Long Island Man Sentenced to 10 Years in Prison for Sprawling COVID-19 Loan Fraud

 

Glen Cove Man Used a Series of Shell Companies to Steal Over $9.6 Million From Federal Disaster Relief Funds

At the federal courthouse in Central Islip, Rami Saab, also known as “Rami Hasan,” was sentenced by United States District Judge Gary R. Brown to 10 years in prison for his role as the mastermind of a sprawling conspiracy to fraudulently obtain disaster relief loans amid the COVID-19 pandemic.  As part of the sentence he is also required to pay restitution of approximately $9.6 million. Saab pleaded guilty in July 2023 to conspiracy to commit wire fraud, stemming from his operation of a yearlong scheme to defraud banks and the Small Business Association (SBA) of millions of dollars’ worth of small business loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL).  A second defendant charged in the indictment remains at large.

Breon Peace, United States Attorney for the Eastern District of New York, Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), Erin Keegan, Acting Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), and Christopher Gust, Acting Special Agent in Charge, Treasury Inspector General for Tax Administration (TIGTA) announced the sentence.

“This defendant used fraud and deceit on an extraordinary scale to exploit government programs designed to keep struggling small businesses afloat during an unprecedented public health crisis,” stated United States Attorney Peace. “Today’s sentence sends a strong message to all those who saw the public response to the COVID-19 pandemic as little more than a get-rich-quick scheme: this Office will find you and prosecute you to the fullest extent of the law.”

Mr. Peace expressed his appreciation to the Nassau County Police Department for their assistance on the case.

“Opportunists like Saab continue to victimize the American taxpayer by pulling from benefits they don’t legitimately qualify for just to satisfy their own greed.  Saab manipulated the COVID-19 loan program so he could fill his pockets with nearly ten million dollars meant for those who suffered as a result of the pandemic.  But now, thanks to strong law enforcement partnerships and an incredible prosecution team, Saab is not only going to spend years behind bars, but he is also required to pay millions in restitution,” said Thomas M. Fattorusso, Special Agent in Charge of IRS-CI New York.

“Rami Saab showed a blatant disregard for all legal — and moral — responsibility in the midst of an unprecedented crisis. COVID-19 relief fraud is far from a victimless crime,” said HSI New York acting Special Agent in Charge Erin Keegan. “The defendant not only stole from hardworking taxpayers, but took advantage of a federal program meant to truly help those experiencing tremendous financial difficulties due to the pandemic. Today’s sending is the result of outstanding coordination between our law enforcement partners to address COVID-19 related fraud.”

“The Treasury Inspector General for Tax Administration aggressively pursues those who attempt to abuse the Coronavirus Aid, Relief, and Economic Security Act and its Paycheck Protection Program, which was created to assist legitimate business owners during the pandemic,” stated acting Special Agent in Charge Christopher Gust.  “We appreciate the efforts of our law enforcement partners and the U.S. Attorney’s Office to ensure individuals engaged in criminal activity are held to account.”

As set forth in court filings, between May 2020 and May 2021, at the height of the COVID-19 pandemic, Saab and a network of co-conspirators fraudulently applied for more than $32 million in PPP and EIDL loans on behalf of shell corporations they controlled.  Relying on false information and fabricated documentation supplied by Saab and his coconspirators, the SBA and private banks administrating the PPP and EIDL programs granted at least 20 such applications, resulting in the disbursement to Saab and his coconspirators of more than $9.6 million in emergency-relief funds intended for distressed small businesses.  Using a web of more than 50 otherwise dormant bank accounts, Saab and his coconspirators laundered the fraud proceeds to conceal their true nature and source, before using the funds for their own self-enrichment, withdrawing large portions of the loan proceeds in cash, and transferring sums to associates overseas in Turkey and elsewhere.

PPP and EIDL provided qualifying small businesses with low-interest loans.  The Coronavirus Aid, Relief and Economic Security (CARES) Act expanded EIDL to provide economic support to help offset the temporary loss of revenue experienced by businesses due to the COVID-19 pandemic. The EIDL payments did not have to be repaid.

Joint Statement from Speaker Adrienne Adams and Deputy Speaker Diana Ayala on the Settlement to Preserve Right to Shelter Protections

 

“For decades, New York’s Right to Shelter legal protections have ensured that our city’s most vulnerable have a roof over their heads, preventing them from having to sleep on the streets, subways, and in other public spaces. This settlement seems to preserve the foundation of this essential protection from further efforts to undermine it, and encourages the continued support of families and individuals seeking asylum, while eliminating the backlog of new arrivals who are reapplying for shelter placements. As a Council, we remain focused on working with the Administration and all stakeholders on immediate and long-term solutions that relieve pressure on the shelter system by helping New Yorkers transition into stable, permanent housing. We are examining the details of this settlement further, and will continue our oversight efforts to protect the health and safety of all New Yorkers.”

Statement from Governor Hochul on Agreement in Callahan 'Right To Shelter' Mediation

 "I am pleased to see an agreement reached between the City of New York and Legal Aid that will allow the City greater flexibility while still ensuring that both longtime New Yorkers and new arrivals have access to safe shelter. I have been proud to partner with Mayor Adams in helping to manage the current humanitarian crisis, including by providing $4.3 billion in state funds, and am committed to continuing our support while the Biden Administration works towards a longer term federal solution."

Justice Department Secures Agreement with Connecticut Department of Correction to Protect Religious Rights in Prison

 

The Justice Department announced that it has reached an agreement with the Connecticut Department of Correction (CDOC) that expands opportunities for group religious practice throughout the state prison system. The agreement resolves the department’s investigation of CDOC, pursuant to the Religious Land Use and Institutionalized Persons Act (RLUIPA).

Under the agreement, CDOC has adopted a new policy that expands access to group worship or other collective religious activities. Under the prior policy, only a chaplain or approved outside volunteer of the same faith as the members of a religious group could supervise the group’s religious practice. The revised policy will permit other staff and chaplains of other faiths to supervise group religious practice and will allow incarcerated persons to facilitate some group religious activities.

“Religious liberty is a foundational principle of the United States, and the religious rights of incarcerated persons are guaranteed by both the Constitution and federal law,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This agreement will protect the religious practices of people held in correctional facilities across Connecticut by expanding the available options for supervising group religious activities. The Justice Department remains steadfast in its commitment to protecting the religious rights of all persons, including those who are incarcerated.”

“Federal law guarantees all Americans the right to freely exercise one’s religion, which includes the right of institutionalized persons to practice their faith and worship together,” said U.S. Attorney Vanessa Roberts Avery for the District of Connecticut. “We are committed to protecting this fundamental right and are grateful for the Connecticut Department of Correction’s ongoing collaboration to ensure better protection for collective religious services.”

In addition to expanding who can supervise group religious practice, the agreement requires CDOC to implement a new “inmate conductor” program, which will allow incarcerated persons to take an active role in facilitating collective religious activities. CDOC will also collect and review data on a regular basis to ensure that the new policy has the intended effect of increasing access to group worship or collective religious activities. The settlement requires appropriate notification and training of CDOC staff and leadership to implement the revised policy. The department will have access to documents and correctional facilities to assess compliance with the agreement.

For additional information about the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt/special-litigation-section. The Justice Department issued a report on the 20th Anniversary of RLUIPA in 2020 and a statement and on the Institutionalized Persons Provisions of RLUIPA in 2017. Those interested in finding out more about RLUIPA can visit www.justice.gov/crt/religious-land-use-and-institutionalized-persons-act-0.

Two Defendants Convicted At Trial For Participating In Cryptocurrency Ponzi Scheme “IcomTech”

 

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict against DAVID BREND and GUSTAVO RODRIGUEZ on one count of conspiracy to commit wire fraud in connection with BREND’s and RODRIGUEZ’s participation in a large-scale cryptocurrency Ponzi scheme known as IcomTech.  U.S. District Judge Jennifer L. Rochon presided over the two-week trial. 

U.S. Attorney Damian Williams said: “IcomTech defrauded tens of thousands of people out of tens of millions of dollars.  It offered the false promise of easy riches based on supposed cryptocurrency investments but wound up cheating working people out of their hard-earned money. David Brend and Gustavo Rodriguez – two individuals who were central to the IcomTech Ponzi scheme – were swiftly convicted by a unanimous jury for their role in defrauding IcomTech investors.  This verdict should send a clear message to those who engage in Ponzi schemes — whether in the cryptocurrency markets or elsewhere — that this Office is committed to rooting out fraud in all its forms and holding those responsible to full account.  Now, as a result of their lies to hardworking people, Brend and Rodriguez stand convicted of a federal crime and face substantial time in prison.” 

According to the Indictment, public filings, public court proceedings, and the evidence presented at trial:

IcomTech launched in mid-2018, when co-defendant DAVID CARMONA hired RODRIGUEZ to build a website for the scheme.  IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors profits in exchange for their purchase of purported cryptocurrency-related investment products.  CARMONA, BREND, and the other promoters of IcomTech falsely promised their respective victims, among other things, that profits from the companies’ cryptocurrency trading and mining would result in guaranteed daily returns on victims’ investments.  In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and BREND and IcomTech’s other promoters used victim funds to pay other victims, to further promote the schemes, and to enrich themselves.

IcomTech promoters, including BREND, traveled throughout the United States and abroad, where they hosted lavish expos and small community presentations aimed at luring victims to invest in the schemes, including in the Southern District of New York.  During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning.  IcomTech promoters often showed up at larger-scale events in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech.  The atmosphere of these events was festive and designed to generate excitement about the schemes.

Victims invested in IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency.  Following a victim’s investment, a victim would be provided with access to an online portal where the victim could monitor the purported returns.  While victims saw “profits” accumulate on the online portal, most victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments.  By contrast, IcomTech’s promoters, including BREND, siphoned off, in some cases, hundreds of thousands of dollars in victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.

RODRIGUEZ worked with CARMONA to run IcomTech’s website and online portal, where victims were provided with personal accounts.  CARMONA and RODRIGUEZ discussed how to structure IcomTech’s compensation plan and investment products; for example, RODRIGUEZ advised CARMONA on where CARMONA should set the purported daily returns on victims’ investment packages and on the size of the investment packages that CARMONA should offer for sale.

At least as early as August 2018, victims who attempted to withdraw money from their online portal accounts had difficulty doing so, and when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all.  Despite these complaints, IcomTech promoters, including BREND, continued to promote IcomTech and accept victims’ investments, and RODRIGUEZ continued to maintain the website.  As complaints mounted, IcomTech began offering proprietary crypto-tokens for sale as a means of injecting liquidity into IcomTech.  Promoters of the schemes claimed that these tokens, known as “Icoms,” would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services.  This was false.  In reality, “Icoms” were essentially worthless and resulted in further financial loss to victims.  By in or about the end of 2019, IcomTech stopped making payments to victims, and IcomTech collapsed.

BREND, 49, of Tampa, Florida, and RODRIGUEZ, 47, of North Hollywood, California, were each convicted of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge.  BREND is scheduled to be sentenced by Judge Rochon on June 27, 2024, at 10:00 a.m., and RODRIGUEZ is scheduled to be sentenced by Judge Rochon on June 28, 2024, at 10:00 a.m.

Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force.  Mr. Williams also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.

If you believe you are a victim of the IcomTech fraud, updated information regarding the case and victims’ rights, as well as contact information for the victim witness coordinator is available here.

MAYOR ADAMS ANNOUNCES LAUNCH OF NEW YORK CITY’S FIRST-EVER TENANT PROTECTION CABINET

 

Multi-Agency Cabinet to Develop Policies and Long-Term Strategies, Use Every Tool to Support Tenants, Ensure Safe, Fair Housing Conditions

 

Cabinet Delivers on Key Initiative Announced in Mayor Adams’ State of the City Address, Builds on Administration’s Policies and Investments to Support Tenants in New York City

New York City Mayor Eric Adams announced the launch of the Tenant Protection Cabinet, a multi-agency collaboration to better serve renters in New York City by developing policies and long-term strategies that support tenants and ensure safer, fairer housing conditions. Following the model of the successful New York City Cabinet for Older New Yorkers, the Tenant Protection Cabinet — co-chaired by Deputy Mayor for Housing, Economic Development, and Workforce Maria Torres-Springer and New York City Executive Director for Housing Leila Bozorg — builds on the Adams administration’s record of investments and policies that uplift and support tenants across New York City, and was a key initiative of Mayor Adams’ State of the City address.

 

“Every day, New Yorkers work hard to build a better future for themselves, their kids and their families, but we cannot have a truly livable city with a housing and affordability crisis,” said Mayor Adams. “The data is clear: the demand to live in our city is far outpacing our ability to build housing, but we will not accept a city where renters are priced out of a chance to build their future. New Yorkers need our support now, and the Tenant Protection Cabinet is going to deliver it to them. Homes are more than brick and mortar — they are places where New Yorkers who rent can build their American Dreams. Together, this cabinet will work to deliver relief for tenants and working-class New Yorkers.”

 

“Protecting tenants is fundamental to our administration's vision for housing, and we’re not only using every tool available, but also creating new ones to ensure all New Yorkers have recourse against bad landlords,” said Deputy Mayor for Housing, Economic Development, and Workforce Maria Torres-Springer. “Mayor Adams has pushed us to take a whole-of-government approach to fulfilling the needs of New Yorkers, and the Tenant Protection Cabinet brings together over two dozen agencies working on tenant issues to help New Yorkers better navigate the city’s resources, and have the safe, quality housing they deserve.”

 

“As a city with millions of tenants, it is crucial that New York City’s leaders come together to provide safe and stable housing for our renters,” said Executive Director Leila Bozorg. “This year, rents are high and our rental vacancy rate is at its lowest, making this a particularly hard time to find and stay in affordable, high-quality housing. As we continue to advocate in Albany for tools that allow us to build more homes, the Tenant Protection Cabinet will be working hard to develop policies and implement solutions that make it easier for tenants to navigate services and access the important supports the city offers. Thank you to all the city agencies who work hard day in and out to serve the many tenants who call New York home.”

 

The Tenant Protection Cabinet will facilitate better information sharing and coordination amongst agencies to:

• Ensure that tenants are connected to the same information and resources regardless of the hotline or agency they contact;
• Focus attention on underutilized tenant services to match New Yorkers with the supports they need; and
• Use data strategically to identify and target areas of highest need, and track progress towards better, more stable housing for tenants.

The launch of the Tenant Protection Cabinet comes at a time of great urgency, following last month’s release of the New York City Housing and Vacancy Survey that found a clear disparity in housing quality by race/ethnicity of heads of household. The survey found that 23 percent of Black and 20 percent of Hispanic New Yorkers reported three or more problems with their housing, compared to 9 percent among those households headed by both a white New Yorker or Asian New Yorker. TPC aims to bolster resources and develop tenant supportive policies to ensure they are living in safe, fair housing conditions, regardless of race or income.

 

This announcement is part of an ongoing commitment by the Adams administration to develop policies and invest in programs to support tenants. Last summer, the Public Engagement Unit (PEU) launched a live operator tenant helpline to provide immediate support to New York tenants who face potential eviction, landlord harassment, or unacceptable living conditions. New Yorkers seeking the PEU Tenant Helpline can call 311 and be referred to a live operator.

 

Mayor Adams has recently taken strong enforcement action against landlords who do not properly maintain their properties — most recently obtaining over $4 million and the appointment of a 7A administrator (an individual appointed by a court to operate privately-owned buildings that have conditions that are dangerous to the tenants' life, health, and safety) against a single landlord with a portfolio of buildings.

 

This announcement also builds on the Adams administration’s advocacy for state lawmakers to consider a package of new affordable housing tools to help deliver relief to New Yorkers in the midst of a housing and affordability crisis. The administration continues to use every tool at its disposal to ease the pressure of the housing crisis, including launching a new $50 million initiative to help minority business enterprises developers overcome historical financial barriers and fully participate in the development of critically-needed affordable housing for New Yorkers.

 

The Tenant Protection Cabinet includes the following city offices:

• New York City Mayor’s Office
• Fire Department of the City of New York (FDNY)
• New York City Administration for Children’s Services (ACS)
• New York City Commission on Human Rights (CCHR)
• New York City Department for the Aging (DFTA)
• New York City Department of Buildings (DOB)
• New York City Department of Finance (DOF)
• New York City Department of Health and Mental Hygiene
• New York City Department of Housing Preservation and Development (HPD)
• New York City Department of Social Services (DSS)
• New York City Department of Veterans Services (DVS)
• New York City Department of Youth and Community Development (DYCD)
• New York City Director of Rodent Mitigation
• New York City Emergency Management (NYCEM)
• New York City Housing Authority (NYCHA)
• New York City Law Department
• New York City Mayor’s Office of Criminal Justice (MOCJ)
• New York City Mayor’s Office of Equity and Racial Justice (MOERJ)
• New York City Mayor’s Office of Immigrant Affairs
• New York City Mayor’s Office of Operations
• New York City Mayor’s Office of Special Enforcement (OSE)
• New York City Mayor’s Office of Technology Innovation
• New York City Mayor’s Office to End Domestic and Gender-Based Violence (ENDGBV)
• New York City Police Department (NYPD)
• PEU

To accelerate housing production and deliver relief to New Yorkers, the Adams administration has advanced a number of creative solutions, including launching its “City of Yes for Housing Opportunity” proposal to build 100,000 additional homes through significant pro-housing reforms to the city’s zoning code; laying out an office conversion accelerator to advance conversions more quickly; unveiling new proposed rules to streamline approvals for sustainable housing; and debuting several pilot programs to help fund the creation of accessory dwelling units, help move New Yorkers out of shelters and into renovated apartments, and help fuel mixed-income developments in neighborhoods across the city; among other innovative efforts.

 

New York City continues to face a serious housing shortage with a record-high shelter population totaling more than 120,000 individuals in the city’s care. But under Mayor Adams’ leadership, the city expanded the number of New Yorkers in shelter who are eligible to access city-funded rental assistance through City Family Homelessness and Eviction Prevention Supplement (CityFHEPS) housing vouchers, and then made further innovations to CityFHEPS to immediately and significantly expand access to the housing vouchers by allowing them to be utilized in any county or locality across New York state. 

 

“New York City is committed to an upstream approach when supporting children and families, and, as part of that work, families must have access to a safe place to live where they can easily access the resources and support they need,” said ACS Commissioner Jess Dannhauser. “This new cabinet will help us to collaborate with our fellow agencies to work together and provide the highest level of service to families so that they can thrive.”

 

“As we continue building an age-inclusive city, housing remains among the most critical issues impacting all New Yorkers, including older ones,” said DFTA Commissioner Lorraine Cortés-Vázquez. “By bringing agencies together to help older adults remain in their apartments, they can continue living in the communities they know best. This model has worked for the Cabinet for Older New Yorkers, where we have taken significant steps to reduce ageism and ensure that older residents are aware of all available resources. I commend the administration’s deep commitment to taking a collaborative approach to the critically important issue of housing and look forward to working with my colleagues to continue this progress through in the newly-formed Tenant Protection Cabinet.”

 

“The creation of the city’s first-ever Tenant Protection Cabinet shows the administration’s commitment to supporting the fundamental rights of all tenants living in our city, and, at DOB, the commitment to protect New Yorkers from the clutches of negligent landlords remains paramount,” said DOB Commissioner Jimmy Oddo. “To that end, we look forward to working closely with our partners in the New York City Council to increase DOB’s access to new enforcement tools that will hold the worst actors accountable for their legal responsibilities to maintain their buildings. From the oversight of DOB’s Office of the Tenant Advocate to the enforcement of mandatory Tenant Protection Plans in occupied multiple dwellings, our mandate to safeguard tenants is resolute and joining this multi-agency cabinet will boost our efforts to advocate for the enhanced enforcement tools we need.”

 

“We are excited to be a part of the Tenant Protection Cabinet, partnering with city agencies to provide New Yorkers with better access to essential city resources and services,” said DOF Commissioner Preston Niblack. “At DOF, we are dedicated to helping eligible tenants receive the full benefits they are entitled to through programs such as the NYC Rent Freeze Program, which allows older adults and those with disabilities to stay in affordable housing. We look forward to joining in this multi-agency initiative to continue to elevate crucial programs and services, safeguard tenants, and promote housing stability in our city.”

 

“It’s simple, in the greatest city in the world, every tenant deserves protection from negligent landlords, harassment, and displacement,” said HPD Commissioner Adolfo Carrion Jr. “The new Tenant Protection Cabinet brings together leaders and experts to break down silos, streamline efforts, and find new solutions to keep families in their homes and keep those homes in safe and in good condition. Mayor Adams has given us a clear mission: make New York a stronger, better, and fairer city for tenants. Under the leadership of Deputy Mayor Maria Torres-Springer and Executive Director for Housing Leila Bozorg, we are ready to make that mission a reality.”

 

“With the announcement of the first-ever Tenant Protection Cabinet, the Adams administration is reaffirming its commitment to New York City renters by taking meaningful action to improve access to the city’s robust and varied tenant supports,” said DSS Commissioner Molly Wasow Park. “DSS provides an array of vital housing supports, including rental assistance and no-cost legal representation to low-income New Yorkers in housing court, that help keep New Yorkers in their homes, and we look forward to working with Deputy Mayor Torres-Springer, Executive Director Bozorg, and the other members of the cabinet to bolster theses services and better assist New York City’s tenants.”

 

“DYCD’s role on the Tenant Protection Cabinet builds on our agency’s existing work through runaway and homeless youth and healthy families programs — connecting young people and adults to more stable housing and helping New Yorkers prevent eviction and housing discrimination,” said DYCD Commissioner Keith Howard. “Mayor Adams has a bold vision for fair, safe, and affordable housing, and DYCD is excited to join our agency partners in making sure it is a reality for all.”

 

“Homes, as critical lifelines to resilience, anchor New York City’s communities during emergencies, and the Tenant Protection Cabinet emphasizes housing’s role as an essential element in emergency readiness,” said NYCEM Commissioner Zach Iscol. “Under Mayor Adams’s administration, the Tenant Protection Cabinet will enhance coordination and resource sharing among city agencies, streamlining solutions and delivering real benefits to New Yorkers.”

 

“The city’s first-ever Tenant Protection Cabinet will serve as a collaborative conduit, connecting tenants to invaluable resources and ensuring safe and equitable conditions for residents,” said NYCHA Chief Executive Officer Lisa Bova-Hiatt. “We look forward to working in close coordination with Deputy Mayor Torres-Springer, Executive Director Bozorg, and our partner agencies to provide enhanced access to housing programs and services to New Yorkers, particularly NYCHA residents.”

 

“The establishment of the city’s Tenant Protection Cabinet is a win for the millions of tenants residing in our city,” said Corporation Counsel Sylvia O. Hinds-Radix. “The Law Department has a strong record of holding landlords accountable in court whenever they violate our housing laws and risk the safety of New Yorkers. We look forward to continuing that good work with our agency partners and furthering the goals of fairness and equity in housing through this comprehensive new initiative.”

 

“Access to safe, affordable, and secure housing is essential to our health, well-being, and social ties. We must ensure that every tenant, regardless of race or income, is protected and has access to the resources and support they need,” said Chief Equity Officer and MOERJ Commissioner Sideya Sherman. “We welcome the launch of the city’s first-ever Tenant Protection Cabinet, a major step forward in promoting problem-solving and collaboration across agencies to ensure all New Yorkers have access to the safe, quality housing they deserve.”

 

“The Tenant Protection Cabinet demonstrates this administration's deep commitment to providing all New Yorkers with resources and support critical to safe and fair housing,” said Chief Technology Officer and OTI Commissioner Matthew Fraser. “As a trusted source of reliable information on city services and programs, including housing rules and tenant rights, NYC311 will be an invaluable contributor to the cabinet’s important mission.”

 

“The men and women of the NYPD work hand-in-hand with our neighbors throughout the five boroughs every day, and we embrace this new multi-agency effort to ensure that all New York City tenants have safe, fair, and equitable access to the services they expect and deserve,” said NYPD Commissioner Edward A. Caban.

 

AUDIT: New York City Is Failing to Accurately Identify Its Infrastructure Repair Needs

 

NYC Comptroller’s audit found that OMB’s annual cost assessment does not properly survey the conditions of the City’s bridges, water & sewer pipes, schools, etc. nor accurately estimate repair or replacement costs

New York City’s annual assessment of its infrastructure and repair needs, the Asset Information Management System (AIMS), consistently fails to accurately depict the costs of maintaining the structural integrity of the City’s major infrastructure assets, a new audit from New York City Comptroller Brad Lander found. As a result, the City does not have an accurate understanding of the true costs to maintain City assets—sewers, roads, bridges, parks, schools, libraries, hospitals, tunnels—that are in need of repair.  

“You can’t fix what you don’t know is broken, and you sure can’t budget properly for repair needs for infrastructure that you did not even inspect,” said Comptroller Brad Lander. “The City’s current annual assessment of its infrastructure fails to provide an accurate picture of the conditions of the City’s infrastructure, and how much it will cost to repair or replace critical assets. We need a more strategic approach, better inspection protocols, and innovative technologies if we’re going to budget properly and maintain our City’s critical infrastructure for the decades to come.”   

The City Charter requires the City to keep an inventory of physical assets that have a replacement cost of at least $10 million and a useful life of at least 10 years. As part of the annual AIMS report, the Charter requires each agency to submit information for:  

• the date of the original acquisition or construction, the original cost and useful life, the current replacement cost and remaining life of the asset, categorized by project type; 
• an agency capital plant inventory with each asset, an update of the above information as well as an assessment of each asset’s condition and a schedule of maintenance activities by year; and 
• updates to ensure the inventory, condition assessments and maintenance schedules are “complete, current and accurate.” 

Every year, the NYC Office of Management and Budget (OMB), working with external consultants and the Department of Design and Construction (DDC), conducts a survey of one-quarter of the City’s physical assets. OMB uses the maintenance schedules derived from the surveys to estimate cost of maintenance, repairs, and replacement. In the Fiscal Year 2023 AIMS Report, OMB reported 5,093 assets within the City’s capital plant, with estimated capital repairs, replacements, and major maintenance costs of $14.1 billion for FY2024–2027 and $14.4 billion for FY2028–2033. The annual cost of producing the AIMS Report is approximately $4 million. 

The Comptroller’s audit of AIMS found: 

1. The AIMS report does not predict the estimated planned costs of projects accurately, and the maintenance schedules and cost estimates are not based on the annual assessed conditions. For instance, the AIMS report assessed the cost of maintaining the Riverside Park Bridge W79th Street Traffic Circle to be $76 million, but when the project went to bid just a few months later, the actual cost was almost double at $149.9 million.
   
   
2. OMB, DDC, and consultants’ survey method limits their reviews to what can be seen on the surface, inaccurately surveying a whole asset. OMB excludes certain structural integrity related items from surveys, especially components not readily observable or accessible such as footings, pavement base, and piles that are below ground or underwater (e.g. a pier bulkhead). In many cases, the decision not to survey conditions that were deemed not readily accessible leads to significantly underestimating the need and cost of repairs.
   
   
3. OMB does not have consistent survey practices and lacks written policies and procedures to govern survey process. The City should create a central guidance for agencies to use in carrying out inspections, which would provide direction on the section scope, rating categories, and schedules. The inspections should be led by agencies, which have the most familiarity with their own assets, rather than with OMB. The auditors also noticed variations in the amount of time DDC surveyors spent surveying different assets, ranging from 20 minutes to inspect a 6,164 square-foot Fire Department (FDNY) facility, to 36 minutes to inspect a 105,000 sq. ft. elementary school).
   
4. Some surveys did not report structural-integrity-related conditions. Between January and August 2023, auditors conducted observations at 10 sampled assets, which agencies last surveyed between December 2021 and June 2022, and found conditions that were not reported in the earlier surveys. Specifically, auditors identified 57 unreported structural-integrity-related conditions, ranging from historical delamination, cracks, and split damage at the door entrance of a Department of Transportation (DOT facility), and steel lintel corrosion and damaged stucco at a FDNY facility. Because these conditions were not reported in the prior surveys, there is no way to know whether they were pre-existing or newly developed.
   
   
5. Assets were not included in the Capital Plant Inventory and others were incorrectly counted in the AIMS report.  
   1. The auditors also reviewed 33 assets that were listed as excluded from AIMS reporting. For instance, the East 91st Street bridge leading to the Department of Sanitation’s (DSNY) Marine Transfer Station has been in use since March 2019, but has not been added to the AIMS Report. The DSNY Section Station 63 has been in use for at least five years but had not been added to the inventory list as of May 1, 2023.
   2. In the auditors’ review of 30 assets that had not been surveyed that measured over 5,300 sq. ft., auditors identified four assets (13%) that were improperly included in the capital plant inventory– two non-City-owned U.S. Coast Guard properties used by the Police Department (NYPD), and two non-structural open spaces within the zoos at Prospect Park and Flushing Meadows Corona Park were improperly included under the Parks Department (DPR). 

Based on the audit’s findings that the AIMS report offers an inaccurate and unreliable depiction of the City’s infrastructure inventory, condition, maintenance, and associated costs, the Comptroller’s Office developed a companion report, The Need for Better AIMS, which lays out best practices for infrastructure assessments that the City of New York should adopt. The report finds that deferred maintenance from delays in identifying and addressing repairs have led to the City spending over $150 million on emergency procurements over the past five years to address structural deficiencies. 

It also calls for the City to overhaul its infrastructure needs assessment, to replace the unreliable and largely unuseful AIMS report with one that enables the City to properly budget and plan for infrastructure upkeep: 

1. Tie capital infrastructure assessments to capital planning. 
2. Prioritize maintenance of existing infrastructure to prevent more costly repairs down the road. 
3. Maintain a detailed inventory of capital assets. 
4. Adopt inspection protocols tailored to specific asset classes. 
5. Use innovative technology to assess the physical condition of infrastructure. 
6. Validate inspection findings conducted by external consultants.  

The new assessment should inform the City’s 10-year capital strategy, identifying infrastructure repair and maintenance costs for the next decade. A new framework should require OMB to estimate costs for all identified infrastructure needs so that the City can make informed planning and budget decisions.  

Read the audit here. Read the report here.