Congressman George Santos Charged in Campaign Finance Fraud Scheme

Santos Allegedly Filed Fraudulent Fundraising Reports with the FEC to Obtain Financial Support for the Campaign and Repeatedly Charged the Credit Cards of Campaign Contributors Without Authorization 

A federal grand jury in Central Islip, New York, returned a superseding indictment today charging George Anthony Devolder Santos (George Santos), 35, a U.S. Congressman representing the Third District of New York, with one count of conspiracy to commit offenses against the United States, two counts of wire fraud, two counts of making materially false statements to the Federal Election Commission (FEC), two counts of falsification of records submitted to the FEC, two counts of aggravated identity theft, and one count of access device fraud. Santos was previously charged with an additional seven counts of wire fraud, three counts of money laundering, one count of theft of public funds, and two counts of making materially false statements to the U.S. House of Representatives in the original indictment.

According to court documents, Santos, who was elected to Congress last November and sworn in as the U.S. Representative for New York’s Third Congressional District on Jan. 7, engaged in two fraudulent schemes, in addition to the multiple fraudulent schemes alleged in the original indictment.

The Party Program Scheme

According to the allegations in today’s superseding indictment, during the 2022 election cycle, Santos was a candidate for the U.S. House of Representatives in New York’s Third Congressional District. Nancy Marks was the treasurer for his principal congressional campaign committee. During that election cycle, Santos and Marks allegedly devised and executed a fraudulent scheme to obtain money for the campaign by submitting materially false reports to the FEC on behalf of the campaign, in which Santos and Marks inflated the campaign’s fundraising numbers for the purpose of misleading the FEC, a national party committee, and the public.

Specifically, the purpose of the scheme was to ensure that Santos and his campaign qualified for a program that the national party committee administered, pursuant to which the national party committee would provide financial and logistical support to Santos and his campaign committee. To qualify for the program, Santos had to demonstrate, among other things, that his congressional campaign had raised at least $250,000 from third-party contributors in a single quarter.

To create the public appearance that his campaign had met that financial benchmark and was otherwise financially viable, Santos and Marks allegedly agreed to falsely report to the FEC that at least 10 family members of Santos and Marks had made significant financial contributions to the campaign, when Santos and Marks both knew that these individuals had neither made the reported contributions nor given authorization for their personal information to be included in such false public reports. In addition, understanding that the national party committee relied on FEC fundraising data to evaluate candidates’ qualification for the program, Santos and Marks allegedly agreed to falsely report to the FEC that Santos had loaned the campaign significant sums of money, including in one instance a $500,000 loan, when, in fact, Santos had not made the reported loans and, at the time the loans were reported, did not have the funds necessary to make such loans. 

Through the execution of this scheme, Santos and Marks ensured that Santos met the necessary financial benchmarks to qualify for the program that the national party committee administered. As a result of qualifying for the program, the congressional campaign received financial support.

The Credit Card Fraud Scheme

As alleged in the superseding indictment, between approximately December 2021 and August 2022, Santos devised and executed a fraudulent scheme to steal the personal identity and financial information of contributors to his campaign. He then allegedly charged contributors’ credit cards repeatedly, without their authorization. Because of these unauthorized transactions, funds were transferred to Santos’ campaign, to the campaigns of other candidates for elected office, and to his own bank account. To conceal the true source of these funds and to circumvent campaign contribution limits, Santos falsely represented that some of the campaign contributions were made by other persons, such as his relatives or associates or other contributors, rather than the true cardholders. Santos did not have authorization to use the cardholders’ names in this way.

For example, in December 2021, one contributor (the contributor) texted Santos and others to make a contribution to his campaign, providing billing information for two credit cards. In the days after he received the billing information, Santos allegedly used the credit card information to make numerous contributions to his campaign and affiliated political committees in amounts exceeding applicable contribution limits, without the contributor’s knowledge or authorization. To mask the true source of these contributions and thereby circumvent the applicable campaign contribution limits, Santos falsely identified the contributor for one of the charges as one of his relatives. In the following months, Santos allegedly repeatedly charged the contributor’s credit card without the contributor’s knowledge or authorization, attempting to make at least $44,800 in charges and repeatedly concealing the true source of funds by falsely listing the source of funds as Santos himself, his relatives, and other contributors. On one occasion, Santos charged $12,000 to the contributor’s credit card, ultimately transferring the vast majority of that money into Santos’s own personal bank account.

The case is currently scheduled for a status conference before Judge Seybert on Oct. 27. If convicted, he faces a mandatory minimum penalty of two years in prison for the aggravated identity theft counts and a maximum penalty of 20 years in prison for the other counts. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Breon Peace for the Eastern District of New York, Assistant Director in Charge James Smith of the FBI New York Field Office, and Nassau County District Attorney Anne T. Donnelly made the announcement.

The FBI is investigating the case, with assistance from the Nassau County District Attorney’s Office.

Trial Attorneys Jacob Steiner and John Taddei of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Ryan Harris, Anthony Bagnuola, and Laura Zuckerwise for the Eastern District of New York are prosecuting the case, with assistance from Paralegal Specialist Rachel Friedman. Former Trial Attorney Jolee Porter of the Criminal Division’s Public Integrity Section provided substantial contributions to the prosecution.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

CEO And Business Partner Charged With Massive Scheme To Defraud New York City’s Homeless Services Programs

 

Defendants Perpetrated the Scheme Through Childrens Community Services, a Non-Profit Organization that Had Over $900 Million in Contracts with the City

Damian Williams, the United States Attorney for the Southern District of New York, and Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”), announced today the indictment of PETER WEISER and THOMAS BRANSKY for conspiring to defraud the City of New York (the “City”) of millions of dollars through a multifaceted scheme to corruptly profit from the provision of temporary housing and homeless services in New York City.  BRANSKY was the Chief Executive Officer of Childrens Community Services, Inc. (“CCS”), a purported not-for-profit homeless services provider formed and initially funded in part by WEISER.  BRANSKY, in turn, fraudulently steered lucrative service contracts ultimately paid for by the City to a group of entities owned and controlled by WEISER.  WEISER and BRANSKY intentionally concealed WEISER’s involvement in the formation and operation of CCS and his ownership and control of certain entities that contracted with CCS, including by submitting false statements and documents to the City.  WEISER and BRANSKY were arrested earlier today and will be presented before U.S. Magistrate Judge Valerie Figueredo in Manhattan federal court later today.  The case is assigned to U.S. District Judge Vernon Broderick. 

U.S. Attorney Damian Williams said: “As alleged, the defendants engaged in a yearslong scheme to pocket millions in taxpayer dollars through the systematic exploitation of City programs intended to meet the basic needs of some of the most vulnerable New Yorkers – homeless men, women, and children.  Worse still, the defendants allegedly perpetrated this massive scheme under the guise of a not-for-profit organization named ‘Childrens Community Services.’  Thanks to the persistent efforts of the New York City Department of Investigation and the Special Agents and career prosecutors of my Office, these two men will face justice for their brazen graft.” 

DOI Commissioner Jocelyn E. Strauber said: “These two defendants, as charged, used New York City’s need for providers of homeless services as an opportunity for fraud and personal profit.  Through a nonprofit entity, Childrens Community Services, and related companies, the defendants caused the City to pay over $50 million that the City would not otherwise have paid to these entities, including in inflated prices and unreasonable mark-ups for goods and services, as alleged in the Indictment.  As charged, the defendants concealed their scheme by straw ownership of companies, false statements, and fictitious bids.  I am grateful for the meticulous, exhaustive work of DOI's investigators and of the U.S. Attorney's Office for the Southern District of New York, our partners in the fight to protect critical public resources from wrongdoers, and for the cooperation of the City Department of Social Services.”

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

From at least in or about 2014 through at least in or about January 2020, THOMAS BRANSKY, who was the Chief Executive Officer of CCS, and his business partner, PETER WEISER, conspired to defraud the City agencies responsible for the administration of homeless services.  Between in or about November 2014 and in or about February 2020, CCS was awarded 12 contracts with the City worth approximately $913 million.  BRANSKY fraudulently steered lucrative service contracts with CCS — contracts ultimately paid for by the City — to a group of affiliated entities owned and controlled by WEISER (the “Weiser Entities”).  To carry out their scheme, WEISER, BRANSKY, and other individuals who worked with them intentionally concealed WEISER’s involvement in the formation and operation of CCS and his ownership and control of certain of the Weiser Entities from the City, including by submitting false statements and documents to the City.

WEISER and his associates created the Weiser Entities to profit unlawfully from the City’s provision of homeless services by capturing downstream revenues arising from CCS’s massive contracts with the City.  For the most part, the Weiser Entities were created for the sole purpose of providing goods and services to CCS.  WEISER and BRANSKY attempted to disguise the Weiser Entities as legitimate providers of, among other things, IT services and hardware, security services, office and living furniture, and food services.  In reality, and with few exceptions, the Weiser Entities were fly-by-night companies with no or few employees.  In most cases, the Weiser Entities obtained goods and services from legitimate third-party vendors and then re-sold those goods and services to CCS at marked-up and, in some cases, grossly inflated prices.  For example:

• Delta IT Solutions LLC (“Delta”): In or about December 2016, WEISER and his associates created the Weiser Entity Delta to sell IT services and hardware to CCS at inflated prices and in violation of the City’s conflict-of-interest policies.  Internal Delta records reflect significant markups for goods that Delta purchased from vendors (such as Amazon and Staples) and resold to CCS.  For example, an internal Delta pricing list from 2019 shows markups of up to 330% for items such as routers, printer cables, and surge protectors.  Likewise, Delta charged a 331% markup for telecom services that Delta obtained from a third-party provider.  These exorbitant markups were not disclosed to the City.

• AMX Distributors, LLC (“AMX”): WEISER and one of his associates created the Weiser Entity AMX to source and supply various consumer goods, including furniture, to CCS at inflated prices and in violation of the City’s conflict-of-interest policies.  Through AMX, WEISER sold furniture and supplies to CCS, including, among other things, beds, mattresses, sheets, towels, pillows, sofas, cribs, microwaves, refrigerators, chairs, tables, and toiletries.  WEISER sold these goods to CCS at unjustified markups of up to 309%.

• 511 Realty Management, LLC (“511 Realty”): CCS contracted with a Weiser Entity called 511 Realty to lease certain residential and commercial properties.  However, 511 Realty provided no legitimate services.  Instead, 511 Realty made monthly rent payments to third-party landlords on CCS’s behalf.  For this, 511 Realty charged hefty markups to CCS and, as a result, the City.  For example, CCS would make monthly payments to 511 Realty of approximately $24,000 for CCS’s office space in the Rockaway Offices.  511 Realty, in turn, would pay the landlord $17,500 monthly, representing a 37% markup, for essentially doing nothing more than writing a check; the markup increased to 46% by in or around 2019.  

• Pronto Cleaning Services, LLC (“Pronto”): A Weiser Entity called Pronto Cleaning contracted with a legitimate janitorial services company to provide cleaning services at CCS offices and facilities.  Pronto, which had no employees, resold those cleaning services to CCS at an approximately 56% markup, which was paid for by the City. 

WEISER and BRANSKY, along with their coconspirators, attempted to conceal the scheme from the various City agencies and components responsible for the administration of homeless services.  The defendants and their coconspirators solicited straw owners to appear on paper as the owners of the Weiser Entities when, in reality, WEISER owned, financed, and controlled each Weiser Entity.  Moreover, WEISER, BRANSKY, and their coconspirators made and caused to be made false statements to City officials and personnel about, among other things, the ownership of the Weiser Entities, the interconnectedness of the Weiser Entities, the selection process through which CCS awarded contracts to the Weiser Entities, and the ability and experience of the Weiser Entities in providing quality goods and services.

Likewise, to evade and bypass the City’s fraud-detection and cost-saving policies and procedures, WEISER and BRANSKY, along with their coconspirators, caused CCS to award contracts to the Weiser Entities without using a competitive bidding process, conducting proper due diligence, completing necessary documentation, or obtaining requisite approvals.  When questioned by the City, BRANSKY at times made and caused to be made false statements, including that the required documentation had been misplaced when, in fact, it had never been completed.  At other times, WEISER created and/or solicited fictitious competing bids and caused those fictitious bids to be submitted to the City to secure contracts between CCS and the Weiser Entities and to conceal the inflated pricing. 

WEISER, BRANSKY, and their coconspirators caused CCS — and, as a consequence, the City — to pay the Weiser Entities more than $50 million for goods and services.  The City would not have authorized or made these payments had proper and truthful disclosures about the Weiser Entities been made.  The fraudulent scheme harmed the City in numerous ways, including: (i) the City paid inflated prices resulting from the unnecessary insertion of middlemen (the Weiser Entities) between legitimate providers of goods and services and CCS; (ii) the City paid objectively unreasonable markups for certain goods and services; and (iii) CCS’s subversion of the mandatory bidding process and concealment of its conflicts of interest exposed the City to the risk — often realized — that the City would not obtain the best value for its money.

Through the scheme, WEISER collected more than $7 million in illicit profits, and BRANSKY earned more than $1.2 million in salary as the CEO of CCS.

WEISER, 80, of Lawrence, New York, and BRANSKY, 47, of Woodmere, New York, are each charged with one count of conspiracy to commit wire fraud and one count of wire fraud, which each carry a maximum sentence of 20 years in prison, and one count of embezzlement of government funds, which carries a maximum sentence of 10 years in prison.  In addition, WEISER is charged with one count of money laundering, which carries a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of DOI and the Special Agents of the U.S. Attorney’s Office. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas Chiuchiolo, Jilan Kamal, and Sagar K. Ravi are in charge of the prosecution.

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

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

Attorney General James, Governor Hochul, Senator Gounardes, and Assemblymember Rozic Take Action to Protect Children Online

 

New Legislation Would Limit Social Media Features Harmful to Teen Mental Health, Prevent Collection of Children’s Personal Data Legislation Comes as Mental Health Issues Among Vulnerable Teens Have Doubled in Recent Years

New York Attorney General Letitia James, Governor Kathy Hochul, State Senator Andrew Gounardes, and Assemblymember Nily Rozic announced new legislation today to help keep children safe online and prevent dangerous health consequences of addictive social media platforms. Recent research has shown devastating mental health effects associated with children and young adults’ social media use, including increased rates of depression, anxiety, suicidal ideation, and self-harm. The advent of dangerous, viral ‘challenges’ being promoted through social media has further endangered children and young adults. Children also face unique risks when their data is collected online. The two bills, both sponsored by State Senator Gounardes and Assemblymember Rozic, will protect children by prohibiting online platforms from collecting and sharing their personal data without consent and limiting addictive features of social media platforms that are known to harm their mental health and development. 

“Social media platforms are fueling a national youth mental health crisis that is harming children’s wellbeing and safety,” said Attorney General James. “Young New Yorkers are struggling with record levels of anxiety and depression, and social media companies that use addictive features to keep minors on their platforms longer are largely to blame. This legislation will help tackle the risks of social media affecting our children and protect their privacy. I applaud Senator Gounardes and Assemblymember Rozic for sponsoring this legislation, I thank Governor Hochul for her focus on this issue, and I am proud to help advance these commonsense measures to protect the next generation of New Yorkers.”  

“Our kids are in crisis, and the adults in the room need to step up. The statistics are extraordinarily disturbing: teen suicide rates are spiking, and diagnoses of anxiety and depression are surging,” said Governor Kathy Hochul. “It's critical we all stand together to address the youth mental health crisis, and I'm proud to partner with Attorney General James, Senator Gounardes, and Assemblymember Rozic to fight for our kids' future.”

“As a parent of two young children, taking legislative action to protect our children on social media is personal,” said State Senator Andrew Gounardes. “For years we’ve implemented safeguards to shield youth from major industries such as tobacco, alcohol, and personal vehicles. Social media can be just as harmful, and it's crucial that big tech companies no longer circumvent sensible regulations designed to protect their youngest users. Today is a crucial step in ensuring big tech can no longer prioritize profits over children's well-being. I am proud to partner with Governor Hochul, Attorney General James, and Assemblymember Rozic in the fight to protect the well-being of children online.”

“Today, we take a critical step towards safeguarding the online privacy of our children and young adults. The New York Child Data Protection Act will provide defenses in an era where digital platforms often overstep boundaries,” said Assemblymember Nily Rozic. “In a world where our children live much of their lives online, it's imperative that we establish clear boundaries to protect their privacy. This legislation empowers both parents and young users, giving them the assurance that their online experiences will be free from pervasive monitoring and data exploitation. We're not only protecting privacy; we're preserving the rights of children in the digital age. Thank you to Attorney General James, Governor Hochul, and Senator Gounardes for partnering with me in this crucial effort.”

Multiple studies have shown that social media can cause a wide range of negative mental health effects for children and young adults. Addictive feeds, which are designed to harness personal data to serve users content to keep them on the platform for as long as possible, have increased the addictive nature of social media platforms and heightened the risk to young users’ wellbeing. Ninety-seven percent of teenagers report being online daily, and research has found that frequent social media use among adolescents can be associated with long-term developmental harms. Multiple studies have found a link between excessive social media use, poor sleep quality, and poor mental health among young people. Other research has shown that adolescents who spend more than three hours per day on social media face double the risk of experiencing poor mental health outcomes, including symptoms of depression and anxiety. Additionally, research has found that for young girls, the association between poor mental health and social media use is stronger than the associations between poor mental health and binge drinking, sexual assault, obesity, or hard drug use. 

Children also face various risks to their privacy online. While other states and countries have enacted laws to limit the personal data that online platforms can collect from minors, no such restrictions currently exist in New York. This current deficiency leaves children vulnerable to having their location and other personal data tracked, shared, and sold online. As a consequence, that data is at greater risk of falling into the wrong hands, including human traffickers and others who might prey on young people.  

The two pieces of legislation introduced today will add critical protections for children and young adults online by restricting the collection of minors’ personal data and changing how young users are served content online to reduce the harms of addictive features that keep children on social media longer.  

Bill #1: Stop Addictive Feeds Exploitation (SAFE) for Kids Act 

This SAFE for Kids Act will require social media companies to restrict the addictive features on their platforms that most harm young users. Currently, platforms supplement the content that users view from the accounts they follow by serving them content from accounts they do not follow or subscribe to. This content is curated using algorithms that gather and display content based on a variety of factors. However, algorithmic feeds have been shown to be addictive because they prioritize content that keeps users on the platform longer. Addictive feeds are correlated with an increase in the amount of time that teens and young adults spend on social media and significant negative mental health outcomes for minors. 

To address this problem, the legislation will:  

• Provide users under 18 with a default chronological feed from users they already follow — the same way that social media feeds functioned before the advent of addictive feeds. Users may also search for specific topics of interest. Minors may opt in to receiving addictive feeds with parental consent.
• Allow parents to opt out of access to social media platforms for minors between the hours of 12:00 a.m. and 6:00 a.m. and limit the total number of hours per day that a minor spends on platforms.
• Prohibit social media platforms from sending notifications to minors from 12AM and 6AM without verifiable parental consent. 
• Authorize the Office of the Attorney General (OAG) to bring an action to enjoin or seek damages or civil penalties of up to $5,000 per violation. Allow any parent/guardian of a covered minor to sue for damages of up to $5,000 per user per incident, or actual damages, whichever is greater.
• Provide platforms an opportunity to cure any claim brought by the parent/guardian of a covered minor.  

This legislation will only impact social media platforms with feeds comprised of user-generated content along with other material that the platform recommends to users based on data it collects from them. For example, Facebook, Instagram, TikTok, Twitter, and YouTube would all be subject to this legislation.

Bill #2: The New York Child Data Protection Act 

With few privacy protections in place for minors online, children are vulnerable to having their location and other personal data tracked and shared with third parties. To protect children’s privacy, the New York Child Data Protection Act will prohibit all online sites from collecting, using, sharing, or selling personal data of anyone under the age of 18 for the purposes of advertising, unless they receive informed consent or unless doing so is strictly necessary for the purpose of the website. For users under 13, this informed consent must come from a parent. The bill authorizes OAG to enforce the law and may enjoin, seek damages, or civil penalties of up to $5,000 per violation and authorizes the parent/guardian of a minor to seek damages of up to $5,000 per user per incident, or actual damages, whichever is greater, and/or injunctive or declaratory relief. Online sites will be provided an opportunity to cure any claim brought by a parent/guardian of a minor.

“Children need our protection as they spend an ever-growing percentage of their time online and engaged in social media,” said Michael Mulgrew, President of United Federation of Teachers. “These are common sense precautions to help parents navigate their children's online experience.”

“School leaders have seen firsthand how social media can impact the wellbeing of students of all ages,” said Henry D. Rubio, President of the Council of School Supervisors and Administrators. “The Council of School Supervisors and Administrators applauds Governor Hochul, Attorney General James, Senator Gounardes, and Assemblymember Rozic for the SAFE For Kids Act, which will prevent social media from offering addictive feeds to any children under 18 years of age, and the NY Child Data Protection Act, which will protect their privacy. The safety of our children is paramount, and this important legislation will help parents and educators prevent online harm to their social and emotional development.”

This legislation is part of Attorney General James’ ongoing efforts to protect New Yorkers online. In July, she led a multistate coalition of attorneys general to defend the federal government’s ability to communicate with social media companies about dangerous online content. In April, she released a comprehensive guide to help businesses adopt effective data security measures to better protect New Yorkers’ personal information. She also joined a bipartisan coalition of 44 attorneys general urging Facebook to abandon plans to launch a version of Instagram for children under the age of 13. In October 2022, she investigated and released a report on the role online platforms played in the Buffalo mass shooting. She also announced a $1.9 million agreement with the owner of SHEIN and Zoetop for failing to properly handle a data breach that compromised the personal information of millions of consumers nationwide. In June 2022, Attorney General James secured $400,000 from Wegmans and required the retailer to improve data storage security after a data breach exposed consumers’ personal information. 

Governor Hochul Announces Launch of $10 Million Empire Technology Prize to Advance Tall Building Low Carbon Heating System Retrofits

NYSERDA Prize Administered by The Clean Fight Includes $3 Million Wells Fargo Sponsorship

Supports The Climate Leadership and Community Protection Act Goal to Reduce Emissions 85 Percent by 2050

Governor Kathy Hochul today announced the launch of the $10 million Empire Technology Prize, a competitive opportunity for global solution providers focused on advancing building technologies for low carbon heating system retrofits in tall commercial and multifamily buildings in New York State. The New York State Energy Research and Development Authority initiative, administered by The Clean Fight with technical support from Rocky Mountain Institute, includes a $3 million sponsorship from Wells Fargo. This program supports New York State’s nation-leading Climate Act agenda including the goal to achieve an 85 percent reduction in greenhouse gas emissions by 2050.

“Investing in new clean, resilient technologies is just one way that New York is advancing progress toward our ambitious Climate Act goals, and the Empire Technology Prize is the newest tool as we move forward,” Governor Hochul said. “This program will help us develop solutions that lower harmful emissions from buildings, creating healthier spaces for all New Yorkers to live and work, as we come together to fight climate change.”

Today’s announcement was made at an event held in Manhattan to discuss the transformative potential of technology to reduce energy and dependence on fossil fuels in existing tall buildings. The Empire Technology Prize is a competitive program that represents a significant market opportunity for equipment manufacturers and entrepreneurs to develop low-carbon solutions in discussion with leading real estate partners while exploring opportunities for heating system retrofit demonstration projects in tall commercial and multi-family buildings. Applicants are challenged to develop a tested and fully functional prototype of a heating or distribution system that can be installed in a manner that does not displace occupants and works with existing infrastructure in buildings seven stories or taller.

Solution providers are encouraged to submit proposals that will be reviewed and judged by industry experts, in conjunction with participating real estate companies partnering with The Clean Fight. The Clean Fight will bring together finalists and leading New York real estate portfolio owners interested in giving feedback on the finalist’s proposed solutions and discussing pilot and demonstration opportunities in New York. Applicants will be eligible to receive up to $1 million each; $250,000 on acceptance as a Finalist, and up to $750,000 in milestone payments by progressing their solution. In addition, a total of $2 million will be available to help finalists offset the costs of installing solutions such as pilot programs or demonstration projects in eligible tall buildings in the New York market. At the end of the one-year prize program, beginning July 2024 and ending June 2025, one winner will be awarded an additional $1 million grand prize, based on the solution with the greatest potential cumulative carbon emissions reduction by 2040 in the New York market, with a goal of facilitating the further development and deployment of the solution in New York's tall buildings.

With approximately 1.5 billion square feet of existing buildings that use steam to provide heating to New York families and workers, proposals are sought for two focus areas including:

• Centralized building heat pumps that generate steam or high temperature hot water.
• Solutions that make it easier to adopt readily available centralized low temperature heat pumps into existing building distribution systems.

Applications will be accepted through 3:00 p.m. on March 22, 2024.

The Clean Fight was selected as the program administrator for the Empire Technology Prize in September 2022 and has successfully operated a cohort-based, growth-stage accelerator program for the past 2.5 years. Rocky Mountain Institute (RMI), an independent nonprofit dedicated to transforming global energy systems through market-driven solutions, is providing technical, prize design, and program support. Wells Fargo’s sponsorship aligns with the company’s ongoing work in affordability in New York and its commitment to support its business, customers and communities transitioning to a resilient, equitable and sustainable future. In addition to philanthropic efforts, the company has a goal to deploy $500 billion in sustainable financing by 2030 and is one of the largest affordable housing lenders in New York State.

The Empire Technology Prize was first announced in April 2021 as part of the $50 million Empire Building Challenge which included partnerships with 10 leading real estate groups with the goal of transforming existing multifamily and commercial tall buildings to substantially reduce the carbon footprint of these structures. The Empire Building Challenge cohort has since expanded to include partnerships with 16 leading real estate owners who collectively operate over 220 million square feet of New York real estate.

Buildings are one of the leading generators of greenhouse gas emissions in the State and 70 percent of buildings in New York State were constructed before the energy code and will need to be upgraded in order to achieve the State’s climate goals. The Empire Technology Prize continues the New York State Energy Research and Development Authority’s leadership in advancing carbon-neutrality in existing buildings and will draw on lessons learned from projects supported through the Empire Building Challenge.

This announcement builds on New York State's investments in research, development, and commercialization to support innovators that are accelerating the low emissions and carbon sequestering technologies needed to meet the State's goal for economy-wide carbon neutrality. NYSERDA's Innovation program, is deploying $800 million over 10 years as direct investments via grants and wrap-around commercialization support. More than $680 million in private investments and $200 million in project finance capital have been enabled, and more than 450 innovative clean energy products have been commercialized as a result of NYSERDA's technology and business development investments, including LED lighting systems, home appliances, longer-lasting batteries, and more efficient heating-and-cooling systems.

As authorized by the New York State Public Service Commission, funding for this initiative comes from the State’s 10-year, $6 billion Clean Energy Fund and Wells Fargo as a program sponsor. More information about the CEF is available on NYSERDA’s website.

NYS Office of the Comptroller DiNapoli: Mobile Sports Betting Adds to State Revenue, But Calls to Problem Gambling Hotline Rise as Gaming Expansion Continues

 

State collections from the taxes on mobile sports betting totaled $727.4 million in State Fiscal Year (SFY) 2022-2023 and have continued to grow in the first quarter of the current fiscal year, according to a report by State Comptroller Thomas P. DiNapoli. With the legalization of mobile sports betting, the New York State Gaming Commission noted a 26% increase in problem gambling-related calls to the Office of Addiction Services and Supports (OASAS) from 2021 to 2022.

“Gaming has significantly expanded in the state in the last several years,” DiNapoli said. “With the ease and 24/7 availability of mobile betting apps, problem gambling and addiction are poised to increase. More attention should be devoted to understanding the implications of mobile sports betting, particularly on young New Yorkers.”

Gaming Revenues

From SFY 2011-12 to 2022-23, state revenues from lottery sales and taxes on gaming revenues increased by 69.5%, growing from $2.8 billion to $4.8 billion. The increase is primarily from the implementation of new forms of gaming rather than from increased consumption of existing ones. New York is now among eight states that offer the most forms of gaming nationwide.

State revenues from video lottery terminal (VLT) facilities, casinos, and tribal-state compacts in SFY 2020-21 were less than half of those collected in SFY 2019-20 due in large part to gaming facilities being closed for five months because of the COVID-19 pandemic. Two years later, collections from the taxes on gaming revenues of the commercial casinos have yet to return to SFY 2019-20 levels. In addition, New York’s gaming industry has not recovered from 2020 losses of approximately 3,400 jobs. Employment in 2022 was nearly 20% lower than its pre-pandemic level.

In SFY 2022-23, the state’s $4.8 billion in gaming revenues comprised 3.6% of total state operating funds spending. While nearly 95% of the revenues were used for education purposes, they averaged just over one dollar of every eight state dollars spent on education over the past 12 years.

Mobile Sports Betting

Mobile sports betting in New York was authorized in the SFY 2021-22 Enacted Budget and went live in January 2022. With a tax rate of 51% on gross gaming revenues, New York joins Rhode Island and New Hampshire in levying the highest rate in the nation. In SFY 2021-22, mobile sports betting generated $360.7 million for the state, far more than the $99 million initially projected. The $727.4 million in collections for the first full year of mobile sports betting in SFY 2022-23 was double the projection of $357 million. The higher collections were due primarily to the number of licenses issued to mobile sports wagering providers and the higher tax rate imposed subsequent to initial projections. Revenues in the first quarter of the current fiscal year have continued to grow, although the state Division of the Budget projects collections will level out, increasing by 6.9% over the next four fiscal years.

Since mobile sports wagering has gone into effect, gross gaming revenue from in-person sports wagering at the state’s commercial casinos has declined, down 45% in SFY 2022-23. Tioga Downs in the Southern Tier saw the steepest fall off of in-person wagering, 58.7%, while Rivers in the Capital Region saw the largest revenue decline at $2.9 million.

Problem Gambling

Since DiNapoli’s 2020 gaming report, OASAS spending on problem gambling services has increased from about $5.7 million in SFY 2019-20 to over $9.6 million in SFY 2022-23, according to OASAS testimony to the state Legislature.

The legislation authorizing mobile sports betting required 1% (about $1.6 million) of the tax on mobile sports betting revenues to be set aside for problem gambling services in SFY 2021-22. For each successive state fiscal year, problem gambling services will receive $6 million from those revenues.

Research indicates higher rates of gambling problems occur among individuals wagering with a mobile device, enabled by the accessibility, privacy and ease of smartphone use. The Gaming Commission – in conjunction with OASAS – is required to submit annual reports to the Governor and the Legislature on the impact of mobile sports betting on problem gambling. The first annual report, which was issued in April 2023 and updated in June 2023, contained limited data on the impact in the state and demographic information on individuals affected by the addiction. More information and better reporting are necessary to understand the effect of mobile sports betting, particularly on young people and the vulnerable.

Gaming Expansion Continues

The SFY 2022-23 Enacted Budget authorized the creation of three additional commercial casinos to be located in New York City, Long Island, or in the counties of Westchester, Rockland or Putnam. Applicants are required to pay a $1 million application fee, and the winners would pay a $500 million license fee. Other legislative proposals to expand gaming include authorizing online casino gaming and a plan to double the number of VLTs from 1,000 to 2,000 at a casino/hotel on Long Island.

With three new commercial casinos expected, careful analysis should be done to ensure projections of revenues and economic benefits are reasonable and attainable. As was shown in DiNapoli’s recent report Revenue Impact of Commercial Casinos on Upstate Local Governments, the actual revenues received from the four upstate casinos fell significantly short of projections. The four casinos also fell short of their projections that they would create over 4,700 jobs. When all four casinos were fully operational in 2019, jobs in the entire leisure and hospitality industry increased by just under 3,800 in the casinos’ host counties.

With mobile sports wagering, the need to travel to a casino diminishes, as shown in the decline in revenue from in-person sports betting. With proposals to authorize online casino gaming introduced, economic benefits from the casinos could be eroded as foot traffic potentially declines.

Report

Recent Impact of Gaming Expansions on Revenues and Problem Gambling in New York

Related Reports

Revenue Impact of Commercial Casinos on Upstate Local Governments

A Question of Balance: Gaming Revenues and Problem Gambling in New York State