Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 13, 2016

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A.G. SCHNEIDERMAN ANNOUNCES GUILTY PLEA OF NURSE AIDE WHO STOLE FROM NURSING HOME RESIDENT 

Hope Pearson Used Stolen Credit Card To Purchase Over $5K In Stolen Goods 

Schneiderman: Nursing Home Professionals Who Steal From Defenseless Residents Will Be Held Accountable 

CORTLAND – Attorney General Eric T. Schneiderman today announced that Hope Pearson, a certified nurse aide, entered a plea of Guilty to the charge of Criminal Possession of Stolen Property in the Fourth Degree, a Class E felony in Cortland County Court. Pearson, together with the co-defendant Schenekqua Carter, was indicted on charges alleging the theft of a debit/credit card from a resident of Crown Center for Nursing and Rehabilitation in Cortland.  The two defendants used the card throughout central New York, at stores, at ATMs, and at the casino, stealing a total of $5,229.14 in merchandise and cash.

“Nursing home residents are amongst our state’s most vulnerable citizens, and they deserve to be treated with the utmost respect and dignity by those in charge of their care,” Attorney General Schneiderman said. “For a certified nurse aide to steal from someone whose wellbeing is their primary responsibility is reprehensible. Nursing home professionals who seek to profit by stealing from defenseless residents will be held accountable.”

Using personal information which could have come only from someone with close personal access to the victim, Pearson and her co-defendant activated the card and checked on available balances.  Phone records identified both defendants.

Pearson worked as an agency-assigned certified nurse aide and was not a regular employee of the facility.  She provided care for the victim in the week prior to the fraudulent use of the card. The administration of Crown Center Nursing Home was of great assistance in identifying the cause of the initial theft.

Following the plea, a Pre-Sentence Report was ordered, and Pearson will return for sentencing on October 4, 2016.

Co-defendant Schenekqua Carter entered a similar plea and was sentenced to a split sentence of five years’ probation, with credit for 45 days in jail, and an order of restitution.

This case was investigated by Senior Special Investigator Patrick M. Lynch of the Attorney General’s Medicaid Fraud Control Unit; Investigator Patrick Sweeney of the Cortland Police Department; and Jennifer Pudney, Senior Fraud Investigator for NBT Bank.  The case is being prosecuted by Paul Berry, Special Assistant Attorney General with the Medicaid Fraud Control Unit’s Syracuse Regional Office.  Catherine Wagner is the Chief of Criminal Investigations–Upstate, and William Falk is the Deputy Chief Investigator-Upstate.  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.

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 13, 2016

New York City Press Office / 212-416-8060
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A.G. SCHNEIDERMAN ANNOUNCES SETTLEMENT WITH OWNER OF ROCHESTER TRAVEL AGENCY FOR DECEIVING CLIENTS

Constance Catanise, Owner of Escapes, Inc, To Pay $60K In Restitution; Is Banned From Business For Failing To Book Pre-Paid Travel For Clients 

Schneiderman: Business Owners Who Fail To Provide Paid Services And Cause Undue Stress To Customers Will Be Held Accountable

ROCHESTER – Attorney General EricT. Schneiderman today announced an agreement with Escapes, Inc. and its owner, Constance Catanise to pay $60,000 in restitution to consumers who had been harmed by their deceptive business practices.  In addition, Catanise is barred from operating as a travel consultant or travel promoter.  Consumers paid Catanise for overseas plane tickets, hotels and tours only to discover that Catanise had not made some of the bookings.  In one case, consumers learned the night before they were to return home from Italy that Catanise had not booked the return flights, leaving most of them stranded at the airport.

“Travelers who choose to employ the services of a booking agent do so for increased security, convenience and peace of mind,” Attorney General Schneiderman said. “Because Catanise failed to perform the basic functions of her job, her customers forced into scary, stressful and very expensive situations. This settlement sends the message that business owners who do not provide the services for which they’ve been paid will be held accountable.”

The Attorney General’s investigation found that Escapes, Inc and Catanise engaged in deceptive and fraudulent business practices that included accepting full payment for tours but then failing to book and pay for all of the items in the itinerary.  In one case, an alumni group from McQuaid Jesuit High School paid Catanise for a tour or World War I and II battlefields in France.  When they arrived at the Toronto Airport, however, they learned that Catanise had not booked the flights that she said she had booked.  After spending the night in Toronto, most of the group returned home rather than rely on Catanise and risk being stranded in France. 

In another case, a family booked a trip to Italy to see the village where their mother was born and to see relatives still living there.  Catanise failed to book several items on the itinerary for which the family had paid her.  But most seriously, when the family arrived at the airport in Italy to return home, they learned that Catanise had failed to book and pay for business class plane tickets for the whole group.  As a result, some group members were required to stay the night and book and pay for their own flights on the next day. 

In a third case, Catanise failed to book round trip tickets for a group traveling to Santiago de Compostela in Spain.  The group decided to travel without confirmed return tickets, which Catanise eventually booked.  But one couple had to pay an additional $1,450.

In addition to the payment of $60,000 in restitution, Catanise is permanently barred from operating as a travel consultant or travel promoter.

This case was handled by Assistant Attorney General James M. Morrissey in the Buffalo Regional Office. The Buffalo Regional Office is led by Assistant Attorney General In Charge Michael Russo. The Division of Regional Offices is led by Executive Deputy Attorney General for Regional Affairs Marty Mack.

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 13, 2016

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STATEMENT FROM THE OFFICE OF THE ATTORNEY GENERAL IN RESPONSE TO REPRESENTATIVE LAMAR SMITH AND REPUBLICANS ON HOUSE COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

NEW YORK— The following statement was issued today by Eric Soufer, spokesman for Attorney General Eric T. Schneiderman:

“The American public will wake up tomorrow morning shaking their heads when they learn that a small group of radical Republican house members is trying to block a serious law enforcement investigation into potential fraud at Exxon. Chairman Smith and his allies have zero credibility on this issue, and are either unwilling or unable to grasp that the singular purpose of these investigations is to determine whether Exxon committed serious violations of state securities fraud, business fraud, and consumer fraud laws. This committee has no authority to interfere with these state law enforcement investigations, and whether they issue a subpoena or not, this Attorney General will not be intimidated or deterred from ensuring that every New Yorker receives the full protection of state laws.”

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 14, 2016

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A.G. SCHNEIDERMAN, ALBANY POLICE CHIEF COX, NYSP SUPERINTENDENT BEACH ANNOUNCE TAKEDOWN OF MULTISTATE DRUG PIPELINES IN “OPERATION UPTOWN RED ALERT”

State Investigators Indict 27 Defendants, Seize $500,000 Worth Of Heroin, $50,000 Worth Of Cocaine, More Than 1,000 Illegal Prescription Narcotic Pills, And Multiple Firearms

Schneiderman: This Office Will Continue To Use Its Full Resources To Fight The Heroin And Illegal Narcotic Prescription Medication Epidemic

ALBANY – Attorney General Eric T. Schneiderman, Albany Police Chief Brendan Cox, and New York State Police (NYSP) Superintendent George P. Beach today announced the indictment of 27 people charged with operating two drug distribution rings: one that allegedly transported heroin, cocaine and illegal narcotic pills throughout New York State and surrounding States; and a second that allegedly sold cocaine throughout the City of Albany.

“Operation Uptown Red Alert strikes a blow in the fight against the heroin and opioid epidemic that continues to plague New York State, as well as the Country as a whole,” said Attorney General Eric T. Schneiderman. “I will not tolerate those who peddle death in our neighborhoods. My office and our partners in law enforcement will continue to use all of the tools and resources at our disposal to fight this criminal and public health epidemic.”

“Operation Uptown Red Alert continued the efforts that law enforcement has been taking to combat the heroin issues facing our communities,” said Albany Police Chief Brendan Cox. “We will continue our efforts and working with other agencies, with the ultimate goal of eradicating this problem.”

“The New York State Police will continue to work in conjunction with the Attorney General’s Office as part of an aggressive strategy to target the networks that are bringing heroin and other dangerous narcotics into upstate communities,” said New York State Police Superintendent George Beach. “The State Police will continue to work with local law enforcement and the Attorney General’s Office to shut these illegal operations down and put the perpetrators behind bars.”

Over the course of the year-long investigation, which was led by the Attorney General’s Organized Crime Task Force (OCTF), New York State Police, and the Albany Police Department, authorities seized:

• More than two pounds of bulk heroin capable of being packaged into 50,000 bags of heroin to be sold on the street, giving the heroin an approximate street value of $5o0,000
• More than 1 pound of bulk cocaine with an approximate street value of $50,000
• 1,067 Oxycodone pills
• 2 shotguns
• 1 hand gun
• Over $21,000 in cash
• 7 MDMA (“Molly”) pills.
• A homemade heroin kilogram press

The two separate indictments charge 27 individuals with 324 crimes including three individuals charged with Operating as a Major Trafficker which carries a mandatory life sentence in state prison, and various counts of Criminal Sale and Criminal Possession of a Controlled Substance (class A and B felonies), and Conspiracy to commit those crimes. The Operating as a Major Trafficker statute (§220.77 of the Penal Law of the State of New York), authored by Attorney General Schneiderman when he was a legislator, went into effect in November 2009, as part of reforms to the Rockefeller-era drug laws and is the only felony narcotics charge in the state that carries a possible life sentence.

“Operation Uptown Red Alert” focuses on two major distribution rings:

The first ring – codenamed “Uptown” -- was allegedly comprised of at least 6 individuals. This ring would allegedly send cocaine from New York City to Albany and then distribute it in and around the City of Albany. Over the course of the investigation, authorities seized one pound of cocaine.

The Second ring – codenamed “Red Alert”- was allegedly comprised of at least 21 individuals. This ring would allegedly send heroin, cocaine and illegal prescription medication from New York City to Albany and then distribute it in and around the Capital Region, the Catskill Region, and the States of Maine and Pennsylvania. Over the course of the investigation, authorities seized over 1,000 grams of bulk heroin capable of being turned into 50,000 bags of heroin with a potential street value of $500,0000; and over 1,000 illegal Oxycodone pills that were in route to the State of Maine for distribution. The ring also included one individual- Korey Holloway- who managed his own narcotics trafficking ring from behind bars while he was serving a prison term in the State of Pennsylvania for an unrelated drug trafficking conviction. Holloway would allegedly arrange for the purchase of narcotics from prison and have his girlfriend pick them up and then sell them. At times, Holloway allegedly used 3-way calls from prison to discuss drug deals with defendant Juan Ramos, of Brooklyn, a supplier, and his girlfriend.

This ring includes three people charged with “Operating as a Major Trafficker”:

• Diomedes Silfa, of Bronx, New York
• Noemi Maldonado, of Brooklyn, New York
• Juan Ramos of Brooklyn, New York

The three major traffickers allegedly arranged for heroin and cocaine to be transported from New York City to the Capitol Region and, as previously noted, face mandatory life sentences.

The remaining defendants face maximum sentences between 9 and 24 years in prison, depending on the individual’s criminal history.

Those charged in today’s two indictments include:

Noemi Maldonado, of Brooklyn, New York (Charged with Operating as a Major Trafficker)

Juan Ramos, of Brooklyn, New York (Charged with Operating as a Major Trafficker)

Diomedes Silfa, of Bronx, New York (Charged with Operating as a Major Trafficker)

Amber Best, of Allentown, Pennsylvania

Clifford Chesky, of Albany, New York

Scott Cross, of Freehold, New York

Carla Davis, of Albany, New York

Symphony Davis, of Rensselaer, New York

Christopher Demasi, of Cobleskill, New York

Charles Hall, of Albany, New York

Eric Hines, of Albany, New York

Korey Holloway, of Allentown, Pennsylvania

Elijah Johnson, of Troy, New York

Isaiah Johnson, of Albany, New York

Adrian Mattei, of Albany, New York

Lowell McGill, of Schenectady, New York

Michael Miller, of Albany, New York

Marlon Nesbeth, of Albany, New York

Pedro Pablo Ramirez, of Bronx, New York

Joseph Rozier, of Rensselaer, New York

Lachone Rozier, of Albany, New York

Joseph Russo, of Albany, New York

Jennifer Sablan, of Brooklyn, New York

Aliem Shabazz, of Albany, New York

Manuel Soto, of Cornwallville, New York

Neylon Wagner, of Albany, New York

Martin Wright, of Palermo, Maine

Several additional agencies participated in the investigation, including the New York National Guard Counterdrug Task Force, United States Department of Homeland Security, United States Drug Enforcement Administration, the New York Police Department, the United States Probation Office and the United States Marshalls Service.

The investigation was conducted by OCTF Investigator John Monte, Supervising Investigator William Charles, and personnel from the Albany Police Department and New York State Police.

The case is being prosecuted by OCTF Assistant Deputy Attorneys General Michael Sharpe and Andrew McElwee, and Deputy Chief Eugene Black.  The Investigations Bureau is led by Chief Investigator Dominick Zarrella. Deputy Attorney General Peri Alyse Kadanoff runs the Attorney General’s Organized Crime Task Force. The Executive Deputy Attorney General for Criminal Justice is Kelly Donovan.

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

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 14, 2016

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A.G. SCHNEIDERMAN OBTAINS GUILTY PLEA FROM PEEKSKILL HOME HEALTH CARE AGENCY OWNER OVER WAGE THEFT

Defendant Pled Guilty To A Scheme Defrauding 67 Employees Out Of $135K In Wages
 
Defendant Created False Tax Documents Misreporting Wages And Underpaid Unemployment Insurance Contributions To New York State

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 15, 2016

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A.G. SCHNEIDERMAN URGES GOVERNOR CUOMO TO SIGN LEGISLATION AUTHORIZING OFF-HOURS ARRAIGNMENTS

Bill Adopts Key Recommendation Made By AG As Special Prosecutor Following Investigation Of Raynette Turner’s Death; Turner Died In Police Custody Awaiting Arraignment

Schneiderman: Off-Hours Arraignments Will Help To Protect The Constitutional Rights Of Defendants

NEW YORK—Attorney General Eric T. Schneiderman today wrote a letter to Governor Andrew Cuomo urging him to sign legislation that would expand the availability of off-hours arraignment proceedings across New York. New York’s Criminal Procedure Law requires that arrestees be arraigned “without unreasonable delay,” and New York’s Court of Appeals has ruled that delays in excess of 24 hours are presumptively unreasonable and must be explained. However, such delays are not uncommon because, in many parts of the state, courts are not in session on Sunday.

In July, 2015, Raynette Turner died in custody of the Mount Vernon Police Department after awaiting arraignment more than 48 hours. Attorney General Schneiderman’s Special Investigations and Prosecutions Unit investigated Turner’s death, and issued a report of its findings. The report also contains a series of policy recommendations, including expanding the availability of off-hours arraignments, to avoid delays like the one that occurred in the Turner case. The legislation that is before the Governor would adopt that recommendation.

“Expanding off-hours arraignments will help to protect the Constitutional rights of defendants, both by minimizing delays in the arraignment process, and ensuring that defendants can be represented by counsel at arraignment,” Attorney General Schneiderman said. “This bill will make our criminal justice system fairer and more efficient, and I urge the Governor to sign it into law.”

Joo-Hyun Kang, Director of Communities for Police Reform, said, “The reforms recommended by AG Schneiderman are exactly the type of common sense changes that our state needs to make right away. No one should be forced to sit in a jail cell for days just to get an arraignment. States across the country, from Pennsylvania to Florida, already use video arraignments and other tools to prevent anyone from suffering that type of injustice, and it’s long past time that New York do the same. We commend AG Schneiderman for bringing this issue front and center, and urge Governor Cuomo to sign this important legislation right away.”

The legislation (S.7209-A (Bonacic)/A.10360 (Lentol), which the Legislature passed in June, authorizes the Chief Administrative Judge of the New York Unified Court System to adopt a plan for select local criminal courts to conduct off-hours arraignment proceedings on a rotating basis.The Chief Administrative Judge will periodically assign Judges and Justices of local criminal courts to preside at “off-hours arraignment” parts in select counties.

The Attorney General’s recommendation to the Governor that he sign the bill came in a letter from the Chief of the Attorney General’s Special Investigations and Prosecutions Unit, Alvin Bragg, to the Governor’s Counsel, Alphonso David. The letter is available here. The Special Investigations and Prosecutions Unit was created pursuant to Executive Order No. 147, signed by Governor Andrew Cuomo on July 8, 2015, appointing the Attorney General as a special prosecutor “to investigate, and if warranted, prosecute certain matters involving the death of an unarmed civilian . . . caused by a law enforcement officer.”

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 18, 2016

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A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT OF NON-PROFIT EXECUTIVES CHARGED WITH CRIMINAL TAX FRAUD AND FILING FALSE TAX RETURNS  

Between July 2011 And January 2015, Defendants Wafa Abboud And Marcelle Bailey Allegedly Stole Hundreds Of Thousands Of Dollars And Failed To Pay Taxes On The Proceeds Of Their Crimes 

NEW YORK – Attorney General Eric T. Schneiderman today announced the indictment of Wafa Abboud, 48, of Merrick, NY, the former Chief Executive Officer of Human First, a not-for-profit organization founded in 2001 serving the developmentally disabled community in New York City and Long Island, for allegedly failing to pay taxes on money that she is charged with embezzling from Human First. In a related indictment, separately charged defendant Marcelle Bailey, 49, of Garden City, NY, the Chief Executive Officer of MPB Management Services, Inc., was also indicted for Criminal Tax Fraud and Filing False Tax returns relating to alleged embezzlement of Human First money. 

“Tax fraud is a serious crime that harms all New Yorkers and shifts the burden to honest taxpayers,” said Attorney General Schneiderman. “The crimes alleged in these indictments are troubling, particularly because they involve funds intended to benefit the developmentally disabled community. My office will continue to prosecute those who try to game the system for their own personal gain.”

“Embezzlement of public funds meant to aid individuals with developmental disabilities impacts some of the most vulnerable members of our community,” said United States Attorney Robert L. Capers. “With this indictment, we serve notice that those who engage in such crimes will be vigorously investigated and held to account.”

The two indictments charging each defendant separately with the crimes of Criminal Tax Fraud and Filing a False Instrument, relate to a joint investigation conducted by the Office of the Attorney General, the Justice Center for the Protection of People with Special Needs, and the U.S. Attorney’s Office For The Eastern District of New York.  In the related investigation, a federal grand jury in Brooklyn returned a seven-count federal indictment charging Abboud and Bailey with embezzling and laundering hundreds of thousands of dollars from Human First. The joint investigation revealed that between January 2011 and May 2016, Abboud allegedly directed Human First to pay hundreds of thousands of dollars in consulting fees to a company controlled by Bailey. Abboud used the funds to pay her personal expenses, including more than $114,000 in personal credit card debt, which included charges for cosmetic surgery, family vacations, jewelry, meals, and spa treatments. She also used the funds to pay property taxes on her Merrick residence and to make large international wire transfers.

Abboud was indicted for two counts of Criminal Tax Fraud in the Third Degree, a Class D Felony, one count of Criminal Tax Fraud in the Fourth Degree, a Class E Felony, and three counts of Offering a False Instrument for Filing in the First Degree, a Class E Felony.

Bailey was indicted for two counts of Criminal Tax Fraud in the Third Degree, a Class D Felony, and one count of Offering a False Instrument for Filing in the First Degree, a Class E Felony.

The investigation was conducted by Richard Cicero, Supervisor of Financial Investigations, from the Justice Center for the Protection of People with Special Needs, and Investigator Steven Broomer of the Investigations Bureau, with assistance provided by Deputy Chief Auditor Sandy Licul Bizzarro of the Forensic Audit Section, and former legal analyst Morgan McCollum of the Public Integrity Bureau.  The Attorney General’s Office thanks the NYS Department of Taxation and Finance for their work on the case. 

The case is being handled by Special Counsel John Chiara, of the Public Integrity Bureau.  The Public Integrity Bureau is led by Bureau Chief Daniel G. Cort and Deputy Bureau Chief Stacy Aronowitz.  The Investigations Bureau is led by Chief Dominick Zarrella. The Attorney General’s Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

The Attorney General’s Office thanks the U.S. Attorney’s Office for its work on this case.  

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

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 19, 2016

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NY A.G. SCHNEIDERMAN, MASSACHUSETTS A.G. HEALEY, MARYLAND A.G. FROSH ANNOUNCE SUITS AGAINST VOLKSWAGEN, AUDI AND PORSCHE ALLEGING THEY KNOWINGLY SOLD OVER 53,000 ILLEGALLY POLLUTING CARS AND SUVS, VIOLATING STATE ENVIRONMENTAL LAWS

Cover-Up Of “Defeat Devices” Was Allegedly Orchestrated And Approved At The Highest Levels Of The Company, Up To And Including Former CEO Martin Winterkorn; German Parent Companies Volkswagen AG And Audi AG Directed US Subsidiaries To Submit False Documents, Make False Claims To New York, Massachusetts And Maryland Authorities

Numerous Employees, Tipped Off By A Senior In-House Lawyer In Germany, Also Destroyed Incriminating Documents, Lawsuits Allege

NEW YORK – New York Attorney General Eric T. Schneiderman, Massachusetts Attorney General Maura Healey and Maryland Attorney General Brian Frosh announced lawsuits today against Volkswagen AG and its affiliates Audi AG and Porsche AG, as well as their American subsidiaries, for the automakers’ sale of diesel automobiles (including over 25,000 in New York, 15,000 in Massachusetts and 12,935 in Maryland) that were fitted with illegal “defeat devices” that concealed illegal amounts of harmful emissions these cars spewed– and then allegedly attempting to cover-up their behavior.

“The allegations against Volkswagen, Audi and Porsche reveal a culture of deeply-rooted corporate arrogance, combined with a conscious disregard for the rule of law and the protection of public health and the environment,” Attorney General Schneiderman said. “These suits should serve as a siren in every corporate board room, that if any company engages in this type of calculated and systematic illegality, we will bring the full force of the law—and seek the stiffest possible sanctions—to protect our citizens.”

“Volkswagen, Audi and Porsche defrauded thousands of Massachusetts consumers, polluted our air, and damaged our environment and then, to make matters worse, plotted a massive cover-up to mislead environmental regulators,” Attorney General Healey said. “With today’s action, we want to make clear to all auto manufacturers that violating laws designed to protect our environment and our public health is unacceptable and will be punished with significant penalties.”

“Maryland has worked tirelessly, through Maryland’s Healthy Air Act and Clean Cars Act, as well as stringent regulations adopted by the Department of the Environment, to clean our air,” said Attorney General Frosh. “As our complaint sets out, Volkswagen, Audi and Porsche installed defeat devices in their cars to trick regulators and to deceive the public; they did so knowing that their conduct was illegal and their misconduct has hindered our efforts to clean the air and to clean the Chesapeake Bay.  Their disregard for the health of our citizens and their disregard for our environment must be punished.”

“These automobile manufacturers deliberately deceived the public into believing their cars met emissions standards when in fact they were excessively polluting New York’s air,” said New York DEC Commissioner Basil Seggos. “This corrupt behavior is unacceptable and it undermines our efforts to protect public health and combat climate change.  I applaud Attorney Generals Schneiderman and Healy for their important efforts to uphold the integrity of our clean air regulations.”

“The emission rules are in place to protect public health and the environment,” said Martin Suuberg, Commisisoner at the Massachusetts Department of Environmental Protection (MassDEP). “This action underscores the serious nature of the violations.”

“The air Marylanders now breathe is the cleanest it’s been in decades, and we will not stand for Volkswagen's dirty tactics that undercut our environmental progress,” said Maryland Secretary of the Environment Ben Grumbles. “The Hogan Administration is committed to reducing pollution from tailpipes and power plants and holding accountable those who threaten the health and well being of our communities and watersheds. Volkswagen must get its act in gear and pay the price for breaking some of the most stringent laws in the country protecting the waters, lands and lungs of Marylanders in the Chesapeake Bay region.”

These lawsuits by the New York, Massachusetts and Maryland Attorneys General offices follow a nine-month long investigation by a multistate coalition of over 40 states and other jurisdictions, led by New York, Massachusetts, and four other states.  New York State’s Department of Environmental Conservation, Massachusetts’s Department of Environmental Protection and Maryland’s Department of the Environment provided important assistance with the investigation.

The complaints allege, in detail, a cover-up that Volkswagen and Audi allegedly managed for nearly a year-and-a-half. The cover-up followed a study by researchers at West Virginia University that alerted authorities in this country that these diesel cars emitted much more nitrogen oxides (NOx) when driven on the road than they did when undergoing emissions testing on test equipment used by the U.S. Environmental Protection Agency (EPA) and the California Air Resource Board (CARB) to test the amount of air pollutants emitted by automobiles. 

These suits follow the car companies’ partial settlements of claims for consumer relief and consumer deception penalties, as well as their agreement to establish a fund to mitigate the environmental damage caused by their admitted misconduct. Those earlier settlements did not resolve any of the claims for civil penalties that New York, Massachusetts and other states, as well as the EPA, may bring for the companies’ flagrant violations of state and federal environmental laws and regulations, nor did the settlements cover all of the vehicles equipped with emission control defeat devices.

The lawsuits allege that, after the EPA and CARB contacted Volkswagen and Audi about the discrepancies revealed by the West Virginia University study -- which the companies fully knew were caused by their defeat devices – Audi and Volkswagen:

• Tried to cover up the problem through sham recalls that they knew would not meet the required standards;
• Repeatedly failed to disclose to regulators the true reason – the defeat devices – for the discrepancies; and
• Only confessed to the defeat devices when they knew the regulators had them pinned to the facts. 

The lawsuits allege this cover-up was orchestrated and approved at the highest levels of the company, up to and including the former CEO, Martin Winterkorn.

Throughout this entire course of alleged illegal conduct, in which dozens of employees, officers and senior executives were involved, the investigation found no evidence that a single Volkswagen, Audi or Porsche employee came forward to blow the whistle.

As alleged in the complaints, Volkswagen’s response to the scandal shows that the company has not reformed its corporate behavior.  When the investigation was getting under way in late 2015, numerous employees, tipped off by a senior in-house lawyer in Germany, allegedly destroyed incriminating documents.  Just last month, the Volkswagen Supervisory Board recommended a package of bonuses for the Management Board that presided over the cover-up totaling over $70 million, including generous severance pay to Mr. Winterkorn himself. That recommendation was overwhelmingly approved by the company’s shareholders.

The Attorneys Generals’ investigation also found evidence that the misconduct of Volkswagen and its Audi and Porsche subsidiaries in the production and sale of these automobiles has few parallels in corporate history. 

Specifically, the complaint alleges, that:

• These three affiliated brands made a knowing decision to violate the laws of New York, Massachusetts, Maryland, and other states not just once, but over and over again. There was not just one defeat device that cheated on emissions tests, but six, with the first going back to Audi’s European-market cars in the mid-2000’s.

• Starting in 2008, Volkswagen and Audi, and later Porsche, began installing these defeat devices in several generations of US-market Volkswagen and Audi diesel engines that equipped over a dozen models, including flagship Audi luxury sedans and high-performance Porsche SUVs, with sales eventually totaling over 25,000 vehicles in New York State, 15,000 in Massachusetts, and 13,000 in Maryland before being pulled from sale last year. 

• The defeat devices took the form of computer software designed to ensure that a vehicle's emissions system performed properly only during emissions testing.  On the road, the defeat device switched off or scaled back the vehicles’ emissions systems, with the result that the cars and SUVs emitted NOx – a harmful pollutant linked to numerous respiratory diseases – far above allowable limits, indeed up to 40 times those limits. 

• Despite their reputations for engineering excellence, Volkswagen, Audi and Porsche resorted to the illegal defeat devices to enable them to equip their cars with shoddy emissions systems that in many cases would have broken down, without the defeat devices, in less than 50,000 miles, contrary to the durability assurances the automakers had falsely given to regulators. 

• In other cases – for example, on the high-end V6 diesel engines that equipped the Porsche, Volkswagen and Audi SUVs and Audi luxury sedans, vehicles that use a urea-based liquid as part of the emissions control system – the automakers installed defeat devices to compensate for the companies’ unwillingness either to make the tanks that hold urea large enough to properly serve the cars’ emissions system, or to reduce the intervals between urea refills in a manner they believed would turn off diesel car owners.  In these vehicles, the defeat devices limited dosing of the urea-based liquid into the emissions system, again driving up harmful NOx emissions far past their legal limits.

• Volkswagen and Audi researched the laws in this country and previous enforcement cases before embarking on this course. They knew what they were going to do was illegal, and if caught they would face government enforcement and sanctions. They went ahead and did it anyway.

• As a result, the complaints allege that consumers in New York, Massachusetts, Maryland and around the country did not receive what they were sold – a “clean” “green” diesel car that the Volkswagen companies aggressively touted. Indeed, Volkswagen, Audi and Porsche expressly and repeatedly promised consumers that they could have the best of all worlds by purchasing a car or SUV with both outstanding power and excellent environmental performance – and charged high mark-ups on the bases of these claims – claims that Audi and Volkswagen knew to be blatantly false.

• As a further result, the complaints allege that thousands of excess tons of NOx were illegally spewed onto city and rural streets around the country, leaving many of residents at greater risk of asthma and other respiratory diseases, and driving up the formation of harmful ozone in the atmosphere.  New York—in particular the New York City metropolitan area—has harmful levels of smog pollution, one of the main reasons the State adopted strict car emission standards to combat this problem.  New York’s complaint alleges that the companies’ conduct has made it more difficult to clean up New York’s air to levels that are adequate to protect public health. Massachusetts also experiences the harmful effects of smog: every year, the Department of Environmental Protection issues air quality alerts on numerous days because ozone levels make the air unhealthy to breathe. Maryland has recorded some of the highest ozone levels in the Eastern United States, and is subject to the perfect storm for ozone air pollution, where unique meteorology and geography line up with transported pollution from power plants in the west and local pollution from the south, primarily cars along the I-95 corridor.

Today’s lawsuits make clear that substantial penalties must be imposed on the Volkswagen companies, above and beyond the amount they have to pay to make American consumers whole and redress the environmental harm they have caused.

The strongest message possible has to be sent:  you cannot deliberately flout the laws of New York, Massachusetts, Maryland, and every other state, and not be severely penalized. Neither Volkswagen, nor any other car manufacturer, should ever again conclude that it can engage in this behavior as part of the cost of doing business. 

New York Attorney General Schneiderman thanks the New York State Department of Environmental Conservation for its help in this matter. Massachusetts Attorney General Healey thanks the Massachusetts Department of Environmental Protection for its assistance. Maryland Attorney General Frosh thanks the Department of Environment for its assistance.

A copy of the New York complaint can be found here.

The New York case is being handled by Senior Enforcement Counsel David Nachman; Deputy Bureau Chief Lisa Burianek, Affirmative Litigation Section Chief Michael Myers, and Assistant Attorneys General John Turrettini, Brian Lusignan and Morgan Costello, Environmental Policy Advisor Peter Washburn and Chief Scientist Alan Belensz of the Environmental Protection Bureau; Assistant Attorney General Noah Popp of the Consumer Protection Bureau; Senior Trial Counsel David Ellenhorn; and with the assistance of Laura Sarli of the Investor Protection Bureau.  The Environmental Protection Bureau is led by Bureau Chief Lemuel Srolovic and the Social Justice Division is led by Alvin Bragg.

The case is being handled in Massachusetts by Gillian Feiner, Chief of AG Healey’s False Claims Division, First Assistant Attorney General Christopher Barry-Smith, Christophe Courchesne, Chief of AG Healey’s Environmental Protection Division, Peter Mulcahy, Assistant Attorney General in AG Healey’s Environmental Protection Division, with critical assistance from Assistant Attorneys General Diane Barry and Gary Klein, along with Attorney Meghan Mackenzie, and Paralegal Krista Roche.

The Maryland lawsuit is being handled by Assistant Attorney General Roberta James.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 19, 2016

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A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT OF BRONX MEDICAL CLINIC OWNER IN ALLEGED $5 MILLION MEDICAID FRAUD 

Joseph Wright Allegedly Duped Innocent New Yorkers Into Receiving Unnecessary Medical Treatment By Luring Them To His Clinic With False Promises Of Affordable Housing

NEW YORK — Attorney General Eric T. Schneiderman today announced the indictment and arraignment of Joseph Wright, 52, of Middletown NY, for his role in an alleged $5 million Medicaid fraud. Prosecutors allege that Wright, as owner of a purportedly not-for-profit organization called Assistance By Improv II, Inc. (ABI), located at 953 Southern Boulevard in the Bronx, lured thousands of low-income New Yorkers to ABI with the promise of affordable housing, arranged to have them subjected to unnecessary medical tests and then filed false claims for reimbursement with the New York Medicaid program. Wright was indicted on felony charges of Insurance Fraud in the Second Degree.

“The defendant in this case allegedly took advantage of the hopes and needs of vulnerable New Yorkers to line his own pockets with millions of dollars in taxpayer funds,” said Attorney General Schneiderman. “This elaborate scheme resulted in an alleged theft of over $5 million of Medicaid funds that should have been used to help medical patients in need.”

Prosecutors allege Wright unlawfully owns and operates ABI as a medical mill that masquerades as a charitable housing organization. ABI claims in newspapers, on television, and on city bus advertisements to be dedicated to providing affordable housing for developmental disabled New Yorkers. Prosecutors allege Wright ignored ABI’s professed charitable mission and duped potential clients, most of whom were Medicaid recipients, into surrendering their personal health care information and undergoing purported medical screening to qualify for housing.

Prosecutors allege potential clients were directed to see various doctors and counselors at ABI, and were often subjected to unnecessary purported medical tests and procedures. Thereafter, staff at ABI, under the direction of Wright, and at the behest of various doctors and counselors employed by ABI, submitted false claims for reimbursement to Medicaid for services allegedly rendered to the Medicaid recipients who provided Wright, his staff and ABI with their client identification numbers.

Wright, prosecutors allege, used the doctors’ and patients’ Medicaid identification numbers to submit a staggering volume of claims for services purportedly rendered to Medicaid recipients. In an eight-month span, over 125,000 claims for medical services allegedly rendered to Medicaid recipients were submitted in the names of eight Medicaid providers actually employed by Wright and ABI. The value of these claims totaled in excess of $10 million dollars, for which Medicaid reimbursed these eight doctors over $5 million dollars, and they in turn paid Wright millions of dollars.

Prosecutors allege that an overwhelming number of these claims were for treatment in connection with a primary diagnosis of “counseling and advice on contraception” or “other contraceptive/sex counseling” and bore no resemblance to the purported examinations to which the recipients were subjected, even if they had been proper. Often these claims were completely fictitious and factually impossible. According to claims records maintained by the Medicaid program, prosecutors allege, these doctors purportedly treated hundreds of patients a day and each patient received the same medical diagnosis. Many of the doctors’ claims were for services outside their field of specialty and for claimed medical diagnosis and treatments the doctor often was unqualified to give.  Furthermore, given the number of claims filed each day by each doctor, the doctors could not have physically rendered the treatment they claimed to have provided.

To date, the Attorney General’s investigation has uncovered no evidence that any of ABI’s patients ever received any housing despite being subjected to unnecessary medical examinations, medical tests, and multiple visits to ABI.

Wright, at the time of his arrest on June 20, 2016 by the Attorney General’s Medicaid Fraud Control Unit (MFCU), was charged with Grand Larceny in the First Degree, Health Care Fraud in the First Degree and Insurance Fraud in the Second Degree. Grand Larceny in the First Degree and Health Care Fraud in the First Degree are both class B felonies with a maximum term of incarceration of 8 1/3 to 25 years in State prison. Bail was set at the time of Wright’s arrest in the amount of $500,000 bond or cash with an examination of surety and today, following Wright’s arraignment and oral argument, continued by the Hon. George Villegas in the same amount. The defendant pleaded not guilty and the case was adjourned until November 22, 2016. The investigation is ongoing.

The Attorney General’s Office thanks the New York State Office of the Medicaid Inspector General (“OMIG”), Computer Services Corporation, the New York City Human Resources Administration (“HRA”) and the New York Office of the United States Department of Health and Human Services, Office of the Inspector General, Office of Investigations for their valuable contributions to this investigation.

The case was investigated by Special Investigators Denitor Guerra and Thomas Dowd with assistance from Supervising Investigator Dominick DiGennaro and Deputy Chief Investigator Kenneth Morgan.  Dominick Zarrella is the Chief Investigator of the Office of the Attorney General. OMIG Investigator Nigill Johnson also assisted in the investigation. The audit investigation was conducted by MFCU Auditor Investigator Lisandra Defex with assistance from Principal Auditor Investigator Emmanuel Archer and Regional Chief Auditor Thomasina Smith. Also assisting in the investigation were Stephanie Paton and Margaret Tsui of OMIG and Leslie Dykeman from Computer Services Corporation.

The case is being prosecuted by MFCU Special Assistant Attorneys General Alyssa A. Preston and Mark P. Cannon with the assistance of New York City Regional Director Christopher M. Shaw. Thomas O’Hanlon is the MFCU Downstate Chief-Criminal Investigations.  The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul Mahoney.  The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

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

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE 
July 19, 2016

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A.G. SCHNEIDERMAN ANNOUNCES $4.28 MILLION SETTLEMENT WITH INTERNATIONAL ART DEALER GAGOSIAN GALLERY FOR FAILURE TO COLLECT AND REMIT NEW YORK SALES TAX

Gagosian Gallery Has Locations In U.S., Europe And Asia; Sells Over $1 Billion Annually

NEW YORK—Attorney General Eric T. Schneiderman announced today a $4.28 million settlement with international art dealer Gagosian Gallery following an investigation into sales tax collection practices. Gagosian Gallery is a leading dealer of contemporary art, with galleries in New York City, Beverly Hills, San Francisco, London, Paris, Geneva, Rome, Athens and Hong Kong. Its owner, Laurence Gagosian, is a prominent figure in the contemporary art scene, and it is estimated to sell over one billion dollars of art annually.

“There is one set of tax rules for all, and that includes art dealers and collectors,” said Attorney General Schneiderman. “Those who fail to pay their fair share can deprive the state of millions of dollars, leaving ordinary New Yorkers to foot the bill. We will continue to remain vigilant in order to ensure that art dealers and collectors fully abide by the state’s tax laws.”

The Attorney General alleges that from at least 2005 to 2015, Pre-War Art, Inc., a California affiliate of Gagosian Gallery, sold and shipped nearly $40 million of art to customers in New York without collecting or remitting New York state and local sales tax.  During this time, employees of Pre-War, and the Gagosian Gallery location in New York, engaged in substantial economic activity to promote and facilitate the sale of Pre-War’s art in New York. 

Additionally, the Attorney General alleges that from at least 2012 to 2015, Gagosian Gallery Inc. sold a significant volume of art in New York that was shipped out of state, for which it should have, but did not, collect New York state and local sales tax.  Under New York law, New York sales tax is due if possession is transferred by the vendor to the purchaser or purchaser’s agent within New York.  When it turned over art to shipping companies within New York that were not common carriers like UPS, FedEx or the U.S. Postal Service, but rather, were contract carriers acting as the purchasers’ agents, Gagosian should have collected and remitted sales tax. 

In addition to the cash payment of $4.28 million, it was agreed that Pre-War will provide information regarding its sales to New York to the New York State Department of Taxation and Finance for the next six years.  Furthermore, Gagosian Gallery has agreed to a code of conduct to include the following:

• Gagosian Gallery will establish a wholly-owned division called GG Shipping, which will handle the shipment of art from Gagosian Gallery’s New York location to out-of-state customers; 

• Gagosian will charge New York state and local sales taxes on taxable sales of art to be shipped out of state, unless the purchaser agrees to use GG Shipping; and

• If the customer chooses to use GG Shipping, GG Shipping will arrange for shipping by selecting a carrier, and entering into a principal-agent contract with that carrier for shipment of the art outside of New York.

Attorney General Schneiderman expresses his thanks to the New York State Department of Taxation and Finance for its important assistance in bringing this investigation to resolution.

The Attorney General’s investigation of Gagosian Gallery was led by Assistant Attorney General Sujata Tanikella, with assistance from Legal Support Analyst Bianca LaVeglia, former Assistant Attorney General Lisa White, and former Legal Support Analyst Rupinder Garcha.

The Taxpayer Protection Bureau, overseen by Bureau Chief Thomas Teige Carroll and Deputy Chief Scott Spiegelman, enforces the New York False Claims Act, including tax claims made thereunder.  It is a unit of the Criminal Division, which is headed by Executive Deputy Attorney General Kelly Donovan.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 20, 2016

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A.G. SCHNEIDERMAN ANNOUNCES AGREEMENTS WITH TWO COMPANIES FOR DECEPTIVE SALES PRACTICES THAT RESULTED IN HIDDEN CHARGES TO CONSUMERS ORDERING PRODUCTS MARKETED ON TV

Tristar And Product Trend Lured Consumers With Infomercials That Advertised Illusory Prices That Did Not Disclose Significant Processing and Handling Fees; Marketers Must Make Major Reforms To Their Advertising, Marketing And Customer Service Practices

Schneiderman: Consumers Have A Right To Understand The True Terms Of An Offer Before They Are Charged

NEW YORK — As part of a wider investigation into deceptive advertising and sales practices allegedly used by the direct marketing industry, Attorney General Eric T. Schneiderman today announced  settlements with Tristar Products, Inc. (“Tristar”), a firm headquartered in Fairfield, New Jersey, and Product Trend, LLC (“Product Trend”), headquartered in Williston, Vermont.  The agreements require the direct marketers to make significant reforms to their advertising, ordering processes and customer service practices.  The marketers sell their products directly to consumers, typically through television and online advertising.  Tristar’s products include Genie Bra; blenders and juicers, as well as a variety of exercise equipment, such as the Ab Coaster and Cardio Twister.  Product Trend’s products include Total Pillow, Wonderhanger and Furniture Fix. 

The agreements also require each marketer to make a monetary payment to the New York Attorney General’s Office for restitution, penalties, costs and fees, with Tristar paying $700,000 and Product Trend paying $175,000.

“These agreements insure that consumers will not be hit with charges they did not authorize and will not be frustrated with long hold times or unresponsive customer service when they seek assistance,” Attorney General Schneiderman said. “The settlements also bring much needed reforms to two major players in the direct marketing industry and insure that consumers will have a clear understanding of the charges before they place an order.”

The Attorney General’s Consumer Frauds Bureau launched a probe into the industry after receiving complaints from consumers, including hundreds forwarded by the Better Business Bureau.

According to the Attorney General’s investigation, both marketers ran misleading infomercials on television that often featured attractively priced “Buy One, Get One” offers, which required consumers to purchase a double order of the advertised product. However, the ads did not adequately disclose that consumers would be charged two separate processing and handling fees or the amount of those fees, which significantly increased the cost of the offer. When consumers placed orders by phone or online, they were subjected to a confusing, automated ordering process that typically included numerous “upsell” offers for additional products. Consumers were also not given the opportunity to review and edit their orders before they were processed. As a result, in some cases, consumers who responded to the marketers’ advertisements were charged significantly more than they expected and received products that they did not intend to order. 

One Product Trend customer responded to a “Buy One, Get One” ad for Total Pillow, advertised for $19.99, plus shipping and handling, but was charged $91.73 after placing an order online. A Tristar customer who responded to a $19.99 “Buy 3, get 3” Genie Bra advertisement ended up being charged $101.83. Although she subsequently returned the bras, Tristar refused to refund the $27.00 charged for shipping and handling.

The Attorney General’s investigation also revealed that consumers who sought warranty service from Tristar for products that malfunctioned or to obtain authorization to return products often faced long telephone hold times and otherwise had difficulty obtaining relief or assistance.

The settlements require the marketers to:

• Clearly and conspicuously disclose all material terms of an advertised offer.
• Clearly and conspicuously disclose the amount of any processing and handling fee for the second item in a “Buy One, Get One” offer.
• Provide consumers with an opportunity to confirm the details and the total price of any order before it is processed.  For orders placed online, this includes presenting the consumers with a checkout or shopping cart page that the consumer can edit.
• Disclose the amount of any processing and handling fees during the ordering process before the consumer is asked to confirm the order details.
• Label all hyperlinks to clearly convey the consequence of clicking the link.
• Email consumers who place orders by phone an order summary with any processing, handling or other charges.
• Ensure that the marketers’ customer service lines are adequately staffed so that consumers are not subjected to long hold times.

In March 2015, the Attorney General and Federal Trade Commission reached a similar settlement with Allstar Marketing Group, LLC located in Hawthorne, New York. 

Consumers who believe they may be entitled to a refund should notify the Attorney General’s office. Consumers can file a complaint online or obtain a complaint form at www.ag.ny.gov. Consumers can also call the Attorney General’s consumer helpline at 1-800-771-7755. This investigation is being handled by Assistant Attorney General Amy Schallop, Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General Manisha M. Sheth.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE 
July 21, 2016

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A.G. SCHNEIDERMAN JOINS JUSTICE DEPARTMENT AND TEN STATES SEEKING TO STOP ANTICOMPETITIVE MERGER BETWEEN HEALTH INSURERS ANTHEM AND CIGNA

Merger Could Substantially Reduce Competition Among Large Employer Plans In New York And Nationally, Potentially Affecting Millions Of People, Including Hundreds Of Thousands Of New Yorkers

Schneiderman: My Office Will Do Everything Possible To Prevent Mergers That May Harm Patients By Raising Their Costs Or Reducing Access To Quality Healthcare

NEW YORK– Attorney General Eric T. Schneiderman announced today that New York has joined a joint federal/state complaint alleging that the proposed merger between insurance giants Anthem and Cigna would be anticompetitive and should be stopped.  Anthem and Cigna are two of the top five national health insurance carriers in the United States, and Anthem is the second largest carrier in New York State.  The proposed transaction has the potential to impact the accessibility, affordability, quality, and availability of health care for hundreds of thousands of individuals in the New York metropolitan area.

“Affordable, quality health care is essential to the well-being of all Americans,” Attorney General Schneiderman said. “Most consumers are covered by insurance plans that their employers choose and negotiate with companies like Anthem and Cigna.  By reducing competition, this proposed merger has the potential to significantly increase the merged firm’s power in the marketplace, to the detriment of consumers. Employers will be left with fewer choices, and ultimately consumers could be saddled with higher premium costs, reduced access to providers, and lower quality care.  I stand with my federal and state partners in fighting to stop this merger before it harms New Yorkers.”

The lawsuit, which was filed today in federal court in Washington, D.C. by the Department of Justice, New York, ten other states, and the District of Columbia, seeks a court order halting the merger between the two companies.  The complaint alleges that the consolidation would reduce competition for large-group employer plans in 35 local markets in which Anthem does business, including the New York City metropolitan area.  It also alleges that the merger would reduce competition in the market for national plans sold to large employers covering employees throughout the country, including New Yorkers.  In addition, it charges that the merger has the potential to drive down reimbursement rates for healthcare providers in a manner that might affect access to and quality of health care services in some areas of the country, including the New York City metropolitan area.

The case is being handled by Assistant Attorney General Irina C. Rodríguez of the Antitrust Bureau, under the supervision of Deputy Bureau Chief Elinor R. Hoffmann. The Antitrust Bureau is part of the Division of Economic Justice, led by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE 
July 21, 2016

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A.G. SCHNEIDERMAN ANNOUNCES NEW GRANT PROGRAM FOR COMMUNITIES TO COMBAT ZOMBIE HOMES

The Zombie Remediation And Prevention Initiative Will Reverse The Proliferation Of Vacant And Abandoned Properties And Help Families Avoid Foreclosure; Adds Momentum To Recently Passed “Abandoned Property Neighborhood Relief Act”

$13 Million Grant Initiative Made Possible By Schneiderman’s $3.2 Billion Settlement Agreement With Morgan Stanley

Schneiderman: This Office Will Continue To Help Communities Emerge From The Foreclosure Crisis And Its Enduring Legacy Of Zombie Homes

SYRACUSE – Attorney General Eric T. Schneiderman announced a new grant initiative to address the growing statewide problem of so-called “zombie homes” – vacant and abandoned homes that are not maintained during a prolonged foreclosure proceeding.

The Zombie Remediation and Prevention Initiative will provide $13 million in grants to local governments throughout the state through a competitive application process. The 100 communities with the greatest problem of zombies and vacancy have been invited to apply for the funds. The money will address housing vacancy and blight by bolstering municipalities’ capacity for housing code enforcement, for tracking and monitoring vacant properties, and for legal enforcement capacity to ensure banks and mortgage companies comply with local and state law.  The grants also require communities to develop innovative programs and policies and connect at-risk homeowners to services so they can avoid foreclosure and stay in their homes. The initiative coincides with the recent passage of the Abandoned Property Neighborhood Relief Act, a bill that was authored by Attorney General Schneiderman, championed by Senator Jeff Klein (D-Bronx) and Assemblywoman Helene Weinstein (D-Brooklyn), and signed into law by Governor Cuomo on June 23^rd. 

“Too many communities across this state have been hit hard by the proliferation of zombie properties,” said Attorney General Schneiderman. “This new grant initiative puts tools directly in the hands of towns and cities across the state to reverse course, rebuild from the foreclosure crisis, and put zombie homes in the rear-view mirror.”

Funding for the initiative will be drawn from the $3.2 billion settlement agreement with Morgan Stanley that Schneiderman, as co-chair of the federal-state working group on residential-mortgage-based securities, negotiated in February. That settlement generated $550 million in cash and consumer relief for New Yorkers.

The Local Initiatives Support Corporation (LISC) is running the grant program. LISC is a national community development intermediary that specializes in affordable housing, economic development, and community revitalization. LISC selected the grantees for this program based on the number of abandoned properties within the municipality; the proportion of such properties compared to the overall size of the municipality; and its level of general economic distress. All invitees must have populations of at least 5,000 residents and at least 100 vacant and abandoned properties.

Applications are due on Tuesday, August 16^th, by 5 p.m. and award notifications will be made by early September 2016.

LISC expects to award grants in amounts ranging from $75,000 to $350,000, depending on the size of the municipality, the scope of its zombie problem, and its track record and capacity for addressing such issues. Each municipality must also include a prevention component in its application, to connect families to services that help families avoid foreclosure, including programs supported by the Attorney General, describe in more detail below.

There are at least 16,000 zombie homes across the state, based on data released by Realty Trac in 2015. Zombie homes invite crime, threaten public safety, and drive down the value of surrounding homes.  Studies have shown that each zombie property reduces the value of all homes within 750 feet by one percent.

The Zombie Remediation and Prevention Initiative is but one component of Attorney General Schneiderman’s broad strategy to help New York families and communities recover from the housing crash.  He has led the fight for strong bank settlements that hold the banks accountable for their recklessness and responsible for mitigating the damage they caused.  He has obtained settlements that brought more than $70 billion to communities across the country. 

More than $5 billion of that settlement money has flowed into New York. It allowed the Office of the Attorney General to establish the Homeowners Protection Program, HOPP, in 2012, which currently funds 90 agencies across the state to provide legal services and counseling to help families stay in their homes. More than 62,000 families have been served to date; and nearly a third of them have mortgage modifications pending or approved.  In Central New York, HOPP has served 3,600 families.

That settlement money also established the New York State Mortgage Assistance Program (MAP) in 2014.  Since it began, MAP has provided $18 million in small loans to homeowners to clear other debts and qualify for mortgage modifications; it has prevented more than 650 foreclosures; and it has preserved $153 million in property value for nearby homeowners.

The Office of the Attorney General has allocated some $30 million from settlement monies toward land banks—local, nonprofit entities that purchase and rehabilitate abandoned properties that are a blight on communities across the state. Already, 16 land banks in communities from Erie to Suffolk County are working to return vacant properties to productive use, including the Syracuse Land Bank, which has obtained 1,000 properties, razed 100 of the most dilapidated, unsafe structures, and restored 270 to the market.

The initiative coincides with the recent passage of the Abandoned Property Neighborhood Relief Act, a bill that the Attorney General wrote, the Legislation passed and the Governor signed.  Among other provisions, that law requires banks to register any properties abandoned by their owners with the Department of Financial Services and to maintain those properties during the foreclosure process, and not just once the process has been completed.  Banks face significant fines for non-compliance.  The state will share the registry with localities and will run a toll-free hotline for individuals to report such properties.

“Rehabilitating blighted properties and putting them back into productive use improves the quality of life in our neighborhoods and generates more property tax revenue for municipalities,” said Mayor Stephanie A. Miner, City of Syracuse. “This grant program will support cities like Syracuse as we continue to deal with ongoing issues presented by zombie properties. I thank Attorney General Schneiderman for his ongoing commitment to housing issues faced across the State of New York.”

“The financial crisis might seem like a distant memory to some, but the vacant properties left in its wake are continuing to destroy the quality of life in many of our communities,” said Denise Scott, executive vice president with LISC. “Local leaders now have a strong policy framework, and LISC is helping deliver targeted resources and housing expertise, so neighborhoods can recover. We are gratified to be working closely with Attorney General Schneiderman’s office to help municipal leaders across the state take effective action against zombies.”

“Foreclosed and abandoned properties are a serious problem in our neighborhoods, affecting quality of life for residents and forcing localities to spend precious resources on monitoring them,” said Senator David J. Valesky. “I commend Attorney General Schneiderman for taking steps to address this issue. I am confident these grants will make a difference here in Syracuse and across the state.”

“Zombie properties have devastating impacts on our communities,” said Assemblywoman Pamela J. Hunter. “When they fall into disrepair at the hand of absentee banks, they attract crime and lower the property values of the surrounding homes. We need to invest in programs, like the one announced today, that will help our local municipalities and homeowners come together and fight against the blight caused by these zombie properties.”

“I commend Attorney General Schneiderman for his leadership in combatting zombie properties and blight in our communities,” said Assemblyman Bill Magnarelli. “As chair of the Assembly Local Governments Committee, I know firsthand the difference he has made in combatting this issue. His previous efforts provided our new Land Banks with significant capital investment to address abandoned and blighted properties. This new initiative will continue that work and provide our municipalities with the resources they need to end the scourge of zombie properties in New York.”

“The Zombie Remediation and Prevention Initiative will provide much-needed aid to communities across Central New York to help families stay in their homes,” said Assemblyman Al Stirpe. “I look forward to continuing to work with the Attorney General and with my colleagues in the Assembly to tackle the issue of zombie properties and strengthen our neighborhoods.”

“This funding finally gives local municipalities the ability to react and address the consistently problematic blighted properties in our communities that detract from our neighborhoods and property values,” said Mayor Billy Barlow, City of Oswego. “In Oswego, neighborhood revitalization and encouraging residential investment is taking place all over our community. Thanks to Governor Cuomo and Attorney General Eric Schneiderman, we now have an additional resource to expedite the entire revitalization process and combat homes that detract from our efforts.”  

“As the Mayor of Auburn, I’m pleased to hear about the invitation to apply for funding to combat the plaguing issue of vacant and abandoned homes in our communities,” said Mayor Michael Quill, City of Auburn. “I applaud Attorney General Eric T. Schneiderman for his continuing effort to address and improve the housing troubles of many New Yorkers.”

“As Mayor for the City of Cortland, I hear frequently from constituents and I see on a regular basis the negative impact that a zombie property can have on an entire neighborhood,” said Mayor Brian Tobin, City of Cortland. “The Attorney General has heard the concerns of municipal officials throughout the great State of New York, and has consistently acted to help us with our zombie properties. I am grateful that the AG is offering funding opportunities to help us be more active in supporting our neighborhoods, and addressing this blight on all communities in New York.”

"On behalf of the City of Fulton, I appreciate Attorney General Schneiderman's continued effort in recognizing the problem communities face with the increase in zombie properties and the damaging effect it has on neighborhoods,” said Mayor Ronald L. Woodward, Sr., City of Fulton. “These vacant properties that have been allowed to stagnate for years help to devalue their worth as they are allowed to deteriorate.  These properties become a nuisance, attract criminal activity and aid in bringing down the quality of life for the residents in the area. I am thrilled to hear about the funding, and thank the Attorney General for his commitment to helping New York State communities.

“Abandoned properties negatively affect the quality of life and the market value of surrounding homes,” said Kerry Quaglia, executive director of Home HeadQuarters. “Addressing zombie properties will help restore Upstate New York’s neighborhoods and create an opportunity to improve the present and future needs of vacant buildings and the surrounding communities. We are grateful to NYS Attorney General Eric T. Schneiderman for providing another funding opportunity to revitalize communities.”

“Given the disproportionate impact of the foreclosure crisis on communities of color, we are excited to hear about the Attorney General's initiative to address the problem of zombie properties,” said Sally Santangelo, executive director of CNY Fair Housing. “Our cities have suffered too long with issues of vacancy and blight and we are encouraged to see the commitment of additional resources to improve our neighborhoods.”

“Years after the first wave of the mortgage foreclosure crisis, communities like Syracuse continue to struggle with zombie properties in our neighborhoods,” said Katelyn E. Wright, executive director of the Greater Syracuse Land Bank. “We're grateful for Attorney General Schneiderman's continued support for local governments tackling this problem. These resources will complement the recently passed zombie law and give us more tools at our disposal to take control of problem properties and turn them into opportunities.”

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE 
July 21, 2016

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A.G. SCHNEIDERMAN ANNOUNCES SETTLEMENT OF LAWSUIT AGAINST UTICA CITY SCHOOL DISTRICT TO ENSURE EQUAL EDUCATIONAL OPPORTUNITIES FOR IMMIGRANT AND REFUGEE STUDENTS

Schneiderman: My Office Is Committed To Ensuring That Every Child Has Access To Education Regardless of Immigrant Or Refugee Status

NEW YORK – Attorney General Eric T. Schneiderman today announced the settlement of a lawsuit against the Utica City School District ensuring equal educational opportunities for immigrant and refugee students. The complaint in that suit, filed in November 2015, alleged that the District denied enrollment to immigrant and refugee students above the age of sixteen in the District’s only public high school, and instead diverted those students to inferior, and segregated, alternative education programs.  The consent decree settling the lawsuit requires the District to create new policies to ensure that such students can be enrolled in high school, as well as to retain an internal Administrator and an external Independent Monitor to ensure compliance with the agreement and with federal and state laws.  Moreover, the District will offer compensatory educational services to all immigrant students who experienced delays or denials of enrollment, and will ensure that any future alternative education program offered by the District meet standards prescribed by federal law.  

“Full and equal access to education is not only a legal right, it is the very foundation of the American Dream,” said Attorney General Schneiderman.“School districts should not place unnecessary barriers in the way of students seeking enrollment.  Our country and state were built in part by the significant labors of immigrants, and my office is committed to ensuring that New York’s education system is open to any and all children, regardless of race, national origin, English language proficiency, or immigrant or refugee status.”

The Attorney General began looking into the District’s practices as part of its joint compliance review with the New York State Education Department of enrollment policies and procedures of school districts across New York State, in order to determine whether districts were impermissibly discriminating against students or prospective students on the basis of immigration status.  To date the Attorney General has entered into agreements with twenty-two school districts as part of this initiative, including one with the Westbury Union Free School District in February 2016, which engaged in similar underlying conduct as that alleged in the Attorney General’s complaint against the Utica City School District.  Those agreements ensure that immigrant students – many of them unaccompanied minors – have full and equal access to educational opportunities.

The City of Utica is a major resettlement center for refugees coming to the United States from around the world, including from the countries of Vietnam, Myanmar, Russia, Ukraine, and Somalia,; many of these refugees fled ethnic persecution in their home countries.  According to the 2010 Census, approximately eighteen percent of Utica’s total population was born outside of the U.S., and over a quarter speaks a language other than English at home.  The area served by the District has one of the largest proportions of limited English proficient households in New York, with more than one in ten households having no member over the age of fourteen who speaks English “very well.”

In March 2015 the Attorney General opened a formal investigation into the Utica City School District alleging that the District discriminated against immigrant and limited English proficient individuals above the age of sixteen, on the basis of national origin and immigration status.  After several attempts to resolve the investigation failed, in November 2015 the Attorney General filed suit against the District in the United States District Court for the Northern District of New York.  Today’s consent decree resolves that complaint.

In its complaint, the Attorney General alleged that the District created and implemented a policy in 2007 that denied enrollment into the District’s only public high school, Thomas R. Proctor High School, to any student over the age of 16 who had limited English proficiency.  The complaint further alleged that the District rigorously enforced this policy through the efforts of senior District officials, its central office administrative staff, high school staff, and staff located at a local refugee center.  Rather than allow these students to enroll in high school, the District diverted them into alternative programs that provided English as a Second Language classes, or provided minimal preparation for the high school equivalency exam, but could not result in a high school diploma.  As a result, the complaint alleged, dozens of newly arrived immigrants and refugees above the age of sixteen were deprived of any opportunity to attend classes with their high school peers or to earn credits toward a diploma.  The complaint alleged that the District’s conduct violated federal and state laws, as well as the guarantee of equal protection of the laws under the U.S. and New York Constitutions.

The consent decree entered into between the Attorney General and the District, subject to court approval, requires the District to do the following:

• Modify District enrollment materials;
• Develop new enrollment procedures governing the activity of District personnel responsible for enrollment and academic placement;
• Develop training materials addressing permissible and impermissible inquiries in the enrollment process, and legal requirements concerning academic placement and the entitlement to a public education until a student turns 21, as well as annual training for relevant District personnel; 
• Hire or designate a new Enrollment Administrator responsible for enrollment and throughout the District;
• Retain an Independent Monitor to assure compliance with applicable law and the agreement;
• Provide compensatory educational services to all immigrant students who were delayed or denied enrollment or diverted into non-degree bearing programs during the past four years; and
• Obtain written pre-clearance authorization from the Attorney General before creating any new alternative education program for refugee or immigrant youth, or before counseling or referring such youth to any alternative program.

Lily Htoo, the English as a New Language Home School Coordinator for the Albany City School District, said, “I am happy to hear that the Attorney General has settled his lawsuit against the Utica City School District.  When I was eighteen years old, I moved to Utica after living in a refugee camp in Thailand for years.  When I arrived here, my English was very limited, but I took a friend who spoke better English to Proctor High School with me and tried to enroll.  An employee at the high told me I was too old to enroll there, and I was devastated.  I ended up working in casinos and factories for years, but I finally managed to enroll in Hudson Valley Community College, and then SUNY Albany, and recently graduated.  I always wanted to help refugees and immigrants because of what happened to me, and I did not want other refugees and immigrants to be denied the right to go to high school just because they arrived here when they were older.  That is why I took the job I have now.  I know the real benefits of allowing older immigrant students to attend high school, like the integration of students with non-refugees, avoiding the isolation that can happen to newly arrived immigrants, learning life skills, and learning about the culture here in the United States.”

“As a leading advocate and service provider for immigrants and resettled refugees in the State of New York, Catholic Charities is pleased the Attorney General has reached a settlement with the Utica City School District,” said Vincent W. Colonno, Statewide Chair of the New York State Council of Catholic Charities Directors.  “Now our communities can work to successfully welcome those who have been resettled in the United States due to war, conflict, and persecution in their home countries – especially children who are seeking an education.  Catholic Charities is proud to provide needed services throughout New York to assist immigrants, and we continue to stand for just and fair policies to give our new neighbors every chance at success.”

This matter is being handled by Assistant Attorneys General Justin Deabler, Diane Lucas and Ajay Saini of the Civil Rights Bureau, with the assistance of bureau support staff.  The Bureau is led by Bureau Chief Lourdes Rosado and is part of the Division of Social Justice, which is led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE 
July 26, 2016

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
nyag.pressoffice@ag.NY.gov
Twitter: @AGSchneiderman 

A.G. SCHNEIDERMAN ANNOUNCES SETTLEMENT WITH LONG ISLAND YACHT CLUB FOR UNDER-PAYING OVERTIME

Yacht Club And Catering Facility Will Pay $50,000 In Back Pay Owed To 19 Workers

NASSAU COUNTY – Attorney General Eric T. Schneiderman today announced a settlement resolving an investigation into the pay practices at Bridgeview Yacht Club in Nassau County, a facility owned by John Vitale. An investigation by Attorney General Schneiderman’s Office found the company failed to adequately track employee hours, in an effort to avoid proper payment of overtime wages. At least 19 employees were found to have been owed compensation for miscalculated overtime pay.

“Wage theft is a serious problem facing too many New Yorkers and my office will continue to investigate businesses that fail to properly compensate their employees,” said Attorney General Schneiderman. “Nothing is more fundamental that getting a fair day’s pay for a fair day’s work and we will vigorously enforce the laws protecting our most vulnerable workers.”

Bridgeview Yacht Club, based in Island Park, NY, is a banquet facility and yacht club on Long Island. New York labor law requires employers to record all employee hours and to pay 1 ½ times an employee’s regular pay rate (“time and a half”) for all hours over forty worked in one week. Bridgeview did not track wait staff and bartender hours for payroll purposes, resulting in inadequate overtime payments. Some workers were paid their regular hourly rates for hours over forty, instead of time and a half as required, while other employees were simply given a lump sum payment for hours past forty, in an amount that did not comply with overtime requirements. 

This matter was handled by Assistant Attorney General Najah Farley of the Labor Bureau. The Labor Bureau is led by Bureau Chief Terri Gerstein and Deputy Bureau Chief ReNika Moore. The Labor Bureau is part of the Division of Social Justice led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

If you are aware of a violation of workplace rights in New York State, whether as a victim or a concerned witness, please file a complaint with the Attorney General’s Labor Bureau by filling out this complaint form or by calling the Labor Bureau at 212-416-8700.