AFTER COMPTROLLER STRINGER AUDIT, DEPARTMENT OF FINANCE CORRECTS TAX STATUS OF NEARLY 100 MIXED-USE BUILDINGS IN QUEENS

City will collect an additional $1.28 million in taxes over the next five years that can be used to support schools, build roads and affordable housing 

Similar audit in Brooklyn identified over $2 million in potential revenue

   New York City will bring in up to an additional $1.28 million in revenue over the next five years because of changes at the Department of Finance prompted by an audit released today by New York City Comptroller Scott M. Stringer. The audit found nearly 100 mixed-use buildings in Queens that had been improperly assessed by the Department of Finance and taxed at an incorrect, lower rate.

Today’s findings follow a similar report from February which identified 197 misclassified mixed-use buildings in Brooklyn. Changes stemming from that audit will bring the City an additional $2.09 million in revenue over the next five years. Combined, the two audits identified an additional $3.37 million that will be collected through 2022.

“These two audits spurred immediate changes that will right a wrong and benefit our entire City,” Comptroller Stringer said. “To their credit, the Department of Finance took quick action after auditors identified misclassified buildings, and now the City stands to gain an additional $3.37 million in revenue over the coming years. That’s real money that can be used to build affordable housing, fix our streets, and support our schools.”

Properties in New York City are given one of four tax classes (Class 1 are one to three unit buildings, primarily used for residential purposes; Class 2 are all other residential properties; Class 3 are properties owned by utilities and special franchises; and Class 4 are all other properties not in Class 1, 2, or 3). This audit examined whether Class 1 mixed-use buildings in Queens were properly assessed and taxed by the Department of Finance as of May 2015.

Auditors identified 97 buildings that were misclassified as Tax Class 1 mixed-use buildings, and taxed at a lower rate than they should have been. DOF agreed that 78 properties should be taxed at 45 percent of market value, instead of the residential rate of six percent at which they had been taxed, and that 19 properties required additional interior inspection. In total, the Comptroller’s office estimated that after the changes are made, the City will bring in an additional $1.28 million in taxes over the next five years.

Auditors also found that 33 of the misclassified buildings in Queens had been inspected by DOF assessors within the last three years – raising questions about the agency’s training and inspection process.

The Department of Finance has already re-classified 78 of the properties, and agreed with all three of the audit’s recommendations, including that it should:

• Conduct an interior inspection of the 19 remaining properties identified in the audit as misclassified and ensure they receive the correct tax class;
• Make sure assessors are properly trained so they do not misclassify buildings; and
• Enhance its oversight and quality assurance to ensure buildings are properly inspected.

“The bottom line is that everyone should pay their fair share of taxes. The Department of Finance will now collect more revenue that will help to fund critical programs in our City. Going forward, this agency must strengthen its training and oversight to ensure properties in every borough are properly assessed, and the correct taxes are collected” Stringer said.

To read the full audit report, click here.

Bronx Veterans Day Parade Applications

Senator David Carluci Birthday Bash

New York City Council Member Andy King Calls for the Firing of DOE Educator Who Demeaned A Queens’ School Black Teachers

  NYC Council Member Andy King, an executive board member of the Black, Latino and Asian Caucus, is calling on his colleagues in government and the city Department of Education (DOE) to fire Minerva Zanca, formerly the principal at Pan American International High School, Queens, who reportedly harassed and demeaned the school's black teachers.

On Thursday, it was announced that federal prosecutors sued the DOE on civil rights violations for failing to stop Ms. Zanca’s actions.

“I’ve never heard of such unprofessional dialogue and behavior coming from a top educator. It’s time to take a stand against racism and bigotry and not allow it to go on in our schools,” said King, who sits on the Council’s Civil Rights and Education committees. “Without question, Ms. Zanca created an ugly culture of derogatory name calling and “my way or highway” actions and if you spoke up or didn’t agree she would retaliate. Ms. Zanca shouldn’t be allowed to supervise any staff or group of youngsters in the NYC education system. I put the onus on Schools Chancellor Farina and the DOE to terminate Ms. Zanca and do it now!”

Ms. Zanca  joined the DOE in 1988 and  retired as a principal in June 2015. She has been working as a part-time guidance counselor at Frederick Douglass Academy in Brooklyn.

Norman Seabrook, President Of Correction Officers’ Benevolent Association, Arrested For Demanding And Accepting Bribes In Exchange For Investing Union Money In New York-Based Hedge Fund

Murray Huberfeld, Founder of Manhattan-based Hedge Fund, Also Charged For Paying Off Seabrook to Invest in the Fund

Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that NORMAN SEABROOK and MURRAY HUBERFELD were arrested this morning and charged in Manhattan federal court with committing honest services wire fraud, in connection with HUBERFELD’s payment of a $60,000 bribe to SEABROOK, the President of the Correction Officers’ Benevolent Association (“COBA”), and the promise of future bribe payments, in exchange for SEABROOK’s investment of $20 million of COBA money in HUBERFELD’s hedge fund.  SEABROOK was arrested this morning by FBI agents in the Bronx, and HUBERFELD was arrested this morning by FBI agents in Manhattan.  They will be presented before U.S. Magistrate Judge Kevin N. Fox in Manhattan this afternoon.

Manhattan U.S. Attorney Preet Bharara said:  “As alleged, Norman Seabrook and Murray Huberfeld engaged in a straightforward and explicit bribery scheme.  For a Ferragamo bag stuffed with $60,000 in cash, Seabrook allegedly sold himself and his duty to safeguard the retirement funds of his fellow correction officers.  Norman Seabrook, as COBA’s president for over two decades, allegedly made decisions about how to invest the nest egg for thousands of hard-working public servants, based not on what was good for them, but on what was good for Norman Seabrook.”

FBI Assistant Director-in-Charge Diego Rodriquez said:  “When an official takes advantage of his or her position as steward of an organization’s financial resources in order to line their own pockets, it is a dereliction of duty for someone trusted to protect the financial contributions of the hard working men and women who belong to the organization.  When a hedge fund manager provides bribe payments to organizations to gain their business, he or she puts the financial security of the fund’s investors at risk.  This kind of criminal collusion destabilizes the system and undermines investors’ confidence in the integrity of the marketplace.  The FBI, along with our partners, will continue to work to protect our citizens from the destructive consequences of corruption and deceit.”

According to the allegations in the Complaint filed yesterday in Manhattan federal court[1]:          

COBA is New York City’s largest correction officers union and the largest municipal jail union in the United States.  COBA represents over 9,000 correction officers in New York City, including at Riker’s Island.  NORMAN SEABROOK, the defendant, is the President of COBA and has been for over 20 years.  SEABROOK’s power over the affairs of COBA is rarely questioned by his Executive Board due to his ability to affect their assignments, pay, and hours.  SEABROOK’s control extends to the union’s finances, including the administration of its “Annuity Fund,” a retirement benefits program funded by the City of New York that invests more than $70 million for correction officers’ retirements.         

Toward the end of 2013, on a trip to the Dominican Republic with, among others, an individual who is now a cooperating witness for the Government (“CW-1”), SEABROOK told CW-1 that he worked hard to invest COBA’s money and was not getting anything out of it, and it was time that “Norman Seabrook got paid.”  CW-1 was friendly with and had done business with MURRAY HUBERFELD, a founder and part owner of Platinum Partners (“Platinum”), a Manhattan-based hedge fund that principally ran two funds.  CW-1 was aware that Platinum was looking to attract public and institutional investors – as opposed to its more typical investor set of high net-worth individuals – and told HUBERFELD that SEABROOK would likely invest COBA money in Platinum if HUBERFELD were willing to pay SEABROOK money.  HUBERFELD agreed to the proposition, and HUBERFELD worked out a formula in which SEABROOK would be paid a kickback of a portion of the profits from COBA’s investment that HUBERFELD estimated could be between $100,000 and $150,000 per year.

SEABROOK then began investing COBA’s money, at first going through the motions of having Platinum make a pitch to COBA’s Annuity Fund board and having advisers conduct diligence.  Those advisers included attorneys who expressed concern that public pensions like COBA do not typically invest in higher-risk vehicles like hedge funds.  In March 2014, COBA’s Annuity Fund made a $10 million investment in one of Platinum’s funds.  In June 2014 – this time without running the investment by the COBA Board or seeking any approval – SEABROOK invested $5 million, or 40 percent, of COBA’s own assets in the same fund.  In August 2014, the Annuity Fund invested another $5 million in Platinum.  By that point, COBA was the largest investor in that Platinum fund for all of 2014, and amounted to more than half of all incoming investments for the fund.  At the same time, the fund was experiencing significant redemptions by other investors.

Toward the end of 2014, SEABROOK wanted the first of his kickback payments, and demanded it from CW-1.  HUBERFELD told CW-1 that the fund had not performed as well as expected, and that he could pay SEABROOK only $60,000.  CW-1 agreed to lay out the cash, and HUBERFELD agreed to reimburse CW-1 on Platinum’s behalf.  HUBERFELD suggested that to paper over the reimbursement, CW-1 invoice Platinum for a number of CW-1’s tickets to the Knicks, in the amount of $60,000, and Platinum would then cut a check to CW-1.

CW-1 paid SEABROOK the first $60,000 kickback on December 11, 2014.  Before meeting SEABROOK that evening, CW-1 went to one of SEABROOK’s favorite stores, Salvatore Ferragamo on Fifth Avenue in Manhattan, and bought an expensive bag for SEABROOK.  CW-1 put the money in the bag, and met SEABROOK a few blocks away in SEABROOK’s COBA vehicle, where he handed SEABROOK the bag.  CW-1 and SEABROOK had dinner with two other persons, then attended a Torah dedication ceremony, after which SEABROOK left Manhattan.  These events have been corroborated by, among other things, phone records, e-mails, license plate reader records, and a receipt from Salvatore Ferragamo.  On the same day, CW-1’s assistant prepared a $60,000 invoice to Platinum for Knicks tickets, which CW-1 forwarded by e-mail to HUBERFELD.  Three days later, Platinum paid CW-1 by check.

HUBERFELD, through another co-conspirator not identified in the Complaint, continued to lobby SEABROOK for more money in 2015.  However, after a lawsuit filed by a former COBA board member referred to the Platinum investments, and the U.S. Attorney’s Office grand jury investigation resulted in subpoenas to Platinum and COBA in May 2015, no further investments were made.

SEABROOK, 56, of the Bronx, New York, and HUBERFELD, 55, of Manhattan New York, have been charged with one count of conspiracy to commit honest services wire fraud, and one count of honest services wire fraud.  Each of the two counts carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Bharara praised the investigative work of the FBI, the NYPD Internal Affairs Bureau, and the Internal Revenue Service’s Criminal Investigations Division, and noted that the investigation is continuing.  

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Martin Bell, Russell Capone, and Kan M. Nawaday are in charge of the prosecution.

The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.

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BOROUGH PRESIDENT DIAZ RELEASES ANNUAL DEVELOPMENT REPORT

Highlights Over $9.4 Billion in Total Bronx Development Since 2009

Bronx Borough President Ruben Diaz Jr. has issued his annual development report, highlighting the total development seen in The Bronx since he first took office in 2009 through the end of 2015.

“Great things are happening here. We are seeing unprecedented levels of development in The Bronx, including new housing units of all types and vibrant commercial projects. As we continue to attract new investors and new interest in our borough, my office will continue our efforts to ensure that the ongoing revitalization of The Bronx works for everyone,” said Bronx Borough President Ruben Diaz Jr.

The report notes that, in total, The Bronx has seen more than $9.493 billion in total development in all categories since 2009, when Borough President Diaz first took office. In 2015 alone, The Bronx saw a record $2.385 billion in new development.

The report finds that, between 2009 and 2015, more than 23,000 new units of housing and over 54 million square feet of total development. In 2015 alone, the borough saw more than 10 million square feet of development and nearly 7,000 units of new housing, higher numbers than any year of Borough President Diaz’s tenure.

The report follows other encouraging news about the continued economic growth of The Bronx. Late last month, the New York State Department of Labor announced that the borough’s unemployment rate had fallen to fell to 6.6 percent in April 2016, down from 7.9 percent in March 2016 and 7.8 percent in in April 2015. This is the lowest unemployment rate the borough has seen since Bronx Borough President Ruben Diaz Jr. first took office in May 2009. Those same statistics showed that more than 100,000 Bronxites are employed today than when the borough president first took office.

Read the full report at http://on.nyc.gov/1U6aCco.

New York City plastic bag measure makes cents for stores; no sense for residents

  Avella bill passed by Senate encourages recycling of all plastic bags without onerous fees

The New York State Senate on Tuesday passed legislation by State Senator Tony Avella, and supported by Independent Democratic Coalition members, to spur plastic bag recycling without imposing fees on residents.

Avella’s bill (A.7085A) requires stores to place plastic bag recycling receptacles with a sign in plain view where consumers can return used plastic bags from previous shopping trips or any other type of plastic sacks such as newspaper and dry-cleaning bags.

“When it comes to ‘reduce, reuse, recycle’, we are supposed to be reducing our city’s waste, not our resident’s bank accounts. Fees to use plastic bags would cost our city's families, while failing to increase the recycling of those bags. That is why I am proud to pass my legislation, along with my Senate colleagues, to increase awareness of plastic bag recycling programs already in place, and encourage the return of all plastic bags, not just those used at grocery stores. This bill will increase recycling without hurting New York's low-income families,” said Avella.

“We heard our constituents loud and clear when we bagged New York City’s nonsensical idea to impose a fee on grocery store bags. This fee would have hit hard many New York families and consumers, while doing little to encourage actual recycling. The passage of Senator Avella’s bill accomplishes the green-goal of returning all plastic bags, not just supermarket bags, without taking green from anybody’s wallet,” said Independent Democratic Conference Leader Jeff Klein.

“This recycling initiative encourages us to return all plastic bags, not just certain types of plastic bags. On Staten Island and in the Brooklyn portion of my Senate District the City Council’s measure was soundly rejected by its representative and my constituents. Nobody minds being environmentally-friendly, but everyone minds being hit with extra fees in an already costly city. This legislation is a win-win for the environment and residents of New York City,” said State Senator Diane Savino.

Under this measure, retailers with 10,000 square-feet or chain stores with five or more franchises of 5,000 square-feet must place a large collection bin in its store as part of its recycling program. Above each container a sign, in a large font, must alert consumers of the recycling initiative.

Each store must track plastic bag recycling in logs monitoring collection, transport and weight of the plastic material. Stores must retain records for three years, under the proposal. Retailers would also be required to use plastic bags that clearly state, “Please return to a participating store for recycling,” and offer reusable bags as an alternative.