Attorney General James and CFPB Sue Auto Lender for Cheating Thousands of New Yorkers

 

Credit Acceptance Corporation Pushed Consumers into Unaffordable Loans and Cut Secret Financial Deals with Car Dealerships

New York Attorney General Letitia James and the Consumer Financial Protection Bureau (CFPB) today sued Credit Acceptance Corporation (CAC), one of the nation’s largest subprime auto lenders, for deceiving thousands of low-income New Yorkers into high-interest car loans. The lawsuit alleges that CAC pushed unaffordable loans onto tens of thousands of low-income consumers throughout the state without considering their ability to repay their loans in full. CAC misstated key terms on loan agreements, including the principal and interest amounts, and did not disclose thousands of dollars in credit charges. In addition, CAC packaged these illegal loans into securities that it sold to investors. These deceptive lending practices lowered consumers’ credit scores and cost New Yorkers millions of dollars. The lawsuit seeks to end CAC’s abusive and deceptive practices, reform or eliminate existing CAC loan agreements, and collect restitution for impacted consumers.

“CAC claimed to help low-income New Yorkers purchase cars, but instead, drove them straight into debt,” said Attorney General James. “CAC steered hardworking New Yorkers toward financial ruin by tricking them into unaffordable, high-interest auto loans while cutting backroom deals with dealers to protect their own profits. These predatory actions hurt innocent people and left them with mountains of debt. I thank the CFPB for their partnership to stop this harm and protect everyday New Yorkers.”

“Credit Acceptance obscured the true cost of its loans to car buyers, leading to severe financial distress for borrowers and subjecting them to aggressive debt collection tactics on loans its own systems predicted that borrowers can’t afford to repay,” said CFPB Director Rohit Chopra. “The CFPB's action with the New York Attorney General seeks to end Credit Acceptance's unlawful practices and makes consumers whole.”

CAC is a subprime auto lender that claims to help low-income borrowers with low or little credit history get loan approval and improve their credit. An investigation by the Office of the Attorney General (OAG) found that CAC’s lending practices were deceptive and left tens of thousands of New Yorkers with massive debt. The OAG’s investigation also found that CAC routinely pushed borrowers into purchasing vehicles that were worth far less than their loans. This predatory practice led many borrowers to lose their vehicles through repossession, while still owing thousands of dollars on the loans. CAC attempted to collect on those loans through lawsuits, default judgments, debt collection, and wage garnishment. Even borrowers who paid off their CAC loans ended up paying thousands of dollars more in hidden credit charges that CAC and car dealerships they were affiliated with built into the loan agreements.

The OAG’s investigation found that while CAC’s loan agreements in New York claimed an annual percentage rate (APR) of 22.99 percent or 23.99 percent, CAC actually charged more than 38 percent APR on average — and on numerous occasions charged more than 100 percent APR. As a result of CAC’s high-interest loans, nearly 90 percent of New York borrowers became delinquent on their loans at some point, often leading to additional fees that added to the cost of their already expensive car loans. More than half of New York borrowers failed to repay their loans by the terms of the loan agreements, with 44 percent of New York borrowers experiencing repossession at some point.

As an example of CAC’s typical business practices, one consumer, who supports two minor children, signed up for a CAC loan requiring her to pay more than $13,000, despite the dealer needing only $5,614 to sell her the car. After she paid more than $7,600 to CAC, they repossessed her vehicle, sold it at auction, and sued her for more than $7,500.

The lawsuit alleges that CAC projected, down to the penny, how much money it could extract from borrowers through loan payments, late fees, repossession and auction, debt collection, and wage garnishment, without considering a consumer’s ability to repay their loan. CAC then offered to split the projected collections with its affiliated dealers. Through this practice, CAC ensured that as long as it collected the projected amount, both CAC and the dealer would profit — even if the borrower ended up in delinquency, default, or had the vehicle repossessed.

In addition, the lawsuit alleges that CAC cut deals with its affiliated dealerships and assisted them in misleading consumers by including costly add-on products in their purchases. Despite receiving repeated complaints that its dealers fraudulently told consumers that these products were required and that dealers even included the products without the consumer’s consent, CAC took no action to stop this. Instead, CAC continued to incentivize its dealers to push these products and actually adopted e-signing practices that made it easier for dealers to include the products with little or no notice to consumers.

The final step in CAC’s deception was to unload a large proportion of the loans onto unsuspecting investors, packaging the consumer loans into securities. In creating, marketing, and selling these securities, CAC represented to initial purchasers, rating agencies, and investors who purchased the securities that the underlying loans complied with applicable law. However, these representations were false, and the lawsuit alleges that CAC’s statements constituted securities fraud under New York’s Martin Act.

Through this lawsuit, Attorney General James seeks to stop CAC’s abusive and deceptive practices, reform or rescind existing CAC loan agreements, provide restitution to impacted New Yorkers, and secure penalties and damages from CAC due to this unacceptable and illegal behavior.

The OAG encourages New Yorkers who have had negative experiences or feel they have been taken advantage of by CAC or its affiliated dealers to submit an online complaint with the Consumer Frauds Bureau.

Former United States Postal Service Employee Sentenced to 30 Months in Prison for Stealing Blank Money Orders Valued at Over $4 Million

 

Defendant Also Found in Possession of Stolen Unemployment Benefits Cards

 Earlier today, in federal court in Brooklyn, Jaleesa Wallace was sentenced by United States District Judge Carol Bagley Amon to 30 months in prison for postal theft. As part of her sentence, Wallace was also ordered to pay over $4 million in restitution.

Breon Peace, United States Attorney for the Eastern District of New York, and Matthew Modafferi, Special Agent-in-Charge, United States Postal Service, Office of the Inspector General, Northeast Area Field Office (USPS-OIG), announced the sentence.

“The defendant exploited her position with one of our most trusted institutions, the United States Postal Service, for her own personal gain and caused significant losses to financial institutions,” stated United States Attorney Peace.  “Residents of the district need to be confident that postal employees carry out their duties honestly and that important documents can travel safely in the mail.”

Mr. Peace also expressed his thanks to the United States Postal Inspection Service, New York Division, and the New York City Police Department for their diligent efforts on the case. 

“The Special Agents of the USPS OIG will vigorously investigate Postal Service employees who compromise their integrity for personal gain. The sentence imposed on the defendant will serve as a reminder that there are severe consequences when individuals utilize their Postal position to commit crimes,” stated USPS-OIG Special Agent-in-Charge Modafferi. “The U.S. Postal Service, Office of Inspector General would like to thank our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

As set forth in court filings, in February 2021, 10,000 blank money orders were reported missing from a USPS post office on Utica Avenue in Brooklyn where Wallace worked.  The money orders can be deposited with a financial institution for up to $1,000 each.  Agents recovered over 3,000 of the stolen money orders from Wallace’s residence.  Over $4 million worth of the stolen money orders have been cashed at various financial institutions throughout the country. Agents also recovered prepaid Department of Labor unemployment benefit cards and approximately $43,000 in cash from Wallace’s apartment. Additionally, Wallace was in possession of approximately 42 pieces of mail from the Department of Labor that were not in her name. 

Wallace was terminated by the USPS in August 2021. She forfeited the cash seized from her apartment to the United States Postal Inspection Service. A related defendant, Willie Cook, pleaded guilty to mail theft in March 2022 and is awaiting sentencing.

Joint Statement by Speaker Adams & Civil Service and Labor Committee Chair De La Rosa on Council Holding a Hearing to Consider Legislation Amending Administrative Code to Preserve Health Care Choice for Retirees

 

New York City Council

“Given that the Administration and the Municipal Labor Committee are moving forward to implement Medicare Advantage in alignment with the courts and arbitrator’s decisions, the Council is formally considering legislation to preserve retirees’ choice of health insurance rather than have them automatically enrolled in Medicare Advantage as the sole plan on January 29. We are deeply concerned with the challenges in our health care program for municipal retirees and employees. While many of the underlying problems that created this situation require comprehensive solutions from all levels of government, the City must confront this dilemma to the maximum extent possible within its own authority. This must include support for low-income retirees to truly access choice in their healthcare coverage, reigning in the runaway costs of care that created this crisis, and guaranteeing an insurance program that benefits all of our dedicated public servants.

“The Council will consider the proposed legislation to preserve healthcare coverage choice for retirees at a Civil Service and Labor Committee hearing next week that is open to the public and all stakeholders. We are working to examine the major outstanding questions, the details of the Medicare Advantage plan that is moving forward regardless of any potential Council action, and how the City fulfills its health care commitments to all employees and retirees.”

Final Phase Of $1.7B Hunts Point Access Improvement Project Kicks Off In The South Bronx

 

New York governor Kathy Hochul has announced the third and final phase of the $1.7 billion Hunts Point Access Improvement Project is now underway in the South Bronx. Launched in 2019, the goal of the project is to provide improved access between the Hunts Point Peninsula and the Sheridan and Bruckner Expressways for automobiles and trucks traveling to and from wholesale commercial businesses located on the peninsula. The project will also address infrastructure deficiencies in the area.

A $446 million contract has been awarded for the third and final phase of the project, which includes reconstruction of the Bruckner Expressway interchange with Sheridan Boulevard and other improvements that will reduce congestion, enhance bicycle and pedestrian safety, and provide easier access to the Hunts Point Terminal Market, one of the largest wholesale food distribution centers in the world.

It is estimated that more than 78,000 vehicles travel to the Hunts Point Peninsula every day. Around 13,000 of these vehicles are currently forced to use small local roads that have suffered degradation as a result, and has adversely impacted air quality in the community.

In addition to infrastructure improvements, phase three will also create a 117-vehicle parking lot under the Bruckner Expressway that will include 24 electric vehicle charging stations.

“There is no better example of the important role modern infrastructure can play in ensuring the economic health and well-being of a community than Hunts Point,” said governor Hochul. “The changes we are making to this vital hub for commerce will not only make it easier to transport goods to and from the market, but also improve quality of life for the surrounding neighborhoods by taking thousands of trucks off local streets and providing new recreational opportunities that will further fuel the revitalization of the South Bronx.”

Phase three construction is expected to be completed by fall 2025.

Phase one was completed in October 2022 and included the reconstruction of a nine-span overpass and three bridges above Amtrak/CSX train tracks, the construction of two new ramps connecting Hunts Point Peninsula with the Bruckner Expressway and Sheridan Boulevard, as well as extensive pavement and sidewalk repairs.

Phase two is still under construction and involves 1.25 miles of the Bruckner Expressway between 141st Street and Barretto Street. The scope of work includes widening the roadway and providing new entrance and exit ramps that connect Bruckner Expressway to Leggett Avenue. The ramps will provide a direct route between the highway network and the Hunts Point Peninsula, including the Hunts Point Food Distribution Center. The outcome is expected to drastically reduce truck traffic on local streets.

“The Hunts Point Access Improvement Project is a game changer for the South Bronx and is part of the historic commitment governor Hochul has made to revitalizing our infrastructure in ways that reconnect our communities and strengthen our neighborhoods,” said New York State Department of Transportation commissioner Marie Therese Dominguez. “When this project is completed, the people of the South Bronx will see fewer trucks on local roads and less congestion, which will help improve air quality, and they will also have wonderful new recreational opportunities.”

All phases of the project are overseen by the New York State Department of Transportation.

MAYOR ADAMS ANNOUNCES NEARLY 1,000 NEW ELECTRIC VEHICLES TO REPLACE FOSSIL FUEL-POWERED CITY FLEET VEHICLES, DEPLOYMENT OF NEW EV CHARGING INFRASTRUCTURE

 

Vehicles Include Electric Transit Vans and Pick-Up Trucks for Agencies Citywide, and Electric Refuse Trucks and Hybrid Plug-In Street Sweepers for DSNY

 

New Investments in Electric Vehicle Fleet Made Possible by $10.1 Million in Federal Grant Funding

New York City Mayor Eric Adams, New York City Department of Citywide Administrative Services (DCAS) Commissioner Dawn M. Pinnock, and New York City Department of Transportation (DOT) Commissioner Ydanis Rodriguez today announced $10.1 million in federal grants to replace nearly 925 fossil fuel-powered fleet vehicles with electric vehicles (EV) and install 315 new EV chargers across the city. DOT facilitated the grant application process through the U.S. Department of Transportation’s Congestion Mitigation and Air Quality Improvement Program and will administer the funding. DCAS will receive $6.2 million, and the remainder will be disbursed to the New York City Department of Sanitation (DSNY). This investment helps advance the city’s goal of electrifying its entire vehicle fleet, building on the steps already taken by the Adams administration to meet the New York City Clean Fleet Plan ahead of schedule.

 

“When New Yorkers see cars, trucks, and vans with the ‘NYC’ logo on the side, they can rest assured that those vehicles are contributing to a greener city,” said Mayor Adams. “We are already ahead of schedule in transitioning city vehicles away from fossil fuels, and this new grant will allow us to take nearly 1,000 fossil-fuel vehicles off our roads, helping us reduce carbon emissions, make our air cleaner, and save on fuel costs.”

 

“Under Mayor Adams’ leadership, New York City has already become a national leader in sustainability and green infrastructure,” said First Deputy Mayor Lorraine Grillo. “This new grant will help us continue to transition our fleet to electric vehicles, protecting our environment and continuing to ‘Get Stuff Done’ for New Yorkers.”

 

“Thanks to this investment from the Biden Administration, the city is poised to make huge progress on making our fleet more climate-friendly,” said Deputy Mayor for Operations Meera Joshi. “Our agencies rely on these vehicles to complete vital operations within the five boroughs, and this funding helps us decarbonize some of the hardest vehicles to decarbonize: heavy-duty trucks. From cleaning the streets to getting our air cleaner, the trucks move us in the right direction.”

 

“We are laying the groundwork for an all-electric fleet of the future that will support critical citywide operations while benefiting the environment,” said DCAS Commissioner Pinnock. “Through this funding from the U.S. Department of Transportation, we are poised to make a significant transition for our light- and medium-duty fleet. This is a critical next step for our agency as we lead the charge in government fleet operations. We thank our partners at our sister agency, the New York City Department of Transportation, for their support and advocacy for this funding and look forward to these vehicles replacing fossil fuel-powered models.”

 

“We see the impact of climate change each day, so today’s announcement recognizes that the time for meaningful change — including accelerating the adoption of electric vehicles — is now,” said DOT Commissioner Rodriguez. “Thanks to this funding from the U.S. Department of Transportation, the city will be able to replace nearly 1,000 municipal vehicles — including a large proportion of DOT’s fleet — with greener alternatives. Under the leadership of Mayor Adams, we are proud to work with DCAS and our other sister agencies on our shared goal of reducing emissions from the transportation sector.”

 

“The mechanical broom cleans the streets, and with these new hybrids, we’ll be able to clean the air, too,” said DSNY Commissioner Jessica Tisch. “I want to thank our partners in city government and in Washington, D.C., for making this possible.”

 

“Today’s announcement highlights how the Adams administration continues to drive down greenhouse gas emissions by adding even more electric vehicles to the city’s municipal fleet,” said Chief Climate Officer and New York City Department of Environmental Protection Commissioner Rohit T. Aggarwala. “This $10.1 million grant supports the city’s first major investment in all-electric pick-up trucks and vans, as well as new charging ports, which will help us decarbonize the transportation sector, combat climate change, and create a cleaner, greener future for all New Yorkers. I want to thank the U.S. Department of Transportation for this important funding and our partners at DCAS, DOT, and DSNY for their continued efforts to electrify and reduce dependance on fossil fuels.”

 

“New York City must lead by example, and we are grateful for these critical partnerships with the federal government to help us reach our climate and air quality goals,” said New York City Mayor’s Office of Climate and Environmental Justice Executive Director Kizzy Charles-Guzman. “This investment in electric vehicles and charging infrastructure will improve the health of New Yorkers and create a more sustainable New York.”

 

The $10.1 million in funding will help procure 382 Chevrolet Bolts, 360 Ford E-Transit vans, and 150 Ford F-150 E-Lightning pick-up trucks. Additionally, 25 plug-in hybrid street sweepers will be earmarked for DSNY, an important step in electrifying the city’s specialized equipment fleet.

 

The funds will additionally support the first major investment by DCAS in all-electric pick-up trucks and vans. DCAS recently registered its first requirements contracts for electric cargo vans, electric pick-ups, and a law enforcement model of the electric pick-up. In total, the city operates over 6,000 pick-up trucks and vans, which represent 25 percent of the city’s total on-road fleet. This first order of electric pick-up trucks and vans brings the agency closer to meeting the goal of an all-electric light- and medium-duty fleet by 2035.

 

The seven all-electric refuse trucks will be the first owned by DSNY following a successful pilot assessment of an all-electric refuse unit. DSNY will test the operation of these trucks citywide. The funding will also support DSNY’s first order of plug-in hybrids and help the agency assess the efficacy of both plug-in hybrid electric and all-electric sweepers.

 

As of September 2022, DCAS reached its 2025 goal of transitioning 4,000 vehicles in the city fleet to electric vehicles — three years ahead of schedule. Currently, the electric fleet includes a wide range of vehicle types and categories from over 200 Ford Mustang Mach Es — most of which are for law enforcement purposes — to nearly 850 GM Bolts.

 

DCAS expects to operate over 5,000 EVs by June 2023. The agency has also ordered the first three electric buses for the New York City Department of Correction and is working on EV contracts for box trucks, garbage trucks for the New York City Department of Parks and Recreation, and additional replacements of gas cars with electric models.  

 

In addition to increasing the EV fleet, DCAS also operates the largest EV charging network in New York State, with over 1,300 charging ports available to fleet units. DCAS will deploy another 600 charging ports in the next 18 months. This funding announced today is supporting the purchase of 315 additional charging units.

 

“New York City’s fleet has committed to going all-electric for most units by 2035,” said DCAS Deputy Commissioner for Fleet Management Keith Kerman. “We’ve already made progress on electrifying cars. Electrifying medium- and heavy-duty is the next big step, and this procurement of over 540 electric trucks is our most important yet. Thank you to our great partners at the U.S. Department of Transportation, DOT, and DSNY for helping make our electric dreams a reality.”

 

Frank James Pleads Guilty to Mass Shooting on New York City Subway

 

Defendant Directed a Barrage of Gunfire at Helpless Commuters During Rush Hour in Brooklyn

 Earlier today, in federal court in Brooklyn, Frank James pleaded guilty to 10 counts of committing a terrorist attack or other violence against a mass transportation vehicle—one count for each gunshot victim—and one count of discharging a firearm in furtherance of his attack.  The charges relate to the defendant’s April 12, 2022 mass shooting on the New York City subway in Sunset Park, Brooklyn.  Today’s proceeding was held before United States District Judge William F. Kuntz, II.  When sentenced, James faces up to life in prison on each of the 11 counts.

Merrick B. Garland, United States Attorney General, Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Keechant L. Sewell, Commissioner, New York City Police Department (NYPD), announced the guilty plea.

“On the morning of April 12, 2022, Frank James cold-bloodedly shot innocent New Yorkers traveling on the subway in Brooklyn, and brought terror to our great city.  James’s crimes of violence have been met with swift justice,” stated United States Attorney Peace.  “James’s admission of guilt to all eleven counts of the superseding indictment acknowledges the terror and pain he caused. This guilty plea is an important step towards holding James fully accountable and helping the victims of the defendant’s violence and our great city heal.”

Mr. Peace praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD in bringing the defendant to justice.  Mr. Peace also thanked the Metropolitan Transportation Authority (MTA) for their substantial assistance.

“As described in court filings, the defendant set off a smoke bomb in a New York City subway car and then fired a handgun more than 30 times, striking ten innocent passengers,” said Attorney General Merrick B. Garland. “Today’s guilty plea demonstrates that the Justice Department will work relentlessly to hold accountable those who engage in mass violence and terrorize our communities.”

“Frank James, as he admitted today, deliberately planned and carried out an attack of terror on everyday New Yorkers.  The FBI's JTTF and our law enforcement partners remain ever vigilant in our efforts to protect our city, and we will ensure those willing to commit acts of terror face the consequences of their actions,” stated FBI Assistant-Director in Charge Driscoll.

“Today’s guilty plea is a distinct admission of the terror Mr. James inflicted on New Yorkers last April in Brooklyn, and he is being held accountable for his reprehensible actions that morning,” stated NYPD Commissioner Keechant L. Sewell. “Our nation’s largest transit system is the lifeblood of New York City. And its subway riders expect and deserve the brisk, coordinated, and meticulous work exhibited by everyone involved in bringing this terrible incident to a successful close. For their unwavering dedication to all the people we serve, I thank and commend the NYPD patrol officers who arrested Mr. James on the run, as well as each of the detectives and agents assigned to the Joint Terrorism Task Force who methodically shrunk his world until he had nowhere else to turn. Lastly, I also want to thank the public for their vigilance and their help in taking this violent criminal off of our streets.”

According to court filings and facts presented at the plea proceeding, at approximately 8:26 a.m. on April 12, 2022, James used a Glock 17 handgun that he legally purchased in Ohio to conduct a mass shooting on an N subway train in Brooklyn.  As part of his attack, James—disguised in an orange reflective jacket and yellow hardhat to look like an MTA employee—set off a smoke-emitting device in a subway car before opening fire on his captive victims.  The smoke-emitting device caused panicked passengers to scramble to one end of the subway car, allowing James to more easily shoot at his victims.  In total, 10 victims were struck by the defendant’s bullets.  Even more passengers suffered from smoke inhalation and other emotional and physical injuries caused by the defendant’s attack. 

The investigation reflects that the attack was the culmination of substantial planning.  Beginning as early as 2017, James began purchasing items he could use in an attack, including smoke grenades, ammunition, weapons, and his disguise.  In the months leading up to his attack, James conducted internet searches for “MTA,” “New York,” “transit,” “stops on the N train,” and “311 kings highway brooklyn ny,” which is near where James parked his rented U-Haul van before entering the subway.  The defendant also recorded and posted videos online foreshadowing his plans, including stating that “if you hear the name Frank James on the news, if something happens to a Frank James that’s sixty-something years old, chances are that’s me.”

Following James’s attack, law enforcement officers searched James’s apartment and storage unit and uncovered a stockpile of weapons, including, among other items: 9mm ammunition; a threaded 9mm pistol barrel, which allows for a silencer or suppresser to be attached; .223 caliber ammunition, which is used with an AR-15 semi-automatic rifle; a taser; a high-capacity rifle magazine; and a blue smoke cannister.

Former NYC Councilman Ruben Diaz Sr. - Governor Kathy Hochul's Problems

 

By Former NYC Councilman Rev. Ruben Diaz

You should know that this past Sunday, January 01, 2023, The Honorable Kathy Hocul was officially sworn in, for the first time as New York State Governor.

 

As you know, Kathy Hochul became Governor, "By Accident." When Governor Andrew Cuomo was forced to resign due to allegations brought by Letitia James, Attorney General of New York State.

 

It is important for you to know that after being Sworn in as the First Woman to have the Statewide Seat as Governor for New York, this woman begins her Governorship plagued by problems, rejections, and oppositions, coming from the Leadership of her own Democrat Party. These Democrat leaders are in a power struggle, and it appears as though they have decided not to grant Governor Hochul the same luxury of having the same level of power, control, and authority that Andrew Cuomo had over the State Legislature.

 

The question, within the political community, is why this power struggle? Why is it that these same Democrat Leaders never dared to challenge, or opposed Andrew Cuomo when he was Governor?

 

Many also try to answer those questions and some say that "This opposition to Kathy Hochul may be due to the perception that she possesses weakness, lacks experience and lacks the will to lead."  Others may say that the Legislative Democrats in leadership had a bad experience with Governor Andrew Cuomo, who tended to micromanage and therefore controlled all their actions. This time they may not want to permit a similar situation to be repeated with Governor Hochul.

 

Finally, we cannot dismiss those who conveniently use the Gender card, as an excuse to say that " Kathy Hochul is facing these problems because she is a woman, and therefore they do not want to be controlled and told what to do by a woman.  So, the struggle is to nip the problem of Gubernatorial Control from the beginning.  The Democrats want to send a clear message and make apparent who are the ones who rule and are in control in Albany.

 

We do not know the Reason or Reasons for this Power Struggle that is brewing in Albany.  What is clear is that the Governor’s Leadership and reputation is in the line of fire for the following reasons.

 

1.She prematurely Approved a $32,000 salary increase for each of the 63 Senators and each of the 150 State Assembly Members without being able to negotiate any of her proposals. No Governor approves salary increases or legislators from $110,000.00 to $142,000.00 without first ensuring approval for the Governors projects.

 

2. Her first Official act as Governor was to nominate Judge Hector Lasalle for Chief Justice of the Court of Appeals.  This nomination is facing resistance among Members of her own Party. Despite her having approved legislative salary increases of $32,000.00, they do not support her Judicial appointment. In the event the Governor fails to get her nominee through her own party, she will be viewed on a national level as a puppet that is manipulated by the State Legislature.  This would be devastating for her leadership as Governor.

 

3. Governor Hochul is under pressure from Progressives Democrats to terminate Mr. Jay Jacobs as the Chairman of the State Democratic Party.  Mr. Jacobs is a loyal advocate and ally of Kathy Hochul. Can you  imagine, my dear reader, what would happen if the Governor were to fire her loyal ally as is Mr. Jacob?

 

You should Know, my dear reader, that for my first column of What You Should Know for the year 2023, I felt it is important to inform you of some of the problems that the first Female Governor of New York State is confronting at the beginning of her leadership as our states number one political figure.

 

These problems may be resolved in the coming weeks or months. Soon New Yorkers will know who or whom will be calling the shots in Albany.  Is it the Governor, a potentate, or potentates? 

 

We will soon know if Governor Kathy Hochul, New York’s First Female Governor is up to the challenge before her.  Will she rise in leadership, control, and reputation? Will she rise as a national political figure to be viewed as an example for other women in leadership or will she buckle under the weight of all the pressure? 

 

I am the Rev. Rubén Diaz, and This is What You Should Know.

Former Chief Financial Officer Of Two SPACs Pleads Guilty To Fraud Scheme

 

Cooper Morgenthau Embezzled More Than $5 Million and Caused False Statements to Be Made to Accountant and Auditor and in SEC Filings

 Damian Williams, the United States Attorney for the Southern District of New York, announced today that COOPER MORGENTHAU, the former chief financial officer of two special purpose acquisition companies (“SPAC-1” and “SPAC-2”), pled guilty to one count of wire fraud in connection with a scheme to embezzle more than $5 million from the two companies.  The defendant pled guilty before U.S. District Judge Paul A. Engelmayer.

U.S. Attorney Damian Williams said: “Cooper Morgenthau, the former CFO of two SPACs, has admitted that he breached the trust that he owed to his public and private investors, stealing millions of dollars from them to trade meme stocks and cryptocurrencies.  This Office remains committed to rooting out fraud in the SPAC market and to protecting Main Street investors from abuses on Wall Street.”

According to the allegations in the Information and statements made in public court proceedings:

Between in or about June 2021 and in or about August 2022, MORGENTHAU, who was the CFO of SPAC-1 and SPAC-2, embezzled more than $5 million from the two companies.   SPAC-1 had recently had its initial public offering, while SPAC-2 was raising money from private investors in preparation for its anticipated IPO.  MORGENTHAU used the embezzled funds to trade equities and options of so-called “meme stocks” and cryptocurrencies, losing almost all of the money that he stole.  To conceal and facilitate his embezzlement from SPAC-1, MORGENTHAU fabricated bank statements, which he provided to SPAC-1’s accountant and auditor; made and caused to be made material misstatements in SPAC-1’s public filings with the Securities and Exchange Commission (“SEC”); and transferred some of SPAC-2’s funds to SPAC-1 to cover up the funds he had misappropriated from SPAC-1. 

MORGENTHAU, 35, of Fernandina Beach, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  As part of his guilty plea, MORGENTHAU agreed to forfeit $5,111,335 and to pay restitution of $5,111,335. 

The statutory maximum sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  MORGENTHAU is scheduled to be sentenced by Judge Engelmayer on April 25, 2023. 

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams further thanked the SEC for its assistance and cooperation in this investigation.