News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 27, 2016

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
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Twitter: @AGSchneiderman  

A.G. SCHNEIDERMAN ANNOUNCES $528K AGREEMENT WITH OWNERS OF THE ESPLANADE SENIOR RESIDENCES IN WHITE PLAINS

Esplanade Owners Rented Apartments To Seniors Without Informing Them Of Plan To Vacate The Building And Convert It To Luxury Rentals

Schneiderman: My Office Is Committed To Protecting Our Most Vulnerable Citizens And Holding Landlords Accountable For Their Actions

WHITE PLAINS – Attorney General Eric T. Schneiderman today announced an agreement with Esplanade of White Plains Venture Partnership, L.P. and White Plains Hotel, L.P., the owners of the Esplanade Senior Residences located at 95 South Broadway and 10 Lyon Place in White Plains, NY.  Under the agreement, the Esplanade owners will make payments totaling over $528,000 to 139 elderly residents who were forced to vacate their apartments.

“By failing to inform potential residents of their plan to vacate and repurpose the building, the Esplanade owners caused many seniors to suffer undue and unnecessary stress, hardship and expense,” said Attorney General Schneiderman. “This agreement will help the residents cover some of the expenses they incurred in having to make an unanticipated move from a facility where they expected to live out their remaining years. My office is committed to protecting our most vulnerable citizens, and to holding landlords accountable for their actions.”

In November 2015, the Esplanade owners sent a letter notifying all residents that a “multi-year complete overhaul” of the facility was planned, and that the “enormous level of construction will make it necessary to vacate the building.” The letter was sent in connection with the owners’ plan to repurpose the building from a senior residence to luxury rental apartments not restricted to seniors.

Although the plan to vacate and renovate the building was in the works since 2014, the Esplanade owners continued renting apartments to senior citizens – without informing them of the plan. Some residents moved in just weeks before the November 2015 notification was sent.

Attorney General Schneiderman commenced an inquiry after receiving complaints from Esplanade residents who were heartbroken and upset when they learned that they would have to move out. Residents who moved to the Esplanade in 2014 and 2015 were especially angry that the Esplanade owners had not revealed their plan to repurpose the building. These residents, some of whom chose the Esplanade to be close to their children and grandchildren, believed that they would never have to move again – let alone within such a short time after having moved in.

In addition to agreeing to make payments to residents who moved in during 2014 and 2015, the Esplanade owners agreed to make smaller payments to residents who moved in earlier. All 139 residents as of November 2015 will receive some payment.

Under the agreement obtained by the Attorney General’s Office, the Esplanade owners will pay $6,500 to each of the 60 residents who moved into the facility during 2014 and 2015, $3,250 to each of the 27 residents who moved in during 2013, and $1,250 to each of the 52 residents who moved in prior to 2013. Payment will be made within thirty days.

“I am very appreciative of Attorney General Schneiderman’s efforts to compensate the senior citizens who were forced to leave their homes without fair notice,” said Senator Stewart-Cousins. “I will continue to fight for the legislation I introduced this year, which will prevent those who market and create senior communities from pulling the rug out from under these residents without cause and appropriate notice.”

“This is a great resolution for unacceptable behavior by the Esplanade owners,” said Assemblymember Shelley Mayer. “​I salute the New York State Attorney General office's successful efforts at securing monetary relief for many of the tenants who were forced to move through no fault of their own. We​ will continue to work to ensure this will not happen again by passing state legislation such as A9460/S6883.” 

“I would like to thank Attorney General Eric Schneiderman for obtaining compensation for the former residents of the Esplanade who were displaced from their homes,” said Assemblyman David Buchwald (D-White Plains), who sponsored legislation in the State Assembly to prevent situations similar to what occurred at the Esplanade from happening in the future. “Seniors deserve to be treated with respect. It is my hope that the former residents of the Esplanade and their families will have some closure in this matter and be able to live without fear of eviction in their new homes.” 

Before executing the agreement with the Attorney General’s Office, the Esplanade owners had made payments totaling $14,382.50 to certain residents as reimbursement or partial reimbursement for moving expenses. Those payments will be deducted from the amount those residents will receive pursuant to the agreement. The total amount Esplanade will pay its residents pursuant to the agreement is $528,367.50.

This matter was handled by Gary S. Brown, Assistant Attorney General-in-Charge of the Westchester Regional Office, and Irma K. Nimetz, Volunteer Assistant Attorney General, under the direction of Marty Mack, Executive Deputy Attorney General for Regional Affairs.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 27, 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 AND DEC ACTING COMMISSIONER SEGGOS ANNOUNCE CHARGES AGAINST ONONDAGA COUNTY BUSINESS OWNER FOR ALLEGEDLY DISCHARGING POLLUTED WATER INTO LEY CREEK 

Michael Jones, Owner of Coast Transportation And Recycling, LLC, Faces Up To 4 Years In Prison And Over $400,000 In Fines  

SYRACUSE – Attorney General Eric T. Schneiderman and Department of Environmental Conservation Acting Commissioner Basil Seggos today announced the arrest of Michael Jones, 44, of Skaneateles, following the unsealing of an indictment charging Jones and his company, Coast Transportation and Recycling, LLC (“Coast”), with multiple environmental law crimes, including discharging polluted water into Ley Creek and failing to obtain appropriate state regulatory permits.  

An Onondaga County Grand Jury handed up a ten-count indictment charging Jones and Coast, an automobile salvage and scrap recycling facility located at 15 Dippold Avenue in the Town of Salina, with violations of the New York State Environmental Conservation Law (“ECL”).  The charges include a Class E felony for allegedly knowingly discharging pollutants without first obtaining a New York State Pollution Discharge Elimination System  (“SPDES”) permit.  The Honorable Thomas J. Miller arraigned Jones on the indictment today in Onondaga County Court and released him on his own recognizance. The defendant is next scheduled to appear in court on August 31, 2016.   

“My office will continue to protect New York’s waterways from illegal forms of pollution,” said Attorney General Schneiderman. “Protecting our state’s natural resources is essential to safeguard both the public health and local economies, and those who break the law will be held accountable.”

These charges are the result of an investigation conducted by the New York State Department of Environmental Conservation (“DEC”).

“The actions of the defendant in this case show a total disregard for the environment and for the safety of the community around Ley Creek,” said Commissioner Seggos. “I applaud the work of our Environmental Conservation Officers and the Attorney General’s office in ensuring that the state's laws are enforced and its environment protected.”

According to statements made by the prosecutor at arraignment, DEC’s investigation revealed that in February 2010, two underground storage tanks were removed from the Coast facility.  These tanks, which contained fuel oil, had leaked and contaminated the surrounding soil.  More than 500 tons of petroleum contaminated soil was ultimately excavated from the areas surrounding the underground storage tanks and stored on Coast’s property.  According to the prosecutor, the PCS was not removed from the Coast facility until October 2014, and neither Coast nor Jones ever applied for or obtained the necessary permit.  The ECL and DEC regulations allow the temporary storage of petroleum contaminated soil (“PCS”) on site, but only for a period of 60 days.  Storage of PCS for longer than 60 days constitutes the operation of a solid waste management facility and requires a permit issued by DEC.   Solid waste management facilities are subject to strict operational and closure requirements to avoid the adverse impacts to public health and the environment associated with solid waste. 

Also according to statements made by prosecutor at arraignment, DEC’s investigation further revealed that on May 15 and 19, 2011, liquid runoff from the soil pile flowed across the Coast property and into a storm water drain on Dippold Avenue, which ultimately discharged into a tributary of Ley Creek.  Laboratory testing by DEC revealed that the liquid flowing into the storm water drain contained the hazardous substances benzene, toluene, ethyl-benzene, and xylene.

Additionally, on September 18, 2012, Jones allegedly directed a Coast employee to set up and operate an electric pump to discharge storm water that had accumulated in the Coast parking lot into another storm water drain, which also ultimately discharged into a tributary of Ley Creek.  Laboratory testing by DEC revealed that this storm water contained motor oil.  Jones and Coast allegedly discharged the oil laden storm water without having obtained a SPDES permit or having a Storm Water Pollution Prevention Plan in place, both of which are required by the ECL. 

The indictment filed today in Onondaga County Court charges Jones and his company with one felony and nine misdemeanor environmental law crimes.  The felony charge carries a prison sentence of up to four years in jail and a maximum fine of $75,000 per day.  The misdemeanor charges include one count of operating an unpermitted solid waste management facility, which carries a maximum jail sentence of up to one year and a maximum fine of $37,500 per day, and eight counts of Endangering Public Health, Safety or the Environment in the Fourth Degree, which carries a maximum jail sentence of up to one year and a maximum fine of $37,500.    

The DEC previously filed an administrative enforcement proceeding against both Jones and Coast in June 2011, related to improper dismantling of vehicles at the yard.  An Administrative Law Judge found that both Jones and Coast had failed to conduct proper “fluid draining, removal and collection activities” at the Coast facility and had intentionally released fluids and discharged “petroleum onto the ground at the facility.” Jones and Coast were assessed a civil penalty of thirty thousand dollars ($30,000). 

The charges against Jones and Coast are merely accusations and they are presumed innocent unless and until proven guilty in a court of law. 

The Attorney General thanks the DEC for their assistance in this investigation. 

Also assisting in the investigation was Investigator Joel Cordone of the New York State Office of the Attorney General and Deputy Chief Investigator Antoine Karam.  The Attorney General’s Investigations Division is led by Chief Dominick Zarrella. 

The case is being prosecuted by Assistant Attorney General Andrew Tarkowski of the Criminal Enforcement and Financial Crimes Bureau.  The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary Fishman and Deputy Bureau Chief Stephanie Swenton.  The Division of Justice is led by Executive Deputy Attorney General Kelly Donovan.

If you witness an environmental crime, contact the NYSDEC 24-hour Poacher and Polluter hotline at 1-844-DEC-ECOS (1-844-332-3267). 

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 28, 2016

New York City Press Office / 212-416-8060
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Twitter: @AGSchneiderman

A.G. SCHNEIDERMAN REACHES AGREEMENT WITH ZIPCAR FOR CHARGING THOUSANDS OF CONSUMERS DAMAGE FEES IN VIOLATION OF LAW 

Zipcar Failed To Provide Consumers With Opportunity To Dispute Damage Fees Before Charging Customers’ Accounts; Impacted Customers To Receive Full Restitution 

NEW YORK—Attorney General Eric T. Schneiderman today announced that his office has reached a settlement with the membership-based rental car company Zipcar, Inc. for routinely charging New York consumers damage fees for rental vehicles in violation of New York law. The law requires that consumers have an opportunity to dispute damage fees before they are assessed, but an investigation by the Attorney General’s Office found that, in some cases, Zipcar charged consumers damage fees before notifying consumers of suspected damage.

“Consumers should never learn that they have been accused of damaging a rental car when they see a surprise charge on their credit card statement,” said Attorney General Schneiderman. “New Yorkers have a right to contest damage fees before any penalties are assessed and my office will continue to enforce the law to ensure that customers are treated fairly.”

Zipcar’s membership contracts provide that consumers are liable for any damage to the rental vehicle that occurs while the car is in their possession – whether they cause the damage or not.  Zipcar failed to provide consumers with notice of the damage and the amount of liability, and an opportunity to inspect the damaged vehicle before charging for damage to the vehicle, as required by New York law.  Instead, when damage to a vehicle occurred, Zipcar conducted an investigation to determine which Zipcar member had the car reserved at the time the damage occurred.  It then notified the consumer it deemed responsible for the damage, and charged the consumer’s account for the damage – up to a limit of $1,000 – before the consumer had the opportunity to dispute the charge. Under this policy, Zipcar charged 5,000 New York consumers for damage to its vehicles from 2011 through 2015.

In one instance, Zipcar charged a consumer $750 for scratches on a car before it even notified the consumer of the damage.  When the consumer complained that the damage had not occurred at the time of his reservation, Zipcar reviewed the file but refused to refund the money it had charged.

Under the settlement with the Attorney General, Zipcar has agreed to refund any damage charges that were assessed against consumers who contested their responsibility for the vehicle damage.  Zipcar has also agreed to pay $35,000 in fees and costs to the Attorney General’s office.  In addition, Zipcar has agreed to comply with New York law, and not to charge consumers for damage to its vehicles unless they affirmatively agree that they are liable or Zipcar obtains a legal determination of liability.

Unlike the traditional rental car industry, which requires consumers to visit a centralized rental car location every time they want to rent a vehicle, Zipcar permits pre-approved consumers who sign a membership agreement and pay a membership fee to rent Zipcar cars on an hourly or daily basis without having to pick up the car at a rental car agency.  Zipcar members can pick up rental vehicles at a variety of locations, including street parking spots and commercial parking garages.  Zipcar charges consumers for each rental using the credit or debit card information maintained by the consumer on file.   

Consumers who were charged a damage fee in connection with their rental of a Zipcar vehicle may be eligible for a refund if they objected to liability at the time the damage fee was assessed.  Consumers can submit a claim online at www.ag.NY.gov/zipcar-inc-refund-program, or call the Attorney General’s office at 212-416-6045 to have a claim form sent to them or they can submit a request by mail.

The Zipcar investigation was handled by Assistant Attorney General Kate Matuschak, Special Assistant Attorney General Stephen Mindell, Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau.  The Consumer Frauds and Protection Bureau is part of the Division of Economic Justice, headed by Executive Deputy Attorney General Manisha Sheth. 

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 28, 2016

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
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Twitter: @AGSchneiderman

A.G. SCHNEIDERMAN AND GOVERNOR CUOMO ANNOUNCE FILING OF AMICUS BRIEF CHALLENGING NORTH CAROLINA'S DISCRIMINATORY ANTI-TRANSGENDER LAW

New York And Washington State Lead Coalition Of Ten States And The District Of Columbia In Filing A Friend-of-the-Court Brief Seeking To Prevent Enforcement Of North Carolina's So-Called “Bathroom Bill” 

Coalition And Two Additional States File Second Brief Opposing Texas’ Challenge Of Federal Guidance That Seeks To Prevent Transgender Discrimination In Public Schools

NEW YORK – Attorney General Eric T. Schneiderman and Governor Andrew M. Cuomo today announced that New York State is leading a coalition of ten states and the District of Columbia in challenging the blatantly discriminatory North Carolina law that limits the ability of cities and localities to protect the rights of transgender and non-gender-conforming people. Additionally, the coalition, along with two other states, filed a second court brief opposing the State of Texas's challenge to federal guidance allowing transgender students to use facilities consistent with their gender identity.

“Transgender people deserve to live with dignity, free from discrimination,” said Attorney General Schneiderman.“New York knows firsthand that forcing transgender students and workers to use facilities inconsistent with their gender identities is unnecessary, unworkable, and undermines the core American ideal of equal justice under law. My office will keep fighting every day to defend the fundamental guarantee of equal protection of the law for all Americans.”

"The kind of divisiveness and discrimination encouraged by this law directly undermine the core values of this nation,"Governor Cuomo said.“Just as in New York, this country's strength is found in our diversity and inclusiveness. At a time when so many are seeking to create rifts that separate Americans from one another, it is our responsibility to fight back and do all we can to bring this nation closer together.”

North Carolina's Public Facilities Privacy & Security Act, also known as North Carolina H.B.2, was enacted in March 2016 in reaction to a nondiscrimination ordinance in the city of Charlotte, which included protections against discrimination on the basis of gender identity. The North Carolina law mandates that local boards of education and public agencies require single-sex, multiple-occupancy bathrooms or changing facilities to be designated for use by—and used only by—persons based on their “biological sex.” The law defines “biological sex” as "the physical condition of being male or female, which is stated on a person's birth certificate."

In response to the discriminatory law, Governor Cuomo signed an executive order in March banning non-essential state travel to North Carolina. Attorney General Schneiderman also banned non-essential travel by Office of the Attorney General staff to North Carolina. In May, the United States sued North Carolina, its Governor, the North Carolina Department of Public Safety, the University of North Carolina, and the UNC Board of Governors, alleging that implementation and enforcement of H.B. 2 would violate three federal antidiscrimination statutes. New York and its coalition filed this brief in support of the United States suit, arguing that the experience of the states shows that the North Carolina law is not needed to protect safety and privacy rights, and the law instead will cause unjustified and unnecessary harm to transgender people.

New York is joined by nine other states in the brief including: Washington, California, Connecticut, Illinois, Maryland, Massachusetts, New Mexico, Oregon, and Vermont, and the District of Columbia.

This coalition was also joined by New Hampshire and Delaware in filing a second friend-of-the-court brief opposing the State of Texas's challenge to federal guidance that allows transgender students to use single-sex multiple-occupancy facilities consistent with their gender identity.

In May 2016, Texas and several other states filed suit in federal court challenging federal guidelines that direct public schools to allow individuals to use facilities that align with their gender identity. According to the federal Departments of Education and Justice, which issued the guidelines under a statute that extends federal antidiscrimination law to educational programs that receive federal funding, the guidelines are intended to ensure that “transgender students enjoy a supportive and nondiscriminatory school environment.” While Texas claims that the federal guidance poses a risk to the safety of the public, the coalition's brief again argues that no such harm has been demonstrated and that without this federal guidance, transgender people will be at risk of unjustified and unnecessary harm.

News from Attorney General Eric T. Schneiderman

A.G. SCHNEIDERMAN ANNOUNCES LAWSUIT AGAINST STATEN ISLAND AUTO DEALERSHIPS FOR ALLEGED DECEPTIVE PRACTICES THAT ILLEGALLY INFLATED CAR PRICES

Court Papers Charge Dealerships With Selling Undisclosed Products To Consumers, Including Illegal Credit Repair And Identity Theft Protection Services

 Schneiderman:  When Consumers Shop For A Car, They Should Not Be Misled By Deceptive Dealerships Looking To Make Illegal Profits

NEW YORK – Attorney General Eric T. Schneiderman today announced a lawsuit against two Staten Island dealerships owned by SG Hylan Motors Corp. d/b/a Honda of Staten Island, Staten Island Honda, Nissan of Staten Island and Staten Island Nissan (collectively “SG Hylan Motors”).  The lawsuit, filed in New York Supreme Court, alleges that SG Hylan Motors unlawfully sold “after-sale” products and services, including credit repair and identity theft protection services, to over 2,300 consumers. These extra products could sometimes exceed costs of $2,000 per consumer, and the charges were applied without the knowledge of the car buyer.

“When consumers shop for a car, they should not be misled by deceptive dealerships looking to saddle consumers with hidden costs,” said Attorney General Schneiderman. “Unfortunately, some dealers pad their pockets with fees for products and services that unaware consumers don’t need, and don’t want. We will continue to crackdown against car dealerships that seek to unfairly take advantage of ordinary New Yorkers.” 

According to the lawsuit, the SG Hylan Motors dealerships used deceptive sales tactics, including charging consumers for services while concealing such additional charges from the consumers, or by misrepresenting that the services were free.  In fact, consumers did not receive the credit repair and identity theft protection services for which they were charged. 

The court papers also allege that the SG Hylan Motors dealerships collected more than $2 million from consumers between 2011 and 2014 using these kinds of deceptive tactics.  The suit seeks a court order prohibiting the dealerships from engaging in such practices in the future and directing them to refund all illegally obtained overcharges to consumers.

SG Hylan Motors arranged with an independent company, called Credit Forget It, Inc., to sell credit repair and identity theft protection services beginning at least in 2011. It is a violation of state and federal law to charge upfront fees for services that promise to help consumers restore or improve their credit.  Contracts that violate the credit repair laws are void.

The court papers further allege that the SG Hylan Motors dealerships added on charges for other after-sale items like security systems and special tire protection services without clearly disclosing what they were charging for such services. The costs of these services were often bundled into the vehicle sales price and not separately itemized. As a result, unknown to the consumer, the price of the car stated on purchase and lease documents was inflated by the amount of these after-sale items or services.

This lawsuit is part of the Attorney General’s initiative to end the practice that automobile dealers call “jamming,” or charging consumers for hidden purchases.  In 2015, Attorney General Schneiderman announced a settlement with Credit Forget It, Inc., the company that purported to provide the credit repair and identity theft protection services.  Since 2015, the Attorney General has settled with 9 dealership groups for amounts totaling nearly $16 million in restitution and penalties.  Nearly 20,000 consumers were eligible for restitution under these settlements. 

The settlements include the following dealerships:

• Paragon Auto Dealership: a group of automobile dealers in Queens and Westchester counties, including Paragon Honda, Paragon Acura, and White Plains Honda
• Plaza Auto Dealership: a group of dealers located on Nostrand Avenue, Brooklyn, including, Plaza Toyota-Plaza Scion, Plaza Hyundai, Plaza Honda and Acura of Brooklyn
• Manfredi Auto Dealership: a group of dealers located on Hylan Blvd, Staten Island, including Manfredi Fiat and Fiat of SI, Manfredi Mitsubishi, Manfredi  Kia, Manfredi Hyundai, Manfredi Cadillac, Manfredi Chrysler Jeep & Dodge, Manfredi Fiat Inc., S.I. Toyota, Manfredi Toyota and Manfredi Scion, Manfredi Subaru, Manfredi Mazda and Staten Island Subaru
• Koeppel Auto Dealership: a group of dealers located in Jackson Heights, Long Island City and Woodside, Queens, including Koeppel Nissan, Inc.; LK Automotive Enterprises, LLC. d/b/a Koeppel Subaru, KL Auto Enterprises LLC. d/b/a Koeppel Mazda and Koeppel Volkswagen, Inc.
• L.I. Autoworld, Inc. d/b/a Generation Kia: located in Bohemia, Long Island
• Nissan 112:   located in Patchogue, Long Island
• Huntington Honda, Honda of New Rochelle and New Rochelle Toyota: located on Long Island and in Westchester counties
• Westbury Jeep Dodge and Fiat of Westbury: located in Westbury, Long Island
• Security Auto Sales, Inc. d/b/a Security Dodge: located in Amityville, Long Island

The office is continuing to investigate a number of other New York auto dealers that sold or sell after-sale services without the knowledge and consent of consumers. 

Consumers who believe they have been jammed with unwanted products or services in connection with a vehicle lease or purchase or who were sold Credit Forget It’s credit repair or identity theft protection services are urged to file complaints online or call 1-800-771-7755.

The case against the SG Hylan Motors dealerships is being handled by Assistant Attorney General Elena González, Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau, and the Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.

 News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 28, 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 ARREST OF FORMER NURSING HOME COUNSELOR FOR ALLEGED SEXUAL ABUSE OF RESIDENTS WHO SUFFERED FROM TRAUMATIC BRAIN INJURIES

Jacky Stanley Allegedly Used His Position To Gain Access To Impaired Residents

PEARL RIVER—Attorney General Eric T. Schneiderman today announced the arrest of Jacky Stanley, a former employee of Northeast Center for Special Care, for allegedly sexually abusing two residents of the facility, both of whom suffered from traumatic brain injuries. Northeast is one of the largest rehabilitation centers in the country specializing in persons with acquired traumatic brain injury.

“Committing sexual abuse against vulnerable New Yorkers is deplorable, and the allegations in this case are incredibly disturbing,” said Attorney General Schneiderman. “We will not allow individuals to exploit their role as caretakers in order to take advantage of those they are meant to protect. Those who commit acts of sexual abuse will be punished.”

Northeast offers care and rehabilitation to individuals who have suffered traumatic brain injuries caused by stroke, motor vehicle accidents, falls and other catastrophic events. Stanley was employed as a counselor at Northeast and was responsible for helping new residents acclimate to the Center. Stanley’s duties, as a “Neighborhood Counselor,” included managing the residents’ social environment and ensuring that residents participated in their required programs.

Between September and November 2014, Stanley allegedly used his position to gain access to a resident multiple times and forcibly perform sex acts on him, including oral sex. In February 2015, Stanley again allegedly used his entrusted position to perform oral sex on another resident while the resident slept. Stanley was suspended and then terminated from the facility based upon allegations of sexual abuse.

Stanley, 50, of Kingston, is charged with two counts of Criminal Sexual Act in the First Degree, a class B felony, five counts of Sexual Abuse in the First Degree, a class D felony, and related charges. He faces up to twenty-five years in prison. He was arraigned today before the Hon. Marsha S. Weiss in Ulster Town Court. Bail was set at $50,000 cash or $100,000 property bond. The charges against the defendant are merely accusations and the defendant is presumed innocent unless and until proven guilty.

The Attorney General thanks the Town of Ulster Police Department, particularly Detectives William Moylan and Joshua Normann, and the Northeast Center for Special Care for their assistance in this matter.  

The investigation was led by Investigators Frank Bluszcz and Peter Olsen with the assistance of Supervising Special Investigator Peter Markiewicz and Deputy Chief Kenneth Morgan. Special Assistant Attorney General William McClarnon of the Medicaid Fraud Control Unit’s Pearl River Regional Office is prosecuting the case under the supervision of Regional Director Anne Jardine. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations–Downstate. Director Amy Held and Assistant Deputy Attorney General Paul Mahoney lead MFCU. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 29, 2016

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A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT OF ALLEGED RINGLEADERS OF CHECK FRAUD SCHEME

Kevin Lee And Daniel Green Allegedly Cashed Over $100,000 In Fraudulent Checks As Part Of A Scheme To Defraud Account Holders And Local Credit Unions

Defendants Face A Maximum Of 10 To 20 Years In State Prison If Convicted

ONONDAGA COUNTY – Attorney General Eric T. Schneiderman announced the arraignment today of Kevin Lee (aka Kev Escobar) and Daniel Green (aka Lance Gambino) on a 19-count indictment charging them with issuing over $100,000 in fraudulent checks written in the name of a fictitious business as part of a scheme to defraud vulnerable account holders and small financial institutions.  Lee and Green are accused of convincing vulnerable individuals, many of whom were contacted over Facebook and other social media outlets, to deposit forged checks into their personal checking accounts. Lee and Green then allegedly drained the accounts of the available balances before the checks were returned and the financial institutions discovered them to be worthless.  The defendants are charged in Onondaga County Supreme Court with Grand Larceny, Forgery, and Identity Theft, among other charges. The defendants face a maximum of 10 to 20 years in state prison.

“These defendants allegedly attempted to line their own pockets by preying on vulnerable New Yorkers who were looking for an extra financial boost,” said Attorney General Schneiderman. “My office has zero tolerance for those who commit identity theft and seek to exploit local financial institutions that ordinary consumers rely on for stability.”

State Police Superintendent George P. Beach II said,  “These suspects are accused of using a devious scheme to victimize vulnerable people for their own gain. I commend the Attorney General and our Special Investigations Unit in Syracuse for their work on this case. It’s because of our strong partnership that we were able to bring charges and seek to hold these two suspects accountable for their alleged crimes.”

According to statements made by prosecutors in court today, Lee created phony bank accounts in the name of Jones Maintenance, a fictitious business in which Lee claimed to have an interest.  Thereafter, Lee and Green, relying heavily on Facebook and other social media outlets, allegedly targeted numerous financially vulnerable individuals—college students, young single parents, and other indigent, disadvantaged, and unwary young adults—to whom they issued forged checks in the name of that company. In exchange for depositing these forged checks in their accounts, the account owners were promised a portion of the check as a fee. After the checks were deposited and the funds cleared and became available, the defendants allegedly withdrew the money for their own personal use. In some instances, the defendants are accused of assuming the identities of the account holders, accessing their accounts, and withdrawing funds through ATM transactions using personal information the account holders had been required to provide for asserted security purposes.  As a result, the targeted financial institutions targeted were forced to devote resources to compensate account holders for the phony checks and fraudulently withdrawn funds.

Also according to prosecutors, between December of 2015 to May of 2016 alone, Lee and Green issued over $100,000 in fraudulent checks pursuant to this alleged scheme, primarily targeting small, local or regional credit unions and banks.

The Attorney General’s indictment charges Kevin Lee  with three counts of Grand Larceny in the Third Degree (a class D felony), three counts of Attempted Grand Larceny in the Third Degree (a class E felony), one count of Grand Larceny in the Fourth degree (a class E felony), six counts of Forgery or Criminal Possession of a Forged Instrument in the Second Degree (class D felonies), one count of Identity Theft in the First Degree (a class D felony), one count of Identity Theft in the Second Degree (a class E felony), one count of Falsifying Business Records in the First Degree (a class E felony), and one count of Scheme to Defraud in the First Degree (a class E felony). Daniel Green is charged with two counts of Grand Larceny in the Third Degree, one count of Attempted Grand Larceny in the Third Degree, two counts of Forgery in the Second Degree and one count of Scheme to Defraud in the First Degree.

Lee, 26, of Clay, and Green, 20, of Syracuse, were arraigned today in Onondaga County Court before the Honorable Judge Aloi; Lee is currently being held without bail, and Green is currently being held on $150,000 bond over $75,000 cash bail.

The charges against the defendants are allegations and they are presumed innocent until proven guilty in a court of law.

The Office of the Attorney General is continuing to investigate the alleged operation of this check cashing ring in other counties across the state, including Westchester, Rensselaer, Albany, Schenectady, Saratoga, Oneida, Broome, and Oswego counties.

The Office of the Attorney General thanks the New York State Police Special Investigations Unit – Syracuse and the Financial Crimes Unit for their invaluable assistance on this case.

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

The criminal case against Lee and Green is being handled by Assistant Attorneys General John R. Healy and Andrew Tarkowski of the Criminal Enforcement and Financial Crimes Bureau.  The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau 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 Joel Cordone and Deputy Chief Antoine Karam. Forensic accounting was performed by Associate Auditor Matthew Croghan under the supervision of Deputy Chief Auditor Sandy Bizzarro. The Investigations Bureau is led by Chief Dominick Zarrella.  The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
August 1, 2016

New York City Press Office / 212-416-8060
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A.G. SCHNEIDERMAN ANNOUNCES 50-COUNT INDICTMENT OVER ALLEGED FORGERY OF DAMAGE REPORTS IN WAKE OF SUPERSTORM SANDY; RELEASES RECOMMENDATIONS TO REFORM FEMA’S NATIONAL FLOOD INSURANCE PROGRAM

Matthew Pappalardo And Engineering Firm Hi Rise Engineering, P.C. Allegedly Altered Structural Damage Assessment Reports For Residential Properties Covered By The National Flood Insurance Program

Attorney General Releases Report Identifying Fundamental Flaws In Flood Insurance Program And Recommends Reforms To Increase Transparency And Accountability

Schneiderman: Today’s Charges Reveal A Flagrant Disregard For The Well-Being And Safety Of New Yorkers, And My Office Will Not Tolerate It

NEW YORK – Attorney General Eric T. Schneiderman announced today the unsealing of a 50-count indictment charging Matthew Pappalardo and his former employer, HiRise Engineering, P.C., with allegedly altering engineering reports prepared in connection with the assessment of structural damage of residential properties resulting from Superstorm Sandy.  Pappalardo and HiRise Engineering, P.C. (HiRise) are charged with 25 counts of Forgery in the Second Degree, a class D Felony; Pappalardo is also charged with 25 counts of Unauthorized Practice of Engineering, a class E Felony. In addition, Attorney General Schneiderman also announced today the release of a report identifying several fundamental flaws in the National Flood Insurance Program (NFIP), which includes recommendations to increase transparency and accountability.

“Fraudulently altering engineering reports undermines the integrity of the entire FEMA claims process, which homeowners and families rely upon in a time of crisis. Today’s charges reveal a flagrant disregard for the well-being and safety of New Yorkers, and my office will not tolerate it,” said Attorney General Schneiderman. “Along with our criminal investigation, my office has also released a reported calling on federal regulators and industry participants to enact reforms to ensure that the insurance claims process is more transparent, which will help protect homeowners against the alleged fraud that we have uncovered. When the next major storm hits, it’s crucial that families know exactly what kind of damage is covered by insurance, and that their claims are being handled professionally and reliably.”

In June 2014, counsel for owners of residential properties in New York that had incurred damage as a result of Superstorm Sandy reported alleged fraudulent alterations in engineering reports to the Office of the Attorney General (“OAG”).  In December 2014, the OAG’s Criminal Enforcement and Financial Crimes Bureau commenced a criminal investigation into the suspected unlicensed practice of professional engineering and forgery of engineering reports by engineering firms operating in Nassau County and elsewhere in New York. 

According to statements made by prosecutors at arraignment, after Superstorm Sandy in October 2012, HiRise, a Uniondale-based engineering firm, was contracted to perform structural engineering assessments for properties covered under the National Flood Insurance Program. HiRise, in turn, retained numerous licensed professional engineers to perform house inspections and prepare engineering reports. 

According to prosecutors, the original reports authored by the on-the-ground, subcontracted professional engineers were allegedly altered by employees of HiRise, under the direction of project manager Pappalardo.  Pappalardo and the other HiRise employees who made the alterations to the original reports did not personally inspect the damaged buildings and were not licensed to practice engineering in New York State. The altered reports were then allegedly submitted by HiRise, and ultimately provided to the adjusting firms, without the consent or approval of the underlying professional engineers. Federal flood claim administrators and adjusting firms then relied on these reports as part of their evaluation of coverage under the NFIP. 

Pappalardo, 38, and Hi Rise were arraigned today in Nassau County Supreme Court before the Honorable Robert G. Bogle.  Bail for Pappalardo was set at $20,000 cash over $40,000 bond.  

The charges against the defendants are allegations and they are presumed innocent until proven guilty in a court of law.  

In addition to the crimes charged in Nassau County, the Attorney General’s investigation into the damage assessment process after Superstorm Sandy has also uncovered evidence of other crimes which fall outside the scope of New York State’s jurisdiction.  As a result, the Attorney General has referred these findings to the United States Department of Justice. 

The Attorney General’s Report, entitled “Murky Waters:  Increasing Transparency and Accountability in the National Flood Insurance Program, Findings and Recommendations in the Wake of Superstorm Sandy,” identifies several fundamental flaws related to both the scope of coverage and the structural damage assessment process under the NFIP.  The report also calls for the immediate implementation of specific reforms. 

Flaws in the NFIP identified by the OAG include:

• A lack of clarity in the scope of coverage under the Standard Flood Insurance Policy;

• Inadequate training and lack of certification requirements for structural engineers retained in connection with flood claims; and

• Poor administration and supervision of the flood claims process, including the failure to provide important documentation to policyholders.

Reforms to the NFIP recommended by OAG include:

• Increase the transparency and clarify the scope of flood insurance coverage and any applicable exclusions, to provide consumers with a better understanding of what is and is not covered under their flood policy, through the creation of a plain language disclosure sheet;

• Provide policyholders with all documents created during the course of the flood claim administration process and ultimately relied upon in determining payment or denial of a flood claim, including all final adjuster and engineering reports, as a matter of course;

• Implement a national certification process for all engineers retained to provide structural damage assessments in the wake of a flood event; and

• Ensure the transparency of fees paid to engineering experts by implementing a standardized fee schedule for all engineering services.

Attorney General Schneiderman thanks the United States Department of Homeland Security, Office of the Inspector General for their valuable assistance on this investigation, including Special Agent in Charge Gregory K. Null, Assistant Special Agent in Charge Julio Santana, Special Agent in Charge of Headquarters Michael Dawson, Special Agent George Heitz and Special Agent Steven Tseng.

Attorney General Schneiderman also thanks the New York State Education Department, Office of Professions for their valuable assistance on this investigation.

The OAG investigation was conducted by Senior Investigator Michael Leahy and Investigator Anna Ospanova. The Supervising Investigator is Sylvia Rivera and the Deputy Bureau Chief is John McManus. The Investigations Division is led by Chief Investigator Dominick Zarrella.

The case is being prosecuted by Assistant Attorneys General Joseph D’Arrigo and Robert Miller of the Attorney General’s Criminal Enforcement and Financial Crimes Bureau.  The 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 original Consumer Frauds investigation was handled Assistant Attorney General Melvin L. Goldberg of the Consumer Frauds and Protection Bureau.  The Bureau is led by Bureau Chief Jane Azia. The Division of Economic Justice is led by Executive Deputy Attorney General Manisha M. Sheth.

Matthew Pappalardo y empresa de ingeniería HiRise Engeniring, P. C. supuestamente alteraron informes de evaluación sobre daños estructurales de inmuebles residenciales cubiertos por el Programa Nacional de Seguro de Inundación

El Fiscal General publica informe identificando fallas fundamentales en el Programa de Seguro de Inundación y recomienda reformas para aumentar la transparencia y rendición de cuentas

Schneiderman: La acusación de hoy revela una violación flagrante de bienestar y seguridad de los neoyorquinos y mi oficina no lo tolerará

NUEVA YORK - El Fiscal General Eric T. Schneiderman anunció hoy la revelación de un expediente con 50  cargos contra Matthew Pappalardo y su antiguo empleador, de HiRise Engineering, PC, por supuestamente alterar los informes de ingeniería preparados en relación con la evaluación de los daños estructurales de las propiedades residenciales resultantes del huracán Sandy. Pappalardo y de HiRise Ingeniería, P. C. (HiRise) están acusados de 25 cargos de Falsificación en Segundo Grado, un delito clase D; Pappalardo también está acusado de 25 cargos de práctica no autorizada de Ingeniería, un delito clase E. Además, el Fiscal General Schneiderman anunció hoy la publicación de un informe que identifica varios defectos fundamentales en el Programa Nacional de Seguro de Inundación (NFIP), que incluye recomendaciones para aumentar la transparencia y la rendición de cuentas.

"Alterar fraudulentamente los informes de ingeniería socava la integridad de todo el proceso de reclamos de FEMA, que los propietarios de viviendas y las familias dependen en un momento de crisis. Los cargos de hoy revelan una violación flagrante de bienestar y seguridad de los neoyorquinos, y mi oficina no lo va a tolerar ", dijo el Fiscal General Schneiderman. "Junto con nuestra investigación criminal, mi oficina también ha lanzado un comunicado pidiendo a los reguladores federales y participantes de la industria realizar reformas para asegurar que el proceso de reclamaciones de seguros es más transparente, lo que ayudará a proteger a los propietarios de viviendas contra del presunto fraude que hemos descubierto. Cuando la próxima gran tormenta llegue, es crucial que las familias sepan exactamente qué tipo de daño está cubierto por el seguro, y que sus demandas están siendo manejadas profesional y honestamente".

En junio de 2014, abogados de los dueños de las propiedades residenciales en Nueva York que habían sufrido daños como consecuencia de huracán Sandy informaron supuestas alteraciones fraudulentas en los informes de ingeniería a la Oficina del Fiscal General ("OAG"). En diciembre de 2014, el Buró de Ejecución Penal de Delitos Financieros de la Fiscalía General, inició una investigación criminal sobre la presunta práctica no autorizada de profesionales de ingeniería y falsificación de informes de ingeniería de las empresas de ingeniería que operan en el Condado de Nassau y en otros lugares en Nueva York.

De acuerdo con las declaraciones hechas por los fiscales en la lectura de cargos, tras el paso del huracán Sandy en octubre de 2012, HiRise, una firma de ingeniería con sede en Uniondale, fue contratada para llevar a cabo las evaluaciones de ingeniería estructural para las características cubiertas por el Programa Nacional de Seguro contra Inundación. HiRise, a su vez, contrató numerosos ingenieros profesionales con licencia para llevar a cabo inspecciones de las casas y preparar informes de ingeniería.

Según los fiscales, los informes originales escritos por los ingenieros profesionales subcontratados, habrían sido alterados por los empleados de HiRise, bajo la dirección del jefe de proyecto Pappalardo. Pappalardo y los otros empleados de HiRISE que hicieron las modificaciones en los informes originales no inspeccionaron personalmente los edificios dañados y no tenían licencia para practicar la ingeniería en el estado de Nueva York. Los informes fueron alterados luego fueron enviados por HiRise, y en última instancia proporcionados a las empresas de ajuste, sin el consentimiento o aprobación de los profesionales de la ingeniería. Administradores federales de reclamación de inundación y las empresas de ajuste a continuación, se basaron en estos informes como parte de su evaluación de la cobertura bajo el NFIP.

Pappalardo, de 38 años, y Hi Rise fueron procesados hoy en Tribunal Supremo del Condado de Nassau ante el Honorable Robert Vogle. La fianza para Pappalardo se fijó en $ 20,000 en efectivo o más de $ 40,000 bonos.

Los cargos contra los acusados son acusaciones y se presume inocente hasta que se pruebe su culpabilidad en un tribunal de justicia.

Además de los delitos imputados en el Condado de Nassau, la investigación del Fiscal General del proceso de evaluación de los daños después de huracán Sandy también ha descubierto pruebas de otros delitos que quedan fuera del alcance de la jurisdicción del Estado de Nueva York. Como resultado, el Fiscal General ha referido estos hallazgos al Departamento de Justicia de Estados Unidos.

El reporte del Fiscal General, titulado "Aguas Turbias: El aumento de la transparencia y rendición de cuentas en el Programa Nacional de Seguro contra Inundaciones, conclusiones y recomendaciones a raíz de huracán Sandy," identifica varios defectos fundamentales relacionados tanto con el alcance de la cobertura y el proceso de evaluación de daños estructurales en el marco el NFIP. El informe también pide la aplicación inmediata de reformas específicas.

Los defectos en el NFIP identificados en el reporte del Fiscal General incluyen:

• A falta de claridad en el alcance de la cobertura bajo la póliza de seguro estándar de inundación;
• Formación Inadecuada y la falta de requisitos de certificación para los ingenieros estructurales contratados en relación con las reclamaciones por inundación; y
• Mala administración y supervisión del proceso de reclamaciones por inundación, incluyendo el hecho de no presentar la documentación importante para los asegurados.
• Reformas recomendadas al NFIP en el reporte incluyen:
• Aumentar la transparencia y aclarar el alcance de la cobertura de seguro contra inundaciones y las exclusiones aplicables, para proporcionar a los consumidores una mejor comprensión de lo que está y no está cubierto por su póliza de inundación, a través de la creación de una hoja de divulgación con lenguaje sencillo;
• Proporcionar a los asegurados con todos los documentos creados durante el curso del proceso de administración de reclamos de inundaciones y en última instancia en que se basan para determinar el pago o la denegación de una solicitud de inundaciones, incluyendo todos los informes finales de ajuste y de ingeniería, como una cuestión de rutina;
• Implementar un proceso de certificación nacional para todos los ingenieros retenidos para proporcionar evaluaciones de daños estructurales en la estela de un evento de inundación; y
• Garantizar la transparencia de los honorarios pagados a los expertos en ingeniería mediante la implementación de un programa de tarifas estándar para todos los servicios de ingeniería.

El Fiscal General Schneiderman agradece al Departamento de Seguridad Nacional, Oficina del Inspector General de Estados Unidos por su valiosa ayuda en esta investigación, incluyendo el agente especial a cargo de Gregory K. Null, Agente Especial a cargo de Julio Santana, Agente Especial Michael Dawson, Agente Especial George Heitz y el Agente Especial Steven Tseng.

Fiscal General Schneiderman también gracias al Departamento de Educación del Estado de Nueva York, Oficina de las profesiones por su valiosa ayuda en esta investigación.

La investigación de la Fiscalía General fue llevada a cabo por el Investigador Superior Michael Leahy y la Investigadora Anna Ospanova. La Investigadora Supervisora es Sylvia Rivera y el Vice Jefe del Buró es John McManus. La Dirección de Investigación está a cargo del Investigador Principal Dominick Zarrella.

El caso está siendo procesado por los Fiscales Auxiliares Joseph D'Arrigo y Robert Miller de del Buró de Ejecución Penal y de Delitos Financieros. La Oficina está dirigida por el Jefe Gary T. Fishman y la Vice Jefe del Buró Stephanie Swenton. La División de Justicia Criminal está dirigida por la Fiscal General Ejecutiva Adjunta Kelly Donovan.

La investigación original de Fraude al Consumidor fue manejada de por el Fiscal Adjunto Melvin L. Goldberg del Buro Contra el Fraude y Protección al Consumidor. La Oficina está encabezada por la Jefa Jane Azia. La División de Justicia Económica es dirigida  por la Fiscal Ejecutiva Adjunta Manisha M. Sheth.

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
August 1, 2016

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A.G. SCHNEIDERMAN AND U.S. ATTORNEY HARTUNIAN ANNOUNCE $3.2M SETTLEMENT WITH ST. JOSEPH’S HOSPITAL FOR BILLING MEDICAID FOR MENTAL HEALTH SERVICES RENDERED BY UNQUALIFIED STAFF

St. Joseph’s Comprehensive Psychiatric Emergency Program’s Mobile Crisis Outreach Team Failed To Meet Mental Health Staffing Requirements 

Schneiderman: We Will Continue Working To Ensure That Psychiatric Patients Are Cared For By Qualified Personnel

NEW YORK – Attorney General Eric T. Schneiderman and United States Attorney Richard S. Hartunian today announced that St. Joseph’s Hospital Health Center (St. Joseph’s) will pay $3.2 million to resolve allegations that it violated the federal and New York False Claims Act by presenting false claims for payment to the state Medicaid program for mental health services rendered by unqualified staff.

Medicaid is a jointly funded federal-state program that provides health care to needy individuals.  St. Joseph’s operates a Comprehensive Psychiatric Emergency Program (CPEP) that provides evaluation and treatment to individuals suffering from an acute mental health crisis.  The CPEP’s “mobile crisis outreach” unit provides initial evaluation and assessment and crisis intervention services to individuals in Onondaga and Madison counties who are unable or unwilling to use hospital-based crisis intervention services in the emergency room.  The mobile crisis unit also provides interim crisis services for patients discharged from the emergency room who require follow up care from a mental health professional.

“Mental health staffing requirements are intended to protect the public and avoid the waste of public funds by ensuring that services are delivered by qualified personnel in a meaningful way,” said Attorney General Schneiderman.“We will continue to work with our federal partners to fight to recover misappropriated money on behalf of New York’s taxpayers.” 

New York State has issued regulations governing the staffing of CPEPs.  The regulations provide that at least two CPEP staff members, one of whom must be a member of the professional staff, shall be present whenever crisis intervention services are rendered outside of an emergency room.  Professional staff includes credentialed alcohol counselors, physicians, psychiatrists, psychologists, registered professional nurses, rehabilitation counselors and social workers.  The regulations condition payment of claims for CPEP services on compliance with these staffing requirements, making clear that use of qualified staff is a prerequisite to government payment of Medicaid claims for these services.

“Today’s settlements reflect my office’s commitment to protecting central New York’s most vulnerable citizens, including those in crisis,” said U.S. Attorney Hartunian.  “We will continue to use the False Claims Act to protect health care beneficiaries and the federal fisc by ensuring that taxpayers do not pay for services rendered by unlicensed or unqualified individuals.”

Today’s settlements resolve allegations that St. Joseph’s knowingly presented false claims for payment to Medicaid for mobile-crisis outreach services rendered from January 1, 2007 through February 29, 2016 by personnel who failed to satisfy the basic CPEP staffing requirements.  By submitting claims for payment to Medicaid without disclosing that its CPEP staff failed to meet the regulatory staffing requirements, and by accepting payment for these claims, the governments allege that St. Joseph’s misrepresented its compliance with mental health staffing requirements that are central to the provision of counseling services and, by doing so, violated the False Claims Act.  As part of today’s settlements, St. Joseph’s admits that it was improper to have conducted mobile crisis outreach visits without a member of its CPEP professional staff present and then bill Medicaid for such services.

“Individuals that receive mental health services deserve to be treated by properly qualified providers, something St. Joseph’s failed to ensure,” said Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region (“HHS-OIG”).  “HHS-OIG is committed to protecting the taxpayers and the federally funded health care programs intended for the nation’s most vulnerable citizens.”

This investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the federal and New York False Claims Acts, which allow private persons, known as “relators,” to file civil actions on behalf of the government and share in any recovery.  The relator in this case will receive $560,000 of the settlement proceeds after full payment by St. Joseph’s.  The case is docketed with the U.S. District Court for the Northern District of New York under number 5:14-cv-850.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the New York State Attorney General’s Office, and HHS-OIG.  The United States was represented by Assistant U.S. Attorney Adam J. Katz. 

The state case was handled by Special Assistant Attorney General Jill D. Brenner and Principal Auditor Investigator Michael Beers.  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
August 2, 2016

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A.G. SCHNEIDERMAN ANNOUNCES ARREST OF FOUR NURSING HOME STAFFERS FOR ALLEGED FAILURE TO PROVIDE CARE TO A 94 YEAR-OLD RESIDENT

Lorraine Caldwell, Amanda Gus, Sarah Schuyler And Donna Gray Allegedly Left Resident In A Recliner For 41 Hours 

Schneiderman: We Will Bring To Justice Caregivers Who Ignore The Law By Hurting And Neglecting Patients

COOPERSTOWN – Attorney General Eric T. Schneiderman today announced the arrest and arraignment of four former employees of Focus Rehabilitation and Nursing Center (Focus) Lorraine Caldwell, Licensed Practical Nurse (L.P.N.), 54 years old from Holland Patient, NY, Amanda Gus,  L.P.N., 30 years old from Hartwick, NY, Sarah Schuyler, Certified Nurse Assistant (C.N.A.), 29 years old from Mohawk, NY, and Donna Gray, C.N.A., 48 years old from Sidney, NY on charges alleging that they each failed to provide care to a 94 year old resident over the Memorial Day weekend this year.

“Our healthcare workers have a basic duty to care for their patients, to provide required care, keep them safe and not to injure them,” Attorney General Schneiderman said. “My office will bring to justice caregivers who hurt and neglect patients, who ignore the law and safety protocols, and who falsify records to cover up their crimes.” 

For over 41 hours over Memorial Day weekend while she was a resident at Focus, resident M.P. was allegedly left in a recliner and received substandard care.  During this period of time, staff members allegedly failed to administer medications and fulfill basic necessities like providing food and incontinence care with the exception of one meal, one round of medications, and one change of her briefs. All of this was captured by a facility video camera.  At the end of the 41 hour period, the resident was removed from the recliner, returned to her room and diagnosed with a pressure sore measuring 4 cm x 2 cm.   Defendants Lorraine Caldwell, Amanda Gus and Sarah Schuyler were arraigned on various felony charges of Falsifying Business Records, Endangering the Welfare of an Incompetent or Physically Disabled Person in the First Degree, as well as the misdemeanor charge of Wilful Violation of Health Laws, and defendant Donna Gray was arraigned on the misdemeanor charge of Wilful Violation of Health Laws, before Honorable Gary Kuch in Otsego Town Court.  The defendants were released on their own recognizance.

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

The investigation was conducted by Investigators Danette Benson and Michael Connelly of Albany’s Medicaid Fraud Control Unit with the assistance of Medical Analyst Stephanie Keyser, Supervising Investigator Dianne Hart and Upstate Deputy Chief Investigator William Falk. 

This case was handled by Regional Director Kathleen Boland and Special Assistant Attorney General Erin Lynch of the Albany Regional Office Medicaid Fraud Control Unit of the Office of the Attorney General. Catherine Wagner is MFCU's Upstate Chief of Criminal Investigations. The New York Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul Mahoney.  The Criminal Justice Division is led by Kelly Donovan.

Newsfrom Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
August 3, 2016

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A.G. SCHNEIDERMAN ISSUES CEASE AND DESIST LETTERS DEMANDING COMPANIES STOP FALSELY ADVERTISING INEFFECTIVE PRODUCTS AS “ZIKA-PREVENTIVE”

A.G. And NYC Health Commissioner Warn Consumers About Deceptive Ads For Zika Prevention Products That Don’t Work, Advises On Evidence-Based Zika Prevention Measures Consumers Can Take

Schneiderman: My Office Will Not Tolerate Deceptive Advertising Of Products That Provide Only A False Sense Of Security Against A Real Threat

NEW YORK—Attorney General Eric T. Schneiderman today announced that his office issued cease and desist letters to seven companies that market products with claims that the products prevent or protect against Zika virus even though the products are known to be ineffective for that purpose. The letters demand that the companies selling these products stop advertising them as “Zika-protective” or “Zika-preventive.” The Attorney General also issued a consumer alert warning New Yorkers about the deceptive ads and directing them to evidence-based Zika prevention measures that have been recommended by public health authorities. Attorney General Schneiderman was joined for the announcement by NYC Health Commissioner Dr. Mary T. Bassett and State Senator Adriano Espaillat.

“New Yorkers are understandably concerned about Zika virus and looking for ways to protect themselves and their families,” Attorney General Schneiderman said. “Unfortunately, some companies are taking advantage of public concern about Zika to peddle products that simply don’t work. My office will not tolerate deceptive advertising of products that provide only a false sense of security against a real threat.”

State Senator Adriano Espaillat said, “It is completely unacceptable for companies to deceive their customers, and it is particularly heinous when their deception could negatively impact the public's health.  I am proud to join Attorney General Eric T. Schneiderman, a tireless consumer advocate, to tell these companies that we will not tolerate these practices in New York.”

“The only products that provide effective protection from mosquito bites contain DEET, picaridin, oil of lemon eucalyptus, and an insect repellent called IR3535 – all other products are a waste of money and may put you at risk of being bitten,” said Health Commissioner Dr. Mary T. Bassett.“We continue to remind women who are pregnant or trying to become pregnant to not travel to a Zika-affected area – that includes most of Latin America and the Caribbean, and a neighborhood in Miami, Florida. Because of the risk of sexual transmission, partners of pregnant women should consider staying away from these areas, too.”

Each of the seven companies that were issued cease and desist letters advertised either ultrasonic devices or botanical oil-based products with claims that the products would prevent or protect against Zika virus by repelling mosquitoes even though the products contain no EPA-registered insect repellents with at least one of the five CDC-recommended active ingredients. The makers of ultrasonic devices claim that they repel mosquitoes by emitting a high frequency buzz. Numerous scientific studies have found that ultrasonic devices do not repel mosquitoes, and may even attract mosquitoes. The makers of botanical oil-based products, including wrist bands, bracelets, patches and stickers, claim that products contain ingredients that repel mosquitoes. Common botanical ingredients, including oil of geranium, cedar, lemongrass, soy and citronella and are not EPA-registered insect repellents with at least one of the five CDC-recommended active ingredients, and the New York State Department of Health has warned that these products have limited effectiveness in repelling mosquitoes. 

Zika virus is primarily spread by infected mosquitoes, although it can also be spread by sexual contact or blood contact. Zika virus can cause symptoms including mild fever, rash, joint pain, and conjunctivitis (red eyes). Zika poses a serious threat to women who are pregnant, or trying to become pregnant, because it may cause microcephaly, a serious birth defect that affects brain development.

To prevent bites from potentially infected mosquitoes, the Centers for Disease Control recommend that consumers use only EPA-registered insect repellents with at least one of the five CDC-recommended active ingredients. These repellents contain ingredients that have been clinically proven to effectively repel mosquitoes.

Attorney General Schneiderman advised consumers to avoid ultrasonic and botanical mosquito repellents, as well as Vitamin B-based repellents, which have also been found to be ineffective. Products that are currently being sold to New York consumers that claim to prevent the Zika virus, even when these products contain none of CDC-approved active ingredients include:

• Wildheart Outdoors Natural Mosquito Repellent Bracelet
• MosQUITo Repellent Bracelet Wristband Band
• Neor Mosquito Repellent Bracelet
• Kenza High Quality Zika Mosquito Repellent Smiley Patch
• Mobile Pro Gear ZIKA Shield Mosquito Repellent Bands
• STAR Ultrasonic Pest Repeller
• iGear iGuard 2.0 Ultrasonic Insect Pest Repellent

Instead, the Attorney General advised consumers to look for EPA-registered insect repellents containing at least one of the following active ingredients: DEET, Picaridin (also known as KBR 3023, Bayrepel and icaridin), IR3535, Oil of Lemon Eucalyptus, and Para-Menthane-Diol. Only products containing at least one of these ingredients have been recommended by the CDC as the safe and effective way of protecting against the Zika virus.

Consumers should also be aware that there is no cure for the Zika virus as of this date, and products claiming to be cures are deceptive.

New York consumers are also advised to follow these CDC recommendations to protect against the Zika virus:
 

• Avoid travel in areas with active mosquito-borne transmission of the Zika virus. These areas can be found on the CDC’s website.
• If one must travel to one of the identified areas, consumers should:
  • Wear pants and long sleeves,
  • Stay in places with air conditioning and screens on windows and doors,
  • Sleep under mosquito bed nets, and
  • Treat clothing with permethrin or purchase pre-treated clothing.
    

According to the New York City Department of Health, as of July 15 there were 346 reported cases of Zika in New York City. However, if experiencing symptoms associated with Zika, consumers are strongly encouraged to visit their healthcare provider immediately.  

El Fiscal General advierte a los consumidores acerca de engañosos anuncios de productos de prevención del Zika que no funcionan; emite consejos sobre medidas de prevención, basadas en evidencia, que los consumidores pueden tomar 

Schneiderman: Mi oficina no tolerará publicidad engañosa de los productos que sólo proporcionan una falsa sensación de seguridad contra una amenaza real

NUEVA YORK-El Fiscal General Eric T. Schneiderman anunció hoy que su oficina emitió cartas de cesar y desistir a siete empresas que comercializan productos con afirmaciones de que previenen o protegen contra el virus Zika a pesar de que se sabe que dichos productos son ineficaces para tal fin. Las cartas exigen que las compañías que venden estos productos dejen de hacer publicidad como "protectores del Zika" o "preventivos del Zika" El Fiscal General también emitió una alerta al consumidor advirtiendo a los neoyorquinos sobre los anuncios engañosos y los exhorta a tomar medidas de prevención de Zika basadas en la evidencia que han sido recomendadas por las autoridades de salud pública. El Fiscal General Schneiderman fue acompañado durante el anuncio hecho por el Senador Estatal Adriano Espaillat.

"Los neoyorquinos están justificadamente preocupados por el virus Zika y buscan formas de protegerse a sí mismos y sus familias", dijo el Fiscal General Schneiderman. "Desafortunadamente, algunas compañías están tomando ventaja de la preocupación pública por el Zika para vender los productos que simplemente no funcionan. Mi oficina no tolerará la publicidad engañosa de productos que proporcionan solamente una falsa sensación de seguridad frente a una amenaza real".

"Es completamente inaceptable que empresas engañen a sus clientes, y es particularmente atroz cuando su engaño podría impactar negativamente la salud pública", dijo el senador estatal Adriano Espaillat (D-Manhattan / Bronx). Estoy orgulloso de unirme a Fiscal General Eric T. Schneiderman, un incansable defensor de los consumidores, en decirle a estas empresas que no vamos a tolerar estas prácticas en Nueva York.

"Los únicos productos que proporcionan una protección eficaz contra las picaduras de mosquitos contienen DEET, picaridin, aceite de eucalipto de limón, y un repelente de insectos llamado IR3535 - todos los demás productos son una pérdida de dinero y pueden ponerle en riesgo de ser picado" dijo la Comisionada de Salud Dra. Maria T. Bassett. "Seguimos recordándole a las mujeres que están embarazadas o tratando de quedar embarazadas no viajar a un área afectada por el Zika - que incluye la mayor parte de América Latina y el Caribe, y un barrio en Miami, Florida. Debido al riesgo de transmisión sexual, parejas de las mujeres embarazadas deben considerar mantenerse alejados de estas áreas también".

Cada una de las siete empresas a las que se emitieron cartas de cese y desista anunciaron, ya sea dispositivos ultrasonido o productos a base de aceites botánicos, afirmando que los productos podrían prevenir o proteger contra el virus Zika al repeler los mosquitos a pesar de que los productos no contienen repelentes de insectos registrados por la EPA. Los fabricantes de los dispositivos ultrasónicos afirman que repelen los mosquitos emitiendo un zumbido de alta frecuencia. Numerosos estudios científicos han encontrado que los dispositivos ultrasónicos no repelen los mosquitos, e incluso pueden atraer a los mosquitos. Los fabricantes de productos a base de aceites botánicos, incluyendo pulseras, brazaletes, parches y pegatinas, afirman que los productos contienen ingredientes que repelen los mosquitos. Ingredientes botánicos comunes, incluyendo el aceite de geranio, cedro, hierba de limón, soja y citronella y repelentes de insectos no están registrados por la EPA y el Departamento de Salud del Estado de Nueva York ha advertido que estos productos tienen una eficacia limitada para repeler los mosquitos.

El virus del Zika se propaga principalmente por mosquitos infectados, aunque también se puede transmitir por contacto sexual o por contacto con la sangre. El virus Zika puede causar síntomas que incluyen fiebre leve, sarpullido, dolor en las articulaciones y conjuntivitis (ojos rojos). El Zika supone una seria amenaza para las mujeres que están embarazadas, o están tratando de quedar embarazadas, ya que puede causar microcefalia, un defecto congénito grave que afecta el desarrollo del cerebro.

Para evitar las picaduras de mosquitos potencialmente infectados, los Centros para el Control de Enfermedades recomiendan que los consumidores utilicen repelentes de insectos solamente registrados por la EPA. Estos repelentes contienen ingredientes que han sido probados clínicamente efectivos para repeler los mosquitos.

El Fiscal General Schneiderman aconsejó a los consumidores evitar repelentes de mosquitos por ultrasonidos y botánicos, así como repelentes a base de vitamina B, que también se han encontrado ser ineficaces. Los productos que actualmente están siendo vendidos a los consumidores de Nueva York que pretenden evitar el virus Zika, incluso cuando estos productos no contienen ninguno de los ingredientes activos aprobados por los CDC incluyen:

• Wildheart Outdoors Natural Mosquito Repellent Bracelet
• MosQUITo Repellent Bracelet Wristband Band
• Neor Mosquito Repellent Bracelet
• Kenza High Quality Zika Mosquito Repellent Smiley Patch
• Mobile Pro Gear ZIKA Shield Mosquito Repellent Bands
• STAR Ultrasonic Pest Repeller
• iGear iGuard 2.0 Ultrasonic Insect Pest Repellent

En su lugar, el Fiscal General aconsejó a los consumidores a buscar repelentes de insectos registrados por la EPA que contienen al menos uno de los siguientes principios activos: DEET, Picaridin (también conocido como KBR 3023, Bayrepel y icaridina), IR3535, aceite de eucalipto de limón, y Para- mentano-diol. Sólo los productos que contienen al menos uno de estos ingredientes han sido recomendados por el CDC como la manera segura y eficaz de protección contra el virus Zika.

Los consumidores también deben ser conscientes de que no existe una cura para el virus Zika hasta el momento, y productos que dicen ser curas son fraudulentos. También se recomienda a los consumidores de Nueva York seguir estas recomendaciones del CDC para protegerse contra el virus Zika:

• Evitar los viajes a zonas activas con transmisión por mosquitos del virus Zika. Estas áreas se pueden encontrar en el sitio web de los CDC. • Si hay que viajar a una de las áreas identificadas, los consumidores deben: o Usar pantalones y camisas de manga larga, - Permanecer en lugares con aire acondicionado y mallas en las ventanas y puertas, o descansar bajo mosquiteros, y o Tratar su ropa con Permetrina o la compra de ropa pre-tratada.

De acuerdo con el Departamento de la ciudad de Nueva York de la Salud, el 15 de julio hubo 346 casos reportados de Zika en la ciudad de Nueva York. Se recomienda que si experimenta síntomas asociados con Zika, visitar su proveedor de atención médica inmediatamente.

Newsfrom Attorney General Eric T. Schneiderman

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August 3, 2016

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A.G. SCHNEIDERMAN ANNOUNCES GUILTY PLEA OF NYS EMPLOYEE FOR STEALING NEARLY $2.4M IN STATE FUNDS THROUGH BRIBERY SCHEME

NEW YORK - Attorney General Eric T. Schneiderman today announced that Keisha Relf Davis, a New York State Department of Education vocational counselor, pleaded guilty to taking part in a scheme that stole over $2.3 million from New York State. In September 2014, a Bronx County grand jury indicted Relf Davis and three co-defendants. Two co-defendants, Juan Cabrera and Juani Ortiz, previously pleaded guilty to Grand Larceny charges. The remaining co-defendant, Steven Washington, is awaiting trial. As a result of her plea, the judge is expected to sentence Relf Davis to 2 to 6 years in state prison. The plea was unsealed by the court today. 

“This scheme drained millions from a state program intended to help vulnerable New Yorkers,” said Attorney General Schneiderman. “Government employees must be held to the highest standards, and my office will remain vigilant against those who seek to exploit the system for their own financial gain.”

As part of the scheme, Relf Davis, in exchange for cash bribes, approved students for the Office of Adult Career and Continuing Education Services’ Vocational Rehabilitation Program (“ACCES-VR”), although these students never applied to the program. The ACCES-VR program was created to help eligible New Yorkers with disabilities and functional limitations gain self-dependence through education, training, and employment. Relf Davis knew that the students she approved did not have disabilities or functional limitations to qualify for this program.

From approximately October 2010 through March 2013, in Bronx County and elsewhere in New York, Relf Davis and others agreed to steal over one million dollars from the ACCES-VR program. When students sought on-the-road commercial driver’s license (“CDL”) training lessons at Roadway and Americana, the co-defendants required the students to provide a copy of their driver’s license and social security card. In addition, students were required to pay $300 to $500 in cash for the lessons. These cash payments were paid directly to Relf Davis as bribes. Over the course of the scheme, each driving school paid Relf Davis over $10,000 in bribes.

In exchange for the cash bribes, Relf Davis agreed to fraudulently fill out an application for ACCES-VR services on behalf of each Roadway and Americana student for whom she received a driver’s license and social security card by the co-defendants. She forged multiple student signatures and falsely indicated that the students suffered from substance abuse problems, when they did not. For each student Relf Davis approved to receive CDL training at Roadway or Americana, Relf Davis agreed to approve payments from ACCES-VR to the driving schools ranging from approximately $3,900 to $4,930, without requiring documentation or evidence that the schools provided the services contained in the proposals or vouchers.

Relf Davis and others knowingly filed false and forged documents with the State Education Department and with ACCES-VR. Specifically, they falsely filed: applications; certifications of vocational services eligibility; proposals; and vouchers with certifications that Roadway and Americana provided 50 hours of classroom instruction, 40 hours of theoretical instruction, and 35 hours of on-the-road training services for the ACCES-VR purported consumers. Roadway and Americana did not provide these services to the students. The services that students received from the schools were worth far less than the amount that ACCES-VR paid.

The Attorney General’s office thanks the Department of Education for their assistance in this case.

Relf Davis plead guilty to Grand Larceny in the First Degree in the New York Supreme Court for Bronx County before Judge Steven Barrett.

Prosecuting the case are Assistant Attorneys General Kevin B. Frankel and Travis Hill of the Attorney General’s Public Integrity Bureau, under the supervision of Bureau Chief Daniel Cort and Deputy Bureau Chief Stacy Aronowitz. The investigation was handled by Investigator Angel Laporte of the Attorney General’s Investigations Bureau, under the supervision of Deputy Chief Investigator John McManus. The Investigations bureau is led by Chief Dominick Zarrella. Associate Forensic Auditor Matthew A. Croghan assisted in the investigation under the supervision of Forensic Audit Section Chief Edward J. Keegan, Jr. Legal support analyst Katharine Litka of the Public Integrity Bureau also assisted in the investigation. The Criminal Division is led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan. 

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August 3, 2016

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STATEMENT FROM A.G. SCHNEIDERMAN ON DAILY FANTASY SPORTS LEGISLATION SIGNED INTO LAW BY GOVERNOR CUOMO TODAY

NEW YORK—Attorney General Eric T. Schneiderman issued the following statement on daily fantasy sports:

“As I've said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law and protect New Yorkers from illegal or unscrupulous conduct.  Today, the Governor has signed a bill that amends the law in order to legalize daily fantasy sports contests, with consumer protections for New York players. I will enforce and defend the new law. Our false advertising and consumer fraud claims for past misconduct by Draft Kings and Fan Duel will continue to move forward.”

NUEVA YORK-El Fiscal General Eric T. Schneiderman emitió la siguiente declaración sobre deportes de fantasía:

“Como he dicho desde el principio de la investigación de mi oficina sobre los deportes de fantasía diarios, mi trabajo es hacer cumplir la ley y proteger a los neoyorquinos de conducta ilegal o sin escrúpulos. Hoy en día, el gobernador ha firmado un proyecto de ley que modifica la ley con el fin de legalizar las apuestas de deportes de fantasía, con protecciones al consumidor para los jugadores de Nueva York. Voy a cumplir y defender la nueva ley. Nuestras demandas sobre publicidad falsa y de fraude al consumidor por la mala conducta Draft Kings y Fan Duel continuarán hacia adelante".

Newsfrom Attorney General Eric T. Schneiderman

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August 4, 2016

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A.G. SCHNEIDERMAN AGREEMENT ENDS NON-COMPETE AGREEMENTS FOR EMPLOYEES OF NATIONAL MEDICAL INFORMATION SERVICES COMPANY EMSI 

Agreement Follows Complaint From A Former Non-Managerial Employee Who Was Unable To Accept A Better Job Because Of Onerous Requirement 

NEW YORK – Attorney General Eric T. Schneiderman today announced that Examination Management Services, Inc. (EMSI), a nationwide medical information services provider headquartered in Texas, agreed to stop using non-compete agreements for most employees in New York. The non-compete agreements prohibited all employees from working for competitors after leaving the company, regardless of whether they had access to trade secrets or other sensitive information. All New York employees were required to sign such a non-compete agreement.

“Restricting rank-and-file workers from being able to find other jobs is unjust and inappropriate,” said Attorney General Schneiderman. “Workers should be able to change jobs without fear of being sued by their prior employer.” 

Prior to today’s agreement, EMSI’s mandatory non-compete agreements prohibited employees, for nine months after leaving the company, from working for competitors within fifty miles of any location where they worked for EMSI. Nearly all EMSI employees in New York work in non-senior level positions whose jobs involve traveling extensively around the state to conduct routine physical examinations, draw blood, and collect bodily specimens for lab testing.

The Attorney General received a complaint from a former EMSI employee, a phlebotomist who drove long hours to individual homes and offices around upstate New York performing physical examinations and collecting specimens. She was offered a job by a clinical laboratory company that offered more regular hours, higher pay, and no travel requirements, but the offer was rescinded when the company discovered she was subject to a non-compete with EMSI. When the Attorney General intervened, EMSI agreed to release the former employee from her non-compete and to end its use of non-competes for all regular employees.  

Under today’s agreement, EMSI will no longer require employees in New York (other than top executives, such as directors and officers) to sign non-compete agreements that cover employment opportunities after they stop working for EMSI. EMSI will also notify all current employees, and all former employees who left within the last nine months, that the non-compete agreement is no longer in effect.

“I am grateful to Attorney General Schneiderman for looking into this issue,” said Margaret Beebe, the former EMSI employee. “Now that I am released from my non-compete with EMSI, I can look for a good, stable job in my field without worrying about having a non-compete agreement.”

New York law does not permit the use of non-compete agreements, except in very limited circumstances, such as when an employee has unique skills or access to trade secrets. In June, the Attorney General obtained similar settlements with Jimmy John’s and Law 360.  The U.S. Treasury Department and the White House recently issued reports that criticized the negative effects of non-competes, and described legislation in other states that limits or prohibits non-competes altogether.

Employees who believe they are subject to an unlawful non-compete agreement are encouraged to contact the New York Attorney General’s office at 212.416.8700 or noncompete@ag.NY.gov with questions or concerns.

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

 Newsfrom Attorney General Eric T. Schneiderman

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August 4, 2016

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A.G. SCHNEIDERMAN ANNOUNCES $125 MILLION SETTLEMENT WITH DRUG COMPANY THAT IMPEDED COMPETITION BY GENERIC PRESCRIPTION MAKERS

Settlement With Manufacturer Of Provigil Recovers Money For Consumers And State Of New York 

Schneiderman:  New York Led This Effort To Ensure That Money Gets To Those Who Overpaid Because Of Anticompetitive Conduct

NEW YORK – Attorney General Eric T. Schneiderman today announced a $125 million, 48-state settlement with drug manufacturer Cephalon and affiliated companies (“Cephalon”), now part of Teva Pharmaceutical Industries.  The settlement ends a multistate investigation into anticompetitive conduct by Cephalon to protect the profits it earned from having a patent-protected monopoly on the sale of its landmark drug, Provigil.  Cephalon’s conduct delayed generic versions of Provigil from entering the market for several years.

“When pharmaceutical companies put profits ahead of people by illegally restricting competition, it harms patients across our state,” said Attorney General Schneiderman. “This misconduct which drives up the cost of prescription drugs will not be tolerated.”

As patent and regulatory barriers that prevented generic competition to Provigil neared expiration, an investigation found that Cephalon intentionally defrauded the Patent and Trademark Office to secure an additional patent, which a court subsequently deemed invalid and unenforceable.  Before that court finding, Cephalon was able to delay generic competition for nearly six additional years by filing patent infringement lawsuits.  Cephalon settled those lawsuits by paying competitors to delay sale of their generic versions of Provigil until at least April 2012.  Because of that delayed entry, consumers, states, and others paid hundreds of millions more for Provigil than they would have had generic versions of the drug launched by early 2006, as expected. 

The settlement includes $35 million for distribution to consumers who bought Provigil.  New York’s total recovery will be: (1) $6 million in compensation to certain state entities and others who bought off of state contracts; (2) an estimated $3.1 to $4.8 million for distribution to New York consumers who purchased Provigil; and (3) $1.3 million for disgorgement and costs. 

This multistate settlement was facilitated by Federal Trade Commission litigation against Cephalon.  In May 2015, the FTC settled its suit against Cephalon for injunctive relief and $1.2 billion, which was paid into an escrow account.  The FTC settlement allowed for those escrow funds to be distributed for settlement of certain related cases and government investigations.

The settlement is subject to court review, including providing consumers with notice and an opportunity to participate in, object to, or opt out of settlement.  The states expect court review will be provided by Judge Mitchell Goldberg of the Eastern District of Pennsylvania, who is overseeing other litigation concerning Provigil against Cephalon and others.

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August 4, 2016

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A.G. SCHNEIDERMAN ANNOUNCES COMPANIES STOP DECEPTIVELY ADVERTISING “ZIKA-PREVENTIVE” PRODUCTS FOLLOWING CEASE AND DESIST LETTERS SENT BY OFFICE

Changes Come Less Than A Day After Attorney General Schneiderman Demanded Seven Companies Stop Their Deceptive Advertising

NEW YORK—Attorney General Eric T. Schneiderman announced today that six of the seven companies that received cease and desist letters from his office for deceptively marketing products as “Zika-preventive” have reformed their advertising. The companies had marketed their products with claims that they prevented or protected against Zika virus, even though the products are known to be ineffective for that purpose. The removal of the misleading advertising claims yesterday comes less than 24 hours after the Attorney General commenced action. Some of the companies have completely removed their products online.

“I am pleased that the action my office undertook has led to the immediate removal of nearly all the deceptive Zika-related claims that we targeted. We won’t let fraudsters take advantage of a public health crisis, and this should serve as a warning to other companies who seek to engage in the same dishonest practices. I urge consumers to educate themselves about the repellents that will actually protect you against Zika to avoid being fooled by these outrageous scams,” said Attorney General Schneiderman.

• Wildheart Outdoors Natural Mosquito Repellent Bracelet
• MosQUITo Repellent Bracelet Wristband Band
• iGear iGuard 2.0 Ultrasonic Insect Pest Repellent
• Kenza High Quality Zika Mosquito Repellent Smiley Patch
• Mobile Pro Gear ZIKA Shield Mosquito Repellent Bands
• STAR Ultrasonic Pest Repeller

The Attorney General’s investigation remains ongoing. Read more here.