CEO And President Of Premium Ticket Resale Business Charged With Engaging In A Multimillion-Dollar Ponzi Scheme Resulting In Losses Of At Least $70 Million

Jason Nissen Is Alleged to Have Told Investors He Was Financing Large Purchases of Premium Tickets to Events Such As the Super Bowl, the World Cup, and “Hamilton,” and Instead He Used Investors’ Money on Himself and to Pay Back Other Investors

   Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeny Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that JASON NISSEN was arrested and charged in Manhattan federal court today with defrauding victims of at least $70 million by falsely representing that he was using the victims’ money to further a profitable, multimillion-dollar wholesale ticket business.  NISSEN was arrested this morning and will be presented in Manhattan federal court later today. 

Acting Manhattan U.S. Attorney Kim said:  “Jason Nissen claimed he was investing in premium tickets for events like the Super Bowl, the World Cup and the Broadway hit ‘Hamilton,’ but as alleged, Nissen was actually cheating his investors out of over $70 million and spending it on himself. The veneer of a successful and interesting business was allegedly just that, an alleged cover for a massive Ponzi scheme.”      

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:   “As charged today, Nissen represented his business as an investment opportunity for those willing to finance the purchase of large quantities of premium tickets to a number of sporting events and entertainment venues.  The tickets were supposed to be sold for profit, but they weren’t.  As alleged, Nissen eventually defrauded his victims out of at least $70 million collectively, all of which he used in furtherance of his scheme and for his own personal gain.  For Nissen, the final quarter didn’t prove as profitable as anticipated; he must now face the penalty for his actions.”

According to the Complaint filed in Manhattan federal court:[1]

Since 2012, NISSEN has operated a ticket resale business (the “Ticket Company”) located in Manhattan, New York, through which NISSEN purchased large quantities of premium tickets for sporting and entertainment events, and then resold such tickets for a profit.  NISSEN was the Ticket Company’s chief executive officer and president.  

The Ticket Company’s website states that “[The Ticket Company] is an industry leader in providing VIP access and premium tickets to all concerts, Broadway theatre, red carpet premieres and sporting events worldwide . . . the Ticket Company stocks one of the largest revolving inventories for sports, concerts, and theatre worldwide.”

From 2015 to May 2017, NISSEN defrauded multiple victims of tens of millions of dollars through the Ticket Company.  NISSEN represented to victims that he would use money lent to him and his ticket business by victims to purchase bulk quantities of premium tickets to sporting and entertainment events such as the Super Bowl, the World Cup, the U.S. Open, and “Hamilton,” and then resell the tickets at a profit.  However, in truth and in fact, NISSEN used the victims’ money in large part to repay other victims and to enrich himself. 

For example, one victim, referred to as “Victim-2” in the Complaint, gave NISSEN and his ticket business more than $1.9 million to be used for the bulk purchase of tickets to a UFC fight in New York to be resold by NISSEN.  Instead of purchasing tickets, NISSEN used the money as follows: (i) he made two cash withdrawals – one for $20,000 and the other for $23,250; (ii) he transferred $383,000 to the bank account of another company he controlled to bring that company’s account balance out of a negativebalance of about $382,000 to a positive balance of about $578; and (iii) he transferred $1,500,050 to his personal bank account, which had a balance of $88 at the time, and then that same day, NISSEN transferred $1,500,025 from his personal account to another victim to whom he owed money. 

To further perpetuate his fraudulent scheme and to raise additional sums from victims, NISSEN falsified financial documents and inflated accounts receivable ledgers, which NISSEN presented to certain victims as purported proof that their money was being used to purchase premium tickets for resale. 

On May 7, 2017, unable to obtain more financing to continue the scheme through existing or new victims, NISSEN admitted to an executive of Victim-2 that he had been operating a Ponzi scheme.  When the CFO of Victim-2 asked NISSEN the next day whether a bank document that NISSEN had previously provided to Victim-2 was forged, NISSEN admitted he had fabricated the bank document.  When asked how he had done so, NISSEN replied: “Photoshop.  Ever hear of it?”  

Two days later, on May 10, 2017, NISSEN told another victim, referred to in the Complaint as “Victim-1,” that he had been committing a fraud and that he had fabricated the income numbers of the Ticket Company that he had been reporting to Victim-1.

In total, JASON NISSEN defrauded victims of at least $70 million.     

NISSEN, 44, of Roslyn, New York, has been charged with one count of wire fraud, which carries a maximum sentence of 20 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.

Mr. Kim praised the investigative work of the FBI and noted that the investigation is continuing. 

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

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

NYPD SERGEANT INDICTED FOR MURDER AND OTHER CHARGES IN DEATH OF DEBORAH DANNER

Sgt. Hugh Barry Charged with Fatally Shooting Bronx Woman in Her Home

  Bronx District Attorney Darcel D. Clark today announced that a New York City Police Department sergeant has been indicted for second-degree Murder, first and second-degree Manslaughter and Criminally Negligent Homicide in the fatal shooting of Deborah Danner in her Bronx apartment on October 18, 2016, when he and other police officers responded to a call of an emotionally disturbed person. 

  District Attorney Clark said, “A special grand jury investigated this case for more than two months. After a thorough, deliberate investigation, they have indicted NYPD Sergeant Hugh Barry for causing the death of Ms. Danner. When I asked last December that a special grand jury be impaneled, I said there would be no timetable, and that a fair investigation would take place and go wherever the evidence takes it. I commend the grand jurors for their painstaking work and for giving so much time away from their families. 

  “I want to express my condolences again to the Danner family for the heartbreaking loss they have suffered. I thank them for their cooperation and patience throughout these last seven months. 

  “The men and women of the NYPD protect and serve us, and face the possibility of danger every time they respond to calls of emotionally disturbed persons, domestic violence incidents and other crises. They answer thousands of these calls each year without incident. I hope that measures will be taken to prevent another tragedy such as this.”

  District Attorney Clark said the defendant, Hugh Barry, 31, a sergeant in the New York City Police Department assigned to the 43rd Precinct in the Bronx, was arraigned today before Bronx Supreme Court Justice Robert Neary and released on $100,000 bond. He is due back in court on July 7, 2017.

  Barry was indicted on charges of second-degree Murder, first and second-degree Manslaughter and Criminally Negligent Homicide. If convicted of the top charge, he could face up to life in prison. 

  According to the investigation, at about 6 p.m. on October 18, 2016, police officers from the 43rd Precinct responded to 66-year-old Ms. Danner’s seventh-floor apartment at 630 Pugsley Avenue in the Castle Hill section of the Bronx for a 911 call for an emotionally disturbed woman who was screaming in the hallway. Barry arrived after police and Emergency Medical Service EMTs. While they attempted to take Ms. Danner into custody to be evaluated at a hospital, Ms. Danner is alleged to have refused to go to the hospital, at one point holding a pair of scissors and then holding a wooden bat toward Barry before he shot her two times.

  The investigation revealed that, based on these circumstances and his training, Barry did not avail himself of other options before using deadly physical force.

  District Attorney Clark thanked Chief Appellate Attorney Peter D. Coddington and Senior Appellate Attorney Matthew B. White of the Appeals Bureau and Christine Scaccia, Chief of the Homicide Bureau, for their assistance in the case.

  An indictment is an accusatory instrument and not proof of a defendant’s guilt.

Comptroller Stringer Audit: Department of Finance Gave $4 Million in Veterans’ and School Tax Reductions to 1,500 Ineligible Property Owners

An additional $2 million may have been lost to ineligible owners of 571 co-ops and other properties.

  The Department of Finance (DOF) improperly gave away over $4 million in property tax reductions that are intended to benefit veterans and individual homeowners, a new audit from New York City Comptroller Scott M. Stringer shows. The audit report shows that DOF improperly granted or continued Veterans’ Exemptions to over 1,500 ineligible property owners.  In more than 1,000 of those cases, DOF failed to remove the tax breaks after the eligible veteran or family member moved or passed away, and the agency also allowed 60 corporations and LLC’s to receive the exemptions inappropriately.  In some cases, the eligible veterans had moved away in the 1960s, in other cases, the veteran had died in the early 2000s, yet DOF allowed the properties to continue receiving Veterans’ Exemptions through at least July 1, 2016.

 The Comptroller’s audit analyzed records regarding property owners who have received Veterans’ Exemptions over a six-year period beginning July 1, 2011 and calculated the losses from improperly-continued exemptions through June 30, 2017. In total, the Comptroller’s Office identified over $4 million lost to the City from tax reductions improperly given to ineligible property owners through Veterans’ and School Tax exemptions.

 In addition, DOF allowed Veterans’ Exemptions and resulting tax deductions to continue for 571 properties—456 cooperative properties and 115 others—after the eligible veteran died, where no other eligible recipient was named in DOF’s records. Those cases may have cost the city nearly $2 million more in improper tax reductions.

 “This is just wrong. When city government stops minding the store, city taxpayers lose. As Memorial Day approaches, we’re finding out that our city government is handing over millions of dollars that are supposed to help our veterans—to those who aren’t veterans. It’s incredible,” said New York City Comptroller Scott M. Stringer. “Our veterans mean so much to our city and our country. With 1,500 property owners getting veterans’ tax breaks they haven’t earned, it’s time for our Department of Finance to correct the inequity and recover the funds that should be supporting essential City services.” 

Key findings from the audit include:

• DOF failed to remove Veterans’ Exemptions from 740 ineligible properties that were transferred to owners who were not authorized exemption-recipients, costing the City at least $1,654,869 in uncollected revenue. 

• DOF failed to remove Veterans’ Exemptions from at least 341 properties after the eligible homeowners died, which resulted in the loss of at least $798,346.

• DOF may have inappropriately applied Veterans’ Exemptions and resulting tax reductions totaling $1,804,979 to 456 cooperative properties and 115 other properties after the eligible veteran’s death. 

• DOF allowed 162 homeowners to receive multiple Veterans’ Exemptions simultaneously, which is not allowed.

• DOF allowed at least 60 properties owned by ineligible corporations and limited liability companies (LLCs) to improperly receive Veterans’ Exemptions. As to those 60 instances, the audit covered a seven-year period dating back to July 1, 2010.

The Comptroller’s audit laid out a series of 18 recommendations for DOF to correct the tax rolls, recoup lost revenue, and prevent recurrence of these costly errors going forward.

Those recommendations include: 

• Remove Veterans’ Exemptions from properties that were transferred from eligible to ineligible owners, retroactive to the date of transfer. 

• Implement controls to remove Veterans’ Exemptions retroactively to the date of transfer when new owners who do not demonstrate eligibility for them.

• Recover the $1,654,869 in unwarranted tax reductions that resulted from the improper continuation of Veterans’ Exemptions after the properties were transferred to new, presumptively-ineligible owners.

• Verify whether homeowners eligible for Veterans’ Exemptions are deceased as reported by the Social Security Administration (SSA) and this audit report, and determine whether the current property owners are eligible for the exemption as qualified recipients.

• Implement controls to remove the exemptions from properties whose eligible owners are deceased, retroactive to the date of death. 

• Recover the $798,346 in unwarranted tax reductions that resulted from the improper continuation of Veterans’ Exemptions after the qualifying homeowners died.

• Investigate whether the 456 cooperative units and 115 other properties that have continued to receive Veterans’ Exemptions following the death of the eligible veteran-homeowner are currently owned by eligible individuals.

• Recover the $915,173 in unwarranted tax reductions improperly granted to properties containing four or more units. 

• Remove the unwarranted Veterans’ Exemptions from properties owned by either corporations or LLCs. 

• Implement adequate controls to prevent properties owned by corporations or LLCs from receiving Veterans’ Exemptions and school tax exemptions.

• Implement computer edit checks that will automatically:
  • Reject Veterans’ Exemptions for properties owned by corporations and LLCs;
  • Prorate Veterans’ Exemptions for properties that contain more than four units; and
  • Reject multiple Veterans’ Exemptions for each on property owned by an individual veteran or other eligible owner.

To read the full audit, click here.

A.G. Schneiderman Announces Criminal Guilty Plea And Multi-Million Dollar Civil Settlement With Narco Freedom

Narco Freedom Defrauded Medicaid And Exploited Its Patients By Forcing Them To Attend Excessive And Medically Unnecessary Substance Abuse Treatment Services

  Attorney General Eric T. Schneiderman announced today the guilty plea and a multi-million dollar civil settlement with Narco Freedom Inc., a Bronx-based not-for-profit provider of substance abuse treatment, for its participation in a criminal enterprise.  At the time of its indictment in 2015, Narco Freedom was an enrolled Medicaid provider that received nearly $40 million annually in taxpayer-funded reimbursement.  In its plea and a parallel State civil settlement agreement, Narco Freedom admitted today to stealing millions of dollars from the Medicaid program through the actions of its former chief executive officer Alan Brand and subsequent chief executive officer Gerald Bethea. In New York State Supreme Court, Bronx County, Narco Freedom, pled guilty to one count of Enterprise Corruption, a class B felony, three counts of Grand Larceny in the First Degree, a class B felony, and two counts of Offering a False Instrument for Filing the First Degree, a class E felony. 

“Narco Freedom operated a years-long criminal enterprise that ripped off taxpayers and took advantage of New Yorkers in need of substance abuse treatment,” said Attorney General Schneiderman. “Using Medicaid to further one’s bottom line at the expense of those who are struggling with abuse or addiction is shameful.”

The long-term investigation by the Attorney General’s Medicaid Fraud Control Unit (“MFCU”) culminated in a March 2015 indictment charging Narco Freedom and numerous executives with operating a criminal organization that defrauded Medicaid and syphoned funds meant for its patients for the enrichment of their own lifestyles.  That indictment included charges against Narco Freedom, the former chief executive Alan Brand, his son Jason Brand, Gerald Bethea, the chief executive at the time, and the controller Richard Gross.  The Attorney General also filed a civil action seeking asset forfeiture and other remedies, including treble damages and penalties under the New York State False Claims Act.  The indictment and civil action alleged that Narco Freedom stole at least $27 million from the Medicaid program by violating patients’ rights, submitting claims for excessive services, and by operating an unregulated residential treatment program.  The arrests and civil action stopped the illegal business practices of Narco Freedom that exploited the Medicaid program and thousands of Medicaid recipients, resulting in many millions of dollars in savings to Medicaid. 

As part of its plea and civil agreements, Narco Freedom acknowledged that it stole from Medicaid by seeking reimbursement for excessive and medically unnecessary services that it had required its patients to receive.  In addition to operating substance abuse treatment programs, Narco Freedom provided transitional housing.  Today, Narco Freedom acknowledged that it violated the rights of its residents and illegally conditioned residency on attendance at its own substance abuse treatment program.  Narco Freedom further admitted to filing false statements with various state agencies, including the New York State Department of Health and the Office of the New York State Attorney General, Charities Bureau, in efforts to deceive and defraud these agencies.  These filings were filed and signed by Alan Brand and the controller of Narco Freedom, Richard Gross. Prosecutions against Narco Freedom’s former executives remain pending.

Soon after Narco Freedom was indicted, a federal district court judge appointed a temporary receiver to take control of its finances and run the organization.  In September 2015, Narco Freedom ceased treating patients and transferred their care to other substance abuse treatment providers.  Narco Freedom filed for bankruptcy in January 2016. A bankruptcy trustee will take steps to dissolve Narco Freedom pursuant to the State’s not-for-profit corporation laws.  Earlier this month, the bankruptcy court approved a $118 million settlement to settle Narco Freedom’s outstanding government claims, including those of New York State and the federal government, though the precise amount to be distributed to the State in the bankruptcy proceeding is yet to be determined.

In court today, Supreme Court Justice Steven L. Barrett sentenced Narco Freedom to a conditional discharge. 

The Attorney General’s office has worked closely with various state agencies to ensure the continuity of care for all of the patients who used Narco Freedom’s services.  In particular, the Attorney General would like to thank the New York State Office of Alcoholism and Substance Abuse Services, the Office of the New York State Medicaid Inspector General, the New York State Department of Health, the Human Resources Administration of the City of New York, and the Civil Division of the United States Attorney’s Office for the Southern District of New York.

Please report suspected Medicaid fraud in New York State to the Attorney General’s Office at 800-771-7755.

STATEMENT FROM MAYOR DE BLASIO ON INDICTMENT OF NYPD SERGEANT

  "The loss of Deborah Danner was a tragedy felt deeply by our city.  Now that the grand jury has made its decision, we have full faith in the district attorney to lead a fair and thorough prosecution."

STATEMENT FROM ASSEMBLYMAN SEPULVEDA ON INDICTMENT IN POLICE SHOOTING OF DEBORAH DANNER

"We respect the grand jury's decision and look forward to the swift resolution of the case."

State Assemblyman Luis Sepulveda today called today's indictment of an  NYPD police sergeant in the shooting death of a mentally disturbed elderly woman in his Assembly District "a step that will now bring the issue into a court of law, where justice can prevail."

NYPD Sergeant Hugh Barry was indicted by a Bronx grand jury on murder, manslaughter and criminally negligent homicide charges in the Oct. 18, 2016 shooting death of 66-year-old Castle Hill resident Deborah Danner, who had a long history of mental illness.

Police said Danner came at the officer in her Pugsley Avenue apartment, swinging a bat at him "at a close distance." The officer fired two shots, hitting her. She died later at Jacobi Hospital.

At issue is whether the officer, an eight-year department veteran working in the 43rd Precinct, had time to use his Taser stun gun to stop her.

"I was not there, but it would seem, and apparently the grand jury believes, that the officer had time to use a non-lethal weapon to stop Miss Danner," said the Assemblyman. "It is a shame that Deborah Danner had to die. We respect the grand jury's decision and look forward to the swift resolution of the case."

STATEMENT FROM BOROUGH PRESIDENT DIAZ RE: The Indictment of Sgt. Hugh Barry

  “What happened to Deborah Danner was an outrage. Today’s announcement that the police officer involved in Ms. Danner’s fatal shooting will face charges is a positive first step towards addressing an issue that has been long neglected, and that is how to deal with our mentally ill residents in volatile situations. Clearly, there were options available to Sgt. Barry which he failed to implement, and his conduct in this case is by no means a reflection on the great work of the New York City Police Department and its dedicated members. 

"My office has the utmost confidence in District Attorney Darcel D. Clark and her staff, and will continue to monitor this case as it moves forward. We once again offer our condolences to Ms. Danner’s family during this difficult time,” said Bronx Borough President Ruben Diaz Jr.

Congressman Eliot L. Engel, on President's Decision to Pull U.S. Out of Paris Climate Agreement

  Congressman Eliot L. Engel, the Ranking Member on the House Foreign Affairs Committee and a top Member on the House Energy and Commerce Committee, issued the following statement in response to President Trump signaling he will pull the United States out of the Paris Climate Agreement:

“I am deeply disappointed that President Trump has decided to pull the United States out of the Paris Agreement, the most comprehensive global climate agreement in history. This shortsighted decision threatens to unravel the entire agreement, imperiling the planet and further straining relations with our allies.

“Climate change is a global crisis that demands American leadership. What does it say when the President of the United States abdicates that responsibility, brazenly ignoring facts and evidence? Whether the President or his Administration want to admit it, climate change is real, driven by human activity, and cannot be ignored.

“We have a moral obligation to our children and our grandchildren, and to ourselves. This is not a future problem; we are already seeing the effects of our changing climate through excess flooding, stronger storm systems, erratic weather patterns, and extreme drought. We cannot put our heads back in the sand, recklessly consuming fossil fuels while expanding our carbon footprint. We must refocus our energy sector on cheap, renewable sources of fuel before climate change gets even worse.”Congressman Eliot L. Engel, the Ranking Member on the House Foreign Affairs Committee and a top Member on the House Energy and Commerce Committee, issued the following statement in response to President Trump signaling he will pull the United States out of the Paris Climate Agreement: