Friday, January 24, 2020

Founder Of Meridian Capital Asset Management Sentenced To Two Years In Prison For Stealing Over $1 Million Of Investor Funds

 Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN GERACI was sentenced today in Manhattan federal court to 24 months in prison for conspiring to commit securities and wire fraud.  GERACI participated in a scheme to defraud investors in his company, Meridian Capital Asset Management.  GERACI caused two clients (“Victim-1” and “Victim-2”) to invest in a hedge fund through his company called the Meridian Matrix Long Short Fund (the “Meridian Matrix Fund”).  Between in or about December 2015 and November 2016, GERACI provided fictitious account statements and updates to Victim-1 and Victim-2, telling them that their investment was worth millions when, in reality, GERACI knew that large portions of it had been stolen by the Meridian Matrix Fund’s  co-founder, Nicholas Mitsakos.  GERACI eventually liquidated the Meridian Matrix Fund and misappropriated significant portions of the remaining funds.  Although GERACI had stolen over $1 million of Victim-1 and Victim-2’s investment for himself, GERACI falsely told them that their entire investment had been taken by Mitsakos.  GERACI used the stolen money to pay his own personal and business expenses. 
GERACI pled guilty on October 3, 2019, and was sentenced by United States District Judge Alison J. Nathan.
U.S. Attorney Geoffrey S. Berman said:  “John Geraci lied to his clients about their investment with Nicholas Mitsakos, and later concealed that he had recovered a significant portion of their investment from Mitsakos.  Now Geraci, like Mitsakos before him, is headed to prison.”
According to the Complaint, the Indictment, and other statements made in open court:
GERACI was the principal and founder of Meridian Capital Asset Management.  In or about February 2015, GERACI was introduced to Nicholas Mitsakos, who purported to operate a hedge fund called Matrix Capital (“Matrix”).  Mitsakos told GERACI that Matrix had tens of millions of dollars under management and had achieved annual returns between 19.4% and 66.3% from 2012 to 2014.  GERACI and Mitsakos subsequently entered into an arrangement whereby GERACI would raise money for Mitsakos, Mitsakos would manage that money through a new vehicle, the Meridian Matrix Fund, and GERACI and Mitsakos would then split any fees that the Meridian Matrix Fund generated.  As part of this arrangement, GERACI solicited Victim-1 and Victim-2 to invest approximately $2 million in the Meridian Matrix Fund, in large part by relying on Mitsakos’s claims about his supposed fund’s assets under management and performance returns.
By in or about December 2015, however, GERACI learned that Mitsakos had only invested approximately $1.2 million of Victim-1 and Victim-2’s investment, and had misappropriated significant portions of the remaining money.  GERACI also learned that Mitsakos never had any actual assets under management, and that his performance returns were accordingly fictitious and misleading.  Nonetheless, GERACI never told Victim-1 or Victim-2 that their investment was in jeopardy or had been solicited with misleading information.  To the contrary, GERACI sent Victim-1 and Victim-2 updates that hid Mitsakos’s misappropriation and falsely claimed that their investment had appreciated.  GERACI sent these fictitious updates even after GERACI had liquidated the Meridian Matrix Fund’s trading positions in or about June 2016.  Beginning in or about November 2015, GERACI also misappropriated hundreds of thousands of dollars of Victim-1 and Victim-2’s money for himself. 
In or about August 2016, Mitsakos was charged in this District with securities fraud and other offenses.  In or about September 2016, GERACI changed course:  Instead of providing fictitious account updates to Victim-1 and Victim-2, GERACI told them, in substance and in part, that their entire investment had been wiped out through Mitsakos’s fraud.  GERACI did this even though he had ultimately received approximately $1.1 million of Victim-1 and Victim-2’s investment back from Mitsakos, including after liquidating the Meridian Matrix Fund’s trading positions.  Rather than returning this amount to Victim-1 and Victim-2, GERACI used it to pay for his own personal and business expenses, including, for example, payments on a BMW automobile, a gym membership, gas, groceries, travel expenses, and his cellphone bill.
In addition to sending false account updates to Victim-1 and Victim-2 even after learning that Mitsakos had lied about his fund’s assets and performance and that Mitsakos had stolen significant portions of Victim-1 and Victim-2’s investment, GERACI continued to try to raise money from others for an investment related to the Meridian Matrix Fund.  In attempting to do so, moreover, GERACI relied on the same representations about Matrix’s assets and performance that he knew to be false.   
Mitsakos pled guilty to conspiring to commit securities fraud and wire fraud on May 25, 2017, and was sentenced on November 7, 2017, to 30 months in prison by the Honorable Denny Chin, a judge on the United States Court of Appeals for the Second Circuit who was sitting by designation in the Southern District of New York. 
In addition to the prison sentence, GERACI, 62, was sentenced to three years of supervised release.  The Court further ordered GERACI to forfeit a sum of $1,098,971.38 and to pay restitution to the victims of the offense.
Mr. Berman praised the investigative work of the United States Postal Inspection Service and thanked the Securities and Exchange Commission for its assistance. 

Thursday, January 23, 2020

Van Cortlandt Park Alliance - Join us at the Bronx Parks Speak Up


Join us at the Bronx Coalition for Parks and Greenspaces' 26th Annual Bronx Parks Speak Up on Saturday February 29th from 11am to 5pm at Lehman College where our Environmental Education Manager will be leading a presentation, our Urban Eco-Teens will be participating in the panel discussion and the organization will be tabling.  


Bronx Progressives Annual Meeting - Wednesday, Jan 29th, 2019 at 6:30pm!

Hello Bronx Progressives members!

Bronx Progressives is proud to invite you to our upcoming meeting on Wenesday, January 29th at 6:30pm at 1231 Lafayette Ave, 2nd Fl, Bronx, NY 10474 (6 Train to Hunts Point Ave, also BX 5, 6 and 19 buses).

We will be giving an update of our prior year, having a vote to endorse Bernie Sanders and Alexandria Ocasio-Cortez, decide other priority races, and take nominations for the executive committee! 

We look forward to seeing you all on January 29th at 6:30pm! We welcome all to bring a dish to share!

***This meeting is ADA accessible and is a safe space for all races, religions, sexes, gender identities, ages and beliefs***

Wednesday, January 22, 2020

Brooklyn Borough President Eric Adams - Come Join Our Vegan & Veg-Curious Meetup!


As part of my ongoing initiative to improve and protect the health of all Brooklynites, I will be hosting a Vegan & Veg-Curious Meetup in the Community Room of Brooklyn Borough Hall on Monday, February 3rd from 6:00 PM to 8:00 PM. Everyone is welcome to come and learn about the power of a plant-based lifestyle and see the great benefits it can have on your mind, body, and soul, just like it did for me and my own health.

Additionally, please check out our remaining January dates to visit our Fresh Vibes Market, our state-of-the-art RV that has been retrofitted to bring below-market price produce, cooking demonstrations, and nutrition workshops, as well as a range of other social services to food deserts across Brooklyn. Thanks to The Campaign Against Hunger and the Laurie M. Tisch Illumination Fund for their continued partnership.

To RSVP to the meetup, please call (718) 802-3729 or visit for more information. Don't miss this chance to learn more about healthy eating and meet other Brooklynites interested in cooking tips!


Manhattan Man Pleads Guilty To Attempting To Provide Material Support To Terrorist Organization

Jesus Wilfredo Encarnacion Attempted to Travel Overseas to Join Lashkar e-Tayyiba

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced today that JESUS WILFREDO ENCARNACION, a/k/a “Jihadistsoldgier,” “Jihadinhear,” “Jihadinheart,” “Lionofthegood,” pled guilty to attempting to provide material support to Lashkar e-Tayyiba (“LeT”), a Pakistan-based designated foreign terrorist organization responsible for multiple high-profile attacks, including the infamous Mumbai attacks in November 2008.  ENCARNACION pled guilty today before United States District Judge Ronnie Abrams.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Jesus Encarnacion plotted to travel abroad to join and train with the terrorist organization Lashkar e-Tayyiba, infamous worldwide for their brutal jihadist murder of innocent civilians, and to carry out shootings, bombings, and beheadings on their behalf.  Thanks to the excellent work of the FBI and the NYPD, Encarnacion was intercepted before his deadly plot could take flight, and he now awaits sentencing for his crime.”
According to the criminal Complaint, Indictment, and other documents filed in the case, as well as statements made during the plea proceeding:
In November 2018, ENCARNACION expressed his desire to join a terrorist group in an online group chat, where he met another individual (“CC-1”).  CC-1 introduced ENCARNACION to an individual who, unbeknownst to CC-1 or ENCARNACION, was in fact an undercover FBI employee (“UC-1”).  ENCARNACION repeatedly expressed, in the course of recorded communications through a social media service with CC-1 and through an encrypted messaging service with UC-1, his allegiance to and support for LeT, which, since approximately 2001, has been designated as a Foreign Terrorist Organization by both the United States Secretary of State and the Immigration and Nationality Act. 
Over several months, ENCARNACION discussed his desire and plans to join LeT overseas so that he could receive training and participate in violent acts of terrorism.  For example, ENCARNACION told UC-1 that he was “ready to kill and die in the name of Allah” and sought UC-1’s assistance to help ENCARNACION travel abroad to serve as an “executioner” for LeT, stating, “I want to execute.  I want to behead.  Shoot.”  ENCARNACION further stated that he aspired to commit terrorist attacks (“a bombing and shooting”) in the United States, but lacked “guidance” and “guns” to do so.
By early 2019, ENCARNACION and UC-1 agreed on a plan that ENCARNACION believed would allow him to join LeT in Pakistan.  ENCARNACION told UC-1 that he had made arrangements to travel to a particular city in Europe (the “European City”), as the first step in traveling to Pakistan to join LeT.  ENCARNACION purchased an airline ticket for a flight scheduled to depart on February 7, 2019, from John F. Kennedy International Airport (“JFK Airport”) to the European City.  On February 7, 2019, ENCARNACION traveled to JFK Airport, where he was arrested by the Federal Bureau of Investigation (“FBI”) after he attempted to board that flight.
ENCARNACION, 30, of New York, New York, pled guilty to one count of attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
ENCARNACION is scheduled to be sentenced by Judge Abrams on April 24, 2020, at 11:30 a.m.
Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U. S. Customs and Border Protection.

Former Congressman Christopher Collins Sentenced For Insider Trading Scheme And Lying To Federal Law Enforcement Agents

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CHRISTOPHER COLLINS, who represented the 27th District of New York as a member of the U.S. House of Representatives, was sentenced to 26 months in prison today by U.S. District Judge Vernon S. Broderick for participating in a scheme to commit insider trading and for making false statements to federal law enforcement agents when interviewed about his conduct. 

U.S. Attorney Geoffrey S. Berman said:  “Former New York Congressman and Innate board member Christopher Collins received confidential, nonpublic information that one of Innate’s drugs in development had just failed a clinical trial.  Moments later, from the White House lawn, Collins notified his son Cameron, so that he could trade the stock ahead of the public announcement and avoid taking a substantial loss on the stock.  He then lied to the FBI when asked about his conduct.  Collins’s greed and disregard for the law have now led to a criminal conviction for insider trading and lying to the FBI, his resignation from Congress, and over two years in federal prison.  Lawmakers bear the profound privilege and responsibility of writing and passing laws, but equally as important, the absolute obligation of following them.  Collins’s hubris is a stark reminder that the people of New York can and should demand more from their elected officials, and that no matter how powerful, no lawmaker is above the law.”
The following facts are based on the allegations contained in the Superseding Indictment and statements made in related court filings and proceedings:
The Insider Trading Scheme
The Scheme
 In or about June 2017, CHRISTOPHER COLLINS, who, in addition to serving on the board of directors of Innate Immunotherapeutics (“Innate”), an Australian biotechnology company, was also one of Innate’s largest shareholders, participated in a scheme to commit insider trading.  Specifically, on or about June 22, 2017, CHRISTOPHER COLLINS learned that MIS416 – a multiple sclerosis drug that Innate was developing – had failed a critical drug trial that was meant to determine the drug’s clinical efficacy (the “Drug Trial”).  The negative Drug Trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, CHRISTOPHER COLLINS was obligated to keep the Drug Trial results secret until Innate publicly released them.  Instead, in breach of those duties, CHRISTOPHER COLLINS tipped his son, Cameron Collins, who was also a substantial Innate shareholder, so that Cameron Collins could make timely trades and tip others before Innate publicly released the Drug Trial results.  Cameron Collins traded on the inside information and passed it to Stephen Zarsky, the father of his fiancée, as well as to three individuals not named in the Superseding Indictment (“Individual-1,” “Individual-2,” and “Individual-6”), so that they could utilize the information for the same purpose.  Zarsky, in turn, traded on the information and used it to tip three more individuals not named in the Superseding Indictment (“Individual-3,” “Individual-4,” and “Individual-5,”) so that they too could engage in timely trades in Innate stock.  All of the trades preceded the public release of the negative Drug Trial results.
In total, these trades allowed Cameron Collins and Zarsky, and Individual-1 through Individual-6, to avoid over $768,000 in losses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public. 
The Drug Trial Results
In or about October 2014, Innate initiated a Phase 2B clinical trial of its primary drug, MIS416.  Successful completion of the Drug Trial was a necessary prerequisite to the commercialization of MIS416.  Because Innate had no other significant products in development, its stock price was tied to the success of MIS416.
The Drug Trial was widely expected to be completed around the summer of 2017.  For example, on or about June 9, 2017, Innate’s chief executive officer (“CEO”) sent various individuals, including CHRISTOPHER COLLINS, an email stating that “the delivery date for [the] review and ‘verdict’” of the Drug Trial “will [] occur at COB on US Thursday June 22nd.”  As the summer progressed, individuals within Innate remained optimistic that MIS416’s Drug Trial results would be positive.  The initial Drug Trial results were made available by trial administrators to Innate’s CEO on June 22, 2017.  These results established that MIS416 lacked therapeutic value in the treatment of multiple sclerosis.  The results were not publicly released at that time.  Instead, they were released publicly on June 26, 2017, after the U.S. markets had closed (the “Public Announcement”).  Innate’s stock price subsequently crashed, dropping 92% on the first trading day following the Public Announcement. 
Dissemination of the Drug Trial Results
On or about June 22, 2017, at approximately 6:55 p.m., Innate’s CEO sent an email describing the Drug Trial results to the company’s board of directors, including CHRISTOPHER COLLINS.  The email explained to Innate’s board of directors for the first time that the Drug Trial had been a failure.  The email began, in part, “I have bad news to report,” and continued to explain that “the top line analysis of the ‘intent to treat’ patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] ‘clinical failure.’”  The email continued, “Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo,” and concluded by stating, “No doubt we will want to consider this extremely bad news . . . .” 
At the time CHRISTOPHER COLLINS received this email, he was attending the Congressional Picnic at the White House.  At 7:10 p.m., CHRISTOPHER COLLINS replied to the email, stating, in part, “Wow.  Makes no sense.  How are these results even possible???”  After responding to the Innate CEO’s email, CHRISTOPHER COLLINS called his son, Cameron Collins.  They traded six missed calls between 7:11 p.m. and 7:15 p.m.  At 7:16 p.m., CHRISTOPHER COLLINS and Cameron Collins spoke for more than six minutes.  During that six-minute phone call, CHRISTOPHER COLLINS told Cameron Collins, in sum and substance, that MIS416 had failed the Drug Trial.
Trading and Tipping by CAMERON COLLINS and ZARSKY
Cameron Collins began placing orders to sell his Innate shares the morning after he received inside information from CHRISTOPHER COLLINS.  Between the morning of Friday, June 23, 2017, and the close of the market on Monday, June 26, 2017, Cameron Collins sold approximately 1,391,500 shares of Innate stock.  These sales allowed Cameron Collins to avoid approximately $570,900 in losses. 
Furthermore, after learning the Drug Trial results from CHRISTOPHER COLLINS, on or about the night of June 22, 2017, Cameron Collins provided the Drug Trial results to at least the following three sets of individuals so that they could trade in advance of the Public Announcement:  (1) his fiancée, Individual-1; (2) Zarsky and Zarsky’s wife, Individual-2; and (3) Cameron Collins’s friend, Individual-6.  Collectively, these individuals avoided approximately $186,620 in losses as a result of their trading on inside information. 
On or about the morning of June 23, 2017, Zarsky provided the negative Drug Trial results that he had learned from Cameron Collins and Individual-1 to at least the following individuals, among others, or otherwise caused them to trade or attempt to trade in advance of the Public Announcement: (1) his brother, Individual-3; (2) his sister, Individual-4; and (3) his longstanding friend, Individual-5.  Collectively, these individuals avoided approximately $10,900 in losses as a result of their trading on inside information.
False Statements to the FBI
On or about April 25, 2018, special agents from the Federal Bureau of Investigation (“FBI”) separately interviewed CHRISTOPHER COLLINS, Cameron Collins and Zarsky.  During these interviews, and as detailed in the Superseding Indictment, CHRISTOPHER COLLINS, Cameron Collins and Zarsky made false statements to the FBI to cover up their participation in the insider trading scheme. 
In addition to the prison term, CHRISTOPHER COLLINS was sentenced to one year of supervised release and ordered to pay a fine of $200,000.    
Mr. Berman praised the outstanding work of the FBI and thanked the U.S. Securities and Exchange Commission for its assistance.

AG James Pushes Back On Proposal Allowing Predatory Lenders To Take Advantage Of New York's Most Vulnerable Communities

AG James Leads Bipartisan Coalition in Sending Letter Asking Federal Banking Regulator to Withdraw Rule Facilitating ‘Rent-A-Bank’ Schemes

  New York Attorney General Letitia James  led a bipartisan coalition of attorneys general that included the attorneys general of California, Illinois, and 19 other states to object to a proposed rule that would undermine New York’s efforts to prevent predatory lenders from taking advantage of consumers by charging high interest rates on loans and bypassing state caps — or usury laws — already in place. In a comment letter submitted to the Office of the Comptroller of the Currency (OCC), the coalition of attorneys general urge the OCC to reject the proposed rule that would enable predatory lenders to circumvent these caps through “rent-a-bank” schemes — arrangements in which heavily regulated national banks act as lenders in name only and enter into sham partnerships with unregulated entities so that they can receive exemptions that allow them to issue loans at interest rates that exceed state caps.
“At a time when credit card companies are making record profits and millions of Americans struggle to make ends meet, it is disappointing that the federal government has chosen to protect big banks’ profits rather than vulnerable consumers,” said Attorney General James. “Rather than stem the tide of exploitative and predatory loans that trap consumers in a cycle of debt, the OCC wants to open the floodgates by sanctioning schemes that allow the financial services industry to target New Yorkers. Rent-a-bank schemes make a mockery of federal law, and the OCC’s sanctioning of these schemes is an insult to the majority of states whose citizens have rejected the absurd notion that freedom means the ‘right’ to take out a loan at a triple-digit interest rate.”
Under the federal National Bank Act, national banks that are licensed and regulated by the OCC are permitted to charge interest on loans at the maximum rate permitted by their home state, even in states where that interest rate would violate state usury laws. The ability to preempt state usury laws in this way is a privilege granted to national banks — and only to national banks — because they are subject to extensive federal oversight and supervision. This privilege is extremely valuable to national banks because it permits them to lend money at rates in great excess of the rates they pay to borrow money. While federal law provides a carve out from state usury laws for federally-regulated banks, state law continues to protect residents from predatory lending by non-banks, such as payday, auto title, and installment lenders. Congress affirmed that role with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, preserving more protective state laws and rejecting attempts by the OCC to limit the authority of states over the financial services industry.
Despite the protections in Dodd-Frank, the new regulations proposed by the OCC — originally proposed in November 2019 — would extend the National Bank Act exemption for federally-regulated banks to non-bank debt buyers, such as payday lenders or any entity that purchases debt from a national bank. The proposed rule seeks to achieve this result by recasting National Bank Act preemption as an ordinary property interest that can be assigned, and codifying an obscure doctrine that purportedly concerns the assignability of contractual rights — a sharp reversal in law and policy.
In the comment letter, Attorney General James and the coalition of attorneys general object to the proposed rule, stating that it stands in direct conflict with the National Bank Act and the Dodd-Frank Act, exceeds the OCC’s statutory authority, and violates the Administrative Procedure Act. Further, Congress has clearly rejected legislation to expand the National Bank Act preemption to non-banks, further undermining the OCC’s attempt to rewrite federal law to suit its extreme policy preferences. 
Joining Attorney General James in sending today’s letter to OCC are the attorneys general of California, Colorado, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, South Dakota, Virginia, Washington, Wisconsin, and the District of Columbia, in addition to the Hawaii Office of Consumer Protections.

Comptroller Stringer Audit Reveals Weak City Oversight of $53 Million Homebase Homelessness Prevention Program

As homelessness spending reaches all-time high and homeless population continues to soar, City fails to adequately track outcomes or fully oversee providers in key program
HRA failed to review two-thirds of Homebase case files and delayed fiscal audits and recoupments of contract advances -- including more than $2.2 million in advance payments
 In the midst of New York City’s homelessness crisis, Comptroller Scott M. Stringer today released a concerning new audit revealing the City’s weak oversight of the its $53 million-per‑year Homebase Program, which is intended to help families and single adults overcome housing crises, avoid homelessness, and achieve housing stability. The Comptroller’s audit exposed failures by the City’s Human Resources Administration (HRA) to adequately and promptly review Homebase providers’ case files and to promptly alert them to correct the deficiencies it finds. Further, HRA’s incomplete tracking of clients who repeatedly return to the Homebase program for services and financial assistance after their cases are closed, combined with inaccurate program records, undercut the City’s ability to assess the effectiveness of the Homebase program and the individual providers. The audit also revealed lengthy delays in HRA’s fiscal reviews of its Homebase contracts and its failure to recoup more than $2.2 million in advance payments 16 months after one group of Homebase contracts ended.
“We are in the middle of a mounting homelessness crisis, with thousands of families struggling in our shelters. While the City is spending more money than ever before on services that are supposed to help people overcome and prevent homelessness, we are not seeing the reductions in homelessness that we should. This audit presents a damning example of the poor management and failures that plague the City’s approach to this ballooning crisis,” said Comptroller Stringer. “There’s a human cost to the City’s failures. If we don’t keep track of the resources that are intended to help vulnerable New Yorkers, the very people we must lift up fall through the cracks. In the fight against homelessness, every penny counts. The City needs to step up and ensure these programs are working and that no dollar is being wasted.”
The Homebase Program is a City-administered homelessness prevention program operating out of 26 locations across all five boroughs. It primarily serves households whose income is below 200 percent of the federal poverty level for families with children or 30 percent of Area Median Income for adult households who are at risk of homelessness or who have recently left the shelter system.
The administration of Homebase was transferred from the Department of Homeless Services (DHS) to HRA in January 2017, during the scope period this audit covered. However, a majority of the staff in leadership roles overseeing the program have remained the same. HRA currently has Homebase contracts with seven non-profit organizations: Help USA, Bronxworks, Catholic Charities Community Services Archdiocese of NY (ARCHNY), Catholic Charities Neighborhood Services (CCNS), CAMBA, Rise Boro Community Partnership; and SUS Urgent Housing Programs.
HRA’s Inadequate Case File Reviews
The Comptroller’s audit found:
  • As of May 2019, HRA had formally reviewed, and provided the Comptroller’s Office with printed summaries for, only 80 of the 240 Homebase case files it should have reviewed in the preceding 18 months;
  • Although the 80 reviews HRA did initiate dated back to site visits its staff conducted in May and June 2018, the agency did not inform its contracted providers of the results—including multiple deficiencies—before May 2019, in most cases a full year after the review;
  • According to the 80 Homebase case-review summaries HRA originally gave the Comptroller’s office, HRA staff identified 67 deficiencies in 54 of the 80 cases they reviewed—or 68 percent;
  • The deficiencies included 6 instances where clients with income above Homebase program limits were incorrectly deemed eligible to receive services and dozens of instances in which the Homebase service providers’ files lacked required information and documents concerning their clients’ public assistance benefits, income, and financial resources;
  • There were numerous instances in which HRA’s findings and conclusions were internally inconsistent.  In one example, HRA agency staff reviewed five case files maintained by one provider and noted in the conclusion section of their report that two of the five cases did not meet the Homebase program’s income eligibility requirements and should not have received services, but they also noted—inconsistently—in another section of their report that all five cases met income requirements.
  • Toward the end of the year-long audit—after the Comptroller’s auditors informed HRA of the abovementioned deficiencies and inconsistencies—HRA officials claimed for the first time that the case file review summaries they had previously provided to the Comptroller office were not the final versions. HRA later provided the Comptroller’s office with new documents that it claimed were the final versions, which differed significantly from the original summaries.
  • For example, HRA’s revised summaries reported only 23 deficiencies in the 80 case files HRA had reviewed, significantly fewer than the 67 reported in HRA’s original summaries. HRA did not explain the numerous changes, and none of the revised summaries were dated. The original summaries had all been dated either January or February 2019, eight to nine months after HRA had reviewed the case files.  According to HRA, the “final” case file review summaries were not shared with providers until May 19, 2019—in most cases a full year after the site visits.
Information Missing from Homebase Providers’ Case Files
The Comptroller’s auditors also visited 5 of HRA’s contracted Homebase providers and found that 17 of 50 sampled client case files they maintained were either missing required documents or lacked required information.
The deficiencies found in the Homebase contracted providers’ sampled case files are detailed in the table below:
The Comptroller’s auditors also identified additional issues in the providers’ case records, including some that were particularly concerning. For example, according to the providers’ records, 5 of the 28 homes they visited were found to be not habitable.  However, the Comptroller’s auditors found no evidence that the conditions relating to four of those five homes were fixed by the landlords while the Homebase clients continued to reside there. These cases included one where the provider’s case manager observed a rodent infestation, mold or mildew, a water leak and broken windows during the home visit.
In addition, for 27 Homebase cases that remained open longer than 90 days, including 17 cases that were in the program for more than 120 days, up to 270 days, the files contained no evidence that the providers had reassessed the cases as required.
Incomplete Tracking of Homebase-Case Outcomes
HRA does not fully track clients who return to the Homebase Program in ways that could enhance its ability to evaluate the services provided. Clients who return to Homebase for assistance with a new housing crisis are allowed to open a new Homebase case. The Comptroller’s Office found:
  • 2,661 (11 percent) of 24,938 households with Homebase service start dates during Fiscal Year 2018 (July 1, 2017 through June 30, 2018) returned to Homebase from one to four additional times within the same 12-month period after their initial cases were closed;
  • Out of these 2,661 households, 1,860 came back and received the same level of Homebase service more than once;
  • 19 (38 percent) of the 50 sampled cases involved clients who had received Homebase services within 36 months prior to the initiation of the cases we reviewed—3 of whom had previously received services less than 60 days before receiving services in the sampled cases.
Failure to Recoup Advance Payments
The audit found that HRA does not follow its own procedures to recoup advances. For example, the Comptroller’s Office found:
  • $2,271,797 in advance payments for seven contracts that were closed out in October 2017 were not recouped as of March 6, 2019—16 months after the closeouts.
  • Delays in recoupments persisted into the midpoint of Fiscal Year 2019, when HRA failed to recoup $565,256 (10 percent) then due on more than $5.65 million it had advanced earlier that year on six active contracts.
HRA Does Not Ensure Timely Audits
The Comptroller’s audit found:
  • HRA does not ensure that required fiscal audits of providers are completed in a timely manner—or at all.
  • Seven of the 11 audits covering the three-year period ending in Fiscal Year 2015 were not completed until after January 2019.
  • Five of these audits determined that funds totaling $255,728 needed to be recouped from the providers.
  • The audits for the remaining four contracts had still not been completed as of May 7, 2019.  As of January 2019, HRA has initiated only 2 of the 16 audits covering the three-year cycle that ended in June 2018.
In response to the findings, Comptroller Stringer made 19 recommendations, including calling on HRA to strengthen its monitoring controls to ensure that it conducts two formal case file review cycles annually and to ensure that its case file review summaries are scrutinized for accuracy and sent to the providers in a timely fashion. The Comptroller also called on HRA to improve tracking of the clients who return to the Homebase Program after their cases are closed to better measure the effectiveness of services the City is providing New Yorkers enrolled in the program.
To view the full audit and recommendations, click here.

Bronx, New York, Man Admits Role In Conspiracy To Distribute Heroin And Fentanyl From A Drug Mill In The Bronx

  NEWARK, N.J. – A Bronx, New York, man today admitted participating in a conspiracy to distribute heroin and fentanyl from a drug mill in the Bronx to locations in New Jersey, U.S. Attorney Craig Carpenito announced.

Jose Antonio Vasquez Pena, a/k/a “Tono,” 47, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an indictment charging him with one count of conspiracy to distribute 400 grams or more of a mixture and substance containing fentanyl. Dilson Vazquez Genao, 23, Eddie Urena Rodriguez, 35, and Francisco Mercedes Gil, 31, also of the Bronx, New York, pleaded guilty before Judge Salas to the same charges in September 2019.
Three other individuals – Jhan Carlos Capellan Maldonado, 31, Daury Contreras Ulerio, 34, and Reimon Genao Rosario, 23 – were indicted on the same charge as Pena in August 2019. Their cases are pending.
According to documents filed in this case and statements made in court:
In early February 2019, law enforcement officers learned that Maldonado used an apartment in Bronx to store, mix, and package heroin and fentanyl in distribution quantities. Pena stayed at the apartment in order to safeguard the narcotics and narcotics supplies. Maldonado employed approximately five workers at a time—including Rodriguez, Ulerio, Rosario, Gil, and Genao—to assist in preparing the heroin and fentanyl for distribution, which Maldonado then distributed to customers in New Jersey.
On Feb. 25, 2019, law enforcement officers saw Maldonado drive to a retail store and emerge with several full shopping bags and then drive to the apartment. Genoa came out of the building and met with Maldonado, who got out of his vehicle and gave Genoa the plastic shopping bags. Through its investigation, law enforcement later learned that the plastic shopping bags contained materials to package heroin and fentanyl.
Genoa went back inside the building and was followed by law enforcement officers, who watched as Genoa entered Maldonado’s apartment with a key, still carrying the shopping bags. On Feb. 27, 2019, law enforcement searched Maldonado’s apartment and found seven individuals inside, including Rodriguez, Ulerio, Rosario, Gil, Maldonado, Pena, and Genao. All seven defendants attempted to escape out a window, but all but one – Rosario – were apprehended and arrested by law enforcement officers waiting outside. Rosario was arrested at a later date. Law enforcement recovered nearly a kilogram of fentanyl from the apartment, along with materials to grind and package fentanyl for distribution.
Each defendant faces a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. Sentencing is scheduled for April 27, 2020.
U.S. Attorney Craig Carpenito credited the U.S. Department of Homeland Security, Homeland Security Investigations (HSI)’s New Jersey Division, under the direction of Special Agent in Charge Brian Michael, with the investigation leading to the charges.
The charge and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
We have left in the City of Newark N.J. 
We now have to question if this was a man/men who was/were placed in living quarters in Newark N.J., unsupervised by the NYC Department of Homeless Services.


Illegal Narcotics and a Smart Phone Seized by Law Enforcement Officers

  Three criminal complaints were unsealed today in federal court in Brooklyn, New York, charging 21 defendants with conspiring to bribe correction officers employed by the New York City Department of Corrections (“DOC”) as part of narcotics smuggling conspiracies. Three defendants remain at large. The initial appearances for 12 of the defendants are scheduled for this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr. 

 Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Margaret M. Garnett, Commissioner, New York City Department of Investigation (DOI), announced the charges. 

 “The corruption of correction officers presents a security risk to the entire jail population, and a potential danger to the residents of our communities,” stated United States Attorney Donoghue. “We will continue to aggressively investigate and prosecute those who place their personal enrichment over the public duties they have sworn to perform.” Mr. Donoghue thanked Homeland Security Investigations, New York, and the New York City Police Department for their assistance in the investigations.

 “The correction officers charged today allegedly accepted bribes to sneak contraband onto Rikers Island—propagating behavior that has the potential to harm other officers and prisoners alike. The smuggling of contraband into our jails is a common Hollywood storyline, but while there’s an element a fiction in many a screenplay, there’s nothing fake about this real-life threat to our correctional facilities. Along with our partners at the DOI, we are dedicated to confronting this issue head-on,” stated FBI Assistant Director-in-Charge Sweeney. 

 "Contraband smuggling enterprises have long plagued City jail facilities. The arrests today are another example of a pattern in which inmates and outside conspirators identify correction officers vulnerable to corruption, and use them to carry drugs and other illegal substances into the jails,” stated DOI Commissioner Garnett. “These schemes threaten the safety of fellow officers and other inmates, and undermine order and discipline in the City’s jails. DOI will continue to prioritize safety and integrity in the jails, and continue to relentlessly pursue those who threaten it. DOI thanks its partners at the Office of the U.S. Attorney for the Eastern District of New York and the FBI for their partnership in the pursuit of these individuals charged today in our shared effort to root out criminal activity in the City's correction system." 

 Since early 2019, the FBI and DOI have been investigating contraband rings involving the payment and receipt of bribes by DOC officers in exchange for transporting marijuana, the narcotic Suboxone and K2 (a synthetic cannabinoid) and an unauthorized smart phone into the George R. Vierno Center and the Otis Bantum Correctional Center on Rikers Island.

 As set forth in the complaints, the defendants conspired to smuggle the contraband into Rikers Island facilities with the assistance of New York City Correction Officers Darrington James, Patrick Legerme, Aldrin Livingston, Michael Murray, Angel Rodriguez and Christopher Walker. Defendants James Albert, Clarence Brooks, Kyle Charles, John Mohammed and Christopher Rivas, who were incarcerated for unrelated offenses, arranged for marijuana and other contraband to be packaged and secretly delivered to those correction officers by defendants Celena Burgess, Veronica Jagdeo, Jorcetta King, Aboudou Krigger, Jonathan Medina, Styles Shephard and Tony West. The defendant correction officers allegedly received thousands of dollars in bribes to smuggle the drugs past DOC security, for distribution inside the Rikers Island facilities.

 As a part of their investigations, law enforcement officers reviewed financial records related to online money transfer tools, such as CashApp, conducted surveillance and reviewed recorded telephone calls made by defendants who used coded language in their conversations. For example, on February 19, 2019, an inmate at the Vierno facility called a coconspirator to discuss supplying the inmate and Albert with marijuana: “I’m trying to get, um four ‘Oakland Raider jerseys’ [code for marijuana]. “…’Got Pink Panties’ [code for correction officer] on the line right now, you heard? Gangsta. You just gotta make it to the ‘Jungle’ [code for Brooklyn] to drop it off to them and, more or less, we lit from there.” In recorded telephone calls between Rivas and a co-conspirator in October 2019, Rivas requested a ‘joint’ [code for a cellular telephone] with a Facetime application. In a subsequent telephone conversation, Rivas asked West whether the joint is a Size 5 or Size 6 [code for iPhone 5 or iPhone 6], and West replied that it was a Size 6, referring to an iPhone 6 that was delivered to the Vierno facility the previous night.

 On October 25, 2019, a DOC Special Search Team seized an iPhone 6 and an iPhone charger from Rivas’s laundry bag and 12 clear plastic bags containing marijuana from his person. 

 The charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants each face a maximum sentence of five years’ imprisonment.

 The Defendants:    ---
JAMES ALBERT Age: 43 Comstock, New York 
CLARENCE BROOKS Age: 39 Bronx, New York 
CELENA BURGESS Age: 43 New York, New York 
KYLE CHARLES Age: 32 Brooklyn, New York 
VERONICA JAGDEO Age: 24 Freeport, New York 
DARRINGTON JAMES Age: 30 Queens, New York 
JORCETTA KING Age: 33 Bronx, New York 
ABOUDOU KRIGGER Age: 25 Bronx, New York 
PATRICK LEGERME Age: 29 Queens, New York
 ALDRIN LIVINGSTON Age: 31 Queens, New York 
JONATHAN MEDINA Age: 29 Queens, New York 
JOHN MOHAMMED Age: 27 Rome, New York 
MICHAEL MURRAY Age: 28 Brooklyn, New York 
CHRISTOPHER RIVAS Age: 32 New York, New York 
ANGEL RODRIGUEZ Age: 23 Bellport, New York
STYLES SHEPHARD Age: 24 New York, New York 
CHRISTOPHER WALKER Age: 28 Brooklyn, New York 
TONY WEST Age: 24 Brooklyn, New York 


New technology could help City better understand and address air quality concerns

  Mayor Bill de Blasio, Department of Citywide Administrative Services (DCAS) Commissioner Lisette Camilo, and the City of New York’s Chief Technology Officer John Paul Farmer (CTO) today announced the launch of CityScanner, a pilot program that will use city fleet vehicles to test local air quality. Using a new technology developed by the Senseable City Lab at the Massachusetts Institute of Technology (MIT), five vehicles that service the South Bronx will be equipped with sensors that collect air quality data. Air quality data is often used by city government to identify problem areas, determine causes of poor air quality, and make policy decisions to improve air quality. The existing municipal fixed-sensor network – the New York City Community Air Survey – tracks six different kinds of air pollution and how levels vary by neighborhood across the city. Mobile sensors have the potential to augment this existing air quality surveillance by collecting hyper-local data on fine particulates – street by street – at low cost.

“New Yorkers’ air quality shouldn’t be determined by zip code,” said Mayor Bill de Blasio. “We’re piloting technology that can lead us to a greener, cleaner and safer city for all.”

“Every New Yorker deserves the right to breathe air that is clean and safe, and the city is finding new and creative ways to make this a reality,” said Lisette Camilo, Commissioner of the NYC Department of Citywide Administrative Services. “This innovative pilot program will help the city assess whether its fleet vehicles – many of which are electric and hybrid models – can help us collect data to make our city even greener.”

“The City continues to focus on deploying new technologies that improve quality of life for all New Yorkers,” said John Paul Farmer, Chief Technology Officer of the City of New York. “Air quality in New York City is important for everyone, and this pilot promises to help us understand the issue on a more granular level, which will enable us to tailor solutions and make key improvements.”

The solar powered air quality sensors being used for the pilot program are being installed today and will be used for a four-week trial period. Based on the outcome of the pilot, the technology could be installed on additional fleet vehicles.

The CityScanner technology is based on small, solar-powered sensors affixed on top of vehicles, that use a laser-based technology to detect pollutants in the air at an unprecedented level of space and time resolution. This information is used by environmental scientists to dynamically detect pollution hotspots and air quality trends in the city.

In a previous study, MIT deployed City Scanner sensors on trash trucks in the city of Cambridge, MA. Over a twelve months period, the sensors collected more than 1.6 million datapoints, which helped the city map hotspots and gain insights regarding sources of pollution.

In addition to DCAS, CTO, and MIT, this program is supported by the NYC Department of Health and Mental Hygiene, the NYC Department of Parks and Recreation, the NYC Department of Sanitation, and Environmental Defense Fund (EDF). EDF has worked on similar mobile sensing pilots and will serve as advisors on this initiative. The program will have no cost for the City of New York.

This pilot program builds upon the success of similar pilots spearheaded by EDF and governments in Houston, West Oakland, and London:

Houston, TX – In Houston, EDF has worked with city officials to deploy rooftop-mounted air quality sensors on municipal vehicles and is now developing analytics tools and procedures to support city efforts to use mobile air pollution data to target and plan enforcement efforts. In 2019, the city announced a new toxic alert system for detecting high concentrations of benzene, including during disaster events. This first-of-its-kind tool was developed in response to an EDF air pollution monitoring campaign in the wake of Hurricane Harvey to measure emission events that occurred following damage to the region’s petrochemical facilities.

West Oakland, CA – EDF and partners developed air pollution maps using data from a combination of stationary and mobile monitors. The results were then used to highlight impact zones - areas where residents lived among elevated levels of pollution - and to develop emission and exposure reduction strategies that span from truck management and electrification to improved land use zoning and permitting to create greater buffers between industrial areas and vulnerable populations. Community leaders used the maps to advocate for mitigation efforts under a new air quality law seeking to cut pollution in California’s most affected communities.

London, UK – EDF along with the Mayor of London, Google, C40 Cities and others launched Breathe London, which combines sophisticated data analytics with state-of-the-art technology — such as mobile monitoring on Google Street View cars and over 100 stationary monitors — to collect air pollution data points at thousands of locations. Hyperlocal data is being used to create a baseline to help London design, tailor, and understand the impact of future clean air actions.

"Public vehicles equipped with state-of-the-art sensors are a powerful, underutilized tool in the battle against air pollution, given the vast urban footprint they cover," said Harold Rickenbacker Ph.D., Environmental Defense Fund Clean Air & Innovation Manager and advisor on the CityScanner project. "Municipal vehicles performing their routine jobs are capable of detecting pollution at a block-by-block level, giving policymakers unprecedented levels of data to inform environmental and public health decisions. This innovative project has the potential to position New York City as a leader with other cities, the tech community, and the private sector."

“NYC Fleet is one of the nation’s largest adopters of telematics technology,” said Keith Kerman, NYC Chief Fleet Officer and DCAS Deputy Commissioner. “Air quality monitoring through CityScanner will work in conjunction with our telematics solution, adding an exciting new dimension to our efforts to use data to make the City cleaner and safer.”

“Clean air means better health,” said Health Commissioner Dr. Oxiris Barbot. “The Health Department’s New York City Community Air Survey shows continued improvement in the City’s air quality but neighborhood inequalities in related health impacts remain. Additional hyper-local data can help inform community-centered policies to make the air all New Yorker’s breathe even cleaner.”

“From requiring the use of less-polluting fuel in building boilers to creating a cleaner fleet of City vehicles, we have taken many steps that have resulted in much improved air quality in New York City,” said Department of Environmental Protection Commissioner Vincent Sapienza. “Collecting additional data on localized air quality will help us understand where further measures should be taken and we look forward to reviewing the results of the City Scanner pilot program/

“Air quality is closely tied to many health outcomes and I’m thrilled to see the city embrace this cutting-edge measure to utilize existing resources toward such an important new purpose,” said Bronx Borough President Ruben Diaz Jr. “This is a model for how effective it can be to incorporate sustainable technology into municipal operations. We owe it to future generations to identify these areas of opportunity and innovation in sustainability and to make use of them as much as possible. Thank you to the NYC Department of Citywide Administrative Services for making this change and for working toward a greener future.”