Manhattan U.S. Attorney Files Civil Injunction Lawsuit To Shut Down Bronx Tax Preparer And His Company

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, announced the filing of a civil complaint against RAFAEL ALVAREZ and ATAX New York LLC (“ATAX New York”) to prohibit them from, among other things, preparing tax returns for others or engaging in activities that substantially interfere with the administration of federal tax laws. The complaint alleges that ALVAREZ and ATAX NEW YORK have prepared and filed fraudulent tax returns on behalf of their customers in order to reduce their customers’ tax liability and generate refunds to which those customers were not entitled. 

U.S. Attorney Audrey Strauss said:  “Tax return preparers who regularly cheat the tax system by preparing fraudulent federal income tax returns for their customers should not be permitted to continue in business.  This Office will work with the IRS to shut down return preparers who fleece the Treasury by claiming improper deductions or credits for their customers.”

 As alleged in the Government’s complaint filed in federal district court today:

ATAX NEW YORK is a limited liability company that prepares tax returns for customers in the Bronx.  ALVAREZ is a tax preparer and ATAX NEW YORK’s sole member.  Together, ATAX NEW YORK and ALVAREZ prepared and filed over 36,000 federal income tax returns from 2016 to 2019 for their customers.  In preparing those returns, ATAX NEW YORK and ALVAREZ knowingly prepared and filed false federal income tax returns for their customers by fabricating, among other things, unreimbursed business expenses, charitable contributions, capital loss carryovers, and tuition expenses.  Many tax returns prepared and filed by ATAX NEW YORK and ALVAREZ also falsely claimed “head of household” status for their customers as part of this scheme, even by using social security numbers belonging to deceased individuals in claiming dependents.

The Government is seeking an injunction against ATAX NEW YORK and ALVAREZ that would, among other things, permanently bar them from preparing or filing federal tax returns on behalf of others.  The complaint also asks the court to order the defendants to turn over the ill-gotten net profits they earned because of their fraudulent conduct.

Ms. Strauss thanked the Internal Revenue Service for its assistance with this case.

The case is being handled by the Tax and Bankruptcy Unit in the Office’s Civil Division.

BRONX MAN INDICTED FOR SHOOTING AND LEAVING VICTIM IN A COMA

 

Defendant Was on the Run for Months

 Bronx District Attorney Darcel D. Clark today announced that a Bronx man has been indicted on Attempted Murder, Assault and additional charges for a shooting last November that left a man in a coma and with long-term medical complications. 

 District Attorney Clark said, “The defendant allegedly shot the victim in the thigh, striking his femoral artery. The victim was in a coma and miraculously survived. Although months have passed since the shooting, he remains hospitalized.” 

 District Attorney Clark said the defendant, Edgardo Perez, 29, of 980 Prospect Avenue, was arraigned today on Attempted Murder in the second degree, first-degree Criminal Use of a Firearm, two counts of first-degree Assault, second-degree Criminal Use of a Firearm, Attempted Assault in the first degree, two counts of second-degree Criminal Possession of a Weapon, two counts of second-degree Assault, first-degree Reckless Endangerment, Criminal Possession of a Firearm, third-degree Assault, second-degree Reckless Endangerment, fourth-degree Criminal Possession of a Weapon and second-degree Menacing before Bronx Supreme Court Justice Michael Gross. Bail was set at $150,000 cash/$250,000 insurance Bond/$400,000 partially secured bond at 10 percent. The defendant is due back in court on May 27, 2021.

 According to the investigation, at approximately 6:00 p.m. on November 24, 2020 at 851 East 163rd Street, the victim, Erik Gomez, 31, accused the defendant of stealing and they engaged in a fight. The victim, who is acquainted with the defendant, allegedly punched him once and ran away. Perez allegedly pointed the gun at Gomez’ girlfriend, Yahaira Gonzalez, 42, then chased after Gomez and allegedly shot him in the upper right thigh, severing his femoral artery. Gomez lost a substantial amount of blood and slipped into a coma. He suffered liver and kidney failure and is still in the hospital.

 The defendant, who escaped to Pennsylvania after the shooting, was arrested on January 8, 2021. 

 District Attorney Clark thanked Assistant District Attorney Andrea Ingenito and Trial Preparation Assistant Ryan Trzaskoma, both of Trial Bureau 40, and NYPD Detective Frankie Soler of the 41st Precinct for their assistance in the investigation.

 An indictment is an accusatory instrument and not proof of a defendant’s guilt.

A RECOVERY FOR ALL OF US: MAYOR DE BLASIO OUTLINES NEXT PHASE OF COMPREHENSIVE POLICE REFORM EFFORT

 

Draft plan outlines New York City’s ongoing effort to undo the legacy and harm of racialized policing 

 Mayor Bill de Blasio today announced the next phase of the City’s police reform effort. The New York City Police Reform and Reinvention Collaborative draft plan, released today, builds on the initial proposals set forth in the 2021 State of the City and seven years of consecutive police reform under the de Blasio Administration. Through 36 reforms, the plan—the first step of a three-part process—outlines the next phase of the Administration’s ongoing effort to undo the legacy and harm of racialized policing.

 

“When I took office, I vowed to reform a broken stop and frisk policy—both to protect the dignity and rights of young men of color, and to give our brave police officers the partnership they need to continue their success in driving down crime,” said Mayor Bill de Blasio. “There were so many who said it couldn’t be done. But we proved them wrong.  Now, we must go further to confront the harmful legacy of racialized policing. These reforms will restore trust and accountability to create a police force that reflects the communities they serve – all while keeping New York City the safest big city in America.”

 

“As I said in a recent speech to community leaders in Harlem, there is a history in this country that goes back hundreds of years involving the enforcement of unjust laws and racist policies of society. Police have been an inexorable part of that history,” says Police Commissioner Dermot Shea in the report. “We have to acknowledge this truth – and I do. And we must acknowledge the NYPD’s historical role in the mistreatment of communities of color. I am sorry. Our challenge today is to ensure that we will not participate in, or tolerate, any further inequality or injustice. We have engaged in years of steady reform and we must continue.”

 

With 36 proposals, the City’s draft plan focuses on five goals. The plan will now move through a public comment period where it will undergo further revision based on the feedback of the public and through a process with the council.

 

1. Transparency and Accountability to the People of New York City

• Hold police officers accountable for misconduct through internal NYPD disciplinary decisions that are transparent, consistent, and fair
• Strengthening the CCRB via the David Dinkins Plan
• Consolidate NYPD oversight by expanding the authority of CCRB to include the powers of the NYPD OIG and the CCPC
• Supporting a change in State law to give CCRB access to sealed PD records for purposes of investigations, especially biased-policing investigations
• Public and comprehensive reporting on key police reform metrics

 

2. Community Representation and Partnership

• Working with communities to implement NYC Joint Force to End Gun Violence
• Incorporate direct community participation in the selection of Precinct Commanders
• Involving the community in training and education by expanding the People’s Police Academy
• Immersing officers in the neighborhoods they serve
• Elevate the feedback of the community through CompStat and Enhanced Neighborhood Policing
• Launching the Neighborhood Policing App and expanding training
• Improving policing of citywide demonstrations
• Expanding the Precinct Commander’s Advisory Councils
• Expanding Pop Up with a Cop
• Supporting and expanding the Citizen’s Police Academy
• Enhancing Youth Leadership Councils
• Expanding the Law Enforcement Explorers Program.
• Transforming public space to improve community safety

 

3. Recognition and Continual Examination of Historical and Modern-Day Racialized Policing in New York City

• Acknowledging the experiences of communities of color in New York City and begin reconciliation. 
• Eliminating the use of unnecessary force by changing culture through policy, training, accountability, and transparency. 
• Augmenting racial bias training for NYPD leadership
• Comprehensive restorative justice training for NYPD leadership and NCOs to repair relationships with communities.
• Train all officers on Active Bystandership in Law Enforcement (ABLE) by the end of this year.
• Enhancing positive reinforcement, formally and informally, to change culture
• Consistently assessing practices and policies through accreditation. 

 

4. The Decriminalization of Poverty

• Developing a health-centered response to mental health crises
• New approaches to safety, outreach and regulation through civilian agencies
• Interrupt violence through expanded community-based interventions
• Expanding the successful Brownsville pilot via the community solutions program
• Consolidating all crime victim services within the Mayor’s Office of Criminal Justice to support survivors
• Strengthening community partnerships with domestic and gender-based violence providers

 

5. A Diverse, Resilient, and Supportive NYPD

• Recruiting officers who reflect the communities they serve, with a commitment to recruit and retain more people of color and women
• Reform the discretionary promotions process to improve equity and inclusion
• Expanding mental health support for officers
• Supporting professional development through the Commander’s Course and leadership development programs
• Updating the patrol guide so it is more user friendly and less complex for officer and transparent to the public

 

This draft plan is the product of the experiences and insights of hundreds of residents of neighborhoods throughout the five boroughs, in forums of varying size and structure. New Yorkers who shared their insights include community based organizations (CBOs), advocacy groups, clergy, racial justice advocates, cure violence providers, youth groups and youth voices, ethnic and religious organizations, BIDs and small business owners, non-profits, LGBTQI+ community leaders, the deaf and hard-of-hearing community, people with disabilities, tenants’ associations, shelter-based and affordable-housing communities and providers, people involved in the justice system, crime victims, policy experts, prosecutors, oversight bodies, judges, elected officials, academic leaders, and many others. To ensure all voices were heard in this process and to solidify the partnership around reform, meetings were also hosted with uniform and civilian members of the NYPD. These meetings paralleled the community meetings, focusing on members assigned to work in the very same highly affected neighborhoods as the residents who offered testimony.

 

Since Mayor de Blasio took office on January 1, 2014, the de Blasio administration has implemented a sweeping set of wholesale reforms to address over-policing and reduce the overall impact of the criminal justice system, while making the city safer and fairer. The hallmark of the current administration has been a reduced enforcement footprint coupled with a sustained decrease in crime. While many criminal justice systems in the United States continued policies that drive mass incarceration, New York City led an effort to reduce law enforcement focused intervention and incarceration. The results of these efforts have been historic. Comparing 2020 to 2013, the year before the de Blasio Administration took office, there were approximately:

 

• 182,000 fewer stop and frisk incidents, a 95% reduction
• 253,000 fewer arrests, a 64% reduction
• 29,000 fewer marijuana arrests, a 98% reduction
• 5,900 fewer people in jail on average per day, a 52% reduction

 

The New York City Police Reform and Reinvention Collaborative Draft Plan is the continuation of this work. It envisions an NYPD that stays true to its history of bravery in the service to the public, that maintains its stellar record of driving down crime, while continuing to transform itself into an example of just, transparent, and accountable policing, implemented equitably, without regard to race, gender, ethnicity, sexual orientation, religion, or immigration or socioeconomic status.

 

The full report can be read here.

 

Ranked Choice Vote Informational Sessions Tue March 9th, and Thursday March 11th

 

Tuesday March 9 Webex Password bx0309.

Thursday March 11 Webex Password bx0311.

Senator Rivera on Legislature Stripping Governor Cuomo's Emergency Executive Powers

 

"As one of the few legislators who voted against granting Governor Cuomo emergency executive powers last March, I am pleased that today we are finally stripping them away. I firmly believe that the Executive has overstepped its boundaries and refused to work with the Legislature as a co-equal branch of government. We owe it to New Yorkers to address the public health crisis and our recovery process efficiently and transparently, which is what the governing structure in this new law will provide. 

Furthermore, in light of recent events, it is abundantly clear that, at minimum, Governor Cuomo and his administration need increased oversight. They have demonstrated that they are more interested in selling books, taking victory laps and keeping the public in the dark about the impact of the pandemic rather than providing the Legislature with accurate information necessary to crafting policy on behalf of the New Yorkers that rely on us to do so."

John David McAfee And Executive Adviser Of His Cryptocurrency Team Indicted In Manhattan Federal Court For Fraud And Money Laundering Conspiracy Crimes

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JOHN DAVID MCAFEE, the founder of the McAfee antivirus software company, and JIMMY GALE WATSON JR., who served as an executive adviser of MCAFEE’s so-called cryptocurrency team (the “McAfee Team”), with conspiracy to commit commodities and securities fraud, conspiracy to commit securities and touting fraud, wire fraud conspiracy and substantive wire fraud, and money laundering conspiracy offenses stemming from two schemes relating to the fraudulent promotion to investors of cryptocurrencies qualifying under federal law as commodities or securities.  WATSON, who was arrested last night in Texas, will be presented later today before a federal magistrate judge in the Northern District of Texas.  MCAFEE is currently detained in Spain on separate criminal charges filed by the United States Department of Justice’s Tax Division.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception.  The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.  McAfee, Watson, and other members of McAfee’s cryptocurrency team allegedly raked in more than $13 million from investors they victimized with their fraudulent schemes.  Investors should be wary of social media endorsements of investment opportunities.” 

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, McAfee and Watson used social media to perpetrate an age-old pump-and-dump scheme that earned them nearly two million dollars. Additionally, they allegedly used the same social media platform to promote the sale of digital tokens on behalf of ICO issuers without disclosing to investors the compensation they were receiving to tout these securities on behalf of the ICO. When engaging in illegal activity, simply finding new ways to carry out old tricks won’t produce different results. Investment fraud and money laundering schemes carry a strict penalty under federal law.”

According to the allegations in the charging documents unsealed today in Manhattan federal court, including the Indictment against JOHN DAVID MCAFEE and JIMMY GALE WATSON JR. and an earlier-filed criminal Complaint against MCAFEE:[1]

During the period from in or about December 2017 through in or about October 2018, JOHN DAVID MCAFEE and JIMMY GALE WATSON JR., and other members of the McAfee Team, perpetrated two fraudulent schemes relating to the promotion to investors of cryptocurrencies qualifying under federal law as commodities or securities. 

The first scheme involved a fraudulent practice called “scalping,” which is sometimes referred to as a “pump and dump” scheme.  This scalping scheme generally consisted of the following.  First, MCAFEE, WATSON, and other McAfee Team members bought large quantities of publicly traded cryptocurrency altcoins, which qualified as commodities or securities, at inexpensive market prices with advance knowledge that MCAFEE planned to publicly endorse them via his widely followed Twitter account (the “Official McAfee Twitter Account”).  Second, after these purchases, MCAFEE published false and misleading endorsement tweets via his Official McAfee Twitter Account recommending those altcoins to members of the investing public for investment in order to artificially inflate (or “pump” up) their market prices without disclosing that MCAFEE owned large quantities of the promoted altcoins, even though MCAFEE had given false assurances that he would disclose such information in various tweets and public statements during the scalping scheme.  Third, MCAFEE, WATSON, and other McAfee Team members then sold (or “dumped”) their respective investment positions in the promoted altcoins into the temporary but significant short-term market price increases that MCAFEE’s deceptive tweets typically generated, often for significant profits.  From in or about December 2017 through in or about January 2018, MCAFEE, WATSON, and other McAfee Team members collectively earned more than $2 million in illicit profits from their altcoin scalping activities while the long-term value of the recommended altcoins purchased by investors declined substantially as of a year after the promotional tweets.  From in or about December 2017 through in or about October 2018, MCAFEE, WATSON, and other McAfee Team members engaged in various efforts to liquidate the digital asset proceeds of their scalping activities into United States currency. 

In the second scheme, MCAFEE, WATSON, and other McAfee Team members also used MCAFEE’s Official McAfee Twitter Account to publicly tout fundraising events called “initial coin offerings” (“ICOs”) in which startup businesses (“ICO issuers”) issued and sold digital tokens qualifying as securities to the investing public, without disclosing and, in fact, concealing that the ICO issuers were compensating MCAFEE and his team for his promotional tweets with a substantial portion of the funds raised from ICO investors.  As the United States Securities and Exchange Commission had publicly warned, and as MCAFEE and WATSON well knew, the federal securities laws required them to disclose any compensation paid by ICO issuers for touting securities offerings styled as ICOs.  From approximately on or about December 20, 2017 through on or about February 10, 2018, MCAFEE, WATSON, and other McAfee Team members collectively earned more than $11 million in undisclosed compensation that they took steps to affirmatively hide from ICO investors.  In each instance, MCAFEE and WATSON failed to disclose to ICO investors that the ICO Issuers were paying the McAfee Team a substantial portion of the funds raised from ICO investors for their touting efforts, despite knowing that they were required to disclose such compensation under federal securities laws.  Furthermore, in several instances during this ICO touting scheme, MCAFEE and WATSON took active steps to conceal their secret compensation arrangements with ICO issuers from ICO investors, and MCAFEE made false and misleading statements and omissions to hide such deals from ICO investors.  From approximately in or about December 2017 through in or about October 2018, MCAFEE, WATSON, and other McAfee Team members engaged in various efforts to liquidate the digital asset proceeds of their ICO touting activities into United States dollars.

During the period from in or about December 2017 through in or about October 2018, MCAFEE and WATSON caused another McAfee Team member to engage in banking transactions to launder proceeds of the fraudulent ICO touting scheme. 

In separate parallel enforcement actions, the United States Securities and Exchange Commission (the “SEC”) and Commodity Futures Trading Commission (“CFTC”) have filed civil charges against MCAFEE and WATSON.          

MCAFEE, 75, and WATSON, 40, are United States citizens.  Both of them are charged in a seven-count Indictment with one count of conspiracy to commit commodities and securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit securities and touting fraud, which carries a maximum potential sentence of five years in prison; two counts of conspiracy to commit wire fraud and two counts of substantive wire fraud, each of which carries a maximum potential sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum potential sentence of ten years in prison.  In addition to potential prison sentences, each of these charges also carries potential financial penalties.  The maximum potential prison sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentences to be imposed on the defendants will be determined by the judge. 

Ms. Strauss praised the work of the FBI on the investigation of this case and thanked the SEC and CFTC, both of which conducted separate parallel investigations, for their assistance.

This case is being handled by this Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Samson Enzer and Elizabeth Hanft are in charge of the prosecution.

The allegations contained in the charging documents in this case are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1]  As the introductory phrase signifies, the entirety of the texts of the Complaint and Indictment and the description of those charging documents set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Attorney General James Delivers Funding for Low- to Moderate-Income Homebuyers in New York State

 

KeyBank Agrees to Pay $5 Million to Be Used for Down Payment Assistance and to Lend $145 Million to Low- to Moderate-Income New Yorkers

  New York Attorney General Letitia James today announced an agreement with KeyBank that will deliver funding to assist low- to moderate-income New Yorkers buy homes. The agreement resolves an investigation into the bank’s deceptive advertising practices surrounding the “KeyBank Plus” program that was intended to help New Yorkers cash checks for low fees, but was not as readily available as KeyBank’s advertising claimed. As part of the agreement, the Ohio-based bank has agreed to pay $5 million to the State of New York Mortgage Agency (SONYMA) to be used for down payment assistance for low- to moderate-income New York homebuyers, as well as lend $145 million to low- to moderate-income New York homebuyers over the next five years.

“Owning a home is a cornerstone of the American Dream, and today we bring New Yorkers one step closer to that goal,” said Attorney General James. “When companies fall short on the commitments they make to our communities, we will always hold them accountable and ensure they are providing the services that were promised. As a result of this agreement, we’re delivering much needed resources to help New Yorkers with buying a home and starting their future.”

After previously being implemented in other regions across the nation, the KeyBank Plus program was introduced in the Buffalo-Niagara region in 2018. The program was advertised as offering New Yorkers without a bank account a method to cash government and payroll checks at a low cost.

The Office of the Attorney General (OAG) launched an investigation into the KeyBank Plus program in Albany, Buffalo, Plattsburgh, Rochester, Syracuse, and Watertown, as well as in areas of Westchester County, and found that the program was not being implemented as advertised. Specifically, OAG found that KeyBank’s false and deceptive advertisements regarding KeyBank Plus violated both Executive Law § 63(12) and General Business Law Article 22-A. The matter was initially referred to OAG in 2019 by the Buffalo Niagara Community Reinvestment Coalition (BNCRC) and the Western New York Law Center (WNYLC).

As of result of this agreement, KeyBank has agreed to pay $5 million to SONYMA to be used for down payment and home-closing cost assistance for low- to moderate-income New Yorkers, in addition to agreeing to apply to become a participating lender with SONYMA. KeyBank has also agreed to provide $145 million in mortgage loans to low- to moderate-income New Yorkers over the next five years, with 50 percent of those funds going to borrowers in Western New York. Finally, KeyBank has agreed to waive certain fees associated with the loans — limiting their ability to profit off originating the loans. 

“The Western New York Law Center congratulates and thanks the Attorney General’s Office for its extraordinary achievement in protecting the rights of low- to moderate-income consumers in their relationships with KeyBank,” said Steve Halpern, attorney at the Western New York Law Center. “By working with the Law Center and the Buffalo Niagara Community Reinvestment Coalition to reach an agreement with KeyBank regarding the KeyBank Check Cashing Plus Program, the office has shown diligence, commitment, and dedication in protecting consumer rights. The agreement will benefit untold numbers of underserved home buyers in both Western New York and the entire state.” 

“On behalf of the Buffalo Niagara Community Reinvestment Coalition (BNCRC), we express our sincerest gratitude to the New York State Attorney General's Office,” said Kathryn Franco, chair of the Buffalo Niagara Community Reinvestment Coalition. “Without the assistance of the Attorney General, this impactful outcome would not have been possible. BNCRC is an example of dynamic and diverse partnership amongst community organizations that represent the interests of our most vulnerable residents in our city. The Coalition is dedicated to racial and economic justice. Without the vigilance, expertise, and collaboration of partners around the table and the diligent work of our New York State Attorney General, banks are able to continue to extract from and deny access to capital in our communities without any accountability or consequence. It is the Coalition's hope that KeyBank shows their dedication to Buffalo-Niagara without the need for further intervention by regulators.”

This agreement is just the latest in a long list of actions Attorney General James has taken to protect consumers in Western New York. In September 2020, Attorney General James obtained refunds for those who had purchased gift certificates from Simply Certificates only to find that their certificates expired before they were legally permitted to do so. Additionally, in April 2020, Attorney General James secured refunds for New Yorkers who had purchased season passes to local amusement park Fantasy Island, after the local attraction announced it would shut its doors before the season could start, but offered customers no refunds.