United States and California Announce Diesel Engine Manufacturer Cummins Inc. Agrees to Pay a Record $1.675 Billion Civil Penalty in Vehicle Test Cheating Settlement

 

The Justice Department, Environmental Protection Agency (EPA), California Air Resources Board (CARB) and California Attorney General’s Office today released the details of a proposed settlement with diesel engine maker Cummins Inc. for alleged violations of the Clean Air Act and California law. Beyond agreeing to pay a $1.675 billion civil penalty – the largest ever assessed in a Clean Air Act case – Cummins has agreed to spend more than $325 million to remedy the violations, which included the use of software “defeat devices” that circumvented emissions testing and certification requirements.

Under the settlement, Cummins must complete a nationwide vehicle recall to repair and replace the engine control software in more than 600,000 RAM 2500 and RAM 3500 pickup trucks equipped with the company’s diesel engines. Cummins will also extend the warranty period for certain parts in the repaired vehicles, fund and perform projects to mitigate excess ozone-creating nitrogen oxides (NOx) emitted from the vehicles and employ new internal procedures designed to prevent future emissions cheating. In total, the settlement is valued at more than $2 billion.

NOx pollution contributes to the formation of harmful smog and fine particulate matter in air. Children, older adults, people who are active outdoors and people with heart or lung diseases are particularly at risk for health effects related to smog or particulate matter exposure. Nitrogen dioxide formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children. 

“The Justice Department is committed to vigorously enforcing environmental laws that protect the American people from harmful pollutants,” said Attorney General Merrick B. Garland.  “The types of devices we allege that Cummins installed in its engines to cheat federal environmental laws have a significant and harmful impact on people’s health and safety. This historic agreement makes clear that the Justice Department will be aggressive in its efforts to hold accountable those who seek to profit at the expense of people’s health and safety.”

“Today’s agreement, which includes the largest-ever Clean Air Act civil penalty, stands as notice to manufacturers that they must comply with our nation’s laws, which protect human health and the health of our environment,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “We appreciate the work of our partners, the EPA and the State of California, in helping us reach this significant settlement.”

“Today’s landmark settlement is another example of the Biden-Harris administration working to ensure communities across the United States, especially those that have long been overburdened by pollution, are breathing cleaner air,” said EPA Administrator Michael Regan. “Today we‘ve reaffirmed that EPA’s enforcement program will hold companies accountable for cheating to evade laws that protect public health.”

“Cummins installed illegal defeat devices on more than 600,000 RAM pickup trucks, which exposed overburdened communities across America to harmful air pollution,” said Assistant Administrator David M. Uhlmann of EPA’s Office of Enforcement and Compliance Assurance. “This record-breaking Clean Air Act penalty demonstrates that EPA is committed to holding polluters accountable and ensuring that companies pay a steep price when they break the law.” 

“Cummins knowingly harmed people’s health and our environment when they skirted state emissions tests and requirements,” said California Attorney General Rob Bonta. “Today’s settlement sends a clear message: If you break the law, we will hold you accountable. I want to thank our federal and state partners for their collective work on this settlement that will safeguard public health and protect consumers across the country.”

“The collaboration between California and its federal partners makes it clear that companies will be held accountable for violating essential environmental laws that are in place to provide the clean air that communities across California and the nation want and deserve,” said CARB Executive Officer Dr. Steven Cliff. “California’s air quality regulations protect public health and are backed by a world-class emissions testing laboratory that ensures CARB’s enforcement efforts are rigorously supported with data and science, which CARB was pleased to contribute to this landmark case.” 

Background

As in prior cases against other manufacturers, EPA discovered defeat devices in Cummins engines used in RAM pickup trucks through testing at the agency’s National Vehicle and Fuel Emissions Laboratory. That testing of RAM trucks was done as follow-up on a 2015 EPA warning to manufacturers that the agency planned to conduct special testing to identify defeat devices using driving cycles and conditions that were non-standard, but still reflected normal vehicle operation and use.

The terms of the proposed settlement with Cummins are spelled out in two consent decrees that the United States and California filed today with the U.S. District Court for the District of Columbia. In a related set of complaints filed today, the United States and California allege that nearly a million model year 2013-2023 RAM 2500 and RAM 3500 pickup trucks with Cummins diesel engines utilized undisclosed engine control software features, and more than 630,000 of those trucks made in model years 2013-2019 had illegal emissions control software defeat device features. Those software defeat devices helped the trucks pass standard EPA emissions tests, but they artificially reduced the effectiveness of the emission controls – and increased NOx emissions – during normal driving outside of the standard test conditions. 

Recall and Repair Program

Cummins sought all EPA and CARB emission certifications for the RAM trucks equipped with its engines, even though the trucks were sold by the RAM truck division of Fiat Chrysler and its dealers. The settlement requires Cummins to work with Fiat Chrysler and its dealers on a vehicle recall and repair program that will remove all defeat devices from the affected 2013-2019 RAM trucks free of charge and bring the vehicles into compliance with applicable emissions standards under the Clean Air Act. The repair only involves software updates. Cummins has already started the recall and repair program required by the settlement.

Cummins must repair at least 85% of the 2013-2019 RAM trucks equipped with defeat devices within three years. The company must offer a special extended warranty covering emission control system parts on 2013-2019 RAM trucks that receive the replacement software. Cummins also must test some of the repaired trucks over a number of years to ensure that the trucks continue to meet emissions standards over time. 

Mitigation Programs

As another requirement of the settlement, Cummins must fully offset the excess NOx emissions from the 2013-2019 RAM trucks that were equipped with defeat devices. For California, Cummins will make a lump sum payment to CARB of slightly more than $175 million to fund mitigation actions or projects that reduce NOx emissions in California through CARB mitigation programs. For the rest of the country, Cummins will secure offsetting NOx reductions by working with railroad locomotive owners on two types of locomotive emission reduction projects. First, Cummins will finance and ensure the replacement of 27 old, high-emitting diesel locomotive engines with new, low-emitting diesel or electric engines. Second, Cummins will fund and complete 50 projects that will reduce idling time for diesel-powered switch locomotives to reduce fuel usage and emissions of NOx, particulate matter, volatile organic compounds and carbon dioxide. 

Public Information and Public Comment

This EPA website offers additional information concerning the settlement:

https://www.epa.gov/enforcement/2024-cummins-inc-vehicle-emission-control-violations-settlement.

The complaints and the proposed consent decrees in the related cases filed by the Justice Department’s Environment Enforcement Section and the State of California can be viewed on the Justice Department’s website at www.justice.gov/enrd/consent-decrees. The proposed consent decree in the case filed by the United States is subject to a 30-day public comment period.

Attorney General James Leads Multistate Coalition to Stop Sales of Military-Grade Ammunition Used in Mass Shootings

 

Federally Funded Factory Produced Ammunition Used at Tops Supermarket Shooting in Buffalo and Other Recent Mass Shootings

New York Attorney General Letitia James led a multistate coalition of 20 attorneys general calling on the White House Office of Gun Violence Prevention to investigate recent reports that a federally funded contractor has produced military-grade ammunition for sale to civilians, including to perpetrators of horrific recent mass shootings. Attorney General James and the coalition sent a letter asking the Office to investigate how a facility overseen by the U.S. Army, Lake City Army Ammunition Plant (Lake City), produced billions of rounds of ammunition that were sold on the civilian market, and asked the Office to ensure that future military production contracts prohibit the sale of military-subsidized weapons and ammunition to civilians.

“Military-grade weapons and ammunition do not belong in our homes or in our communities,” said Attorney General James. “Ammunition made at Lake City has been used to kill American civilians in devastating recent mass shootings, including the Tops Supermarket massacre in Buffalo. The continued sale of this ammunition on the private market puts everyone at risk. I’m proud to join with my fellow attorneys general to raise this important issue and help ensure that weapons of war don’t make their way onto our streets.” 

Lake City is a manufacturing facility operated by a private contractor and overseen by the U.S. Army. It is one of the country’s largest manufacturers of military ammunition, able to produce some 1.6 billion rounds of ammunition per year, much of it for use in AR-15-style rifles. Its commercial operations have sold billions of rounds onto the civilian market, and recent reporting from the New York Times has shown its products have been used in mass shootings and other crimes.

The coalition of attorneys general notes that Lake City rounds have become the “ammunition of choice” for use in mass shootings, citing shootings at Tops supermarket in Buffalo, New York, Marjory Stoneman Douglas High School in Parkland, Florida, the Tree of Life Synagogue in Pittsburgh, Pennsylvania, and Robb Elementary School in Uvalde, Texas, as recent examples where Lake City rounds were used. The Buffalo mass shooter even praised Lake City ammunition as “the best barrier penetration ammo I can get.” 

The federal government has invested over $860 million to improve production at Lake City, meaning taxpayer funds are subsidizing production of these dangerous rounds sold to civilians. The coalition led by Attorney General James is calling on the White House of Gun Violence Prevention to investigate the contracting and manufacturing practices that led to military-grade rounds being sold to civilians, issue a public report with recommendations about how to keep military ammunition out of civilian hands, and take steps over the long term to ensure that future production contracts prohibit the sale of military weapons and ammunition to civilians.

Joining Attorney General James in sending the letter to the White House are the attorneys general of Arizona, California, Connecticut, Delaware, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia. 

Attorney General James has consistently taken action to stop gun violence and protect communities by limiting the spread of dangerous weapons. Earlier in December, Attorney General James led a multistate coalition of attorneys general supporting a new ATF rule to limit unlicensed gun sales. In November, Attorney General James successfully defended against Second Amendment challenges in six cases in the New York State Court of Appeals involving gun possession charges. In May, Attorney General James sued a gun accessory manufacturer that aided the Buffalo mass shooter. In April, Attorney General James took action to remove more than 3,000 guns off New York’s streets in a single day through the first-ever statewide gun buyback program. In March, Attorney General James and the New York Drug Enforcement Task Force took down a firearm and drug trafficking operation that illegally sold guns, including ghost guns and assault weapons, in New York City. Also in March, Attorney General James secured a court order banning 10 gun distributors from selling and shipping ghost gun parts into New York. In June 2022, Attorney General James sued 10 national gun distributors for bringing ghost gun parts into New York.

Governor Hochul Updates New Yorkers on State Plans for the April 2024 Total Solar Eclipse

 

The First Total Eclipse Over New York State in 99 Years

Nearly Two Dozen State Agencies and Authorities Have Been Working with Local Governments to Ensure a Safe and Enjoyable Experience

Path of Totality Will Traverse 29 Counties, The Rest of the State Will See 88Percent to Over 99 Percent Coverage

With less than 100 days to go before the State’s first total eclipse in nearly a century, Governor Kathy Hochul today updated New Yorkers and the State’s expected hundreds of thousands of visitors on its plans to ensure a safe, enjoyable and awe-inspiring experience.

“Whether you live in New York or are visiting to witness this generational spectacle, ensuring everyone can take in this year’s eclipse safely is our top priority,” Governor Hochul said. “I encourage everyone to keep safety in mind so that all can savor this experience and make memories to last a lifetime. Come for the eclipse, but stay for New York and enjoy all our great state has to offer.”

During the afternoon of April 8, 2024, a total eclipse will encompass the western and northern parts of New York State. In less than 15 minutes within a 3:15 to 3:30 window, the moon will pass between the earth and sun, turning day into night for 1 ½ minutes to 3 ½ minutes. The roughly 100-mile wide path of totality will enter in the southwestern part of the state at just after 3:15 PM, and will depart northern New York just before 3:30. Cities and towns within this path include Jamestown, Buffalo, Rochester, Syracuse, Watertown, Old Forge, Lake Placid and Plattsburgh. The entire event will last for up to 2 ½ hours, marking the time the sun is first obstructed to the last moments when the moon’s shadow is cast.

For other areas of the state that are outside the path, there will still be quite a celestial spectacle. The minimum coverage in the state will be on Long Island, with the sun being shadowed at 88 percent there. New York City will see 89 percent coverage with 96 percent in the Capital Region.

For the last 15 months, an interagency task force, comprised of nearly two dozen state agencies and authorities, has been collaborating on plans to ensure a safe and memorable viewing experience for New York State’s residents and visitors. It is focused on building awareness of the State as a prime location to experience the eclipse by gathering important safety and preparedness information, amplifying and supporting region-specific viewing activities, and maintaining regular communication with local governments and municipalities, especially those within the path of totality. New York’s public safety efforts align with the State’s normal jurisdictional role over State parks and State roads and support to local governments in their planning and decision making in accordance with their own codes, laws and needs as this exciting event approaches.

Public safety challenges for such an event include traffic management, communications capabilities and public health and safety. State, county and local public safety and emergency management efforts have been and will continue to be tailored to the anticipated needs from an influx of those who come to view the eclipse from both inside and outside the state.

The state’s goals surrounding the eclipse are to provide a safe, fun and enjoyable experience from start to finish. Alongside the focus on public safety is the promotion of New York State as an eclipse vacation destination. With so much to do and see in the path of totality, New York State and I LOVE NY are encouraging eclipse viewers to extend an eclipse viewing trip into a full vacation for a more enjoyable experience all around – including avoiding post-event traffic, like the massive backups after the Great Eclipse of 2017, which bisected the United States from Oregon to South Carolina.

April 8, 2024—and the days leading up to and following—mark an important opportunity to showcase New York State's splendor from its parks and attractions to its quaint towns and landscapes. I LOVE NY has launched the multi-platform "Come for the Eclipse, Stay for New York" campaign to present New York as THE place to be to witness this event. The campaign and a special eclipse website highlight viewing location information in the five regions that will experience the path of totality, a variety of attractions and special eclipse-related events happening across the state, and safety best practices across digital platforms, including Instagram, Facebook, TikTok, and Twitter/X, email newsletters, and digital displays in various highly trafficked locations across the state such as the Moynihan Train Hall and regional welcome centers. The website also includes resources for educators, families and kids, along with photos and frequently asked questions about solar eclipses. Visitors can download a special edition eclipse poster, created through an I LOVE NY partnership with acclaimed artist and professional astronomer Dr. Tyler Nordgren to help promote and commemorate the eclipse.

As this once-in-a-lifetime event approaches, meetings and briefings will continue with agencies and governments across the state to continue preparation. In addition, the Governor’s office will be providing updates on relevant milestones and features to keep New Yorkers and its visitors informed on how to best prepare, be safe and enjoy the eclipse.

New York State Division of Homeland Security and Emergency Services Commissioner Jackie Bray said, “It’s been nearly 100 years since New York last experienced a total solar eclipse and thankfully we will not have to wait much longer. With our state so uniquely positioned to view this celestial wonder, people from around the country will be flocking to New York to see it for themselves and we will be ready. As April 8 quickly approaches, we will continue to work hand in glove with our local partners to ensure it will be a safe and enjoyable experience for all.”

MAYOR ADAMS RESTORES FUNDING FOR APRIL 2024 NYPD RECRUIT CLASS, FIFTH FIREFIGHTER AT 20 FDNY ENGINE COMPANIES

 

Administration’s Measured, Responsible Fiscal Management Has Reduced Migrant Costs, Allowing for Select, Reasonable Funding Restorations

 

Police Academy Class Restoration Follows Decrease in Crime in 2023, Including Double-Digit Decreases in Shootings and Homicides

New York City Mayor Eric Adams today announced that thanks to measures the city has implemented to responsibly manage the city’s budget and strategically navigate significant fiscal challenges, funding will be restored for the New York City Police Department (NYPD) to add another police academy class of 600 new recruits set to join the ranks in April. This class of recruits will graduate in October and will join the three additional police classes scheduled to graduate this year. Additionally, Mayor Adams announced that funding will be restored to return a fifth firefighter at 20 Fire Department of the City of New York (FDNY) engine companies and maintain 190 firefighters on payroll who are not expected to be able to return to full-duty status.

 

The funding restorations build on successful efforts by the Adams administration to drive down overall crime, with murders down 12 percent and shootings down 25 percent in 2023. They also follow targeted and effective steps taken by the Adams administration in the face of a $7 billion budget gap in Fiscal Year (FY) 2025 due to federal COVID-19 stimulus funding drying up, expenses from labor contracts this administration inherited after being unresolved for years, , and the growing costs of the asylum seeker crisis — steps that have included helping put migrants on the path to self-sufficiency and reducing per-diem costs for migrants. The restorations will be reflected in the FY25 Preliminary Budget, which will be presented next Tuesday, at the City Charter deadline.

 

“Public safety is the prerequisite to prosperity, and so everything we do is to ensure New York City remains the safest big city in America,” said Mayor Adams. “I am proud to announce that we are not only adding hundreds of additional NYPD officers to our police force this year but also bolstering the Fire Department’s ranks. Today’s measured and reasonable restorations to the NYPD and FDNY are due, in large part, to this administration’s ability to make the right financial decisions for our city and implement creative policies as we continue to see an influx of asylum seekers. But we are not out of the woods and have fiscal challenges in the year ahead, and that’s why we still need help from our federal and state partners to offset the costs of COVID-19 funding sunsetting and the continuous influx of asylum seekers. Our administration will continue to make the right fiscal decisions for our city, while keeping New Yorkers safe.”

 

“Mayor Adams has made public safety this administration’s top priority, and I am proud that, through the use of sound fiscal management and innovative ideas, we have identified solutions to sure up our ranks at both the NYPD and the FDNY,” said Deputy Mayor for Public Safety Philip Banks III. “While our commitment to keeping New Yorkers safe is unwavering, New York City cannot continue to shoulder the burden of this massive humanitarian crisis on its own without significant financial aid from our state and federal partners.”

 

“The restoration of the April police academy recruit class is great news for the NYPD and all New Yorkers,” said NYPD Commissioner Edward A. Caban. “There is no better investment in public safety than that of an NYPD officer — and these 600 additional recruits will help bolster our efforts to drive down crime even further in 2024.”

 

“We are grateful to the mayor for reinstating the fifth firefighter, providing us additional resources as we tackle emerging challenges like lithium-ion batteries,” said FDNY Commissioner Laura Kavanagh. “We know controlling costs is crucial during these tough fiscal times. The department will continue to take every measure necessary to ensure we are spending taxpayer dollars wisely while fulfilling our mission of protecting life and property.”

 

In August 2023, Mayor Adams laid out projections estimating the cost of the asylum seeker crisis to grow to more than $12 billion over three fiscal years — between FY23 and FY25 — if circumstances did not change. From April 2022 through December 2023, the city has already spent an estimated $3.5 billion on shelter and services for over 168,500 individuals who came through the city’s intake center during that timeframe. With sunsetting COVID-19 stimulus funding, slowing tax revenue growth, expenses from labor contracts this administration inherited after being unresolved for years, and a lack of significant state or federal government action on the asylum seeker crisis, Mayor Adams took action — announcing a 5 percent Program to Eliminate the Gap (PEG) on city-funded spending for all city agencies with plans for additional rounds of PEGs in the Preliminary and Executive Budgets. And, through strong fiscal management that included implementing measures to reduce household per-diem costs and helping put migrants on the path to self-sufficiency, the city is projected to achieve a 20 percent reduction in city-funded spending on the migrant crisis by the end of FY24, which will be detailed in the FY25 Preliminary Budget.

 

As a result of the administration’s policies, nearly 60 percent of the asylum seekers who came through the city’s intake center have left the city’s care and taken the next steps in their journeys. Through the Asylum Application Help Center and the city’s satellite sites, the city has helped submit more than 25,000 work authorization, temporary protected status, and asylum applications, moving asylum seekers that much closer to being able to legally work and be self-sufficient.

 

Virginia Animal Breeders Surrender Approximately 200 Dogs and Cats

 

Justice Department Secured Preliminary Injunction for Alleged Pervasive Mistreatment of Animals

Two North Chesterfield, Virginia, animal breeders, Elena Mikirticheva and Andrey Mikirtichev, recently surrendered approximately 200 dogs and cats following court-ordered injunctive relief secured by the Justice Department, on behalf of the U.S. Department of Agriculture (USDA), for alleged, pervasive mistreatment of the animals in their possession.

U.S. District Judge David J. Novak for the Eastern District of Virginia ordered the relief to replace a temporary restraining order after considering a joint agreement by the United States and the defendants. Following entry of the court order, around 45 dogs and cats were surrendered to USDA, which placed the animals in Virginia shelters and rescue organizations for adoption. The agencies then worked with the Virginia Attorney General’s Office, which seized the remaining animals, more than 150, and placed them with the Humane Society of the United States.

Subsequently, the Justice Department filed a consent decree in the U.S. District Court for the Eastern District of Virginia to permanently ban Mikirticheva and Mikirtichev from Animal Welfare Act (AWA) licensure or registration. The USDA filed a corresponding consent decision and order in its administrative enforcement proceeding that includes more than $300,000 in civil penalties and permanent AWA license revocation. Both filings were approved.

In August, the Justice Department filed a complaint and motion for temporary restraining order alleging that Mikirticheva and Mikirtichev, licensed under the AWA, had received over 50 AWA citations for failing to provide adequate shelter, medical and other care, and access to USDA APHIS inspectors, thereby placing the health of their animals in serious danger. The filings alleged that, over the course of two years, APHIS inspectors repeatedly found animals in need of veterinary care. The defendants would delay seeking veterinary care, and, even when animals were seen by a veterinarian, the defendants would fail to follow the veterinarian’s advice. The filings further alleged that APHIS inspectors found animals in cages smaller than AWA requirements and others that were seemingly dehydrated or malnourished due to dominant or aggressive behavior displayed by animals with whom they should not have been housed. APHIS inspectors also allegedly observed junk, waste and/or hazardous materials in areas accessible to the animals.

Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division and Deputy Administrator Dr. Roxanne Mullaney of the USDA’s Animal and Plant Health Inspection Service (APHIS) Animal Care Program made today’s announcement.

USDA APHIS investigated and referred the case as well as removed and secured placement for animals surrendered to it from the facility. The Environment and Natural Resources Division’s Wildlife & Marine Resources Section filed the complaint, preliminary injunction motion, and consent decree in the U.S. District Court for the Eastern District of Virginia.

Release of Body Worn Camera Footage from an Officer Involved Shooting that Occurred on March 26, 2023 in the confines of the 52nd Precinct

 

The NYPD is releasing body-worn camera footage from an officer-involved shooting that occurred on March 26th, 2023 in the confines of the 52nd Precinct..

The video includes available evidence leading up to the incident as well as during the incident. The NYPD is releasing this video for clear viewing of the totality of the incident.

All NYPD patrol officers are equipped with body-worn cameras. The benefits of cameras are clear: transparency into police activity, de-escalation of police encounters and accountability for police officers, through an independent account of interactions between the police and the citizens they serve. Body-worn cameras serve as a vital part of ongoing efforts to increase trust between the police and all New Yorkers.

You can find the video here

D.A. Bragg Announces Guilty Plea of Executive And Company in Wide-Ranging Construction Fraud

 

Manhattan District Attorney Alvin L. Bragg, Jr., announced the guilty pleas of LAWRENCE WECKER, 83, and his company JM3 CONSTRUCTION LLC, for engaging in multiple criminal schemes to increase revenues to the detriment of its workers and fair market competition within the construction industry. WECKER pleaded guilty in New York State Supreme Court to Enterprise Corruption and Attempted Criminal Possession of a Weapon in the Second Degree for fraudulently using minority and women-owned business enterprises as pass-through entities to wrongfully obtain contracts for affordable housing developments, diverting and stealing money related to a New York County construction project, bribing a construction executive in order to obtain a contract, and other forms of corruption. His company, JM3 CONSTRUCTION LLC, pleaded guilty to Scheme to Defraud in the First Degree.

Subcontractor JACG Construction LLC and its owner JOSEPH GUINTA, 48, also pleaded guilty today to one count each of Insurance Fraud in the Third Degree for their role in WECKER’s enterprise. WECKER is expected to be sentenced to a promised 2-to-6 years in state prison on April 30, 2024, while GUINTA will be sentenced on March 12, 2024, to a promised sentence of 6 months in jail and 3 years of probation and will be required to make restitution of $150,000 to the New York State Insurance Fund (“NYSIF”). The charges against an additional six individuals and four companies charged in the New York State Supreme Court indictments remain open and pending. 

“By corrupting the market, Lawrence Wecker and Joseph Guinta robbed legitimate MWBEs and smaller contractors of the chance to do business in New York,” said District Attorney Bragg. “These defendants engaged in multiple types of fraud and corruption, from committing insurance fraud to doling cash bribes. We will not tolerate fraud in the construction industry, particularly at the expense of New York’s workers.”

DOI Commissioner Jocelyn E. Strauber said, “These defendants engaged in an array of criminal schemes to exploit their workers and the City’s Minority and Women-Owned Business Enterprises (M/WBEs) program, and to fraudulently obtain contracts to build affordable housing in New York City; today they acknowledge and are held accountable for their crimes.  DOI thanks the Manhattan District Attorney’s Office and all our partners on this important prosecution for their commitment to combat construction fraud in New York City, to protect the City’s initiatives to develop affordable housing, and to advance legitimate M/WBEs.”

According to court records and as admitted in the defendants’ guilty pleas, WECKER owned and operated JM3 CONSTRUCTION LLC, a large, non-union drywall and carpentry company that specialized in government-subsidized affordable housing projects in Manhattan and the greater New York City area. WECKER, with assistance a codefendant, directed business operations including:

•   Reporting truthful information about JM3’s use of Minority and Women-Owned Business Enterprises (M/WBE) subcontractors and suppliers to city and state agencies.
•  Providing truthful payroll information for workers’ compensation insurance purposes.
•    Giving accurate accounting information to clients.
•    Properly paying subcontractors.

From 2015 through 2021, the JM3 CONSTRUCTION ENTERPRISE engaged in numerous criminal schemes, including falsifying the business records related to the large, multi-million-dollar cash payrolls of JM3 CONSTRUCTION LLC and subcontracting companies including JACG CONSTRUCTION LLC, led by GUINTA.

During the course of the investigation, JM3 CONSTRUCTION LLC’s cash payroll typically amounted to $150,000 a week, which also included the company making large, weekly cash payments to certain subcontractors, including GUINTA. None of the cash was reported to the companies’ workers’ compensation insurance providers or tax authorities. The companies and their owners also took steps to hide and cover up workers’ injuries so that clients and insurance providers would not discover the cash payroll.

 

JACG CONSTRUCTION LLC had workers’ compensation insurance policies through NYSIF. It made false statements to NYSIF about the company’s workforce size and payroll amounts, defrauding NYSIF of significant premiums.

 

The JM3 CONSTRUCTION ENTERPRISE engaged in a pervasive and multi-faceted M/WBE fraud scheme to obtain lucrative, government-subsidized affordable housing contracts. This involved falsifying business records and offering false instruments for filing with governmental entities (the New York City Department of Housing Preservation and Development and the New York State Department of Homes and Community Renewal) to make it appear that M/WBE firms were providing goods and services on projects. In fact, JM3 CONSTRUCTION LLC and/or other non-M/WBE firms provided the goods and services. 

 

Among the projects in which the JM3 CONSTRUCTION ENTERPRISE engaged in M/WBE fraud were:

•  National Urban League, 126 West 126th Street, Manhattan
•    The Fountains, 888 Fountain Avenue, Brooklyn
•    Vital Brookdale, 535 East 98th Street, Brooklyn
•    79 Avenue D, Manhattan
•    Via Vyse, 1812 Vyse Avenue, Bronx
•    Story Avenue East, 1520 Story Avenue, Bronx
•    14 LeCount Place, New Rochelle

Furthermore, JM3 CONSTRUCTION LLC, WECKER paid owners of M/WBEs cash payments to secure business for JM3 CONSTRUCTION LLC, and to falsify records to claim that the M/WBEs would provide carpentry work they were wholly unqualified to perform. WECKER and the JM3 CONSTRUCTION ENTERPRISE also stole money from their subcontractors and falsified related business records in connection with these thefts. Finally, they also rigged construction project bids to ensure that JM3 CONSTRUCTION LLC was awarded projects with inflated amounts to cover substantial bribes.

DOI ISSUES REPORT ON DISCLOSURE OF OVERNIGHT STAYS AT THE PATH INTAKE CENTER IN SUMMER 2022 AND THE MANIPULATION OF THE PUBLICLY-REPORTED PATH ELIGIBILITY RATE FROM 2017 TO EARLY TO MID-2022

 

Jocelyn E. Strauber, Commissioner of the New York City Department of Investigation (“DOI”), issued a Report today that examined two separate and unrelated allegations regarding the Prevention Assistance and Temporary Housing Intake Center (“PATH”). PATH is an intake facility in the Bronx for families with children seeking shelter provided by the City Department of Homeless Services (“DHS”), an agency that is part of the City Department of Social Services (“DSS”). First, DOI investigated DSS’s identification of, and disclosure to City Hall and others of, a July 18, 2022 incident in which four families who arrived at PATH before 10 p.m. remained there overnight. The overnight stays violated longstanding DHS policy that families arriving at PATH by 10 p.m. be provided with a shelter placement and transported out of the intake center by 4 a.m. the following morning, a policy referred to in the Report as the “10-to-4 Rule”. Second, DOI investigated an allegation that DSS manipulated the publicly-reported 30-day eligibility rate of homeless families with children applying for DHS shelter from mid-2017 through early to mid-2022. The Report describes DOI’s findings regarding both allegations and the six recommendations DOI issued to DSS as a result. A copy of the Report is attached to this release and can be found at the following link: https://www.nyc.gov/site/doi/newsroom/public-reports.page 

DOI Commissioner Jocelyn E. Strauber said, “This in-depth, 18-month investigation tackled two complex and distinct issues involving the City’s PATH Center. First, DOI found weaknesses in PATH’s policies and procedures applicable to tracking the entry and exit times of families seeking shelter, among other issues, which limited DSS’s ability to timely identify and report violations of DSS’s policies concerning the provision of shelter to those families (the “10-to-4 Rule”) in the summer of 2022. Second, DOI identified an intentional and yearslong effort within DSS to manipulate the number of families eligible for shelter on a daily basis, dating from 2017 through early to mid-2022, in order to control the Monthly Eligibility Rate, a publicly-reported figure. Accuracy and transparency are critical to government operations, and DOI’s recommendations seek to improve DSS’s procedures and to facilitate the collection and reporting of correct information concerning families in need of shelter.”

Allegations Regarding DSS’s Identification and Disclosure of Violations of the “10-to-4” Rule in the Summer 2022

On July 18, 2022, executive leadership at DSS and DHS were notified that four families who arrived at the DHS PATH Intake Center before 10 p.m. on July 17 remained in the PATH building until after 4 a.m. on July 18, and thus were not en route to temporary shelter by 4 a.m. in violation of the 10-to-4 Rule. The 10-to-4 Rule is a DHS policy, in place for at least two decades, based on Section 21-313 of the New York City Administrative Code. Section 21-313 requires DHS to provide “temporary shelter placement for that night” (including transportation) to any family with minor children “in the process of applying” for DHS services as of 10 p.m. in the evening. Subsequent to these events — and in light of the ongoing influx of migrant families in need of shelter in New York City — the 10-to-4 Rule was, and remains, temporarily suspended. DOI’s investigation into the above-described violations and surrounding events found significant gaps in PATH’s record-keeping concerning the entry and exit times of families at the PATH facility. Due to those gaps, and deficiencies in DSS’s compliance and staff training relating to the 10-to-4 Rule, DSS Leadership (and City Leadership) were unaware of additional violations of the 10-to-4 Rule. The investigation also exposed a lack of full transparency by former DSS Commissioner Gary Jenkins in his initial discussions with City Hall about the July 18 incident. City Leadership disclosed the four violations that occurred on July 18 during a press conference on July 21 and thereafter, in August, City leadership identified and disclosed a fifth violation that had occurred on July 19th.

the evening. Subsequent to these events — and in light of the ongoing influx of migrant families in need of shelter in New York City — the 10-to-4 Rule was, and remains, temporarily suspended. DOI’s investigation into the above-described violations and surrounding events found significant gaps in PATH’s record-keeping concerning the entry and exit times of families at the PATH facility. Due to those gaps, and deficiencies in DSS’s compliance and staff training relating to the 10-to-4 Rule, DSS Leadership (and City Leadership) were unaware of additional violations of the 10-to-4 Rule. The investigation also exposed a lack of full transparency by former DSS Commissioner Gary Jenkins in his initial discussions with City Hall about the July 18 incident. City Leadership disclosed the four violations that occurred on July 18 during a press conference on July 21 and thereafter, in August, City leadership identified and disclosed a fifth violation that had occurred on July 19th.

Allegation Related to DHS’s Manipulation of Public-Facing Shelter Eligibility Data 

DOI’s investigation substantiated a separate allegation that from June 2017 through early to mid-2022, DHS Administrator Joslyn Carter and her subordinates, acting at her direction, artificially lowered PATH’s publicly-reported Monthly Eligibility Rate by delaying DHS’s final determination that families had been deemed eligible for shelter, when there was no legitimate reason for that delay. The rate is published on NYC Open Data, and reflects the percentage of families seeking DHS shelter who are found eligible for shelter each month. The City uses the PATH Eligibility Rate for census forecasting, shelter capacity planning, and budgeting for rental assistance vouchers and shelter beds. 

Administrator Carter told DOI that she acted at the direction of former DSS Commissioner Steven Banks (who led the agency from April 2015 until December 2021) and who instructed her to decrease the Monthly Eligibility Rate in light of then-Mayor Bill de Blasio’s concerns about increases in the rate. Former Commissioner Banks acknowledged that he paid attention to fluctuations in the rate and at times discussed it with then-Mayor de Blasio and other senior Administration officials but denied knowledge of or involvement in any manipulation of the Monthly Eligibility Rate. DOI found that both Administrator Carter and former Commissioner Banks provided credible accounts with respect to their understanding of and involvement with the Monthly Eligibility Rate during the relevant time period, and each account is corroborated in certain respects. However, their accounts are irreconcilable as to the question of whether former Commissioner Banks knew of and directed Administrator Carter to engage in the data manipulation and DOI was not able to corroborate that claim. 

In its investigation, DOI was unable to assess the full impact of DHS’s manipulation of the Monthly Eligibility Rate due chiefly to limitations in the available data. However, witnesses uniformly told DOI that DHS’s method of manipulating the Monthly Eligibility Rate did not have any substantive impact on the ultimate eligibility determinations (i.e., no eligible family was coded as ineligible for shelter due to the manipulation). Witnesses also told DOI that the manipulation did not cause any families to be denied shelter for which they were eligible, because they were able to remain in their existing DHS shelter on a conditional basis while their eligibility determination was pending. However, the practice could have delayed the transition of unhoused families from DHS shelter into permanent housing. 

Witnesses informed DOI that DHS’s manipulation of the Monthly Eligibility Rate ended around early- to mid2022, when it became apparent that the new mayoral and DSS administrations were not focused on the Monthly Eligibility Rate. DOI found no evidence that former DSS Commissioner Gary Jenkins, current DSS Commissioner Molly Wasow Park, or anyone in the current mayoral administration had any knowledge of the manipulation. 

In light of the findings described above, DOI made six Policy and Procedure Recommendations to DSS to address these issues:

1: DSS should design and implement a process to ensure families’ arrival and departure times at PATH are consistently and accurately documented. 

2: The process described in Recommendation #1 should be fully automated. 

3: Once the process described in Recommendation #1 is implemented, and regardless of whether Recommendation #2 has already been implemented, DSS should conduct regular audits to ensure that the process is functioning as intended and that client movements into, within, and out of PATH are easily discernible. 

4: DSS should create a written procedure detailing the requirements of the right to shelter for homeless families with minor children. This procedure should include provisions on the reporting of 10-to-4 Rule violations up the chain within DHS/DSS leadership, City Hall, and the public. 

5: DSS should provide regular training to PATH staff and DHS/DSS leadership concerning the requirements of the right to shelter for homeless families with minor children, and DHS’s obligations and policies with respect to the same. 

6: In light of the manipulation of publicly-reported data confirmed by DOI, DSS should design and implement an internal audit process intended to ensure the integrity of all data that DHS makes public. 

This investigation was conducted by Confidential Investigator Daniel Malvey, former DOI Legal Fellow Mirelis Gonzalez, and Inspector General Audrey Feldman, with the assistance of Deputy Inspector General Jeremy Reyes and Inspector General John Bellanie, under the guidance of Deputy Commissioner of Strategic Initiatives Christopher Ryan and Deputy Commissioner/Chief of Investigations Dominick Zarrella.