News From Comptroller Thomas P. DiNapoli

Executive Director of Baychester Youth Council Indicted for Stealing More  Than $100,000 From Federal Grant

Earnestine Russell Charged with Grand Larceny; Allegedly Gambled Funds

Bronx District Attorney Darcel D. Clark and New York State Comptroller Thomas P. DiNapoli today announced that the longtime director of a Bronx youth group has been indicted on charges she stole $112,000 from a state-administered, federally funded grant to support after-school programs for middle school children.

District Attorney Clark said, "The defendant, Earnestine Russell, allegedly turned the Baychester Youth Council into a façade for her thievery, and enriched herself for years instead of enriching the lives of the children she purported to cherish." State Comptroller DiNapoli said, "Earnestine Russell allegedly took public money intended to give children a safe and nurturing place to go after school and spent it on personal trips and electronic equipment for herself. After my office found her theft, we worked closely with Bronx County District Attorney Darcel D. Clark and her staff to make certain that Ms. Russell is held accountable."

District Attorney Clark said that Russell, 66, of 1930 Schiefflin Avenue, was indicted on second-degree grand larceny and second-degree criminal possession of stolen property. She was arraigned today, July 6, 2016, before Bronx Supreme Court Justice Steven Barrett. Bail was set at $30,000 cash and an examination of surety. Russell is due back in court on August 9, 2016.

According to the investigation by the Bronx District Attorney's Office and the State Comptroller's Office, in 2008, Russell--who has run the Baychester Youth Council since the 1980s--received a federal grant, administered by the New York State Education Department, for more than $2.7 million over five years to create a 21st Century Community Learning Center.

The State Comptroller's Office audited Russell in 2012 and found she used $250,400 for inappropriate or undocumented expenses-- including a home theater-- and the grant was revoked.

The Bronx DA's Office began investigating and found that Russell had moved the grant money through numerous bank accounts. Russell made cash withdrawals, wrote checks to cash, herself or family, and made wire transfers from the accounts. When confronted with her gambling records, which showed betting of more than $150,000 during the fraud period of 2009-2011, Russell denied betting, then explained the figures also showed winnings she bet. Russell also told investigators that she could "make whatever use of [the money]" she saw fit.

The case is being prosecuted by Assistant District Attorneys Markus Sztejnberg of the Economic Crimes Bureau and Jeffrey Glucksman , Chief of Trial Bureau 70, under the supervision of William Zelenka, Chief of the Economic Crimes Bureau, and Jean T. Walsh, Chief of the Investigations Division.

District Attorney Clark thanked the State Comptroller's Division of Investigations and Bureau of State Expenditures, as well as New York State Police Investigators John Bode and Charles Sands and Senior Investigators Michael Vazquez, Michael Davis and John Vescio for their assistance in the investigation, and retired Assistant Bronx District Attorney Linda Tacoma for her diligent work on the case.

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

Indictment in U.S. v. Norman Seabrook and Murray Huberfeld

   In a shocking 10 page indictment released today by U.S. Attorney Preet Bharara titled United States v. Norman Seabrook and Murray Huberfeld both defendants are charged with one count of conspiracy to commit Honest Services Wire Fraud, and one count of Honest Services Wire Fraud. 

   The indictment begins with 'Relevant Individuals and Entities'. The Corrections Officers Benevolent Association, COBA President Norman Seabrook, an unnamed Treasurer 1, Platinum Partners (described as a Hedge Fund), Murray Huberfeld (Platinum's founder), and CW - 1 a cooperating witness for the government. 

    The entire 10 page indictment can be found at the link below, and makes for some interesting reading. The next step will be up to the parties in the indictment and the U.S. Attorney Preet Bharara as to where this case goes. There has been speculation of what may happen next, but as of now there is only a few worried people.  

   Link to United States of America vs. Norman Seabrook and Murray Huberfeld

If you are Driving on Gun Hill Road By Evander High School, Smile Your May Be on Candid Speed Camera

Above and Below - If you are driving east on East Gun Hill Road by the old Evander Childs High School at Barnes Avenue get ready to SMILE if you are going over 35 Miles Per Hour, because you are on 'SPEED CAMERA'. This will result in a photo of the licence plate of the vehicle, and the owner will get a fifty dollar ticket in the mail. Fifty Dollars might not be much, but get caught a few times and those fifty dollars add up.  

Above - If you think that you can come back on Gun Hill Road Westbound after getting caught on 'SPEED CAMERA' eastbound, you are wrong. Here you can see the speed camera set up to catch those drivers who think they are safe and can drive over 35 MPH westbound.

Below - That's Councilman Andy King's district office right across the street from the westbound Gun Hill Road 'SPEED CAMERA'. I can't say what the good councilman would say to you, but it should include that the NYC speed limit is 25 MPH citywide unless posted otherwise. It's a good thing that Gun Hill Road is a huge bus thoroughfare, otherwise the speed limit could be 20 MPH, and there would be lots of speed bumps which is a whole other story.

Leftovers From West 238th Street Cement Trucks?

Above - The 40 foot wide (yes that is according to the building plans the width of the lot) 640 West 238th Street building is going up floor by floor. Notice on the right that the second floor windows of the Bonnie House (the building on the corner of West 238th Street and Independence Avenue) have been boarded up so that the windows do not face a cement wall (notice I did not say brick wall, because there is no room to place any bricks between the two buildings). 

Below - It appears that one of the cement trucks had a leak as you can see a line coming from Blackstone Avenue on West 238th Street. Notice the tire marks on the curb. They didn't come from a car.

Above - Notice how the trail as it goes around the bend in the road. Yes that is the street cracking under the heavy weight of the heavy construction equipment and cement trucks.

Below - Just how did that chunk of curb before the bend get broken? 

More Orphan Street Milling Equipment Found

It looks like I found some more milling equipment left over from before the July 4th holiday on city streets.

Above - Here is a back hoe sitting in front of 3850 Hudson Manor Terrace.

Below - A trailer with barrier barrels is around the corner, and sitting within five feet of a fire hydrant. Where is a traffic agent when you need one?

Above - Is it a new type of tree pruning gadget?

Below - No just some more street milling equipment that was left behind from before the July 4th holiday. That is MS/HS 141 in the background where there is summer school in session. 

How Many Cement Trucks Does it Take to Build a Building?

As you can see there are seven cement trucks lined up on Independence Avenue stretching from West 238th Street down the block to the Riverdale Jewish Center. Why these seven trucks are lined up when it was said to Community Board 8 that the contractor would work with the neighborhood and not do this, one has to ask the CB 8 Land Use Chair Mr. Charles Moerdler that.

Above - The permit says that there must be 15 feet clearance from the fire hydrant. This looks like only 5 feet, and the site supervisor starts walking towards me wanting to know what I am doing. I told him taking this photo so I can put it up on my blog and sending it to DOT to show that there continues to be violations at this work site, and the permit should be revoked. By the way West 238th street was not one of the streets in the area that were milled.. The street is in the condition it is due to the heavy construction and cement trucks using it to access the tiny construction site. 

Below - A moving truck is backing in to 3777 Independence Avenue, and with all the cement trucks parked waiting to unload, the street becomes a safety hazard for several minutes with no place for emergency vehicles to go. Hatzolah Ambulances are stationed around the corner on West 239th Street, with two schools and three synagogues within a few blocks.   

Anybody Loose Two Backhoes?

  These two backhoes have been sitting on West 236th Street (between Independence Avenue and the HHP Service Road South) since before the July 4th Holiday when the milling of many streets in the area was done. If you own these two backhoes can you please pick them up they are taking up valuable parking spaces.

  And will you clean up the pile of milled asphalt that was left from the milling machine sitting next to this backhoe? 

COMPTROLLER STRINGER AUDIT FINDS CITY GAVE OUT $59.2 MILLION IN SENIOR CITIZEN TAX BREAKS TO DECEASED NEW YORKERS AND CORPORATIONS

Comptroller Stringer has identified nearly $75 million in lost tax revenue as a result of six audits of DOF since 2014.

  

Audit Report on the New York City Department of Finance’s Administration of the Senior Citizen Homeowners’ Exemption Program

SR16-087A

July 7, 2016

EXECUTIVE SUMMARY

This audit of the New York City Department of Finance (DOF) concerns its administration of tax benefits granted to property owners under the Senior Citizen Homeowners’ Exemption program (SCHE), which provides a partial property tax exemption for senior citizens who own one, two, or three family homes, condominiums, or cooperative apartments in New York City.  The Senior Citizen Homeowners’ Exemption appears as a reduction of the assessed value of the property, which is used to determine the property tax.  The assessment value of the property can be reduced by a maximum of 50 percent depending on the owners’ income.

New York State Real Property Tax Law (RPTL), Section 467 (Section 467), established a partial property tax exemption for senior citizens who own one, two, or three family homes, condominiums, or cooperative apartments.1  Section 467 states that any homeowner who has been granted an exemption must file a completed application every twenty-four months from the date such exemption was granted.  In 1974, the New York State Board of Equalization and Assessment (SBEA) issued an opinion stating that property owned in the name of a corporation may not be granted the SCHE.2  In 1998, the New York State Board of Real Property Services (SBRPS) issued an opinion stating that a property with four or more units would require the SCHE to be prorated to the unit being utilized as the owner’s primary residence; however an entire structure would qualify for the exemption if the property contains three or fewer units.3

Homeowners who receive a SCHE also automatically qualify for and receive an Enhanced School Tax Relief (STAR) exemption based on their income and homeownership status.4  If SCHE was found to be inappropriately applied in prior years, New York State’s Exemption Administration Manual Pertaining to the Partial Tax Exemption on Real Property of Senior Citizens states that a “municipality may rescind the exemption in a subsequent year.”

Audit Findings and Conclusion

DOF improperly credited the SCHE to 3,890 properties that were not eligible resulting in a loss to the City of at least $48,529,687. DOF failed to remove the SCHE from at least 3,246 properties after the homeowners had died.  This resulted in a loss of property tax revenue of at least $35,976,029 from Fiscal Years 2012 through 2017.  In addition, DOF failed to correctly prorate the exemption amounts granted to 573 properties that contain four or more units.  These properties received 3,219 excessive exemption amounts to which they were not entitled, which resulted in a loss of property tax revenue of at least $11,176,036 from Fiscal Years 2011 through 2016.  DOF also allowed corporate owners of at least 71 properties to receive 307 exemptions for which they were not eligible.  This resulted in a loss of property tax revenue of at least $1,377,622 from Fiscal Years 2011 through 2016.  Additionally, DOF improperly credited properties of deceased homeowners and corporate owned properties with Enhanced STAR exemptions totaling $10,647,896.  Thus, this audit identified $59.2 million in lost tax revenue to the City.

Finally, DOF failed to enforce the requirement that homeowners reapply for SCHE every two years as required by Section 467.   The lack of a reapplication process may have allowed properties to continue getting the SCHE and the Enhanced STAR exemptions for many years after they were no longer eligible.

Audit Recommendations

The audit made 12 recommendations, including that DOF should:

• Verify whether all the homeowners that applied for the SCHE are deceased and remove the SCHE and Enhanced STAR exemption from those properties retroactively from the date of death.
• Ensure that it implements controls to remove the exemptions from properties whose owners are deceased, retroactively to the date of death.
• Recover the $35,976,029 in erroneous SCHE exemptions that were applied to properties after the qualifying homeowner(s) were deceased if DOF determines that the subsequent owner was not eligible for SCHE.
• Recover the $10,460,540 in erroneous Enhanced STAR exemptions that were applied to properties after the qualifying homeowner(s) were deceased if DOF determines that the subsequent owner was not eligible for the Enhanced STAR.
• Recover the $11,176,036 in excessive exemptions that were granted to properties containing four or more units.
• Recover the $1,564,978 in erroneous exemptions ($1,377,622 in SCHE and $187,356 in Enhanced STAR) that were granted to the properties owned by either a corporation or LLC.

Agency Response

DOF generally agreed with the audit’s recommendations and stated that it would address the issues identified.  Further, the agency stated that it “appreciates the Comptroller’s audit findings regarding the administration of the Senior Citizen Homeowner Exemption (SCHE) Program.”  However, with regard to the recommendations that DOF recoup prior erroneous exemptions, DOF officials stated that “[w]hile DOF agrees that benefits to business entities should be recouped, the agency is still reviewing the issue with regard to individuals. Our main concern is unfair treatment to ‘innocent purchasers’ who might have been unaware of a benefit on their property — for example, after an ownership change.  Many home owners pay their taxes through mortgage service companies and may not be fully aware of the specifics as to how their taxes are computed.”

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1 NYS RPTL § 467(6)(c)

2 NYS SBEA Volume 3 – Opinions of Counsel SBEA No. 54

3 NYS Volume 10 – Opinions of Counsel SBRPS No. 64

4 A prior audit by our office reviewed instances where corporations and LLCs improperly received STAR exemptions, although they were not entitled to receive such an exemption.  Audit Report on the Department of Finance’s Administration of the School Tax Relief Program, Audit Number FM15-070A, issued June 17, 2015.