Attorney General James, FTC Shut Down Massive Charity Fraud Telefunding Operation

 

Company Made Over 1.3 Billion Deceptive Fundraising Calls, Including Over 72 Million Calls to New Yorkers and Illegally Solicited Funds for Sham Charities

 New York Attorney General Letitia James and the Federal Trade Commission (FTC) today announced the shutdown of a massive telefunding operation that bombarded 67 million consumers with 1.3 billion deceptive charitable fundraising calls, most of which were illegal robocalls. Associated Community Services (ACS) and its affiliated companies and individuals made more than 72 million calls to New York residents alone, haranguing thousands of them more than 100 times each. This operation illegally collected more than $110 million by falsely claiming that funds would go to charities that support veterans, children, and firefighters. 

The defendants have agreed to settle charges by Attorney General James, the FTC, and agencies from 38 states and the District of Columbia that they duped generous Americans into donating to charities that failed to provide the services they promised. The complaint names ACS and its sister companies Central Processing Services and Community Services Appeal; their owners, Dick Cole, Bill Burland, Barbara Cole, and Amy Burland; and ACS senior managers Nikole Gilstorf, Tony Lia, John Lucidi, and Scot Stepek. In addition, the complaint names two fundraising companies allegedly operated by Gilstorf and Lia as spin-offs of ACS, Directele and The Dale Corporation.

“These telemarketers illegally solicited contributions from New Yorkers and inundated them with millions of harassing phone calls,” said Attorney General James. “There is no tolerance for this type of unlawful and predatory behavior. We will continue to work aggressively with partners around the country to stop deceptive fundraising tactics that cheat hardworking New Yorkers.”

According to the complaint, the defendants knew that the organizations for which they were fundraising spent little or no money on the charitable causes they claimed to support — in some cases as little as one-tenth of one percent. The defendants kept as much 90 cents of every dollar they solicited from generous donors on behalf of the charities. Since at least 2008, the defendants made these deceptive calls on behalf of numerous organizations that claimed to support homeless veterans, victims of house fires, breast cancer patients, children with autism, and other causes that well-meaning Americans were enticed to support.

The complaint also charges ACS with making harassing calls, noting that ACS called more than 1.3 million phone numbers more than 10 times in a single week and 7.8 million numbers more than twice in an hour. More than 500 phone numbers were even called 5,000 times or more. ACS made more than 72.6 million calls to New Yorkers over the last three and a half years. The fundraiser called 73,500 New Yorkers more than 10 times in a single week and called 477,000 New Yorkers two times or more within a single hour.

The ACS defendants were the subject of 20 prior law enforcement actions for their fundraising practices. The ACS defendants stopped operating in September 2019. Gilstorf purchased Directele and Dale Corp in October 2019 and, with Lia, the Directele defendants allegedly continued the deceptive fundraising and illegal telemarketing practices. The complaint alleges the defendants violated New York’s Executive Law §§ 63(12), 171-a through 175, the FTC Act, the TSR, and numerous other state laws.

The terms of the settlements with the defendants are as follows:

Associated Community Services Defendants

Each of these defendants will be permanently prohibited from conducting or consulting on any fundraising activities and from conducting telemarketing of any kind to sell goods or services. In addition, they will be prohibited from using any existing donor lists and from further violations of state charitable giving laws, as well as from making any misrepresentation about a product or service. The defendants will be also be subject to the following monetary judgments:

• Associated Community Services, Inc.; Community Services, Inc.; Central Processing Services, Inc.; and Richard “Dick” Cole are subject to a monetary judgment of $110,063,843, which is suspended due to an inability to pay.
• Community Services Appeal, Inc. and Barbara Cole are subject to a monetary judgment of $110,063,843, which is partially suspended due to an inability to pay. Barbara Cole also will be required to turn over the proceeds of the sale of a vacation home in Michigan.
• Robert W. “Bill” Burland and Amy J. Burland are subject to a monetary judgment of $110,063,843, which is partially suspended due to an inability to pay. Amy Burland will be required to turn over $450,000.

Directele Defendants and ACS Senior Managers Scot Stepek and John Lucidi

Each of these defendants will be permanently prohibited from any fundraising work or consulting on behalf of any charitable organization or any nonprofit organization that claims to work on behalf of causes similar to those outlined in the complaint. They will also be prohibited from using robocalls for any form of telemarketing, using abusive calling practices, or making any misrepresentation about a product or service. In addition, the defendants will be required to clearly and conspicuously disclose when a donation they are requesting is not tax deductible.

In addition, the two corporate defendants — Directele Inc. and The Dale Corporation — will be required to cease operations and dissolve.

The defendants will also be subject to the following monetary judgments:

• Scot Stepek will be subject to a monetary judgment of $110,063,843, which is partially suspended due to an inability to pay. Stepek will be required to sell a ski boat in his possession and turn over the net proceeds from the sale.
• Directele Inc., The Dale Corporation, Nikole Gilstorf, and Antonio Lia will be subject to a monetary judgment of $1.6 million. Gilstorf and Lia also will be subject to a judgment of $110,063,843. The judgments are partially suspended due to an inability to pay. Gilstorf and Lia will each be required to turn over $10,000.
• John Lucidi will be subject to a judgment of $110,063,843, which is partially suspended due to an inability to pay. He will be required to turn over $25,000.

The funds being surrendered by the defendants will be paid to an escrow fund held by the state of Florida, and, following a motion by the participating states and approval by the court, be contributed to one or more legitimate charities that support causes similar to those for which the defendants solicited.

Today’s settlement is the second time in six months that New York, in collaboration with the FTC and other states, has banned a fundraising network from fraudulent charitable fundraising. In September 2020, Attorney General James announced a settlement with Outreach Calling, Inc., its owner and various associated companies and individuals, barring them from all charitable fundraising and from deceiving consumers in any other fundraising effort.

Other state agencies joining in the case with Attorney General James and the FTC include the attorneys general of Alabama, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia; the secretaries of state of Colorado, Georgia, Maryland, North Carolina, and Tennessee; the Florida Department of Agriculture and Consumer Services; and the Utah Division of Consumer Protection.

The complaint and final orders were filed in the U.S. District Court for the Eastern District of Michigan.

The matter is being handled by Assistant Attorney General Peggy Farber, under the supervision of Enforcement Section Co-Chief Yael Fuchs and Bureau Chief James G. Sheehan. The Charities Bureau is a part of the Division for Social Justice, led by Chief Deputy Attorney General Meghan Faux, under the oversight of First Deputy Attorney General Jennifer Levy.

Leading Co-Founder Of Cryptocurrency Company Sentenced To 8 Years In Prison For ICO Fraud Scheme

 

 Ilan T. Graff, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that SOHRAB SHARMA, a/k/a “Sam Sharma” was sentenced today to eight years in prison in connection with his leading role in a scheme to induce victims to invest more than $25 million worth of digital funds in Centra Tech, Inc. (“Centra Tech”), a Miami-based company he co-founded and that purported to offer cryptocurrency-related financial products.  SHARMA previously pled guilty to conspiring to commit securities fraud, wire fraud, and mail fraud in connection with his and his co-conspirators’ use of material misrepresentations and omissions to solicit investors to purchase securities, in the form of digital tokens issued by Centra Tech, through fraudulent fundraising efforts that included an initial coin offering (“ICO”) beginning in approximately July 2017.  U.S. District Judge Lorna G. Schofield imposed the sentence in Manhattan federal court.

Mr. Graff said:  “Sohrab Sharma led a scheme to deceive investors by falsely claiming that the start-up he co-founded had developed fully functioning, cutting-edge cryptocurrency-related financial products.  In reality, Sharma’s most notable inventions were the fake executives, fake business partnerships, and fake licenses that he and his co-conspirators touted to trick victims into handing over tens of millions of dollars.  We will continue to aggressively pursue digital securities frauds like this one.”

According to statements in the Superseding Information, and other filings and statements at public court proceedings in the case:

In or about July 2017, SHARMA, along with codefendants Robert Farkas and Raymond Trapani, founded a company called Centra Tech that claimed to offer cryptocurrency-related financial products, including a purported debit card, the “Centra Card,” that supposedly allowed users to make purchases using cryptocurrency at establishments accepting Visa or Mastercard payment cards.  From approximately July 30, 2017, through October 5, 2017, SHARMA and his codefendants solicited investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech (“Centra tokens” or “CTR tokens”), including through a so-called “initial coin offering” or “ICO.”  As part of this effort, SHARMA and his codefendants represented, in oral and written offering materials that were disseminated via the internet: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; (b) that Centra Tech had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard; and (c) that Centra Tech had money transmitter and other licenses in 38 states, among other claims.  Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens.  In or about October 2017, at the end of the defendants’ fundraising efforts, those digital funds raised from victims were worth more than $25 million.  At certain times in 2018, as the defendants’ fraud scheme was ongoing, those funds were worth more than $60 million.

The claims that SHARMA and his co-conspirators made to help secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” and another supposed member of Centra Tech’s executive team were fictional people who were fabricated to dupe investors, Centra Tech had no such partnerships with Bancorp, Visa, or Mastercard, and Centra Tech did not have such licenses in a number of those states.

In 2018, this Office and the Federal Bureau of Investigation (“FBI”) seized, pursuant to judicially authorized seizure warrants, 100,000 Ether units, consisting of digital funds raised from victims who purchased digital tokens issued by Centra Tech during its fundraising efforts based on fraudulent misrepresentations and omissions.  The United States Marshals Service sold the seized Ether units for approximately $33.4 million earlier this year.  Following entry of a final order of forfeiture, these funds and other forfeited fraud proceeds will be available for potential use in a remission program that the Department of Justice intends to create to compensate victims of the Centra Tech fraud.

In addition to the prison term, SHARMA, 29, of Aventura, Florida, was also sentenced to three years of supervised release and ordered to pay a fine of $20,000.  He was further ordered to forfeit $36,088,960.

Mr. Graff praised the investigative work of the FBI and thanked the U.S. Securities and Exchange Commission for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Samson Enzer, Negar Tekeei, and Daniel Loss are in charge of the prosecution.

Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic MARCH 4, 2021

 

Statewide Positivity Rate is 2.81%; Lowest Since November 21

5,177 Patient Hospitalizations Statewide; Lowest Since December 9

44 Percent Decline in Hospitalizations from Mid-January Peak

1,043 Patients in the ICU; Lowest Since December 13

712 Intubated; Lowest Since December 29

60 COVID-19 Deaths in New York State Yesterday

Governor Andrew M. Cuomo today updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic.

"New Yorkers have embodied the definition of New York Tough through this past year and we need to maintain our vigilance to win this war on COVID," Governor Cuomo said. "As we continue this battle, we cannot get complacent. There are precautions and guidelines in place that we know work - wearing masks, socially distancing, hand washing, and, when eligible, getting vaccinated. As we continue to vaccinate New Yorkers, we must continue these practices until we reach critical mass. The light at the end of the tunnel is in sight, and every day we are closer to reaching the end of this journey together." 

Today's data is summarized briefly below:

• Test Results Reported - 270,089
• Total Positive - 7,593
• Percent Positive - 2.81%
• 7-Day Average Percent Positive - 3.12%
• Patient Hospitalization - 5,177 (-146) 
• Net Change Patient Hospitalization Past Week - -526
• Patients Newly Admitted - 606
• Hospital Counties - 53
• Number ICU - 1,043 (-4) 
• Number ICU with Intubation - 712 (-23)
• Total Discharges - 148,355 (+625)
• Deaths - 60
• Total Deaths - 38,796

Governor Cuomo Announces 12 Community-Based Pop-Up Vaccination Sites Coming On Line This Week to Vaccinate More Than 4,000 New Yorkers

 

EDITOR'S NOTE:

There are two sites listed for Manhattan, one for Brooklyn and one for Queens. Also there are eight sites listed for outside of New York City. 

The Bronx has been the hardest hit, but it looks like Governor Cuomo is just like Mayor de Blasio when it comes to the Bronx Missing in Action. Stop dumping on the Bronx and Help us.

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Bolstering State's Commitment to Ensuring Fairness and Equity in Vaccine Distribution Process

Community-Based 'Pop Up' Vaccination Sites Have Enabled Over 50,000 New Yorkers to Receive First Dosage of Vaccine

Host Sites and Partner Providers Conduct Outreach Within Their Communities and Work with Community Leaders and Organizations to Identify Eligible New Yorkers and Schedule Vaccination Appointments

Governor Andrew M. Cuomo today announced 12 community-based pop-up vaccination sites are coming online this week at public housing developments, churches, community centers, schools and fire stations. These sites are expected to vaccinate more than 4,000 people throughout the week. Since January 15, 120 community-based pop-up sites administered more than 50,000 first doses of the COVID-19 vaccine. As has been the case with previous pop-up sites, these sites will be re-established in three weeks to administer second doses.

Moving forward as the federal vaccine supply increases, New York will continue to establish these sites at all 33 NYCHA Senior Housing Developments, which house more than 7,600 seniors. Pop-up locations will also continue to be established at other public housing complexes statewide, as well as at more than 300 churches and cultural centers which have volunteered to house these sites through Governor Cuomo's Vaccine Equity Task Force. 

"Reaching underserved communities across the state is critical to a vaccination strategy that serves all New Yorkers, and community-based pop-up sites bring the vaccine directly to those who have been hardest hit by the virus," Governor Cuomo said. "As we continue to expand access, we're also partnering with community leaders to address vaccine skepticism which remains a large problem in underserved communities. Fairness and equity in the vaccine distribution process remain our top priorities and we will not rest until COVID is defeated once and for all." 

The establishment of many of these vaccination sites was made possible through partnerships with multiple public and private health care providers. Host sites and partner providers conduct outreach within their communities and work with community leaders and organizations to identify eligible New Yorkers and schedule vaccination appointments. The 12 sites being established this week are located at the addresses below: 

NEW YORK CITY
Canaan Baptist Church
132 W 116th St
New York, NY 10026
Open: March 5, 2021; 9:00 AM-5:00 PM 

NYCHA Chelsea Addition
436 West 27 Drive
New York, NY 10001
Open: March 5, 2021; 9:00 AM-5:00 PM 

Jacob Riis Settlement
10-25 41st Ave
Queens, NY 11101
Open: March 7, 2021; 9:00 AM-8:00 PM 

Spring Creek Towers Community Center
1540 Van Siclen Avenue
Brooklyn, NY 11239
Open: March 6 & 7, 2021; 9:00 AM-5:00 PM 

LONG ISLAND
Uniondale High School
933 Goodrich Street
Uniondale, NY 11553
Open: March 4, 2021; 8:00 AM-12:00 PM

B.A.P.S Swaminarayan Hindu Temple
2 Deshon Drive
Melville, NY 11747
Open: March 5, 2021; 8:00 AM-12:00 PM 

HUDSON VALLEY
Open Door Family Medical Center
Village of Ossining Ambulance Corps and Neighbors Link
165 Main St
Ossining, NY 10562
Open: March 6, 2021; 9:00 AM-5:00 PM

**all appointments already filled**

CAPITAL REGION
Hudson Central Firehouse
77 North 7th Street
Hudson, NY 12534
Open: March 6, 2021; 10:00 AM-1:00 PM

**all appointments already filled**

MOHAWK VALLEY
St. Paul's Baptist Church
219 Leah St
Utica, NY 13501
Open: March 4, 2021; 9:30 AM-1:30 PM 

SOUTHERN TIER
Friendship Baptist Church
120 Pearl St
Corning, NY 14830
Open: March 5, 2021; 1:00 PM-4:00 PM 

CENTRAL NEW YORK
Tucker Missionary Baptist Church
515 Oakwood Avenue
Syracuse, NY 13205
Open: March 5, 2021; 12:00 PM -3:30 PM 

FINGER LAKES

Campbell Street R-Center
524 Campbell St
Rochester, NY 14611
Open: March 6, 2021; 9:00 AM-1:00 PM

This continued development of community-based 'pop up' vaccination sites furthers Governor Cuomo's mandate of ensuring the fair and equitable distribution of the COVID-19 vaccine. In late 2020, the Governor announced the launch of New York's Vaccine Equity Task Force chaired by Secretary of State Rossana Rosado, Attorney General Letitia James, National Urban League President & CEO Marc Morial, and Healthfirst President & CEO Pat Wang. Since its establishment, the Task Force has continued work to ensure vulnerable and underserved communities are not left behind by breaking down the barriers to vaccination and ensuring there is equitable distribution of the vaccine across the state.

Comptroller Stringer Calls On NYC Health + Hospitals to Ensure Fair Working Conditions and COVID-19 Protections for Laundry Workers

 

Urges H+H to support laundry workers in ongoing labor dispute with their employer, Unitex, which has refused to commit to basic COVID protections in its laundry processing facilities and is demanding an end to pension benefits for future employees

Stringer: “These essential workers, mostly Latinx immigrants, have worked bravely throughout the pandemic, risking their own safety to clean, process, and deliver linens for patients at hospitals and nursing homes across New York City, including H+H hospitals. They deserve a fair contract – one which includes a commitment to COVID-19 safety, a modest wage increase, and the continuation of the pension plan for current and future employees.”

 Today, New York City Comptroller Scott M. Stringer sent a letter to President and Chief Executive Officer Dr. Mitchell Katz calling on NYC Health + Hospitals to ensure fair working conditions and COVID-19 protections for laundry workers in its facilities. Comptroller Stringer urged H+H to support laundry workers in an ongoing labor dispute with their employer, Unitex, which has refused to commit to basic COVID protections in its laundry processing facilities and is also demanding an end to pension benefits for future employees.

Comptroller Stringer emphasized that these essential workers, represented by Laundry Distribution & Food Service Joint Board of Workers United/SEIU, have kept H+H hospitals running through the pandemic and deserve a fair contract that includes a commitment to COVID-19 safety, a wage increase, and continued pension benefits.

The full letter is available below and here.

Dear Dr. Katz:

First, I am writing to express my deep appreciation for your leadership through the COVID-19 pandemic, which has been instrumental in helping our city confront the overwhelming challenges posed by the pandemic, especially in communities of color that rely so heavily on H+H facilities. That said, I am also writing to urge you to extend your managerial focus to help resolve an ongoing labor dispute between the laundry workers who provide clean linens to H+H patients every day and their employer, Unitex.

These essential workers, mostly Latinx immigrants, have worked bravely throughout the pandemic, risking their own safety to clean, process, and deliver linens for patients at hospitals and nursing homes across New York City, including H+H hospitals. They deserve a fair contract – one which includes a commitment to COVID-19 safety, a modest wage increase, and the continuation of the pension plan for current and future employees.

Sadly, it is my understanding that instead of rewarding workers for their sacrifices during the pandemic, Unitex has refused to commit to basic COVID protections in its laundry processing facilities and is also demanding an end to a modest pension benefit for future employees that would cost just 30 cents an hour. Unitex is also under investigation by Region 22 of the National Labor Relations Board for numerous alleged violations of federal labor law, including illegally threatening to fire workers for striking.

As you know, Unitex benefits from a lucrative sole-source contract worth up to $50 million over three years between Sodexo and H+H, wherein Unitex is the subcontractor processing the laundry for H+H hospitals. While H+H is not a party to the current contract talks, I believe a strong statement from the leadership of H+H that expresses support for the workers of the Laundry Distribution & Food Service Joint Board of Workers United/SEIU – and their right to fair working conditions – would go a long way toward driving an amicable resolution to the current situation.

We have all borne witness to the heroism of our frontline medical workers this past year – no one more so than you – but we need to make sure that our collective appreciation extends to those less visible, like our laundry workers, who make sure that hospital staff and patients have clean linens, garments and other supplies they need to do their jobs to the best of their abilities.

Thank you for your attention to this matter, and I look forward to your reply.

Sincerely,

Scott M. Stringer

New York City Comptroller

Permits Filed For 1616 Crosby Avenue In Pelham Bay, The Bronx

 

Permits have been filed for an eight-story residential building at 1616 Crosby Avenue in Pelham Bay, The Bronx. Located between Middletown Road and Daniel Street, the lot is two blocks south of the Buhre Avenue subway station, serviced by the 6 train. Alfred Mitaj under the First Structure LLC is listed as the owner behind the applications.

The proposed 74-foot-tall development will yield 26,797 square feet, with 21,433 square feet designated for residential space. The building will have 31 residences, most likely rentals based on the average unit scope of 691 square feet. The masonry-based structure will also have a cellar and a 45-foot-long rear yard.

Badaly Architects is listed as the architect of record.

Demolition permits have not been filed yet for the three-story residential structure on the lot. An estimated completion date has not been announced.

NYS COMPTROLLER DiNAPOLI: STATE PENSION FUND CALLS ON COMPANIES TO ADDRESS CLIMATE RISK, TRANSITION TO CLEANER OPERATIONS

 

The New York State Common Retirement Fund (Fund) has reached agreements with five major U.S. companies, including Domino’s Pizza Inc., to set targets to reduce their greenhouse gas emissions (GHG), adopt new energy efficiency measures and increase their use of renewable energy, New York State Comptroller Thomas P. DiNapoli, trustee of the Fund, announced today. In response to the agreements, the Fund withdrew the shareholder resolutions with the companies.

“More and more companies understand that addressing climate change, by reducing their carbon emissions, helps their long-term success and benefits investors," DiNapoli said. “The transition to a low carbon future and meeting our country’s renewed commitment to the Paris Agreement present enormous opportunities for smart, sustainable investments. My thanks to these companies for recognizing their role in building a lower-carbon economy and their responsibility to shareholders’ concerns about climate risk.”

The agreements announced today include:

• Domino’s pledged to adopt GHG targets;
• Steel maker Cleveland-Cliffs Inc. has set GHG targets and committed to co-funding a green hydrogen project;
• Chemical maker Albemarle Corp. has committed to adopting GHG targets;
• Water treatment company Pentair Plc has agreed to commit to setting GHG and clean energy targets; and
• Commercial property owner Realty Income Corp. has agreed to commit to adopting GHG targets by engaging with its clients.

In addition to agreeing to increased targets for renewable energy use, emission reductions and energy efficiency, the companies indicated they would regularly report on their progress in meeting those goals.

Since taking office in 2007, DiNapoli has been recognized as a global leader for his efforts to protect the Fund’s investments, address material risks from climate change and pursue sustainable opportunities for the Fund’s investments. As part of his comprehensive Climate Action Plan to protect investments, DiNapoli uses the Fund’s voice and shareholder voting power by calling on companies to focus on the climate change risks they face, to report on and reduce their GHG emissions and to acknowledge the business opportunities and risks in the emerging low carbon economy.

The Fund has filed more than 150 climate-change-related shareholder resolutions and reached 77 agreements with portfolio companies to analyze climate risks, set GHG reduction targets and renewable energy and energy efficiency goals, prevent deforestation, publish sustainability reports and appoint directors with environmental expertise.

In December, DiNapoli announced the Fund has adopted a goal to transition its portfolio to net zero greenhouse gas emissions by 2040. 

New York State Common Retirement Fund

The New York State Common Retirement Fund is the third largest public pension fund in the United States with assets of approximately $247.7 billion as of Dec. 31, 2020. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the nation.

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