Colombo Crime Family Soldier Sentenced to 37 Months in Prison for Racketeering, Loansharking and Illegal Sports Gambling

 

Vito Difalco Used His Brooklyn Bar, “Tryst,” to Promote Illegal Activities

  Vito Difalco, also known as “Victor” and “The Mask,” an inducted member of the Colombo organized crime family, was sentenced by United States District Judge William F. Kuntz, II, to 37 months’ imprisonment for racketeering.  

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the sentence. 

“With today’s sentence, the defendant has been held accountable for his participation in a violent criminal enterprise that used fear as fuel,” stated Acting United States Attorney DuCharme.  “Investigating and disrupting the activities of organized crime will always remain a priority of this Office and our law enforcement partners.”  Mr. DuCharme thanked the Federal Bureau of Investigation, New York Field Office, and the New York City Police Department, for their outstanding investigative work.

Difalco and co-defendant Joseph Maratea operated a loansharking business, extending loans at exorbitant interest rates and under the threat physical violence or harm if interest payments were not made on a timely basis. Specifically, they charged $15 in weekly interest payments on every $500 extended, which amounted to 3% weekly interest payments or 156% annual interest. To ensure both that they could locate their debtors and that their debtors understood that Difalco and Maratea knew where they resided, they required debtors to provide copies of their driver’s licenses and their contact information. Defendant Difalco also earned illegal proceeds through his gambling business, which included illegal sports-betting and video gambling machines, Difalco used a legitimate business – a bar called Tryst which he operated – to facilitate his criminal activity and limit detection by law enforcement. Specifically, he used the bar to attract new loansharking customers and used his employees to collect loansharking payments. He also used the bar to operate and promote his illegal gambling businesses.

On April 19, 2018, Difalco and Matera had the following conversation about a debtor’s missed payments:

DIFALCO: Alright stretch out, ‘cause we are going to take a ride in a little while.

MARATEA: Alright.

DIFALCO: I’ll be here, then we’ll take a ride up there.

MARATEA: Where by [John Doe #8]?

DIFALCO: Yeah, we’ll go by [John Doe #8].

MARATEA: Did you call him?

DIFALCO: I called him, he didn’t pick up. I figure I’ll ring the bell and flood the house.

Maratea pleaded guilty to racketeering and was sentenced in April 2020 to time served and two years’ probation with the first four months to be served under home incarceration

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Elizabeth A. Geddes and Mathew S. Miller are in charge of the prosecution.

The Defendant:

VITO DIFALCO (also known as “Victor” and “The Mask”)

Age:  65

Brooklyn, New York

SCHUMER REVEALS: AS UPSTATE NEW YORK ECONOMIES CONTINUE TO RECOVER FROM PANDEMIC

 NY HEMP FARMERS HAVE MAJOR CONCERNS WITH PROPOSED USDA GUIDELINES THAT WOULD HINDER GROWTH & DEVASTATE FUTURE OF HEMP INDUSTRY; HOWEVER, USDA SHUTS UPSTATE FARMERS OUT OF FED PROCESS, LEADING TO PROBLEMATIC, IMPENDING FINAL RULES; SENATOR CALLS ON USDA TO IMMEDIATELY HALT REG IMPLEMENTATIONS, HEAR OUT UPSTATE HEMP PRODUCERS & MAKE CRITICAL IMPROVEMENTS TO FINAL PLAN TO HELP NY HEMP FARMS HARVEST POTENTIAL

 Last Year, Schumer Successfully Called On USDA To Extend Comment Period On Hemp Reg Plans; However, Despite Numerous Suggestions And Input From Upstate Hemp Farmers, USDA Made No Significant Change During The Extended Timeline And Issues Remain Unaddressed 

As Financial Struggles From COVID Impact Upstate Economies, Senator Says Substance Of Imminent Interim Final Rules May Devastate Future For Upstate Hemp Farmers 

Schumer: Amend Hemp Regulations And Let Budding Industry Take Flight In Upstate NY

After successfully pushing for an extended comment period to allow Upstate New York hemp farmers to share their concerns with the final rule, U.S. Senator Charles E. Schumer today called on the United States Department of Agriculture (USDA) to delay the issuance of a U.S. Domestic Hemp Production Program final rule until 2022 and allow hemp growers and producers across the country and in Upstate New York to continue to operate under the 2014 Farm Bill pilot program regulations until that time. Schumer said with the economic devastation of the COVID-19 pandemic across all sectors, implementing additional regulations would crush the budding hemp industry.

“When it comes to an industry as promising as industrial hemp in Upstate New York, the feds must do everything they can to nurture its potential. Regulating this rapidly-emerging industry is a must, but the timing of new regulations is important and the current economic crisis must be considered,” said Senator Schumer. “That’s why today I’m urging USDA to delay their issuance of a final rule until 2022 so the hemp industry across the country and in Upstate New York has a chance to grow and create good-paying jobs at a time when jobs are needed the most. Delaying new regulations will help pull New York along in the recovery process as the nation deals with the impacts of the pandemic.”

Allan Gandelman, President of New York Cannabis Growers and Processors Association said, “There are over 700 registered hemp farmers across New York who would be negatively affected by the USDA's Interim Final Rule on hemp. The costs and bureaucracy of implementing the new rules as written create unnecessary financial burdens on farmers and our state agencies. The existing hemp pilot program has been sufficient in making sure farmers are complaint with all testing and public safety protocols. We would like to see the pilot program extended until 2022 and the USDA modify the program to let hemp become a widespread agricultural commodity like Congress intended by the passage of the 2018 Farm Bill.”

Schumer explained, prior to the pandemic, the industrial hemp industry had begun to show significant growth in New York, adding a considerable number of good-paying jobs and bringing in significant revenue to the state, making it an indispensable crop in New York’s agricultural future. Operating under the full benefits of the 2018 Farm Bill, hemp farmers have reported difficulty integrating the Interim Final Rules into their operations, Specifically, Schumer said, the cost of complying with the Rules has proven to be suffocating for the emerging industry. Compliance costs for reporting alone would be $17,363.40 according to USDA calculations, and testing would add over $700 per sample.

The senator said these costs are simply too high for the budding industry to shoulder at a time when New York and the entire country is experiencing an economic crisis. Additionally, Schumer noted, implementing the Interim Final Rules now, also requires states to alter their Pilot Program budgets to meet standards, something which states slammed with COVID-related issues simply cannot spare the time and resources for.

Schumer also pointed out in light of COVID concerns, the timing and testing outlined in the Interim Final Rules would likely push farmers to rush harvests and increase the number of people working in facilities at once, leading to higher risk of COVID transmission among workers. The senator says that delaying implementation until January 2022 and allowing states to continue operating under the 2014 Farm Bill will address these issues, protecting both the hemp industry in New York and farm workers from potential COVID spread.

Senator Schumer’s letter to USDA Secretary Perdue appears below:

Dear Secretary Perdue,

I write in regard to deep concerns that USDA’s U.S. Domestic Hemp Production Program Interim Final Rules will hinder the advancement of the hemp industry and create significant compliance costs both for State Governments and producers. Despite these concerns being reflected in the numerous comments submitted on behalf of industry trade groups, businesses, and State Agriculture Departments during the extended public comment period, no significant changes were made. As you know, the 2018 Farm Bill removed federal regulatory restrictions from industrial hemp production, manufacturing, and sales with the intent of developing a new agricultural commodity for United States farmers. The timing of implementation of the Interim Final Rules, especially during the COVID crisis, will create extreme disruption in this nascent industry. I ask that you delay the issuance of a final rule until January 2022 and allow states to continue to operate under the 2014 Farm Bill pilot program authority until then.

In New York, the industrial hemp industry has started to grow significantly, with new farms and businesses emerging and existing ones expanding operations. This has brought considerably better paying jobs and revenue to Upstate New York, making industrial hemp a critical new part of the state’s agricultural future. However, as industrial hemp farmers and businesses explore the full benefits of the 2018 Farm Bill, they have experienced serious difficulty integrating the Interim Final Rules into their operations. Particularly in the current COVID climate, I see many farmers and processors in New York struggle with incorporating these changes into the existing state Pilot Programs. In a time when farmers and producers struggle with economic uncertainty, the implementation of the Interim Final Rules will create costs without the support of offsetting revenues. USDA calculated compliance costs for reporting alone of $17,363.40 with testing adding approximately an additional $714.50 per sample (see 7 CFR Part 990, 58537 and 58545).

These costs do not just impact businesses across the United States but also state budgets that must alter their Pilot Programs to meet the demands of the Interim Final Rules. With bandwidth completely consumed by COVID concerns, the state regulatory agencies cannot focus on implementation of the Interim Final Rules. At this point, only 19 states have approved plans in place and enforcement efforts will deal a significant economic blow to the industry.

Lastly, I have concerns that the Interim Final Rules will potentially create public health issues in our current COVID environment. As we move into harvest season, farmers will need to operate with as much certainty as possible but timing and testing requirements will likely create bottlenecks that will push farmers to rush harvests. The potential for greater numbers of people working in facilities to meet the rush may create opportunities for COVID to spread among farm workers.

The Interim Final Rules provide a first step in developing regulations for the hemp industry. The critiques from the comment period will provide USDA with areas to consider revisions that further encourage economic opportunity for farmers and producers. However, COVID creates hurdles for states and producers to comply with the Interim Final Rules. Under the circumstances, the Interim Final Rules will harm the very businesses we hoped to help with this new agricultural commodity. We can easily remedy this situation by delaying implementation until January 2022 and allow states to continue under the 2014 Farm Bill until then. This will allow USDA to address some of the more pressing regulatory critiques while giving states and producers additional time to come into compliance.

Once again, I appreciate your efforts to help establish guidelines to develop a thriving American hemp industry. Thank you for your attention to this important matter and please let me know if I can be of any assistance.

Sincerely,

Comptroller Stringer Calls on Congress to Pass RELIEF for Main Street Act to Provide $50 Billion for Small Businesses

 

Small business revenues in New York City have fallen 31 percent and at least 2,800 businesses have closed permanently - more than any other city

Just 12 percent of New York City’s 1,186,728 small businesses and independent contractors received a PPP loan

BIPOC communities represent 73 percent of New York City employment in the retail, food services, and personal services sectors and own 55 percent of the city’s Main Street businesses

Stringer: We must adopt a new approach moving forward, one that actually targets small businesses—not those with 499 employees—in the hardest hit communities

  New York City Comptroller Scott M. Stringer proposed Save Main Street, a crash relief program to help New York City’s struggling small businesses access millions in untapped federal aid, provide tax incentives and other financial relief measures to support reopenings and ongoing small business survival, streamline city approvals for reopening, and encourage reopenings and startups in high-vacancy corridors that have been devastated by the pandemic.

“Every small business in New York City that hasn’t yet closed is fighting for survival. The City must deliver much-needed relief to help businesses reopen, stay open, and revive high-vacancy corridors that have been devastated by the pandemic,” said Comptroller Stringer. “We need smart public investment and outside-the-box thinking to meet this moment. It’s time for a comprehensive strategy to infuse local economies with aid, provide tax relief to small businesses, cut red tape, and modernize our infrastructure to support New Yorkers working and raising families in our new normal.”

Comptroller Stringer’s plan would:

Deliver Immediate Financial Relief:

• Establish Door-to-Door Outreach Teams to help business owners tap into the remaining $150 billion in the Paycheck Protection Program. Given that only 12 percent of New York City businesses and sole-proprietors have received a PPP loan, it is clear that a huge number have not taken advantage of this program. What they need is swift, hands-on support, and the City should provide it in conjunction with banks.
• Offer City tax credits on business income taxes, to speed immediate relief to businesses, help them pay back rent, and cover the costs of reopening—from the utilization of sidewalk space, to interior remodeling that provides social distance and protective barriers, to outreach and advertising.
• Make permanent the City’s temporary cap on third-party food delivery fees. In mid-May, the City Council voted to temporarily cap the fees and commissions that restaurants paid to companies like Uber Eats and Seamless. To help these businesses both during the pandemic and beyond, delivery fees should now be capped permanently at 15 percent and non-delivery services at 5 percent.
• Eliminate the City’s 25% tax on liquor licenses. Meanwhile, the State should expedite the issuance of new liquor licenses, continue to ease regulations on alcohol pick-up and delivery, and repeal the recent executive orders that require food to be purchased along with alcohol and place the onus on businesses to enforce open container laws.
• Allow businesses a “cure period” to address and fix violations, rather than fining them immediately. Moving forward, any business violation that does not pose an immediate hazard to the public should be granted a 30-Day “cure period” to address and rectify the issue. Rather than taking a punitive approach and issuing a fine, the City should grant all businesses the opportunity to remediate problems.

Provide City Support for Re-Openings and Startups: 

• Waive permitting and inspection fees for businesses that take over a vacant space in the next 10 months. This will incentivize businesses to act fast and begin to revive our commercial corridors.
• Work with New York City’s technology community and local business schools to create a NYC Tech Corps that helps small businesses design websites, help purchase business software, and set up digital payroll, sales, and inventory tools.
• Eliminate expeditors, the for-profit fixers that many small businesses are forced to hire to navigate the Department of Buildings, and replace them with in-house Business Advocates that create faster approvals for all applicants.
• Help immigrant entrepreneurs scale up, extend into new markets, and open second businesses.  Small Business Services should help immigrant entrepreneurs expand into new markets and open new stores. Marketing, promotion, and translation services should be offered to help reach new customers beyond their immediate neighborhood and the City should pilot a new program to help proven, successful entrepreneurs open second businesses throughout the city, expediting permitting and helping with the costs of modifying these new spaces.

Resuscitate High-Vacancy Corridors:

• Create a comprehensive, public-facing inventory of vacant storefronts to help entrepreneurs locate spaces quickly, so that would-be business owners can find space quickly without resorting to expensive brokers.
• Provide tax incentives for independent retailers in high-vacancy retail corridors. Independent business owners who are planning to locate and are currently located in corridors with vacancy rates above a certain threshold could receive a credit against either the Commercial Rent Tax or the real property tax.
• Don’t let vacant spaces stay vacant, be creative.  From large malls and department stores to small retail frontage, the pandemic will likely lead to an uptick in vacant space in various neighborhoods.  In the near-term, many can and should be leveraged to provide additional public school space as the City struggles to re-open safely. In the long-term, other civic uses might include libraries, artist studios, community centers, and childcare centers.
• Extend the moratorium on commercial evictions and provide legal assistance to businesses involved in legal disputes. To protect struggling businesses owners and help keep them afloat, Albany should extend its moratorium on commercial evictions, which expires on August 20. The moratorium should continue until the city is fully reopened. Meanwhile, the SBS Commercial Lease Assistance program—which, confoundingly, was cut in the recent budget—should be relaunched to provide legal representation to small businesses in commercial lease disputes and negotiations

Build Back an Even Stronger Small Business Environment:

• Repurpose street space for community and business use, not just automobiles, while dramatically expanding space and infrastructure for pedestrians and cyclists. Our small businesses are embedded in a larger neighborhood and street network that is critical to their viability and success. Without active, well maintained and easily accessible neighborhoods, businesses and communities cannot thrive.  To that end, the City should:

• The City should create a vast system of “shared streets” where cars are only permitted to travel five miles per hour in residential neighborhoods and select commercial streets. As in Barcelona and Montreal, these shared streets can be integrated through a larger network where car travel is largely confined to major thoroughfares, while quieter residential and commercial blocks are primarily left to bikes, pedestrians, cafes and restaurants, and leisure activities
• The City should expand its “open streets” program to clothing stores, bodegas, nail salons, and other businesses that could display their products and offer their services outside of their storefront.
• The City should begin widening commercial and residential sidewalks to make them more passable for shoppers, strollers, and wheel chairs and provide more space for crucial amenities like street seating, street vendors, bus shelters, garbage bins, bike parking, water fountains, and public bathrooms.
• The City should add 100 miles of bus lanes over the next two years, with a special emphasis on increasing access to non-Manhattan commercial corridors. Nearly 35 percent of those working along these commercial corridors walk, bike, or ride the bus to work
• Improve neighborhood mobility and increase bike ridership by over 1,000 percent in the next three years with an ambitious bike agenda:
  • Expand Citi Bike to all five boroughs and provide a deep subsidy for low-income New Yorkers.
  • Increase the number of protected bike lanes by 100 miles in the next two years and by 350 miles in the next five years with a deliberate effort to create an interconnected and robust network of lanes. To this end, the DOT’s Green Wave Plan should be fully funded and accelerated and the Regional Plan Associations’ Five Borough Bikeway should be pursued.  Mandate that all office buildings and schools provide bike storage inside buildings, as well as secure bike racks on every commercial block.
  • Follow the lead of Paris and Italy and subsidize the purchase of e-bikes. 
  • Dramatically improve bike lane maintenance and enforcement by utilizing the City’s inter-agency Street Conditions Observation Unit and introducing traffic cameras in bike lanes along commercial corridors.
  • Offer classes to new and inexperienced cyclists to help them ride safely in the city. Across the five boroughs, there are many New Yorkers who are interested in biking, but lack the experience and confidence to ride. Organizations like Bike New York provide a wide range of classes for new riders to help them get started. The City should help to promote these classes and provide them with funding to help expand their offerings.
• Connect aspiring entrepreneurs to retiring business owners with a “re-entrepreneurship program” that creates continuity rather than closure of small businesses, with special assistance for M/WBEs and CUNY MBAs. Every time a business closes, jobs and wealth are lost as well, and the City should be doing more to help existing businesses transition to the next generation.
• Task the newly announced Chief Diversity Officers with increasing MWBE goals on competitive city contracts and creating a preference for MWBEs on non-competitive contracts.

Stringer’s plan was accompanied by an accounting of the small business wreckage created by the pandemic. The Comptroller’s analysis found that retail, food services, and personal services industries have accounted for 39 percent of recent job losses, despite representing only 18 percent of the City’s workforce prior to the COVID-19 pandemic. Over 60 percent of independent, Main Street businesses are run by immigrant New Yorkers and over 53 percent of the workforce is foreign-born, accounting in part for why unemployment among these communities has surged more than twice as high as white New Yorkers from February to May.

Stringer’s comprehensive analysis found:

Small businesses account for 39 percent of recent job losses

• Over 2,800 small businesses have permanently closed, including at least 1,289 restaurants and 844 retail businesses between March 1 and July 10, according to data from Yelp.
• Small business revenues have dropped 26 percent since early January, ranking New York City 40th among the 52 largest American cities.
• Of the 758,000 private sector jobs that have been lost in New York City through May, 187,000 were in food services, 71,000 in retail, and 36,000 in personal services.
• These industries have accounted for 39 percent of recent job losses, despite representing just 18 percent of the New York City workforce prior to the pandemic.
• Only 43 percent of eligible Main Street businesses in New York City received a Paycheck Protection Program (PPP) loan through the end of June, ranging from 50 percent of personal services businesses—including barbershops, nail salons, laundromats, and drycleaners—to 41 percent of restaurants and bars.

Immigrants and Communities of Color have been hit hardest by COVID-19

• Foreign-born New Yorkers own approximately 70 percent of independent commercial corridor businesses in Queens, 66 percent in the Bronx, 63 percent in Brooklyn, 59 percent in Staten Island, and 57 percent in Manhattan.
• 16 percent of Main Street businesses in the Bronx, 12 percent in Brooklyn, and 8 percent in Queens are black-owned.
• 73 percent of Main Street jobs in New York City are held by people of color, 53 percent by immigrants, and 29 percent by non-citizens.
• Unemployment rates among Black (24.3 percent), Latinx (22.7 percent), Asian (21.7 percent), and foreign-born (20.6 percent) New Yorkers have surged to nearly twice as high as White New Yorkers (13.9 percent).

Small businesses are spread out across all five boroughs

Unlike finance, tech, or insurance, commercial corridor businesses are spread across every corner of the city, with 63 percent of the 66,133 Main Street businesses located in Brooklyn, Queens, the Bronx, and Staten Island.

• While just 18 percent of the city’s private sector workforce is employed in small businesses of fewer than 20 workers, this varies substantially throughout the five boroughs.
• In 30 neighborhoods in Queens, 27 in Brooklyn, ten in Staten Island, eight in the Bronx, and seven in Manhattan, more than 30 percent of local jobs are in small businesses with fewer than 20 employees.
• This concentration of small business employment is particularly evident in North Corona (63 percent of local jobs in businesses with fewer than 20 employees), Westerleigh (56 percent), Prospect Heights (52 percent), Elmhurst-Maspeth (51 percent), Rossville-Woodrow (51 percent), Oakland Gardens (51 percent), Hamilton Heights (51 percent), and Middle Village (50 percent).

Governor Cuomo Announces That, Based on Each Region's Infection Rate, Schools Across New York State are Permitted to Open This Fall

 

Every Region's Infection Rate Is Below the Threshold Necessary By The State's Standards To All Schools To Reopen Based on Strict Department of Health Guidelines 

In-Person vs Partial Reopening to Be Determined Locally By Each Individual School District 

Department of Health Will Review Submitted Reopening Plans From School Districts And Notify Districts of Their Status on Monday

School Districts Must Have Three-Five Public Meetings with Parents Prior to August 21

One Percent of Yesterday's COVID-19 Tests were Positive

5 COVID-19 Deaths in New York State Yesterday

SLA and State Police Task Force Visits 1,028 Establishments, Observes 14 Violations of State Requirements

Confirms 714 Additional Coronavirus Cases in New York State - Bringing Statewide Total to 419,642; New Cases in 44 Counties 

Governor Cuomo: "By our infection rates, all school districts can open everywhere in the state. Every region is below the threshold that we established which is just great news. Let me say it this way: You look at our infection rate; we are probably in the best situation in the country right now - as incredible as that is. If anyone can open schools, we can open schools. That's true for every region in the state. Period."

  Governor Andrew M. Cuomo announced that based on each region's infection rate, schools across the state are permitted to open this fall. Every region's infection rate is below the threshold necessary by the State's standards to open schools. The Department of Health will review submitted reopening plans from school districts and notify districts of their status on Monday. Out of 749 school districts across the state, 127 have not yet submitted plans to the Department of Health, and another 50 are incomplete or deficient.  The determination of how individual districts reopen - in-person vs a hybrid model - will be made by local school districts under strict Department of Health guidelines. The Department of Health's guidance is available here.

The Governor also announced that school districts must post their remote learning plan online as well as their plan for testing and tracing students and teachers. Schools must also have three to five public meetings prior to August 21 with parents - who will be allowed to participate remotely - as well as one meeting with teachers to go through their reopening plan. 

The Governor also updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. The number of new cases, percentage of tests that were positive and many other helpful data points are always available at forward.ny.gov.

Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic

 

One Percent of Yesterday's COVID-19 Tests were Positive

5 COVID-19 Deaths in New York State Yesterday

SLA and State Police Task Force Visits 1,028 Establishments, Observes 14 Violations of State Requirements

Confirms 714 Additional Coronavirus Cases in New York State - Bringing Statewide Total to 419,642; New Cases in 44 Counties 

  Governor Andrew M. Cuomo today updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. The number of new cases, percentage of tests that were positive and many other helpful data points are always available at forward.ny.gov.

"Our performance is extraordinary in this sea of spread around us. Our numbers are great because we're doing what we need to do - the quarantine procedures are all in place and we're enforcing compliance," Governor Cuomo said. "But we cannot become complacent, especially as infection rates continue to surge. We must protect the progress we've made in New York, and it's going to take the work of all of us to keep wearing our masks, socially distancing and staying New York Tough."

Yesterday, the State Liquor Authority and State Police Task Force visited 1,028 establishments in New York City and Long Island and observed 14 establishments that were not in compliance with state requirements. A county breakdown of yesterday's observed violations is below:

• Bronx - 3
• Brooklyn - 4
• Manhattan - 5
• Queens - 2

Today's data is summarized briefly below:

• Patient Hospitalization - 579 (+9)
• Patients Newly Admitted - 84
• Hospital Counties - 30
• Number ICU - 139 (+7)
• Number ICU with Intubation - 66 (-3)
• Total Discharges - 73,530 (+58)
• Deaths - 5
• Total Deaths - 25,190

Acting Manhattan U.S. Attorney Announces Agreement To Address New York City’s Ongoing Non-Compliance With Rikers Consent Judgment

 

  Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that the United States has entered into an agreement (“Remedial Order”) with New York City and the New York City Department of Correction (“DOC”) to address ongoing non-compliance with core provisions of a Court-ordered Consent Judgment entered in October 2015 to reduce violence in NYC jails on Rikers Island and ensure the safety and well-being of inmates.  The Remedial Order, which is subject to the final approval of the Court, requires DOC to implement operational reforms to fix systemic deficiencies that have continued to plague the jail system.  Specifically, under the Remedial Order, DOC must adopt numerous new measures designed to reduce the unnecessary use of force against inmates, improve staff supervision, enhance the quality and timeliness of investigations into use of force incidents, ensure that correction officers are held accountable for their misconduct, and better manage and supervise the youngest inmates in custody.  The independent federal monitor overseeing the Consent Judgment will assess compliance with the requirements of the Remedial Order. 

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Five years ago, this Office entered into a groundbreaking, Court-enforceable agreement requiring the City and the Department of Correction to implement sweeping, comprehensive reforms to protect the constitutional rights of inmates and ensure their safety.  As documented repeatedly through the federal monitor’s reports to the Court, the City and DOC have failed to fulfill core obligations under that agreement.  While this Office recognizes that changing a decades-long culture of violence is not a simple task, the City and DOC must do better.  By agreeing to adopt the measures set forth in this Remedial Order, they have taken a step in the right direction.  This Office will continue to closely monitor the implementation of the required reforms and vigilantly enforce the requirements of the Remedial Order and the underlying Consent Judgment.”

In August 2014, after completing a multi-year investigation, this Office issued a report that concluded that “a deep-seated culture of violence is pervasive throughout the adolescent facilities at Rikers, and DOC staff routinely utilize force not as a last resort, but instead as a means to control the adolescent population and punish disorderly or disrespectful behavior.”  The United States proceeded to join a class action lawsuit against the City, Nunez v. City of New York, which alleged that DOC engaged in a pattern and practice of using unnecessary and excessive force against inmates throughout the jail system.  In October 2015, Judge Laura Taylor Swain entered a Consent Judgment requiring DOC to develop and implement myriad new practices, systems, policies, and procedures to reduce violence and the use of excessive and unnecessary force.  The Consent Judgment is subject to the oversight of the Court and an independent federal monitor.

Notwithstanding these Court-mandated reforms, the frequency with which correction officers use force against inmates has increased dramatically since the Consent Judgment was entered, with the average monthly use of force rate increasing by more than 100% from 2016 to 2019.  In recent bi-annual reports to the Court, the federal monitor has found the City and DOC to be in non-compliance with numerous key provisions of the Consent Judgment.  For instance, in his report filed on May 29, 2020, the federal monitor found that DOC “continues to struggle to properly manage Staff’s use of force” and went on to conclude that “a pattern of unprofessional conduct and hyper-confrontational behavior by Staff, an overreliance on alarms and the Probe Team, misuse of OC spray [i.e., pepper spray], use of painful escort techniques, and improper use of head strikes have all plagued the agency’s use of force since the Effective Date [of the Consent Judgment].”

The Remedial Order requires DOC, among other things, to:

• Improve the level of supervision of Captains by substantially increasing the number of Assistant Deputy Wardens assigned to jails. 
   
• Evaluate inmates who have been involved in a significant number of use of force incidents to determine whether their mental health needs are being adequately addressed, and whether existing security and management protocols are appropriate for these inmates.
   
• Develop a new protocol governing the composition and deployment of Facility Emergency Response Teams (i.e., probe teams) in order to minimize unnecessary or avoidable uses of force by staff.
   
• By the end of the year, complete all outstanding investigations into use of force incidents that have been pending for a lengthy period of time. 
   
• Utilize a recently created unit of trained investigators to investigate all use of force incidents within 25 business days to determine whether staff violated the use of force policy, or whether further investigation is necessary.
   
• Consistently not exceed caseload targets approved by the federal monitor for investigators responsible for investigating use of force incidents.  
   
• Impose immediate corrective action on staff for violations of the use of force policy when recommended by the federal monitor.   

• Expedite the prosecution of disciplinary cases involving violations of the use of force policy by, among other things, ensuring that at least 50 cases are heard each month by the Office of Administrative Trials and Hearings (“OATH”).                                                                                            

• With respect to units housing 18-year-old inmates, improve the staff assignment system such that the same correction officers, Captains, and Assistant Deputy Wardens are consistently assigned to work in the same housing unit and on the same tour, to the extent feasible.
   
• With respect to units housing 18-year-old inmates, implement a system that includes a variety of short-term and long-term rewards and consequences to incentivize positive inmate behavior and sanction negative conduct.

While this Office remains extremely concerned with DOC’s ongoing failure to comply with core requirements of the Consent Judgment, the Office recognizes that the agency has made some significant improvements in other areas since the Consent Judgment became effective.  For example, DOC has installed thousands of wall-mounted video surveillance cameras throughout the jails to ensure complete camera coverage; created and provided a wide range of new training programs for staff; developed a new computerized case management system to track a wide range of information relating to use of force incidents; eliminated the use of punitive segregation for inmates under the age of 22; and stopped housing youths under the age of 18 on Rikers Island.

Company President And Employee Arrested In Alleged Scheme To Violate The Export Control Reform Act

 

  Audrey Strauss, the Acting United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, and Jonathan Carson, Special Agent in Charge of the New York Field Office of the U.S. Department of Commerce, Office of Export Enforcement (“OEE”), announced the arrests today of CHONG SIK YU, a/k/a “Chris Yu,” and YUNSEO LEE.  YU and LEE are charged with conspiring to unlawfully export dual-use electronics components, in violation of the Export Control Reform Act, and to commit wire fraud, bank fraud, and money laundering.  YU and LEE were arrested this morning and are expected to be presented later today before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court.

Acting U.S. Attorney Audrey Strauss said:  “Chong Sik Yu and Yunseo Lee are accused of violating U.S. export laws by sending electronics components with military applications to Hong Kong and China.  Together with the Commerce Department and all of our law enforcement partners, we will continue to protect our national security by preventing dual-use technologies from being sent abroad without the required licenses.” 

Assistant Attorney General for National Security John C. Demers said:  “The Department’s fight against illegal technology transfer to China is no more critical than in areas like those involved in this case – controlled items used in missile and nuclear technology.  We will do everything in our power to disrupt illegal exports like these that jeopardize our national security.” 

OEE Special Agent in Charge Jonathan Carson said:  “A top priority of the Office of Export Enforcement is identifying and disrupting the illicit export of items to Hong Kong and China that undermine the national security of the United States.  We will continue to work with our law enforcement partners using criminal prosecutions to keep the most dangerous goods out of the most dangerous hands.”

As alleged in the criminal Complaint,[1] unsealed today in Manhattan federal court:

Since at least 2019, a U.S. company named America Techma Inc. (“ATI”) has illegally exported electronic components from the United States to Hong Kong for apparent re-export to other countries, including China, in violation of the Export Control Reform Act of 2018 (“ECRA”).  Pursuant to the ECRA controls, the Department of Commerce administers export-licensing and other requirements for the export of goods, software, and technologies from the United States to foreign countries.  These requirements restrict the export of items that could make a significant contribution to the military potential of other nations or that could be detrimental to the foreign policy or national security of the United States.  The Commerce Department identifies the most sensitive items subject to Export Administration Regulations (“EAR”) on the Commerce Control List (“CCL”), which is categorized by Export Control Classification Number (“ECCN”).

YU is ATI’s president, and LEE is an ATI sales representative.  YU and LEE worked together and with others to ship what they knew to be export-controlled items to Hong Kong and China.  For instance, in June 2019, ATI obtained electronics components – which are export-controlled under the CCL for missile technology, nuclear nonproliferation, and anti-terrorism reasons – from a U.S. supplier (“U.S. Supplier-1”), and then sent those components to a trading company in Hong Kong (“Hong Kong Trading Company-1”).  In January 2020, ATI attempted to send to Hong Kong Trading Company-1 several electronic components, which are export-controlled under the CCL for national security, regional stability, missile technology, nuclear nonproliferation, and anti-terrorism reasons.  After the January 2020 package was detained by law enforcement, YU and LEE discussed methods for evading future law enforcement scrutiny by, for instance, transshipping packages through South Korea, and by using a separate company based in New Jersey (the “New Jersey Reshipper”) to send shipments to Hong Kong in an attempt to avoid customs scrutiny of ATI’s shipments.

For instance, on February 12, 2020, LEE sent an email to another ATI customer located in Hong Kong (“Hong Kong Company-2”) stating that: “[W]e had delivery issue currently with customs, so we’ve decided to release all items to South Korea first and release to HK from Korea temporarily.”  The next day, LEE received a response, which stated, in part, “Most of the items we buy from ATI are under ECCN restriction, so I guess ATI will stock in and release to [ATI’s branch in South Korea], and then ship to HK . . . am I correct?”  LEE replied, “Yes you are right.” 

On March 5, 2020, LEE responded to Hong Kong Company-2’s inquiry regarding whether ATI could sell certain components to China.  LEE’s response, which copied YU, stated: “We’ve sold” the requested parts “to China customer many times. . . But currently we have customs issue so we don’t know how to handle it. [W]e are thinking we release all controlled parts to South Korea first then release to HK from Korea[.]”

Hong Kong Trading Company-1 also advised ATI on steps to take in order to evade U.S. export controls.  For instance, Hong Kong Trading Company-1 advised YU and LEE to use a marker to obscure ATI’s name on labels, to cover each component with an electro-static discharge (“ESD”) bag, to remove all original documentation from the package, and to use the New Jersey Reshipper to send the shipment.  On March 14, 2020, LEE sent an email to Hong Kong Trading Company‑1, copying YU, stating: “We will follow your direction like adjusting invoice or removed label. But we do not have responsible if it will have problem during the transit to you. But for sure, we will do everything what you want for preparing shipments.  We just hope that there is no more detained package.” 

In April 2020, ATI sent a package of components to Hong Kong Trading Company-1 using the New Jersey Reshipper.  The package was inspected and detained by U.S. customs authorities.  Consistent with Hong Kong Trading Company-1’s instructions, the components had been placed in ESD bags labelled with part numbers different from the actual part numbers.  One of the components in the April 2020 shipment was export-controlled under the CCL for national security and anti-terrorism. 

Financial and shipping records establish that ATI has had a long-standing relationship with Hong Kong Trading Company-1.  Between August 2016 and July 2020, ATI shipped more than 200 packages to Hong Kong Trading Company-1.  In the one-year period between May 2019 and June 2020, Hong Kong Trading Company-1 transferred over $800,000 into ATI’s bank account in the United States.      

No one involved in any of these transactions obtained the licenses required under the ECRA to export these dual-use components.  

YU, 58, of Oradell, New Jersey, and LEE, 33, of Fort Lee, New Jersey, are each charged with one count of conspiring to unlawfully export dual-use electronics components, which carries a maximum sentence of 20 years in prison, one count of conspiring to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison, and one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Ms. Strauss praised the extraordinary investigative work of the New York Field Office of the Department of Commerce, Office of Export Enforcement.  Ms. Strauss also thanked the Newark Field Offices of Homeland Security Investigations and U.S. Customs and Border Protection for their assistance in the investigation, as well as the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division. 

The charges contained in the Complaint are merely accusations, and the defendants are 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 are only allegations, and every fact described should be treated as an allegation.

Attorney General James Refuses to Back Down in Fight Against NRA

 

AG James Bats Down Notion NRA Can Pick Up and Move to Another State

  New York Attorney General Letitia James today released the following statement in response to a National Rifle Association (NRA) countersuit that seeks to distract from illegal conduct to divert millions of dollars away from the organization’s charitable mission to personally benefit senior leadership, as well as to claims by President Donald Trump and others that the NRA should relocate to another state:

“While President Trump and others have suggested that the NRA should simply pick up and leave New York in an effort to evade responsibility, I’d remind them that we shut down the president’s own foundation, recouped millions in diverted funds after unearthing the illegal use of charitable funds, and directed those funds to lawful organizations for legitimate charitable purposes. We intend to do the same with the NRA. To be clear, no charity registered in New York state, including the NRA, can dissolve and relocate to another state without approval of my office or of the Supreme Court of New York. As long as our lawsuit continues, the NRA must stay right where it is and answer for their deep-rooted fraud. The facts speak for themselves and our lawsuit will continue undeterred.”

Yesterday, Attorney General James filed a lawsuit against the NRA, Wayne LaPierre, and three of LaPierre’s current or former top executives for failing to manage the NRA’s funds; failing to follow numerous state and federal laws, as well as the NRA’s own bylaws and policies; and contributing to the loss of more than $64 million in just three years for the NRA. The suit was filed against the NRA as a whole, LaPierre, as well as former Treasurer and Chief Financial Officer Wilson “Woody” Phillips, former Chief of Staff and the Executive Director of General Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer.