“Ygz” Gang Members Plead Guilty In Manhattan Federal Court To Murders And Other Crimes In Connection With Racketeering Conspiracy

Terrance Williams Pleads Guilty To The Murder Of An Innocent Bystander; Wendell Belle Pleads Guilty To The Brutal Stomping Death Of Moises “Noah” Lora

  Preet Bharara, the United States Attorney for the Southern District of New York, announced that TERRANCE WILLIAMS, a/k/a “TA,” and WENDELL BELLE, a/k/a “Delly Dell,” pled guilty in Manhattan federal court to racketeering and firearms charges involving multiple acts of violence.  WILLIAMS pled guilty yesterday and BELLE pled guilty this morning before United States District Judge Valerie E..Caproni.  Through their guilty pleas, WILLIAMS admitted his murder of Curtis Smith on July 3, 2011, and BELLE admitted his murder of Moises “Noah” Lora on April 16, 2012.  Both of these murders were committed in the South Bronx within the confines of the New York City Police Department’s 40th Precinct, and both were committed in connection with WILLIAMS and BELLE’s membership in the violent “Young Gunnaz” street gang (“YGz”). 

As part of his guilty plea, WILLIAMS admitted to shooting and killing Curtis Smith, a 23-year-old, on Park Avenue near the Jackson Houses in the South Bronx, and to shooting and injuring a rival gang member in front of the Sweet Corner convenience store at Park Avenue and 158th Street in the South Bronx.  On August 31, 2016, WILLIAMS pled guilty under a prior plea agreement with this Office before Judge Caproni to racketeering conspiracy based on his commission of certain acts of violence and drug crimes for the YGz gang.  As a result of law enforcement’s continuing investigation in this case, at yesterday’s plea proceeding before Judge Caproni, WILLIAMS withdrew his previously entered guilty plea and pled guilty under a new plea agreement with the Office to racketeering conspiracy based on the murder of Curtis Smith and the separate attempted murder described above, and based also on his commission of the acts of violence and drug crimes that he had previously admitted on August 31, 2016.  In light of WILLIAMS’s guilty plea in federal court yesterday, WILLIAMS faces a maximum term of life in prison. 

As part of his guilty plea, BELLE admitted to the brutal assault of Moises “Noah” Lora, during which BELLE and others stomped Lora to death in the courtyard of a residential housing complex located at 700 Morris Avenue in the South Bronx.  BELLE also admitted to the attempted murder of another rival gang member on November 16, 2013, immediately in front of the Bronx Criminal Courthouse, during which BELLE fired multiple shots at his rival. WILLIAMS was previously arrested for murdering Curtis Smith based on state charges filed by the Bronx District Attorney’s Office, but the charges were later dismissed.  In light of BELLE’s guilty plea today, BELL faces a maximum term of life in prison and mandatory term of 30 years in prison.  Both WILLIAMS and BELLE are scheduled to be sentenced later this year before Judge Caproni.

Manhattan U.S. Attorney Preet Bharara said:  “For far too long, members of the YGz gang and their rival gangs have terrorized communities in the Bronx by engaging in all manner of mayhem – including murder, attempted murder, and other racketeering activities.  Terrance Williams and Wendell Belle almost got away with murder, but thanks to the tireless efforts of law enforcement, they have both pled guilty to murders they committed as members of the Ygz gang.”

According to the charging and other documents filed in the case, as well as statements made during the plea proceedings:

WILLIAMS was a member of the Bronx-based street gang known as the YGz, a leading member of a set of the YGz based in Maria Lopez Plaza in the Bronx, and committed acts of violence with other YGz gang members to further the goals of the gang.  BELLE was a leading member of the YGz set based in the River Park Towers in the Bronx, and also committed multiple acts of violence with other YGz gang members.  From at least 2005 to 2016, members and associates of the YGz enriched themselves by committing robberies and by selling drugs, such as crack cocaine, heroin, and marijuana, and committed acts of violence, including murder and attempted murder, against various people, including rival gang members, rival drug traffickers, and innocent bystanders.  As part of this enterprise, members and associates of the YGz killed and attempted to kill other individuals. 

As part of their involvement in the YGz gang, WILLIAMS and BELLE each participated in acts of violence, as well as narcotics trafficking, with other YGz members.  

For example, on July 3, 2011, WILLIAMS and several other YGz members rode on bicycles from YGz territory on Morris Avenue near 151st Street northbound to the territory of a rival gang on Park Avenue near 158th Street in the South Bronx.  Upon arriving in the rival gang’s territory, WILLIAMS saw a rival gang member standing at the corner of Park Avenue and 158th Street in front of the Sweet Corner convenience store.  From his bicycle, WILLIAMS pulled out a gun and fired gunshots at this rival gang member, two of which hit and injured the rival, who survived the shooting. 

On the same date, after that shooting was complete, WILLIAMS decided to ride his bicycle southbound on Park Avenue with the goal of returning to YGz territory.  While WILLIAMS was riding south on Park Avenue, he saw a group of people who appeared to be running at him from an apartment building in the rival gang’s territory.  WILLIAMS fired gunshots at this group of people, and hit one of them – 23-year-old Curtis Smith – in the head.  Smith died several days later.           

Meanwhile, on November 16, 2013, only days before his attempted murder in the shadow of the Bronx County Criminal Court, BELLE and other YGz members and associates approached members of a rival gang based on Courtlandt Avenue in the Bronx and fired several shots in the hope of killing those rivals.  In the chaos of that shooting, one of BELLE’s fellow gang members struck and injured an innocent bystander.   

WILLIAMS, BELLE, and multiple other YGz members were included in a December 2015 federal racketeering prosecution captioned United States v. Ramel Matthews, et al., now before Judge Caproni, in which all of the defendants were charged with racketeering conspiracy for participation in the YGz gang, and various of the defendants were also charged with participation in several murders, attempted murders, narcotics trafficking, and firearms offenses.    

WILLIAMS was the third defendant and BELLE was the fourth defendant in a racketeering prosecution by this Office of multiple YGz members to admit participation in YGz gang-related murders.  Earlier this year, as part of guilty plea proceedings before Judge Caproni in that case, co-defendant Anthony Scott, a/k/a “Tyson,” admitted to shooting and killing Darrel Ledgister on June 27, 2009, in the South Bronx within the 40th Precinct, during an attempted robbery, and Paul Gilbert, a/k/a “2Fly Tay,” admitted to participating in the murder of Cody Dubose on September 27, 2014, near the Taft Houses in Manhattan during an attempted robbery.

WILLIAMS was previously arrested for murdering Curtis Smith based on state charges filed by the Bronx District Attorney’s Office, but the charges were later dismissed.  Through the subsequent federal investigation of the YGz gang, this Office and its law enforcement partners further developed the evidence of WILLIAMS’s guilt, culminating in his plea yesterday.  

Mr. Bharara praised the work of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, and the New York City Police Department in the investigation of this case.  He also thanked the Bronx District Attorney’s Office for their support in this case.

Former Police Officer Charged In White Plains Federal Court With Quadruple Homicide

Four Victims of Alleged Homicide Had Not Been Seen or Heard From Since April 11, 2016

  Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), and Peter J. Graziano, Jr., Chief of the Village of Chester Police Department (“Chester PD”), announced charges against NICHOLAS TARTAGLIONE, a retired police officer, for a quadruple murder committed in Chester, New York, in April 2016.  TARTAGLIONE was arrested yesterday and charged in a five-count Indictment for his participation in a conspiracy to distribute 5 kilograms and more of cocaine and for the murders of Martin Luna, Urbano Santiago, Miguel Luna, and Hector Gutierrez in furtherance of that conspiracy.  He was presented in White Plains federal court yesterday before U.S. Magistrate Judge Paul E. Davison

Manhattan U.S. Attorney Preet Bharara stated: “While all murders tear at the fabric of our communities, when the alleged perpetrator of a gangland-style, quadruple homicide is a former police officer, that strikes at the heart of civilized society.  As alleged, Nicholas Tartaglione, a former Briarcliff Manor police officer, participated in the senseless murder of four people in a bar in Chester, New York.  These four men had not been seen or heard from since the day of their alleged murder.  We hope that today’s arrest brings some measure of comfort to the victims’ families and loved ones.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated:  “The despicable acts of murder are more egregious in this case because the alleged murderer, a former police officer, once swore to serve and protect people from harm.  The FBI Hudson Valley Safe Streets Task Force works day after day to battle the crimes that accompany the drug trade to keep criminals and their illegal actions from impacting innocent people.  We hope the victims’ families and community find some solace in an arrest being made.”

NYSP Superintendent George P. Beach II said:  “Once again the work of a strong law enforcement partnership has resulted in an alleged dangerous man being taken off the streets.  These brutal murders are prime examples of the dangerous crimes that are associated with drug distribution.  Narcotics destroy communities and put lives at risk. State Police and our partners will continue to work together to rid our communities of these dangerous substances, and the violence that comes with them.”

Chester PD Chief Peter Graziano, Jr. stated:  “I am grateful for the hard work everyone put into this case and the cooperation of the agencies involved.  This unspeakable crime shows how destructive the drug trade is and why we must all endeavor to continue the fight.  This scourge is not limited to large urban areas, but small rural ones as well.  I hope the victims’ families can find some peace and closure as a result of this arrest.”

As alleged in the Indictment filed today in White Plains federal court[1]:

From June 2015 up to April 2016, TARTAGLIONE and others conspired to sell five kilograms or more of cocaine.  In April 2016, TARTAGLIONE participated in the killing of Martin Luna, Urbano Santiago, Miguel Luna, and Hector Gutierrez in furtherance of that cocaine distribution conspiracy, some of whom were just in the wrong place at the wrong time.  The murders all took place in and around a bar called the Likquid Lounge in Chester, New York. 

A chart containing the charges and maximum penalties faced by TARTAGLIONE, 49, of Otisville, New York, is attached.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Bharara praised the outstanding investigative work of the FBI, the New York State Police, and the Village of Chester Police Department.  Mr. Bharara also thanked the City of Middletown Police Department for its assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Maurene Comey and Michael Gerber are in charge of the prosecution.

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

United States v. Nicholas Tartaglione, S1 16 Cr. 832 (KMK)

CHARGES	MAXIMUM PENALTIES
Conspiracy to distribute and possess with intent to distribute 5 kilograms or more of cocaine.	Life in prison Mandatory minimum: 10 years in prison
Murder of Martin Luna in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.	Life in prison or death Mandatory minimum: 20 years in prison
Murder of Urbano Santiago in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.	Life in prison or death Mandatory minimum: 20 years in prison
Murder of Miguel Luna in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.	Life in prison or death Mandatory minimum: 20 years in prison
Murder of Hector Gutierrez in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.	Life in prison or death Mandatory minimum: 20 years in prison

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

A.G. Schneiderman Calls On President Obama To Dismantle The Ineffective And Discriminatory Federal Registry Which Targeted Muslims

Schneiderman Sends Letter Requesting That President Obama Rescind Regulatory Framework Of National Security Entry-Exit Registration System (NSEERS)

If Left In Place, NSEERS Framework Could Serve As Blueprint For Future Registry Of Muslims Nationwide

   Attorney General Eric T. Schneiderman today called on the Obama Administration to rescind the regulatory framework of the National Security Entry-Exit Registration System (NSEERS), a controversial registry created during the George W. Bush era that sought to track and register non-immigrant males from primarily Arab, Muslim, and South Asian countries regardless of whether they were suspected or accused of any wrongdoing.

Created in the wake of September 11, 2001, NSEERS targeted boys and men primarily from Muslim-majority countries. After the program proved to be ineffective at reducing terrorist activity, new registration in the program was terminated by the Department of Homeland Security in 2011. However, the regulatory framework undergirding the program remains in place, creating an unacceptable temptation for future administrations to restart the program.

The registry has not proven to provide any law enforcement benefit whatsoever. Rather, the NSEERS regulatory framework currently serves only as a dormant reminder of a misguided and discriminatory policy. NSEERS undermined trust and hindered open communications between law enforcement and community members, thus hampering the ability of law enforcement to promote public safety.

“America is a nation built by immigrants and the NSEERS program is an affront to our core American values of pluralism and equal justice under law,” said Attorney General Schneiderman. “We can't risk giving President-elect Trump the tools to create an unconstitutional religious registry. We can never allow our nation to return to the dark days of Japanese internment. By finally dismantling the NSEERS program now, President Obama can make a repeat of that horror significantly more difficult.”

The “call-in registration” portion of NSEERS targeted males from 25 primarily Arab, Muslim-majority, African, and South Asian countries, as well as North Korea and Eritrea, and required them to appear at local immigration offices for fingerprinting and interrogations.

Despite registering more than 80,000 teenage boys and men, NSEERS failed to result in a single terrorism-related conviction. More than 13,000 men who registered with NSEERS were placed in removal proceedings, leaving their families and communities devastated.

By facilitating the government’s ability to single out individuals for special registration, the NSEERS framework echoes policies that many Americans, including law enforcement officers, have disavowed.

BP DIAZ CO-HOSTS YOUTH CHESS CHALLENGE WITH AT&T AND CHESS IN THE SCHOOLS

  Bronx Borough President Ruben Diaz Jr., AT&T and Chess in the Schools co-hosted a youth chess tournament for Bronx students at the Andrew Freedman Home on the Grand Concourse.

 Students from all over The Bronx participated in the third annual Bronx Borough President’s Chess Challenge, which featured chess aficionados from the third grade through middle school testing their skills against one another. Winners in each division were presented awards by Borough President Diaz at the event’s conclusion.

 “It is a great day to host the Chess in the Schools organization right here in The Bronx. Today’s event gave over 200 young chess stars an opportunity to have a friendly competition with each other,” said Bronx Borough President Ruben Diaz Jr. “I am even more thrilled to be on hand throughout the event to play in chess games with the students, provide encouragement and present tournament winners with awards. Chess reinforces discipline on and off the board and the participants are learning the importance of thinking and being patient.”

 “As a chess player myself, I know how valuable the skills developed are to young students. It is a great privilege to continue to support the Bronx Borough President’s Chess Challenge with Chess in the Schools, whose mission so clearly aligns with AT&T’s own commitment to creating pathways to success for New York City’s most underserved students,” said Marissa Shorenstein, New York State President, AT&T. “We are thrilled for the opportunity to work with Borough President Diaz on this initiative as well as so many other events serving the Bronx community.”

 Chess in the Schools has been teaching and empowering more than a half-million students in the most underserved communities throughout New York City, since 1986, helping students learn to use chess as an educational tool to promote learning and critical thinking.

 “Chess in the Schools is proud that Bronx Borough President Ruben Diaz Jr is hosting our Bronx President’s Chess Challenge. Young players from our Bronx classrooms will improve their abilities by competing. Thank you for believing in the power of chess, Bronx Borough President Ruben Diaz Jr.,” said Debbie Eastburn, President & CEO, Chess in the Schools.

Upcoming New Health and Cultural Events in January at JASA Van Cortlandt Senior Center

*New Health & Relaxation class w/Kathleen starts on Wed. Jan. 11^th at 10:30 AM. Kathleen, a certified Yoga/Meditation instructor will conduct a health informational session at 10:30 followed by a Relaxation session of breathing and stretching until 12 Noon. Lunch of Beef Brisket or Tuna salad will be served at 12:15 PM.

*On Wed. Jan. 11^th, Tania Collazo, JASA Floating Kitchen Supervisor, will conduct a new *Healthy Cooking Demonstration at 1:00 PM. Tania will demonstrate simple and nutritious vegetable dishes and desserts.Recommended senior meal contribution: $2.00 and event contribution: $1.00. Please call the senior center office 718-549-4700 for meal reservations by: Mon. Jan. 9th.

Commemorate Dr. Martin L. King with meaningful poems, songs and music on Thurs. Jan. 12^th at 1:00 PM. Volunteers Grace, Lucy, Victor, Andrea and Phyllis will present the program accompanied by Isaac ben Ayala, pianist. Lunch of salmon salad or grilled chicken breast will be served at 12:15 PM. Recommended senior meal contribution: $2.00 and event contribution: $1.00. Please call the senior center office at 718-549- 4700 for meal reservations by Tues.  Jan. 10^th.

*On Fri. Jan. 13^th, enjoy the healing sound of *mBira (“im • BEER • uh”) music from Africa by mBira NYC. Nora and Susan will play spiritual and energizing thumb-piano music from Zimbabwe. Audience participation: clapping, singing and moving is encouraged. A nutritious kosher lunch of Italian roast chicken (legs) or gefilte fish loaf will be served at 12:15 PM. Senior meal contribution is $2.00 and event contribution: $1.00. Refreshments will be served. Please call the senior center office at 718-549- 4700 for meal reservations by Wed. Jan. 11^th.

On Tues. Jan. 17^th, Max Alvarez, author/public speaker, will present a multimedia presentation on “The Golden Age of Movie Musicals” at 1:00 PM. Lunch of fillet of sole or chicken salad will be served at 12:15 PM. Senior meal contribution is $2.00 and event contribution: $1.00. Refreshments will be served. Please call the senior center office at 718-549- 4700 for meal reservations by Fri. Jan. 13^th.

*New: Health & Relaxation class w/Kathleen will meet again on Wed. Jan. 25^th at 10:30 AM.

On Wed. Jan. 25^th, Cesare Civetta will present a spectacular multimedia presentation about the life achievements of Pete Seeger at 1:00 PM. Lunch of turkey meatloaf or tuna salad will be served at 12:15 PM. Senior meal contribution is $2.00 and event contribution: $1.00. Refreshments will be served. Please call the senior center office at 718-549- 4700 for meal reservations by Mon. Jan. 23^rd.

Celebrate Jan/Feb. Birthdays on Tues. Jan. 31^st with the sparkling Linda Ipanema, vocals, and her Dixie Cats (trio) at 1:00 PM. Lunch of chicken Francaise or egg salad will be served at 12:15 PM. Senior meal contribution is $2.00 and event contribution: $1.00. Refreshments will be served. Lunch of turkey meatloaf or tuna salad will be served at 12:15 PM. Recommended senior meal contribution: $2.00 and event contribution: $1.00. Please call the senior center office 718-549-4700 for meal reservations by: Fri. Jan. 27th.

All meals at JASA Van Cortlandt Senior Center are catered by Mauzone (kosher) Meal Service. We offer a daily alternate choice of main dish. Please call the senior center office to request the alternative meal option between 9:30 and 10:30 AM. Refreshments are served at all special events.

Note: *New Classes/Activities:  Health & Relaxation  (twice per month), Movement I (twice per month, starts on Mon. Feb. 13^th at 3 PM) Healthy Cooking demonstrations (once a month) and Healing mBira Music (once a month) are funded by a Health Initiative grant from CM Andrew Cohen.

We are located on the first floor of the Van Cortlandt Jewish Center at 3880 Sedgwick Ave. Take the Bronx #1, 2 or 10 bus to the intersection of Sedgwick Ave. and Van Cortlandt Ave. West. For more Information, please call the center office at   718-549-4700. 

Oilpro.Com Founder Pleads Guilty In Manhattan Federal Court To Hacking Into Competitor’s Computer System

Defendant Stole Information From Over 700,000 Customer Accounts Stored on a Competitor’s Database and Then Sought to Sell Oilpro.com to the Company He Had Hacked

  Preet Bharara, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that DAVID W. KENT, the founder of professional networking website Oilpro.com (“Oilpro”), pled guilty this morning before U.S. District Judge Denise L. Cote in Manhattan federal court to a superseding Information, which charged him with one count of intentionally accessing a protected computer without authorization.  The charge stemmed from KENT’s role in repeatedly hacking into a competitor’s database to steal customer information and attempting to sell Oilpro to the same company whose database KENT had hacked.

Manhattan U.S. Attorney Preet Bharara said:  “David Kent has admitted to his role in hacking into a competitor’s network and stealing client data in order to boost the value of Oilpro, a company he founded.  Kent then attempted to sell Oilpro to the very company he hacked.  Using cyber hacking to gain advantage over a competitor is not only an unfair business practice, but is a federal crime for which Kent has now pled guilty.”           

FBI Assistant Director William F. Sweeney said:  "Today, David Kent pled guilty to intentionally accessing a protected computer without authorization. This is a stern reminder to others that unauthorized access to a computer is a federal crime with severe penalties; even just a quick look at the data on the computer can lead to a prison sentence and that never leads to a leg up in business.”

According to the superseding Information, the previously filed Complaint, and statements made at public court proceedings:

In or about March 2000, KENT founded a website (“Website-1”) that provides, among other things, networking services to professionals working in the oil and gas industry.  Website-1 allows its members to create profiles, which includes personal and professional information.  As part of their profiles, members can also upload their resumes.  The profiles are contained in a database maintained by Website-1 (the “Members Database”).  Members are assigned login credentials (i.e., usernames and passwords) when they create their profiles.  Members use these login credentials to access their profiles.

In or around August 2010, KENT sold Website-1 for approximately $51 million to a publicly traded company headquartered in New York, NY (“Company-1”).  KENT entered into an employment agreement with Company-1 and agreed to continue to serve as the president of Website-1 after the acquisition.  However, KENT left Website-1 in September 2011 and launched Oilpro in October 2013.  Like Website-1, Oilpro provides networking services to professionals working in the oil and gas industry.  Oilpro is headquartered in Houston, Texas.

Between October 2013 and February 2016, KENT conspired to access information belonging to Website-1 without authorization and to defraud Company-1.  KENT accessed the Website-1 Members Database without authorization and stole customer information, including information from over 700,000 customer accounts.  KENT then exploited this information by inviting Website-1’s members to join Oilpro.  Similarly, one of Kent’s employees at Oilpro who previously worked for Website-1 (“CC-1”) accessed information in Website-1’s Google Analytics account without authorization and forwarded the information to KENT.  In the meantime, KENT attempted to defraud Company-1 by misrepresenting during discussions about a potential acquisition of Oilpro by Company-1 that Oilpro had increased its membership through standard marketing methods.          

KENT, 41, of Spring, Texas, was arrested on March 30, 2016.  KENT pled guilty today to one count of intentionally accessing a protected computer without authorization, which carries a maximum penalty of five years in prison.

The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

KENT is scheduled to be sentenced by Judge Cote on March 17, 2017, at 2:00 p.m.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.  Mr. Bharara also thanked the Office of International Affairs and the United Kingdom’s National Cyber Crime Unit (NCCU), and noted that the investigation is continuing.

Comptroller Stringer Finds Financial Reporting Deficiencies at Success Academy Schools

Inconsistent and Incorrect Reporting Created the Appearance of Lower Administrative Costs 

Billing Records Did Not Support Charges to NYC for Special Education Services 

Success Academy’s Management Arm Collected Duplicative Payments from its Schools

  Comptroller Scott M. Stringer released an audit of Success Academy Charter Schools-NYC’s financial controls, which found financial reporting deficiencies. The audit, which covers Fiscal Years 2013, 2014, and 2015, makes 28 recommendations to ensure Success Academy is in compliance with its own financial rules, as well as those of its charter authorizer and other oversight agencies.

Since 2014, the Comptroller’s Office has audited the City Department of Education (DOE) ten times, with ten additional audits currently ongoing, for a total of 20. This is the Comptroller’s fourth charter school audit to ensure taxpayer dollars were used appropriately. The charter schools were selected based on objective criteria, including geography, size, and publicly available financial data.

The audit of Success Academy Charter Schools-NYC found the following:

• Duplicative and questionable payments from Success Academy schools to the Success Academy management “Network,” which are inconsistent with the terms of their contract.
• An inability to demonstrate that some special education services were actually delivered to students, despite Success’s billing the DOE. The audit calls for the DOE to be reimbursed.
• Reporting inconsistencies, which make administrative costs appear lower to the public and oversight agencies – and in-classroom expenditures appear higher – than was actually the case.
• Lax record-keeping and missing documentation for loan agreements worth millions of dollars, which may have never been put in writing by Success.
• Noncompliance with Success Academy’s own fiscal controls over credit card and other spending.
• Clear violations of the internal financial rules under which Success claims to operate.

“Any entity receiving taxpayer dollars must operate efficiently and follow the rules. We found irregularities in this audit of Success Academy that raise serious concerns. Billing the DOE for special education services without records to verify that they were provided, financial reports that made administrative costs seem lower than they actually were, ineffective fiscal controls over credit card and other spending, missing loan agreements for millions of dollars — all were findings uncovered by this audit, ” Comptroller Scott M. Stringer said. “We found situations in which Success Academy was violating its own standards, or those of oversight agencies. We hope Success Academy will embrace our recommendations and adjust its practices. This isn’t about district versus charter schools—it’s about protecting taxpayer dollars and following the rules.”

Success Academy Charter Schools-NYC operated 24 charter schools in New York City, which served 8,715 students in Fiscal Year 2015 (FY 2015). The schools collectively maintain a “management agreement” with a legally separate entity formally known as “Success Academy Charter Schools, Inc.,” also known within the Success Academy organization as the “Network.”  Under the management agreement, the Success Academy Network provides management services, including financial-reporting services, to the Success Academy schools in exchange for a management fee of 15 percent of the per-pupil revenue that the Success Academy schools received from the City DOE. In FY 2015, the Success Academy schools collectively paid the Network a management fee of $18.3 million. The audit focused specifically on Success Academy Harlem 3, which necessitated examining some Network finances.

The audit found the following:

Duplicative Payments from the Success Academy Schools to the Success Academy Network

The audit found that in FY 2015, Success Academy schools paid the Success Academy Network an extra $624,342 for services that the Network should have provided in exchange for its $18.3 million management fee.  The services included staff training and “professional development,” printing, copying, and student assessments.

Incorrectly Classified Expenses Allowed Success to Overstate Spending on Students

The audit found that Success Academy classified its management fee expense inconsistently and incorrectly in its FY 2015 certified financial statements and its 2015 “Report Card” submitted to its authorizer, the State University of New York, creating the appearance that Success Academy was spending more money on educating students – and less on administrative costs – than was actually the case.

• In their certified financial statements, charter schools are required to report spending for both “program services,” meaning money spent directly on educating students, and “supporting services,” including administrative costs. The auditors found that Success Academy reported widely inconsistent versions of how much of its management fee went toward educating students – from none of it, to half, to 92 percent.
• In Fiscal Years 2013 and 2014, Success Academy reported its entire management fee – 100 percent – as “supporting services expenses.” During those two fiscal years, an average of 80.65 percent of Success Academy’s overall spending went to “program services,” while 19.35 percent went to “supporting services,” according to its certified financial statements.
• However, in its FY 2015 financial statements, Success Academy reported only 8 percent of its management fee as “supporting services expenses,” an about-face that created the appearance that more than 92 percent of its spending went directly toward educating students.
• Separately, the audit found, in its FY 2015 Annual Charter School Report Card to SUNY, Success Academy reported that half — 50 percent — of the same management fee was an “administrative expense.”
• The auditors determined that had Success Academy followed a consistent reporting method, it would have reported a lower amount of its overall spending — approximately 81 percent instead of 92 percent — went directly towards educating students.
• As a result, auditors determined that Success Academy understated its “supporting services expenses” by as much as $16 million – or 61.2 percent – which masked its true management and operational costs in its financial statements.

Charging the DOE for Special Education Services That May Not Have Been Provided

The audit found the Success Academy billed the DOE more than $50,000 for special education services that its records did not show it provided.

• In six of 21 sampled special education students at Success Academy Harlem 3 – or 28.6 percent – the audit found billing for a greater level of services or a longer duration of services than were documented as having been provided to the students.
• Based on a review of Individualized Education Programs (IEPs) and Success Academy records, the school failed to provide certain mandated special education services to 10 of the 21 sampled students – or 47.6 percent.
  • For five students, the DOE was incorrectly billed for more than $49,000 for services that were either not provided at all or not fully delivered.
  • In one case, Success Academy improperly calculated the length of time that one student received special education services (resulting in overbilling of nearly $1,500).
• On December 16, 2016, in response to a draft of the audit report, Success Academy provided additional documentation to support its special education billing, which did not significantly alter the report’s findings.  Although Success Academy’s newly-produced records arguably support the billing for special education services provided to one of the six students the auditors sampled, representing a combined total of $10,390 of the $50,825 in questioned billing, the auditors could not adequately establish their reliability because they were not produced during the audit, when Success Academy claimed they were “unavailable.”
• The audit recommends that Success Academies reimburse the DOE for special education services that were not provided.

Untimely and Missing Employee Background Checks

• New York State Education Law requires that all charter school employees be fingerprinted and undergo a criminal background check. When auditors examined files for a sample of 44 employees at Success Academy Harlem 3, they found that 61 percent – or 27 individuals – began working in the school before those checks were completed.
• In one case, an employee worked at Harlem 3 for four years and eight months before these checks were finished.

A Failure to Document or Obtain Required Approvals for Loan Agreements Totaling $8.5 million

• Success Academy schools borrowed $8,500,000 from the Network, but failed to record written loan agreements for $2,700,000 of those funds. The proceeds were used to finance operations at 15 schools.
• Success Academy provided auditors with six agreements for loans with balances totaling $5,800,000 that were signed by the then chairs of the boards of trustees of the charter school-borrowers.  However, Success Academy stated that it could not locate agreements for loans with balances totaling $2,700,000 (of which $250,000 was attributable to Harlem 3).  Moreover, Success Academy stated that it believed that agreements for the loans totally $2.7 million never existed in written form.

Among other findings:

• Success Academy did not maintain adequate controls over its fixed assets inventory as required by its charter. In its FY 2015 financial statements, Success Academy Harlem 3 reported that it had property and equipment valued at $24.8 million. The NYSED Fiscal Oversight Guidebook states that charter schools must inventory all assets and should maintain “complete, up-to-date inventory records.” Success Academy’s inventory records were deficient in several ways. For example, expensive equipment such as computers, smartphones, and cameras were not clearly assigned to an employee or place, and Success Academy did not conduct annual inventory inspections as recommended by the NYSED guidebook. Inventory controls are essential to reduce the possibility of waste, misuse, and theft and to ensure that public funds are being spent appropriately.
• Success Academy did not comply with its own fiscal policies and procedures to ensure that purchases made by network and school employees on behalf of schools were reasonable, appropriate, adequately supported, and properly authorized. Of $320,431 in sampled purchases, auditors questioned purchases totaling $312,088 – or 97.4 percent—based on Success Academy records that showed that Success’s own rules were not followed.  For example, Success Academy purchased services such as advertising, website design, and software support for sums exceeding $25,000 without competitive bidding or the specific justifications and management approval that its own rules require.
• In other instances, credit cards were used for purchases exceeding $500 without a record of the business purpose or that the purchase could not be paid by check, which would reflect a violation of Success’s own rules.
• Under New York State law, charter schools receive per-pupil funding from students’ school district of residence. Accordingly, Success Academy requires its schools to keep students’ proof of residency on file. When auditors reviewed records for 71 sampled students at Success Academy Harlem 3, they found that the school did not obtain appropriate proof of residency for 13 students – or 18 percent of the sample. The City DOE was billed $168,178 for those students, and auditors could not determine whether the charges were appropriate based on Success Academy’s records.
• On December 16, 2016, in connection with its formal, written response to the draft report, Success Academy provided the auditors with additional documentation that includes acceptable proof of residency for 5 of the 13 students cited in the report.

A.G. Schneiderman Announces Agreements With Six Major Retailers To Stop On-Call Shift Scheduling

Disney, Aeropostale, David’s Tea & Other Retailers Agree To Cease Burdensome Scheduling Practice Following Multistate Investigation; Agreements Will Benefit An Estimated 50,000 Workers Nationwide

These Are Latest In Series Of Groundbreaking National Agreements Secured By NY AG’s Office To End On-Call Scheduling At Major Retailers

  Attorney General Eric T. Schneiderman, along with attorneys general from seven other states and the District of Columbia, announced that six major retailers have agreed to stop using on-call shift scheduling following an inquiry by the multi-state coalition of AGs. An estimated 50,000 workers nationwide will benefit from the agreements to end the burdensome scheduling practice, which requires employees to call their employer – typically an hour or two before a scheduled shift – to find out if they will be assigned to work that day. The agreements with these six companies are the latest in a series of groundbreaking national agreements secured by the New York Attorney General’s office to end on-call scheduling at a number of major retailers.

The six companies – Aeropostale, Carter’s, David’s Tea, Disney, PacSun, and Zumiez – were among 15 large retailers who received a joint inquiry letter from the nine attorneys general in April of this year seeking information and documents related to their use of on-call shifts. These six companies reported that they were using on-call shifts, but after discussions with the AGs’ offices, all agreed to stop doing so, and none are currently using on-call shifts.

In addition to ending the use of on-call shifts, four of the companies --  Carter’s, Disney, David’s Tea, and Zumiez – all committed to providing employees with their work schedules at least one week in advance of the start of the workweek.  Such advance notice allows employees to plan ahead to cover child care and other obligations.

“On-call shifts are not a business necessity and should be a thing of the past. People should not have to keep the day open, arrange for child care, and give up other opportunities without being compensated for their time,” said Attorney General Schneiderman.  “I am pleased that these companies have stepped up to the plate and agreed to stop using this unfair method of scheduling.”

These six companies, as well as others involved in a 2015 inquiry by Attorney General Schneiderman’s office, all found alternative staffing methods for addressing unanticipated employee absences or fluctuations in business volume; typically, some kind of pool arrangement has been implemented in lieu of on-call shifts.

The collaboration among attorneys general stemmed from their collective concern about the impact of on-call shifts on employees and their families, as well as the national scope of the retail companies involved.

The April letter states, “Unpredictable work schedules take a toll on employees. Without the security of a definite work schedule, workers who must be “on call” have difficulty making reliable childcare and elder-care arrangements, encounter obstacles in pursuing an education, and in general experience higher incidences of adverse health effects, overall stress, and strain on family life than workers who enjoy the stability of knowing their schedules reasonably in advance.”

It continues, “Our letter today is prompted by the concerns outlined above and by our shared interest in the well-being of workers nationwide,” and notes that certain states have laws regarding reporting or call in pay laws applicable within those jurisdictions.

Attorney General Schneiderman’s Office sent letters to the following fifteen retailers and was joined by some or all of the attorneys generals with retail locations in their respective states: American Eagle, Aeropostale, Payless, Disney, Coach, PacSun, Forever 21, Vans, Justice Just for Girls, BCBG Maxazria, Tilly’s, Inc., David’s Tea, Zumiez, Uniqlo, and Carter’s. Nine of these companies responded that they did not use the practice of on-call scheduling or had recently ended it.

New York State has a “call in pay” regulation that provides, “An employee who by request or permission of the employer reports for work on any day shall be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.”  (12 NYCRR 142-2.3)

In 2015, as a result of an inquiry by Attorney General Schneiderman into on-call scheduling, brands including Abercrombie & Fitch, Gap, J.Crew, Urban Outfitters, Pier 1 Imports, and L Brands (parent company of Bath & Body Works and Victoria’s Secret) all agreed to end the practice of assigning on-call shifts.

The letters were signed by representatives of the attorneys general of California, Connecticut, the District of Columbia, Illinois, Maryland, Massachusetts, Minnesota, New York, and Rhode Island. Several offices signed only letters to retailers located within their states.