of crude oil so that we can prevent a crude oil tragedy in our community. We need faster progress on crude transport safety to protect Americans who live and work near extensive railways – including my constituents in Rockland County. As Ranking Member of the House Appropriations Committee, I will continue working to pass my bill and implement other measures to prevent another crude transport disaster.”

“I commend Attorney General Schneiderman for his action today to highlight the inconsistencies of federal regulations that could place New Yorkers in harm’s way,” said Albany County Executive Daniel P. McCoy. “The volatility of Bakken crude being transported through Albany County is of concern to me and is part of the recommendations put forth in May by the Expert Committee on Crude Oil Safety in Albany County. The time is now for the federal government to address this issue and I am pleased that the Attorney General is calling on the PHMSA to enhance safety by reducing the volatility of the oil shipped through our community.”

“As we have seen in other communities, rail disasters such as the tragedy in Quebec have devastating and far-reaching consequences,” said Erie County Executive Mark Poloncarz. “We must act in all ways possible to prevent such tragedies from befalling other communities, and Attorney General Schneiderman’s proposal to reduce the flammability of crude oil shipments is a common sense way to reduce the likelihood of another such disaster. I support this proposal as another way to protect the residents of Erie County and New York State.”

“I fully support Attorney General Schneiderman’s effort to improve the safety of the highly combustible liquids that are transported through cities like Albany on a daily basis,” said Albany Mayor Kathy Sheehan. “This is a common sense measure that can be easily implemented to protect our residents from the unthinkable harm that can occur when a derailment occurs. We will continue to advocate for stronger guidelines and federal action to ensure the safety of our communities .”

“Trains that are carrying highly flammable crude oil are an inherent risk to communities across New York State,” said Syracuse Mayor Stephanie A. Miner. “I support Attorney General Schneiderman in calling for the federal government to take common sense steps to reduce the flammability of crude oil that is shipped via rail. I firmly believe we must utilize available technology to reduce the risk of catastrophe if an accident occurs.”

“The tragedy at Lac-Mégantic was a result of excess speed and excess volatility.  The Attorney General is calling for common sense, easily implemented controls on vapor pressure to control the volatility of crude oil being transported by rail,” said Plattsburgh Mayor James Calnon.  “As Mayor of a city that has oil trains moving through its downtown, lakefront and residential areas, I heartily endorse the Attorney General’s plan.  At the same time, we cannot drop our vigilance regarding speed limits, and need to resist any attempts to raise them and to endorse attempts to lower them in our populated areas.”

“Communities like Newburgh are at risk with highly flammable crude oil being transported through our neighborhoods,” said Newburgh Mayor Judy Kennedy. "I stand with Attorney General Schneiderman in calling for federal action to reduce the flammability of crude oil that is being shipped via rail. The technology exists to reduce the risk of catastrophe if an accident occurs, and this is a fundamental issue of public safety that is too important to ignore.”

"I join Attorney General Schneiderman's call to mandate vapor pressure of 9.0 psi or lower for crude oil transported by rail. A higher than 9.0 psi was the case for the tragic Lac-Megantic accident. Oil travel through our state and my district remains a serious concern for me and I continue to look for increase safety regulations for these transporters and container companies," said Assemblymember Patricia A. Fahy.

“A roughly 50-fold increase in oil train traffic in the last seven years means more and more of these explosive trains are rolling through communities where people live—especially in New York, which has become a hub for oil tanker trains,” said Richard Schrader, New York Legislative Director, Natural Resources Defense Council. “As the recent uptick accidents show, these trains simply aren’t safe. With any accident having the potential to be catastrophic, the federal government needs to do more to protect people. We applaud Attorney General Schneiderman for taking this important action.”

Peter Iwanowicz, executive director of Environmental Advocates of New York said, “When oil trains derail, the volatility of the fuel can have a significant impact on the size and severity of the explosion. The higher the vapor pressure, the greater chance that lives will be lost. The amount of crude-by-rail traffic passing through our communities has increased thousands of times over. The crude can be made less volatile and the Obama Administration must act before another life is lost. Environmental Advocates applauds Attorney General Schneiderman for exploring every tool available to make communities safer as we also move entirely away from dirty fossil fuels.”

“Communities across New York State are at risk with highly flammable crude oil being transported by trains,” said Patricia Kane, a registered nurse at Staten Island University Hospital and treasurer for New York State Nurses Association. “NYSNA nurses stand with Attorney General Schneiderman in supporting federal action to reduce the flammability of crude oil that is being shipped via rail. There are basic steps that we can take to reduce the risk of catastrophe in the event of an accident and we support this common-sense proposal.”

Industry has for years already employed technology to process crude oil to reduce or remove the combustible gases that give crude oil its high volatility.  The technology is well-known and readily-available.  Known as “stabilization,” the technology reduces crude’s vapor pressure by removing the volatile propane, butane, and ethane gases – often capturing these valuable gases for sale.  Stabilization is commonly used in various sectors of the oil and pipeline industries to limit the vapor pressure of certain highly flammable liquids.  For example, the U.S. Environmental Protection Agency, various states, and pipeline operators across the country have adopted vapor pressure limits for gasoline, which require shippers to employ similar stabilization technology.

This matter is being handled by Assistant Attorneys General John J. Sipos and Mihir A. Desai, and Environmental Scientist John Davis, of the Attorney General's Environmental Protection Bureau which is led by Bureau Chief Lemuel Srolovic.  The Environmental Protection Bureau is part of the Attorney General’s Social Justice Division.  The Executive Deputy Attorney General for Social Justice is Alvin Bragg

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement under the Health Insurance Portability and Accountability Act (“HIPAA”). The settlement, reached with University of Rochester Medical Center (“URMC”), requires the medical center to train its workforce on policies and procedures related to protected patient health information, notify the Attorney General of future breaches, and pay a $15,000 penalty.

“This settlement strengthens protections for patients at URMC, and it puts other health care entities on notice that my office will enforce HIPAA data breach provisions,” said Attorney General Schneiderman.“My office is committed to protecting patients’ private health information. Other medical centers, hospitals, health care providers, and health care entities should view this settlement as a warning, and take the time now to review and amend, as needed, their own policies and procedures to better protect private patient information.”

The settlement is in response to a data breach that occurred in the spring of 2015, when a URMC nurse practitioner gave a list containing 3,403 patient names, addresses, and diagnoses to her future employer, Greater Rochester Neurology (“GRN”), without first obtaining authorization from the patients.  On April 21, 2015, GRN used the information to mail letters to the patients on the list informing them that the nurse practitioner would be joining the practice and advising them of how to switch to GRN.    

URMC learned of the breach three days later, when calls began coming in from patients who were upset about the letter. The nurse practitioner was subsequently terminated, notification letters were sent to the affected patients, and the media was alerted. GRN has attested that all health information transmitted by URMC has been returned or deleted.

In 2009, state attorneys general were empowered under the Health Information Technology for Economic and Clinical Health (HITECH) Act to enforce HIPAA rules by permitting civil actions against violators. 

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

A copy of the settlement can be read here.

The investigation of this matter was conducted by Assistant Attorney General Brant Campbell and Volunteer Assistant Attorney General Laura Puhala of the Attorney General’s Health Care Bureau, together with Assistant Attorney General Herbert Israel and Volunteer Assistant Attorney General Stephen Mindell of the Consumer Frauds Bureau. The Health Care Bureau is led by Bureau Chief Lisa Landau, and is a part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice, Alvin Bragg; and the Consumer Frauds Bureau is led by Jane Azia, and is part of the Economic Justice Division, led by Executive Deputy Attorney General for Economic Justice, Karla Sanchez.

NEW YORK – Attorney General Eric T. Schneiderman today announced that holders of gift cards purchased from the former retailer RadioShack can now file claims seeking to recover the unused balance on their cards.

“Individuals who have unused balances on RadioShack gift cards may now apply to get their money back,” said Attorney General Schneiderman. “When a company goes bankrupt, it is important that consumers are protected and this claims process will ensure just that.”

Consumers who have unused RadioShack gift cards with a balance can go to the website OldRadioShackGiftCards.com to obtain a claim form which they can submit electronically or by mail.

The claims process is part of a settlement agreement previously approved in the U.S. Bankruptcy court in Wilmington, Delaware and supported by Attorney General Eric Schneiderman, 23 other states, and the District of Columbia.

All claims will be reviewed according to the court-approved plan and settlement that established the RSH Liquidating Trust to review and approve claims in accordance with the court’s orders.

Under the Court’s order,  the Trust will treat as a priority claim and pay one hundred percent of the balance on the cards to consumers holding gift cards that were purchased (by either the holder of the card or by the person who gave the card as a gift) from RadioShack, the RadioShack website or any of its authorized sellers.  Per the court order, gift cards acquired in other way will not have priority and will be treated as a general unsecured creditor. 

The deadline for filing claims is December 2, 2016 and consumers in New York as well all fifty states are eligible to file proofs of claim.

Attorney General Schneiderman cautions consumers that no one associated with this settlement will contact them to ask for personal or financial information or to request any payment.  Consumers asked for such information or payment should say no to those requests.

Participating in the settlement with New York are the following: Tennessee, Pennsylvania, Oregon, Arizona, Arkansas, Florida, Georgia, Hawaii, Illinois, Indiana, Maine, Maryland, Massachusetts, Missouri, Nevada, New Hampshire, North Dakota, Ohio, Rhode Island, Texas, Virginia, Washington and the District of Columbia.

To view more information about the claims process and obtain a claim form, please call Attorney General Eric Schneiderman’s Internet Bureau at 212-416-8433 or visit the claims website at OldRadioShackGiftCards.com for more information.

NEW YORK – Attorney General Eric T. Schneiderman, Governor Andrew M. Cuomo, and Mayor Bill de Blasio, joined by Commissioner James S. Rubin of  New York State Homes & Community Renewal (“DHCR”)  and Commissioner Vicki Been of the City’s Department of Housing Preservation and Development (“HPD”),  announced today that 128 landlords receiving lucrative tax benefits under Section 421-a of the New York Real Property Tax Law are now registering 1,823 market-rate apartments across New York City as rent-stabilized. As a result, affected tenants in all five boroughs will enjoy the protections of rent-stabilized leases on their apartments for the first time. 

The recovery of rent-stabilized units is a result of landlords either entering into settlements with the Attorney General during the course of his ongoing 421-a investigation, or agreeing to participate in the Real Estate Tax Compliance Program, a joint initiative of the Attorney General, the New York State Department of Homes and Community Renewal, and the New York City Department of Housing Preservation and Development.

“Landlords of rental buildings who accept these tax incentives must follow through on their end of the bargain and offer rent-regulated leases to their tenants. That’s a central benefit of the 421-a law,” Attorney General Schneiderman said.  “The return of these apartments to rent stabilization will not only bring economic stability to the families that occupy them, but also honor the spirit of the law as it was intended.”

“We will not tolerate landlords who break the law – plain and simple,” saidGovernor Cuomo.“This announcement means that thousands of tenants throughout New York City will have the full legal protections that they deserve. This is an important step toward protecting New York’s renters from overcharges and rent gouging, and we will continue working with our partners in state and local government to hold landlords accountable.”

“We have zero tolerance for waste or abuse that costs New Yorkers vital affordable housing. Our administration is proud to work with Attorney General Schneiderman and DHCR to bring these hundreds of apartments back under rent stabilization, and to hold their owners accountable. We are using every tool we have to bring more affordable housing online, but we are equally focused on protecting the housing we already have,” saidMayor Bill de Blasio.

The Real Estate Tax Compliance Program was established in 2015 by Attorney General Schneiderman, Governor Andrew M. Cuomo, DHCR Commissioner James Rubin and HPD Commissioner Vicki Been to address the violation of the rent stabilization requirements of the 421-a law by 194 landlords of multifamily residential rental buildings, claiming they were operating as condominiums.  To date, 111 landlords eligible to participate in the Real Estate Tax Compliance Program have signified that they will register the 1,415 units they collectively own as rent-stabilized, and have already notified their tenants of their rights. 

Those landlords who have not elected to participate in the Real Estate Tax Compliance Program and are still illegally depriving their tenants of rent stabilized leases now face potential revocation of their 421-a tax benefits by HPD, enforcement action by TPU and private litigation by tenants. 

The State’s Tenant Protection Unit will begin enforcement actions to ensure the remaining 52 landlords who did not register their apartments fall into compliance.

Vicki Been, Commissioner of HPD, said,“These landlords accepted tax benefits with significant value and are required, by law, to give their tenants rent-stabilized leases.  Most building owners step up to the plate and do the right thing, but today we send a warning to those landlords who do not. I have noted previously, this is one step in a long-term, multi-agency enforcement effort, and we will not stop until every property is brought into compliance.  If you own a property that is receiving tax benefits, this would be a good time to heed our warning, take a close look at your legal obligations, and make sure that you are complying.  If you do not, it will be a costly mistake.”

James S. Rubin, Commissioner of New York State Homes & Community Renewal said, “Developers who get the benefit of tax exemption in exchange for the privilege of constructing apartment buildings must meet the requirements of the law, or risk losing those benefits once and for all. Through this collaboration among the Governor’s administration, the Attorney General and the City we have moved owners into compliance and as a direct result, thousands of tenants now have the rights and protections that they deserve under the State rent law. Starting now, we will begin taking legal action against recalcitrant landlords who have not complied during this program.”

Tenants in the buildings identified below may be being denied the protections of a rent stabilized lease by their landlords.  For these buildings, HPD can commence proceedings to revoke the tax benefit and TPU can simultaneously pursue overcharge actions against the owners for collecting improper rents, which may include treble damages on behalf of the affected tenants and ensure that buildings and apartments are properly registered and that tenants are protected from rent gouging.

Prior to launching the Real Estate Tax Compliance Program, Attorney General Schneiderman’s office spent two years investigating various landlords’ violations of the 421-a law.  Over the course of that investigation, the Attorney General has entered into 18 separate settlements with landlords of buildings in all five boroughs of New York City that were receiving 421-a tax benefits, restoring an additional 408 apartments to rent-stabilization.  Per the terms of those settlements, the settling landlords will also collectively pay $5,086,653 into the City’s “Affordable Housing – AG Settlement Fund,” which will be used to fund housing developments for low income families.  

Recent settlements have been reached with 13 landlords of properties in Brooklyn and Queens:

• Aron Kapelyus, who through 10 different shell entities owned 134 apartments in 10 buildings throughout the Williamsburg and Bedford-Stuyvesant  neighborhoods of Brooklyn, and systematically deprived all his tenants in those buildings of rent-stabilized leases, will now pay $103,500 to the City’s Affordable Housing – AG Settlement Fund and has begun supplying all his tenants in the following buildings with the protections of a rent-stabilized lease for the first time:

o   241 South 2^nd Street in Williamsburg, Brooklyn;

o   208 South 3^rd Street in Williamsburg, Brooklyn;

o   120 South 2^nd Street in Williamsburg, Brooklyn;

o   337 Bedford Avenue in Williamsburg, Brooklyn

o   442 South 5^th Street in Williamsburg, Brooklyn;

o   147 Maujer Street in Williamsburg, Brooklyn;

o   543-545 Kosciuszko Street in Bedford-Stuyvesant, Brooklyn;

o   417-419 Hart Street in Bedford-Stuyvesant, Brooklyn;

o   367 Classon Avenue in Bedford-Stuyvesant, Brooklyn; and

o   185-187 Clifton Place in Bedford-Stuyvesant, Brooklyn.

• In the Sheepshead Bay neighborhood of Brooklyn, 2801 Emmons Avenue, LLC, the developer of the 49 unit building located at 2801 Emmons Avenue, will now register all the apartments in that building as rent-stabilized, and will pay $49,000 in restitution to the City’s Affordable Housing – AG Settlement Fund and a further $75,000 in penalties, fees and costs to the State;
• 782 Hart St. Realty Inc., the developer of the building at 782 Hart Street in the Bushwick neighborhood of Brooklyn, will now provide rent-stabilized leases to the 19 families living there and pay $47,500 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• The 12 families living at 43-24 Robinson Street, in Flushing, Queens, will also now receive rent-stabilized leases from the developer of that building, LCLC, LLC, who is also obligated to pay $12,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• Per the terms of settlement that 1997 Ocean Avenue, LLC reached with the Attorney General, another 12 families residing at 1997 Ocean Avenue in the Midwood neighborhood of Brooklyn will now receive rent-stabilized leases, and that developer will also pay $12,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• Farda LLC and Zar LLC, who jointly developed a building containing 11 apartments at 71-57 161^st Street in Fresh Meadows, Queens, will now provide rent-stabilized leases to all the families residing there, and will also jointly pay $11,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• In the Williamsburg neighborhood of Brooklyn, 10 families at 630 Metropolitan Avenue will receive rent-stabilized leases and the building owner 630 Metropolitan Avenue LLC has agreed to pay $10,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• Another 8 families living at 124-128 Gaitling Place, in Astoria, Queens, will become rent-stabilized per the settlement that 124 Gaitling Place LLC reached with the Attorney General, which also requires the developer to pay $8,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• At 271 Nassau Avenue in the Greenpoint neighborhood of Brooklyn, 8 families will be receiving rent-stabilized leases, and the developer of that building will pay $8,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• In the South Slope neighborhood of Brooklyn, the developer of the building at 187 23^rd Street, 187 23^rd Street, LLC, will now provide rent-stabilized leases to the 7 families residing there and pay $10,000 in restitution to the City’s Affordable Housing – AG Settlement Fund;
• Charal Corporation, the developer of 131 Wythe Avenue in the Williamsburg neighborhood of Brooklyn, will now provide rent-stabilized leases to the 6 families living there, and will also pay $6,000 to in restitution to the City’s Affordable Housing – AG Settlement Fund;
• Shirokia Development, LLC, the developer of the building at 142-28 38^th Avenue in Flushing, Queens, will pay $85,000 in penalties, fees and costs to the State; and
• The developer of the building at 90 Clay Street in the Greenpoint neighborhood of Brooklyn, 90 Clay Street LLC, will pay $40,000 in restitution to the City’s Affordable Housing – AG Settlement Fund and a further $20,000 in penalties, fees and costs to the State.

Settlements with five other landlords had been previously announced.  Those earlier settlements included the recovery of all 421-a tax benefits received by the operator of a short-term stay hotel in Midtown Manhattan, recovery of unpaid wages for the building service employees employed by a Brooklyn landlord, and the collective return of 22 apartments owned by three different landlords of buildings in Queens and Staten Island.  Details of those settlements are available here and here.

"Landlords who receive tax exemptions have a legal obligation to adhere to the rules governing the public benefit they receive. They also have a respective moral obligation to aid in reducing the affordable housing not properly registered as rent stabilized. I've spent decades fighting to maintain affordable housing opportunities for families, seniors and young people. This type of preservation measure reassures New Yorkers that predatory tactics by landlords will not be tolerated" said Assemblyman Keith L.T. Wright, Chair of the Assembly Committee on Housing.

"As chair of the Council's Committee on Housing and Buildings, my highest priority is to ensure that we do all we can to end this affordable housing crisis. The 421(a) tax exemption, as currently constituted, requires landlords of rental buildingswho receive the benefitsto register them, and protect tenants by offering rent stabilized leases. Ignorance of the rules, or the law, is no excuse for failing to register the units with the state and failing to offer tenants the protections that come with rent stabilization.  Landlords across the city should know that this type of behavior will not go unnoticed, and wil be addressed. We must remain vigilant and ensure that any landord who, essentially, recieves subsidies to build housing, makes the loss in tax revenue, which could be used for a number of public purposes, worth it. I commend the Attorney General for his work on this issue and look forward to our continued partnership to protect New York City's tenants," said Council Member Jumaane D. Williams, chair of the Council's Committee on Housing and Buildings.

“Thanks to the efforts of AG Schneiderman and state and city leaders, hundreds of families will now receive the rent protections they deserve. Rent stabilization is a critical part of keeping New York affordable for over 2 million New York City residents,  and The Legal Aid Society is grateful to AG Schneiderman and Commissioners Rubin and Been for their efforts in ensuring that tenants are protected and that landlords are forced to comply with the law," said Judith Goldiner, Attorney in Charge, Civil Law Reform Unit, The Legal Aid Society.

“It is critical that the rules for accepting tax exemptions are being enforced and tenants in these buildings are now getting the protections to which they are entitled. Attorney General Schneiderman and the other city and state agencies deserve credit for ensuring compliance and standing up for rent regulated residents," said Benjamin Dulchin, Executive Director, Association for Neighborhood and Housing Development.

New York State enacted Section 421-a of the Real Property Tax Law in 1971 to incentivize the construction of rent stabilized housing, condominiums and cooperatives in New York City.  On June 15 of this year, the 421-a law was extended and modified.

The Attorney General thanks DHCR Commissioner Rubin and HPD Commissioner Been for their partnership in creating the Real Estate Tax Compliance Program, as well as the staffs of the DHCR and HPD for their continued cooperation and ongoing efforts to protect the tenants and taxpayers of New York.

The Tenant Protection Unit, established by Governor Cuomo in 2012, created a new frontier in enforcement of the rent laws. Since its inception, the TPU has used data analytics, metrics, audits and investigations to proactively identify if landlords are complying with the rent regulation statutes. This initiative, along with the creation of the joint Tenant Harassment Prevention Task Force, is one of the multi-agency enforcement actions that protect tenants from harassment. The Tenant Protection Unit has successfully returned more than 44,000 units to rent regulation.

The Attorney General’s 421-a investigation and the Real Estate Tax Compliance Program has been led by Assistant Attorneys General Elissa Rossi, Nicholas J. Minella and Richard J. Shore, Special Counsel Jeffrey R. Rendin, Bureau Chief Erica F. Buckley all of the Real Estate Finance Bureau, and Executive Deputy Attorney for Economic Justice General Karla G. Sanchez.  Research Director Lacey Keller is also working on these cases.

DHCR’s Division of Homes and Community Renewal Tenant Protection Unit staff working on the 421-a initiative include TPU Legal Director Vernitta N. Chambers, Assistant Commissioner for Intergovernmental Affairs Jeffrey A. Margolies, and Forensics Director Harvey Akerman, under the supervision TPU Bureau Chief Gregory C. Fewer and under the overall supervision of DHCR Deputy Commissioner Richard R. White.

Members of HPD’s Office of Legal Affairs and Division of Housing  Incentives are working in close cooperation with the Attorney General’s Office and TPU, including on the Real Estate Tax Compliance Program, to ensure that property owners comply with applicable laws.  

###

 List of 52 Landlords Who Allegedly Continue to Deny Tenants Rent-Stabilized Leases 

NEW YORK, N.Y. – Attorney General Eric T. Schneiderman announced the arrests and indictments yesterday of Shahzad Nawaz a/k/a “Prince Malik,” 44, of Bayside, his business Vital Pharmacies Inc. d/b/a “Vital Drugs,” and the company’s General Manager Irfan Nawaz, 36, of Franklin Square for allegedly stealing more than $3 million from the state Medicaid program and the AIDS Drugs Assistance Program (ADAP). Also indicted were Michael F. Bobadilla, 34, of Bayside, and shell companies, Empire State Surgical and Wholesale Inc. and Exclusive Health and Beauty Wholesale Inc., alleged fictional companies that the defendants used to launder their criminal proceeds.

“These defendants allegedly participated in stealing millions from public funds by placing profit ahead of the well-being and the lives of their seriously ill patients,” Attorney General Schneiderman said. “My office will hold accountable those who violate the trust of the community and exploit vulnerable members of our society for personal financial gain.”  

From June 2007 through September 2011, it is alleged that Vital Drugs, acting through its owner and President, Shahzad Nawaz, a part-time rap artist, and its General Manager Irfan Nawaz, paid patients not to fill their HIV prescriptions and to forego receiving life-saving medications in return for side payments. Shahzad and Nawaz are also charged with dispensing to patients “diverted” medications obtained from unlicensed vendors. Michael Bobadilla allegedly created Empire State Surgical and Wholesale Inc. and Exclusive Health and Beauty Wholesale Inc., both shell companies, to help Shahzad Nawaz and Vital Drugs launder the money they obtained from their criminal conduct.

To get paid, Vital Drugs is charged with then submitted false claims to Medicaid or ADAP that certified that the pharmacy had dispensed the medications to patients in accordance with state and federal law.  An audit of Vital Drugs’ prescription medication inventory charges that from June 2007 through September 2011, Vital Drugs submitted more than $3 million worth of false claims to Medicaid and ADAP for HIV medications that it had not dispensed to patients or that it obtained from illegitimate sources.

Medicaid or ADAP would not have paid these claims had they known that the HIV medications actually dispensed were diverted from sources outside the regulated drug supply chain, or that such medications were not dispensed at all, as charged.  Medicaid and ADAP require that all medications reimbursed through their respective programs be acquired from legitimate and registered pharmaceutical wholesalers.  Prescription medications obtained outside of legitimate distribution channels are considered diverted and present a health and safety risk as their authenticity, purity, condition and strength cannot be tracked or verified. 

Shahzad Nawaz, Irfan Nawaz, and Vital Drugs are each charged with Grand Larceny in the First Degree, a Class B Felony, which carries a maximum penalty of up to 25 years in prison.  In addition, Shahzad Nawaz, Empire State Surgical and Wholesale Inc., and Exclusive Health and Beauty Wholesale Inc. are each charged with the Class C Felony of Money Laundering in the Second Degree, which carries a maximum penalty of up to 15 years in prison.

The Defendants were arraigned before Acting Supreme Court Justice Barry Kron in New York State Supreme Court, Queen County.  Bail was set at $250,000 for defendant Shahzad Nawaz and at $100,000 for Irfan Nawaz.

The Attorney General thanks Bristol Meyer Squibb and the New York State Board of Pharmacy for their assistance in this investigation.

The investigation was conducted by MFCU Special Investigator Denitor Guerra and Special Auditor Investigator Meenal Shah with the assistance of Deputy Chief Investigator Kenneth Morgan, Principle Auditor Investigator Paul Erhardt and Regional Chief Auditor Thomasina Smith. 

The case is being handled by Special Assistant Attorneys General Herman Wun, Travis Hill, David Abrams, and Kathryn Harris with the assistance of New York City Regional Director Christopher M. Shaw.  Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations – Downstate.  MFCU is led by Acting Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.  The Criminal Division is led by Executive Deputy Attorney General Kelly Donovan. 

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

NEW YORK – Attorney General Eric T. Schneiderman announced the conviction of Moazzam Ifzal Malik, a.k.a. Mark Malik, 33, of Lahore, Pakistan, for stealing over $800,000 from investors by fraudulently soliciting them to invest in his purported hedge funds, including Seven Sages Capital, L.P. and Wolf Hedge LLC.   Following a two-week trial in New York County Supreme Court, the jury convicted Malik of all counts charged in the Attorney General’s 28-count indictment, including Grand Larceny and Securities Fraud. Malik faces up to 20 years in prison.  

“Today’s conviction brings justice to those who were brazenly defrauded,” said Attorney General Schneiderman. “We won’t tolerate those who attempt to defraud investors in the state. Our message is clear: if you commit securities fraud in New York, we will bring you to justice.”

During the course of the trial, which included the testimony of 17 witnesses and the admission of hundreds of pages of exhibits, the prosecutor presented evidence that between 2011 and early 2015, Malik lured over a dozen investors with false representations that he managed multi-million dollar hedge funds that would guarantee high returns. 

The evidence at trial showed that Malik claimed to be the founder, CEO and fund manager of a series of hedge funds from 2011 to 2015, including Wall Street Creative Partners, L.P., Seven Sages Capital, L.P., American Bridge Investments L.P., and, most recently, Wolf Hedge LLC. Malik advertised his purported hedge funds on his own website on the internet, and also cold-called investors, enticing them to invest by falsely representing that he had extensive experience on Wall Street and that his funds routinely outperformed the market by over 200%.

The purported success of Seven Sages Capital, L.P. and American Bridge Investments L.P. was listed on financial websites, including Bloomberg and Barclay Hedge.  In 2012, Barclay Hedge awarded American Bridge Investments L.P. the “yearly performance award” and ranked the fund as the year’s top performing equity long-short fund with over $100 million in assets. The evidence at trial showed that this ranking was based on false documentation submitted by Malik to Barclay Hedge, including a forged financial audit.  The evidence further showed that although Malik claimed to have millions in assets management, in actuality his brokerage accounts never held more than $90,000. 

The evidence at trial further showed that Malik promised his victims a partnership interest in his hedge funds, which he claimed held a multi-million dollar portfolio of investments in various high-profile IPO’s and secured bond transactions. Malik created false offering memoranda and marketing material stating that his hedge funds had over $100 million in assets under management. To further his fraudulent scheme, Malik issued fabricated account earnings statements to his victims, which indicated that their investments were consistently earning profits. Instead of investing in securities as promised, Malik diverted investor monies for his own personal use, including $215,000 in cash withdrawals and an additional $210,000 for hotels, airline tickets, rental cars, restaurants, electronics, utilities and even a karaoke bar.

According to his website, Malik “has over a decade of experience on Wall Street in brokerage and in Management” and “used to lead teams to manage assets over USD 5 billion at various alternative asset management firms in New York.” However, the evidence at trial revealed that Malik’s only financial experience was as a trainee at a New York City financial consulting firm, that Malik was only registered as a broker from 2007 to 2009, and that over the past 15 years, Malik had been employed as a security guard, waiter, and traffic agent for the New York City Police Department.

Malik testified at trial and admitted to soliciting dozens of investors in the United States and abroad, including investors in New York, Florida, New Zealand and Switzerland. The evidence at trial showed that based on Malik’s false representations, at least seventeen victims invested over $800,000 in Malik’s purported hedge funds, which Malik then diverted for his personal use.

Today, before the Honorable Ruth Pickholz in New York County Supreme Court, the jury found Malik guilty of two counts of Grand Larceny in the Second Degree (a Class C felony), three counts of Grand Larceny in the Third Degree (a Class D felony), 17 counts of Forgery in the Second Degree (a Class D felony), five counts of Securities Fraud under the Martin Act (a Class E felony), and one count of Scheme to Defraud in the First Degree (a Class E felony).   He is scheduled to be sentenced on December 18.

This conviction is the latest in a series of securities fraud prosecutions brought by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau. In June 2015, the Bureau charged Albany broker Frederick E. Monroe, Jr., Senior Vice President of Capital Financial Planning, LLC, with allegedly stealing over $1 million from investors by fraudulently soliciting them to reinvest their retirement monies and then diverting their monies for his personal use.  In January 2015, the Bureau convicted broker Khawaja Saud Masud for stealing over $1 million from a retired pediatrician and his wife by fraudulently soliciting investments in his purported hedge fund, RKS Capital, LP.  In January 2015, the Bureau charged William Vogt on an 18-count indictment for allegedly posing as an internationally renowned fashion designer named “Bill Bolland” to lure his victim into making more than $350,000 in investments.  In November 2014, the Bureau convicted Robert H. Van Zandt on a 33-count indictment for operating a $4.8 million Ponzi scheme; Van Zandt was sentenced to 3 2/3 to 11 years in prison. In March 2014, the Bureau arrested Wing K. Lim, owner of Wall Street Investment, LP, on a 31-count indictment for allegedly operating a $4.3 million securities fraud scheme; the case is scheduled for trial in January 2016.

The Attorney General thanks the New York Regional Office of the Securities and Exchange Commission, Division of Enforcement, and the Financial Industry Regulatory Authority, Criminal Prosecution Assistance Group, for their assistance in this investigation.

The investigation originated with a complaint to the Attorney General’s Investor Protection Bureau. Assistant Attorney General Desiree Cummings handled the initial investor complaint.

The criminal case is being handled by Assistant Attorney General Shanon N. LaCorte of the Criminal Enforcement and Financial Crimes Bureau. Legal Analyst Natasha Butalia is assisting on the case. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The Attorney General’s investigation was conducted by Investigator Ryan Fannon, Lead Investigator John Sullivan, and Deputy Chief John McManus, with the assistance of Legal Assistant II Edward Jaffe of the Investor Protection Bureau. Auditor Matthew Croghan worked on the case under Chief Auditor Edward J. Keegan. The Investigations Bureau is led by Chief Dominick Zarrella.

NEW YORK – Attorney General Eric T. Schneiderman, New York News Publishers Association, New York Press Association and the New York State Broadcasters Association today announced a joint initiative to crack down on rampant and unlawful advertising of foreclosure rescue scams. Scammers target vulnerable homeowners who are typically in midst of the foreclosure process and are seeking help with mortgage modifications. In recent years there has been a rise in the number of scammers targeting New Yorkers, including an uptick in Deed Theft cases, in which scammers convince homeowners to sign away ownership rights on their homes.

The initiative will help media outlets scrutinize advertisements to identify possible scammers, who often use trusted local outlets as a vehicle to target vulnerable New Yorkers. Dozens of community media outlets are being asked to participate in the voluntary initiative. Copies of the letters sent to media outlets can be found here, here and here.

“Vigilant, well-informed homeowners are the best protection against these deceitful mortgage rescue scams,” said Attorney General Eric Schneiderman. “These scams are particularly repugnant because they take victims of the housing crash and make them victims again. I want to thank New York News Publishers Association, New York Press Association and New York State Broadcasters Association for helping to ensure scammers cannot use the trusted voices of our state’s community news outlets to find and exploit vulnerable families.”

Nationwide, mortgage rescue scammers have conned $100 million from more than 42,000 homeowners, according to a December 2014 report by the Center for NYC Neighborhoods and the Lawyers Committee for Civil Rights Under Law. New York homeowners have submitted over 2,700 foreclosure rescue scam complaints to the Lawyer Committee for Civil Rights, documenting at least $8.25 million in losses. New York homeowners trail only California and Florida in the number of complaints reported to the Loan Modification Scam Database. Scammed homeowners have frequently reported to the Attorney General’s office and local housing counseling partners that they were lured by ads the scammers placed in local media outlets. The companies that place the ads are often in violation of state and federal laws which require individuals who advertise foreclosure prevention or loan modification services to include specific disclosures in their advertisements. 

Attorney General Schneiderman and the Press Publishers and Broadcasters Associations are asking members of their organizations to review ads placed by foreclosure rescue companies to ensure that they comply with state disclosure laws. While the duty to comply with this law is placed on the ads’ producers, the media outlets have an important opportunity to help curtail the spread of foreclosure rescue scams by declining to accept ads that do not include the required language.

On average, each New York victim of a foreclosure rescue scam reported a loss of $4,183 – about $900 more than the national average. Beyond the immediate losses, these scams often result in a domino effect that raises that dollar figure: Homeowners can end up losing tens or even hundreds of thousands of dollars more because their homes fall into foreclosure as a direct result of the scam.

The joint initiative is part of a broad effort by the Attorney General to end the mortgage crisis in New York. In 2012, Attorney General Schneiderman launched the Homeowner Protection Program (HOPP), a network of more than 85 housing counseling and legal services providers who provide free, high-quality representation to families who need help with their mortgage and who are at risk of foreclosure. To date, this network of direct service providers has assisted more than 50,000 New Yorkers.

In December 2014, the Attorney General’s office launched AGScamHelp.com, a web-based app that helps homeowners determine whether a mortgage assistance company has been vetted by a government agency. The app helps homeowners search government-vetted companies, locate nearby HOPP counseling and legal services partners, report scams, and get tips on how to avoid scams. AGScamHelp.com has more than 6600 average weekly users, and more than 112,000 people have used the site since launch. The Attorney General also sponsors a direct hotline which will connect any homeowner to a HOPP direct service provider within 48 hours (1-855-HOME-456).

Currently the Attorney General’s office has several active investigations into mortgage modification scams, including deed theft cases.

David L. Donovan President and Executive Director of The New York Broadcasters Associationsaid, “Broadcasters throughout New York State are committed to serving the needs and interests of their communities.  We are happy to voluntarily participate in this program to help educate our viewers and listeners by asking distressed property consulting services to include disclaimer notifications.   We look forward to working with the Attorney General on this campaign.”

Founded in 1955, the New York State Broadcasters Association, Inc., represents more than 400 local television and radio stations throughout the Empire State.  Broadcasters are committed to serving the needs of their local communities. NYSBA helps broadcast stations achieve this mission by working with New York State and federal officials to create a strong and vibrant broadcast system.   NYSBA also offers a variety of professional services to help stations serve their communities. 

"It is the mission of every newspaper to inform its readers about news that affects them,” said Diane Kennedy, President of the New York News Publishers Association. “Newspapers strive to foster thriving communities in which all community members can succeed and feel safe. We applaud Attorney General Schneiderman for his work to protect homeowners in communities throughout New York State from criminals who would prey upon those in financial distress to steal their money and their homes. We are pleased to work in partnership with the Attorney General to help prevent these criminals from misleading vulnerable citizens through the placement of advertising that does not meet the standards set by state law."

The New York News Publishers Association is the trade association which represents the publishers of the state's daily newspapers. NYNPA represents its members' interests before state government, produces educational materials used in schools throughout the state, recognizes journalistic excellence through an annual awards contest, assists advertisers in reaching customers through our member newspapers and administers the New York Newspapers Foundation, which provides funding to support literacy projects throughout the State of New York.

“New York’s newspaper publishers are committed to making sure readers get trustworthy and truthful information about important issues,” said Michelle Rea, Executive Director of the New York Press Association. “We are pleased to partner with Attorney General Eric Schneiderman to address the problem of foreclosure rescue scams.”

The mission of the New York Press Association is to promote and encourage higher standards of journalism; to aid and advance the study and teaching of journalism; to encourage and promote a better understanding between the public and the Press; to support and defend the First Amendment, including the free press, realizing that only as long as the press is successful will the other rights, privileges and freedoms of New York's citizens be preserved, and to pursue such goals through its legislative efforts, educational services and promotional  initiatives.

NEW YORK – Attorney General Eric T. Schneiderman today issued a consumer alert on five common telephone scams following a recent uptick in reports of telephone scammers posing as officials from the Internal Revenue Service and the Attorney General’s Office. These common scams, identified by complaints and other evidence collected by the Attorney General’s Office, often target seniors, students, and first-generation Americans.

“With the holiday season rapidly approaching, the last thing families need is to be scammed out of their hard-earned money,” said Attorney General Schneiderman. “It is shameful that scam artists target people with bogus threats and scare tactics, but following a few basic tips can help you fight back and stay safe.”

Common Telephone Scams

IRS/Tax Collection Scam – The caller will claim to be an agent or police officer from the Internal Revenue Service or Attorney General’s Office calling about a past due tax balance that is owed. The caller will tell the victim that unless the debt is paid immediately, a team of officers will come to the victim’s home that day to arrest the victim. The scammer will also request that the “IRS Tax Warrant” be paid with a Green Dot Card Money Card or Western Union MoneyGram.  These scammers often use caller ID spoofing so that the victim’s caller ID box says “Internal Revenue Service” or displays the phone number of the Internal Revenue Service. Sometimes scammers will also ask victims for personal information such as a Social Security number in order to commit identity theft.

The calls in which the scammer purports to be from the New York State’s Attorney General’s office often come from a 347-809-6947 phone number.  In the calls and voicemails, the consumer is told that money is owed and the issue must be resolved immediately.

Grandparent Scam – Typically, this scam comes in the form of an urgent phone call. The caller claims to be “your favorite grandson” or just says “it’s me”… prompting the grandparent to supply the needed name. While the emergencies vary, the scenario is usually this: tThe “grandson” is out of town and needs money fast -- to make bail, or to pay for automobile repairs or medical expenses. The caller begs the grandparent not to tell his parents, just wire the money immediately. Scammers know that parents and grandparents fear a call that tells them their loved one is in trouble. Each year, thousands of Americans get caught in the Grandparent Scam. Increasingly, scammers use actual relatives’ names and information gleaned from social media and other internet sites.

Jury Duty Scam – The caller will claim to be an officer of the court and say there’s a warrant for the arrest of the victim for failing to report for jury duty. The scammer will also claim that there is a fine for failing to show up for jury duty, and that unless the fine is paid immediately, the police will be sent to the victim’s home to make an arrest. The scammer will request that the “Jury Duty Warrant” be paid with a Green Dot Card Money Card or Western Union MoneyGram. The scam has been around for years and surfaces periodically in New York.  In one recent case, the calls were traced to a Georgia prison.

Lottery Scam – The caller says you’ve won a foreign lottery and requests that you, as the “winner,” send a check or to wire money to cover taxes and fees.  Legitimate contests never ask for money upfront. The caller may request your banking information in order to electronically direct deposit your winnings. This is an attempt to steal your identity and will wipe out your bank account.

The callers often use a name that sounds like a government agency or official-sounding authority. The name can be invented, like the “National Sweepstakes Bureau,” or “The National Consumer Protection Agency.” Sometimes they will use an actual name of a government agency, like the Federal Trade Commission or the Attorney General’s Office. The scammers claim that the government “oversees” the integrity of foreign lotteries. This is a scam.

Utility Scam – The caller claims to be a representative of a local utility provider. In some cases, the scammer has the victim’s correct account number. The scammer will then advise the resident that the utility bill is past due and must be paid immediately to avoid termination of service.  The scammer will also request that the delinquent bill be paid with a Green Dot Card Money Card or Western Union MoneyGram.  Suspects committing this scam have often obtained personal information via the internet, Facebook, Instagram or other social media. 

Tips To Avoid Falling Victim:

Think Of The Telephone As A “One Way Street” 

It’s okay to give out information over the phone if you made the call to a number you know and trust (such as your own bank). However, never give out personal information when you receive an unsolicited call. If you receive a call soliciting personal information, just hang up the phone, no matter what the caller ID says. If the caller says he’s from your bank and is checking on possible unauthorized withdrawals from your account, hang up the phone and then call your bank.  If it was your bank that was trying to call, then it will be happy to confirm the call and will often provide requests to you in writing.  If your bank says it wasn’t trying to reach you, that means the caller you hung up on was a scammer.  

Beware If A Caller Ask To Keep A Conversation A Secret

A legitimate caller will never request that a conversation remain a secret, and you should immediately be suspicious. Whether the caller claims to be from the government, a bank, or a family member, requests for confidentiality should raise a red flag.

Just Say No!

You don’t have to be polite when you receive unsolicited phone calls. The safest thing to do is to say “no” and hang up. Legitimate callers will typically also provide requests in writing. It is better to be guarded than to fall victim.

Remember the old adage: “If it sounds too good to be true, it probably is.” Be wary of any offers or deals that sound too good to be true, as they likely are too good to be true. 

Attorney General Schneiderman reminds New Yorkers that in addition to being vigilant consumers, they should also report instances of fraud to his office.

Consumers are encouraged to file complaints by visiting the Office’s website or calling 1-800-771-7755.

ALBANY- Attorney General Eric T. Schneiderman today announced the guilty pleas of two personal care aides, Robert Lee Van Horne, 33, of Schenectady, and Nicholas Gallup, 27 of Schenectady, for submitting false time sheets to Capital District Physicians Health Plan (CDPHP), causing over $1,000 in each in theft to Medicaid. The defendants submitted false claims for providing care to a Medicaid recipient that never occurred.

“When individuals exploit the Medicaid program’s flexibility  and a patient’s vulnerability, it takes away from those who are in need of basic health care services, said Attorney General Schneiderman. “The Medicaid program’s Consumer Directed Personal Assistance Program was intended to provide essential health care services by trusted persons in the patient’s own home, and  those who abuse that trust and steal from Medicaid will be held accountable.”

Gallup entered a plea of guilty to one count Falsification of Business Records in the First Degree, a Class E felony in front of the Honorable Peter Lynch in Albany County Court. Under the terms of his guilty plea, he will be sentenced to a period of incarceration in the Albany County Jail and five years probation. Van Horne entered a plea of guilty to one count Falsification of Business Records in the Second Degree, a Class A misdemeanor and one count of Petit Larceny, also a Class A misdemeanor, also in front of Judge Lynch, and will be sentenced to one and a half years in the Albany County Jail.  Both defendants agreed to pay restitution, to stay away from the Medicaid recipient, and to not participate in the Consumer Directed Personal Assistance Program.

According to the original complaints and their admissions at plea, Van Horne and Gallup were hired to provide in-home personal care services to a Medicaid recipient who required the services due to her health issues, through the billing group Resource for Independent Living, (RCIL) a Medicaid provider, from April through June 2014.  Van Horne and Gallup – who were selected by the recipient to provide the care – agreed to provide care on alternate days.  Van Horne and Gallup never provided services to the Medicaid recipient from April to June 2014, and called into a telephone time-keeping  system to falsely document that they had provided care for the Medicaid recipient.  As a result of the false records, RCIL generated a claim and submitted it to CDPHP for payment. CDPHP issued payment to RCIL; then RCIL issued payment to Van Horne and Gallup.  As a result of the false documentation, Van Horne and Gallup each received over one thousand dollars in Medicaid funds.  

The case was investigated by Investigators Danette Benson and J. R. Benshoff with the assistance of Supervising Investigator Dianne Tuffey and Upstate Deputy Chief Investigator William Falk with the assistance Assistant Chief Auditor-Investigator Charles R. Norfleet.

The case was prosecuted by the Albany Regional Office of the Medicaid Fraud Control Unit of the Office of the Attorney General.  Regional Director Kathleen A. Boland represented the People of the State of New York.  Catherine Wagner is MFCU’s Upstate Chief of Criminal Investigations.  MFCU is led by Acting Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.  The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

SCHENECTADY- Attorney General Eric T. Schneiderman today announced the arrest of Kristie Clemovich, a former employee of Ellis Hospital in Schenectady, on charges that she obtained narcotics by presenting prescriptions with the forged signature of a physician assistant at the hospital that were discovered as a result of New York’s I-STOP Prescription Monitoring Program.   

“I am pleased to see that the I-STOP program worked exactly as we envisioned when we created it. Compliance with the law by the nurse practitioner, coupled with diligent patient care, identified possible over-prescribing to her patient,” Attorney General Schneiderman said, “My office will continue working with the state Bureau of Narcotic Enforcement to root out situations like this one, to help quell the prescription drug abuse epidemic that has ruined lives and ripped families apart across our state.”

The felony complaint alleges that from on or about October 2014 through January 2015, Kristie Clemovich presented seven prescriptions for hydrocodone-acetaminophen to Rite Aid and Walmart pharmacies located in Rotterdam, that were issued in the names of relatives of Clemovich and which bear the forged signature of a physician assistant at the Neuroscience Center of Ellis Hospital.  Three of the prescriptions were issued in the name of a minor and four of the prescriptions were issued in the name of an adult relative who was not involved in the scheme.    The pharmacies dispensed 90 pills of the hydrocodone-APAP, a Schedule II controlled substance, for each prescription, to Kristie Clemovich.   In total, Clemovich allegedly received over 600 pills in less than a four month time period.

The controlled substances were dispensed by the pharmacies until February 2015 when, due to New York’s I-STOP-Prescription Monitoring Program (PMP), the forged prescriptions were discovered.  A nurse practitioner treating the real adult relative consulted the I-STOP PMP database maintained by the New York Bureau of Narcotic Enforcement and contacted Ellis Hospital regarding unexpected records of prescriptions for Hydrocodone in the relative’s name.  Ellis Hospital staff advised the nurse practitioner that the prescriptions were not issued by the Physician Assistant and that the relative was not a patient of the Neuroscience Center. 

Attorney General Schneiderman thanks the Albany Region Bureau of Narcotic Enforcement for their invaluable assistance in the investigation of this matter.

Clemovich, 45, of Rotterdam, was arraigned in Rotterdam Town Court before Hon. Kenneth Litz and charged with seven counts of Criminal Possession of a Forged Instrument in the 2^nd Degree, Class D Felonies.  Clemovich faces up to 7 years in state prison.

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

The case was investigated by Investigator John Benshoff of the Medicaid Fraud Control Unit, with the assistance of Investigator Dianne Tuffey and Upstate Deputy Chief Investigator William Falk, working with Investigator Rick Boettcher of the New York State Department of Health Bureau of Narcotic Enforcement and Schenectady Police Department. 

The case was prosecuted by Special Assistant Attorney General Erin Lynch with the assistance of Regional Director Kathleen Boland.  Catherine Wagner is MFCU's Upstate Chief of Criminal Investigations.  MFCU is led by Acting Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.  The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

ROCHESTER – Attorney General Eric T. Schneiderman today announced the arrest and guilty plea of Erica Viverette, a Rochester licensed practical nurse employed to provide private nursing services to a special needs young adult, for stealing nearly $5,000 from the Medicaid program by billing for numerous hours that she did not work.

“Exploiting the needs of disabled individuals for financial profit is inexcusable,” said Attorney General Schneiderman. “My office will continue working vigorously to root out Medicaid fraud and hold those responsible for it accountable.” 

The investigation, conducted by the New York State Attorney General’s Medicaid Fraud Control Unit (MFCU) and the Office of the Medicaid Fraud Inspector General (OMIG) revealed that Viverette, age 30, of Rochester, repeatedly billed the Medicaid program for work she never performed.  Hired to provide nursing services to a four medically fragile persons, Viverette billed for numerous hours of care that she did not provide to those individuals, thereby accruing $4,910.57 in false billings.

The felony complaint, filed in Rochester City Court, charges Viverette with Grand Larceny in the Third Degree (D Felony), and seven counts of Offering a False Instrument for Filing in the First Degree (E Felony).  The charges carry a maximum potential sentence of one and one third to seven years in state prison.

Viverette was arrested and arraigned before Rochester City Court Judge Melchor Castro, where she pled guilty to petit larceny.  The matter is adjourned to February 8, 2016 for sentencing.

The case was investigated by Special Investigator Debra Clementi and Principal Auditor/ Investigator Thomas Clarke with assistance from MFCU Deputy Chief Investigator William Falk and OMIG Investigator Colleen Balkin.  The case is being prosecuted by Special Assistant Attorney General Timothy McFarland.  Catherine Wagner is Director of the Rochester Regional MFCU Office and the Upstate Chief of Criminal Investigations.  The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.