Assemblyman Jeffrey Dinowitz Kicks Off Annual Holiday Canned Food Drive

   Assemblyman Jeffrey Dinowitz(D-Bronx) has kicked off his annual canned food and turkey drive with students from local schools and participating residential buildings. 

The Assemblyman’s office will be accepting donations until December 16^th with a pick-up for Thanksgiving scheduled for November 14^th. Food will be donated to various non-profit organizations in the Northwest Bronx for families in need during the Thanksgiving, Chanukah, and Christmas holiday seasons.  The following canned and non-perishable food items are accepted: canned fruits and vegetables, cereals, dried beans, pasta, rice, tuna, coffee, teas, canned juices, powdered milk, jell-o, and soups.  No glass jars are acceptable except for baby food.

Some schools are also collecting one-dollar donations for the purchase of turkeys for needy families on Thanksgiving.

“Our annual food drive is always such a wonderful event, and I believe this year’s will be even better than the last,” said Assemblyman Dinowitz. “I am always encouraged to continue this event by the selfless actions of our community. We always see a huge swell of support for this, from buildings, to schools, to residents who drop off even a single can at my office. Every year this community donates an impressive amount of food for those in need, making me proud to represent such a generous community. I look forward to another great year of giving, and thank in advance everyone who participates through their donations.”   

Residents are encouraged to set up their own collection bins in their buildings as well, and a time for pick-up can be coordinated by contacting Assemblyman Dinowitz’s office.

Residents may donate their canned goods to Assemblyman Dinowitz’s office located at 3107 Kingsbridge Avenue; one block west of Broadway, just off of West 231st Street.  For more information, call (718) 796-5345.

VISION ZERO: DE BLASIO ADMINISTRATION ANNOUNCES MAJOR DUSK AND DARKNESS SAFETY INITIATIVE AT START OF MOST DANGEROUS SEASON ON CITY STREETS

Drivers should obey the speed limit, slow down, yield to pedestrians when turning and expect heightened enforcement

As evening darkness increases and daylight saving time ends, the danger to pedestrians, especially seniors, dramatically increases; DOT data shows severe pedestrian crashes increase by 40 percent in the late afternoon and evening hours from November through March

    The de Blasio Administration today announced that New York City was redoubling its efforts around Vision Zero as the City enters what has traditionally been the deadliest time of year for pedestrians on New York City streets. Transportation Commissioner Polly Trottenberg, NYPD Chief Thomas M. Chan, TLC Commissioner Meera Joshi and Aging Commissioner Donna Corrado came together for the release at One Police Plaza in Manhattan. The Commissioners together announced new elements to the Vision Zero initiative to address what has traditionally been an autumn upturn in crashes involving pedestrians – especially seniors – as the sun sets during the evening rush.

“While we've made important strides to see that New Yorkers are safer than they were before Vision Zero, one death is one too many and there's still so much more we can do,” said Mayor Bill de Blasio. “To meet our ambitious Vision Zero goals, especially during the more dangerous reality of this season’s evenings and nights, we have focused our efforts even further. Our key Vision Zero agencies have teamed up to not only study crash data, but to work closely together and make critical adjustments that we believe will literally save lives.”

DOT conducted a close analysis of year-over-year crash trends – and observed the following:

• The earlier onset of darkness in the fall and winter is highly correlated to an increase in traffic injuries and fatalities (see “heat map” below). Severe crashes involving pedestrians increase by nearly 40 percent in the early evening hours compared to crashes outside the fall and winter.

• Lower visibility during the dark hours of the colder months leads to twice as many crashes involving turns.

• In 2015, the year with the fewest traffic fatalities in New York City’s recorded history, 40 percent of the year’s pedestrian fatalities occurred after October 1.

• Daylight saving time ended last year on November 1, 2015; in the eight days following last year’s “fall-back” clock change, nine New York City pedestrians lost their lives, one of the deadliest periods of the entire year. All of the victims were between 55 and 88 years old and only three of those deaths occurred during daylight hours.

“As the days get shorter and the weather colder, crashes on our streets involving pedestrians increase – and so we are enlisting data-driven strategies to address that upturn,” said DOT Commissioner Trottenberg. “Through education and enforcement with our sister agencies, every driver needs to learn about the limited visibility of this season and the dangers of fast turns, especially in the evening hours. Re-engineered intersections like the one at the Manhattan Bridge will also make crossing our busiest streets safer for everybody.”

"The NYPD takes the safety of all users of our City’s streets and roadways seriously and will play an active role in mitigating a potential spike in traffic fatalities as daylight saving time ends," said NYPD Chief of Transportation Thomas M. Chan. "There will be citywide Vision Zero enforcement activity during the evening peak hours, as well as a continuation of our education initiatives. This combination of efforts has been yielding positive results since the inception of Vision Zero."

“Vehicle-pedestrian crashes disproportionately affect older New Yorkers, who are 13 percent of the population and accounted for 38 percent of pedestrian fatalities in 2015,” said Department for the Aging Commissioner Corrado. “Our Vision Zero day of awareness will highlight the important issue of pedestrian safety for not only elders, but New Yorkers of all ages.”

“Every driver, and especially our professional licensees, understand the challenges that seasonal driving presents, but with the earlier dusk coinciding with such a busy time for pedestrians, it is urgent that they be especially vigilant,” said Commissioner and Chair of the Taxi and Limousine Commission Meera Joshi. “The decrease in visibility poses a very real danger. It is essential for the increased risk this presents to be on every driver’s mind.”

Starting early Friday morning, DOT and NYPD street teams will engage in a Citywide “Day of Awareness,” distributing more than a million palm cards to educate drivers and other New Yorkers at high-priority Vision Zero target areas across all five boroughs. The palm cards underscore a pre-enforcement message about speeding, failure to yield and the dangers posed by increasing darkness in the fall – reminding drivers that with less sunlight, they will have less time to react to the unexpected.

The following are the Vision Zero multi-agency initiatives being pursued over the next few months:

Enforcement

• Increased Evening/ Nighttime Enforcement: NYPD will focus additional enforcement resources on the most hazardous violations (speeding and failure-to-yield to pedestrians), with precincts increasing their on-street presence around sunset hours when data show serious pedestrian crashes increase.

• Focus on Priority Locations: NYPD will deploy additional Traffic Safety personnel to provide coverage at intersections and corridors with high rates of pedestrian injuries and fatal crashes during key dusk and darkness hours.
• Focused Initiatives Cracking Down on Dangerous Driving Behaviors: In October, November and December the NYPD will launch a series of initiatives to promote concentrated enforcement on speeding, cellphone/texting, failure to yield to pedestrians, blocked bicycle lanes, and other hazardous violations.

• Drunk or Impaired Driving: NYPD will also focus resources on drunk-driving efforts, as the evening and nighttime hours in the fall and winter have historically been when the incidence of DWI also increases.

• Taxis and For-Hire Vehicles: TLC inspectors will conduct speed enforcement to deter speeding among for-hire vehicle operators.

Education

• “Day of Awareness:” NYPD and DOT street teams will tomorrow be educating and engaging drivers and other New Yorkers at different Vision Zero priority areas in all five boroughs, including: in Co-op City, at the Hub and along the Grand Concourse in the Bronx; in Washington Heights, near Grand Central & Penn Stations and along Canal Street in Manhattan; in Jamaica Center, on Main Street, Flushing and along Queens Boulevard in Queens; in Downtown Brooklyn and along Eastern Parkway in Brooklyn; and near both Staten Island Ferry Terminals.

• Targeted Messaging to Drivers to Obey Speed Limit and Yield to Pedestrians: The award-winning Vision Zero “Your Choices Matter” campaign will expand this fall with fresh content, including new radio advertisements timed to air specifically around sunset hours. In this new campaign, listeners will be educated to the correlation between darkness and crashes – and reminded to lower their speeds and to turn slowly. 

• Daylight Saving Awareness: As it did in the spring when clocks “sprung forward,” DOT will lead a public-awareness campaign around the end of Daylight Saving Time, when DOT statistics from 2010-2014 show that serious collisions in early evening increase by approximately 40 percent. This year, Daylight Savings Time will end at 2:00 AM on Sunday, November 6.

• Senior Center Outreach: Older adults who attend DFTA’s network of senior centers have received education and outreach focused on improving safety conditions in their neighborhoods and sharing tips for getting around safely, presented by NYC DOT and NYPD.

• Taxi Driver Outreach: TLC will educate for-hire drivers to the need to be cautious through text messages, the distribution of more than 20,000 palm cards and other channels. In addition, Vision Zero ads will run on Taxi TV, providing another opportunity to reach the broader public.

• “Cross This Way” Curriculum: The expanded Vision Zero traffic-safety curriculum for 4th through 6th graders, announced by DOT and DOE in September, will continue to be taught in public schools throughout the fall and winter season.

• Left Turns: Left turns cause three times as many fatal and severe pedestrian injury crashes as right turns. NYPD will distribute 150,000 palm cards and use variable message boards to advise motorists of their responsibility to yield to pedestrians when making left turns.

Street Design

• Record Number of Upgraded Corridors and Intersections: DOT expects to complete at least 90 Safety Improvement Projects in 2016, the most ever completed in a single calendar year, including expanded pedestrian space, protected bike lanes, corridor improvements, and intersection treatments.

• Manhattan Bridge Safety Improvements: The largest project completed this year, the Canal Street entrance to the Manhattan Bridge, had previously been among New York City’s most dangerous intersections for pedestrians. Between 2010-2014, over 147 people were injured at the intersection, five of them seriously, with one person killed. The $1.5 million project dramatically improves safety at the intersection with new signals, concrete curb extensions, along with extended and widened medians. Pedestrian crossings were shortened at most street crossings around the mouth of the bridge, which also saw its traffic lanes permanently reconfigured to provide more predictability for pedestrians.

• Improved Lighting at Intersections: By the end of 2016, DOT expects to complete lighting upgrades at 1,000 priority intersections throughout the City, adding additional lamps to increase visibility over crosswalks. In addition, the agency is converting older sodium street lights to higher-intensity LED, which makes pedestrians and cyclists more conspicuous, and reduces the capacity for nighttime crashes. LED bulbs also offer the benefits of longer life at an overall lower cost.

“As it begins to get darker early, drivers need to be more aware than ever of pedestrians and cyclists on our streets,” said Council Member Ydanis Rodriguez, Chair of the Committee on Transportation. “This means fewer quick turns at intersections and lower speeds at all times. Drivers have the most responsibility on our streets and caution should always be prioritized to avoid serious injuries and death.”

Council Member Antonio Reynoso said, “Pedestrian safety is top priority throughout the year and especially during these months of early nightfall. I would like to thank the DOT and the NYPD for their research and for guiding us to safer, people-friendly streets.”

In 2016, as part of Vision Zero, DOT has implemented its most aggressive street redesign safety program, with increased investment in street redesign and traffic-calming measures citywide. DOT has also improved the safety at a record number of dangerous intersections and thoroughfares, installing more than 18 miles of protected bike lanes along key high traffic corridors like Queens Boulevard, 6th Avenue, Chrystie Street, Jay Street, and Amsterdam Avenue and installed a record number of leading pedestrian intervals (LPIs) – more than 500 – to give pedestrians a head start while crossing the street.

For more information about the de Blasio Administration’s Vision Zero initiative, please see www.nyc.gov/visionzero.

THREE PEOPLE INDICTED FOR MANSLAUGHTER IN FATAL BEATING OF MAN WHO SHOVED WOMAN OUTSIDE BRONX RESTAURANT

  Bronx District Attorney Darcel D. Clark today announced that two men and a woman have been indicted on Manslaughter and Gang Assault for an attack that led to the victim’s death. 

  District Attorney Clark said, “This was street justice at its most brutal: the defendants allegedly inflicted severe head trauma on the victim because he had pushed a woman down during an argument.” 

 District Attorney Clark said defendants Joel Hernandez, 23, Jenny Gutierrez, 22, and Hector Quezada, 23, all of whom reside in Manhattan, have been indicted on first degree Manslaughter, first-degree Gang Assault, and second-degree Gang Assault. 

 Hernandez and Gutierrez were arraigned on Tuesday, October 25, 2016, before Bronx Supreme Court Justice Eugene Oliver and bail was set at $100,000. Quezada was arraigned today before Bronx Supreme Court Justice William Mogulescu and bail was set at $50,000. They are due back in court on January 23, 2017. 

 District Attorney Clark said that according to the investigation, in the early morning of October 2, 2016, outside of the Parrilla Latina restaurant at 5523 Broadway in Kingsbridge, Donnell Soto, 36, allegedly had an argument with a group of individuals including Quezada, Hernandez, and Gutierrez. After Soto allegedly pushed Gutierrez down, Quezada punched Soto in the face and Hernandez and others joined, punching and kicking Soto in the head and body. Three individuals from the group remain unapprehended. 

 Soto was taken to St. Barnabas Hospital with severe head trauma and was declared brain dead on October 4, 2016.

 The case is being prosecuted by Assistant District Attorney John Miras of the Homicide Bureau, under the supervision of Christine Scaccia, Deputy Chief of the Homicide Bureau and Chief of the Gangs/Major Case Bureau. 

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

Comptroller Stringer Investigation: Child Care Centers in City Shelters Put Homeless Children at Risk

More than 80% of Shelter Childcare Workers Missing Either Criminal or Child Abuse Screening 

Investigation Finds 41% of Shelter-based Child Care Rooms Sampled had no Sprinklers and Nearly 20% had no Fire Extinguishers 

The Number of Homeless Children Aged Three and Under in Commercial Hotels Skyrocketed 224% This Summer 

City Comptroller Scott M. Stringer today released a wide-ranging investigation that found dangerous shortcomings in how child care services are provided to children age zero to three in City shelters, including a failure to ensure that child care workers undergo criminal background checks or enforce basic health and safety standards.  In short, the report found that child care services at City shelters are not subject to the same health and safety regulations that govern child care facilities outside of shelters.

Last December, the Comptroller’s Office released an audit that showed serious safety, security and health issues at shelters for families with children, leading to an unprecedented response by the Department of Homeless Services to address the findings. Building on that audit, this new investigation found that child care services at City shelters were not subject to the same health and safety regulations as all other child care sites, resulting in lower standards for staff screening, training and the physical condition of the facilities.

The investigation released today found that the largest population served by the Department of Homeless Services is children age zero to five, and that the average length of stay in shelters for those children is now 412 days, an increase over previous years – underscoring the importance of providing quality child care to this vulnerable population.  The investigation also documented a 224% increase in the number of children placed in commercial hotels between April and August of 2016 – facilities that have no on-site child care services at all.

“This investigation reveals that New York City has created two standards of care—an inferior system for homeless children and one for everyone else,” Comptroller Scott M. Stringer said. “We found a lack of oversight in shelters that we inspected, as well as conditions that would give any parent nightmares – and that is not acceptable. There should be one health and safety standard for all child care facilities in New York City, regardless of where their children go to sleep at night. That’s why I’m calling on the City to conduct a full census of our youngest homeless children that focuses not just on where they reside, but on whether they’re actually getting the services they deserve.”

Because child care centers in City shelters do not have a formal permitting process and are not subject to Department of Health and Mental Hygiene standards, severe shortcomings are rampant. For instance, the Comptroller’s Office found that:

• Based on surveys of all 43 City shelters with unpermitted child care centers on site, 82 percent of child care workers in these shelters had not been screened for either criminal convictions or records of child abuse, or both.

• In addition, 49 percent of the child care employees at these sites did not have valid training in child abuse and maltreatment identification, reporting, and prevention.

• In person inspections by the Comptroller’s Office of the child care rooms in 21 shelters that have no City child care permits revealed that:
  • 41 percent had no sprinklers;
  • 18 percent had no fire extinguishers;
  • 9 percent of the designated emergency exit doors were locked from the inside at the time of inspection and were not equipped with an emergency push bar; and
  • 30 percent of the shelter-based child care centers had insufficient outdoor space and 20 percent lacked an outdoor play area.

• More than one-fourth of all shelters for families with children operate child care centers onsite without any permits from City government.

• Although ACS funds subsidized child care vouchers and early education programs for children as young as six weeks of age, the Comptroller’s investigation found that ACS and DHS used different methods for tracking children. As a result, neither agency could identify which children in the shelter system received some form of subsidized child care through ACS, and which did not.

For many other children in the City shelter system, child care services are not even an option – either because they are not offered or because of other regulatory barriers that prevent families from accessing them. The Comptroller’s Office found:

• 99 of the 167 shelters housing families with children (59 percent) offer no on-site child care or “linkage agreements” with child care providers. A linkage agreement is required by a shelter contract, and commits a shelter services provider to connect children with locally-based child care.

• Nearly 3,000 children under age 3—who are too young for other City-supported programs, such as Head Start and Universal Pre-K—live in City shelters that do not offer child care services.

• 70 percent of the shelters with on-site child care had some eligibility requirements that restrict access to childcare services.

• This problem is exacerbated by the City’s increasing reliance on commercial hotels to house homeless families – facilities that provide no on-site child care at all. In May 2015, there were no families with children in DHS commercial hotels at all. By mid-August of 2016, the number of children age zero to three in commercial hotels had risen 224 percent since April 2016.

• The length of stay across all shelters among families has also risen dramatically, averaging 412 days – up 28% since 2007.

• As of August 15, 2016, 18.5 percent of all families in DHS shelters for families with children had a head of household who was in DHS shelter as a child.

“We need bold action today to give homeless families a chance to break this devastating cycle tomorrow. That we have such extraordinary regulatory loopholes should alarm all of us. We need to fix it—and we need to fix it now,” Comptroller Stringer said.

The Comptroller’s recommendations and full report can be found here.

BOROUGH ELECTED LEADERS CALL ON APPLE TO OPEN IN THE BRONX

   Nearly every Bronx elected official has signed a letter to Tim Cook, Apple CEO, urging the company to consider the borough as a location for a new Apple Store.

In the letter, the elected officials note that Apple Stores are currently opened in four of the five New York City boroughs, and that opening in The Bronx would help the company complete their branding.

“Few brands are as recognized and admired as Apple, and an ‘Apple Bronx’ location would be another signal to the world that The Bronx is open for business,” states the letter. “It is time for The Bronx to get its bite of the Apple!”

The letter also suggests several potential homes for an “Apple Bronx” location, including The Mall at Bay Plaza in Co-op City, as well as highly trafficked retail corridors at The Hub/3rd Avenue, Fordham Road and Kingsbridge/Broadway.

The letter, as well as a separate letter by New York State Assembly Speaker Carl Heastie, can be read at http://on.nyc.gov/2dYZpgv.

“We have seen incredible, transformative development in The Bronx since 2009. Numerous companies that may have looked us over in the past are now clamoring to do business here. Tens of thousands of Bronx residents are already Apple customers, so a new Apple Store right here in The Bronx would be a perfect fit for this borough. I am hopeful that Apple will consider our request, as a Bronx location would be mutually beneficial not only to the company, but to the thousands of Bronxites who would take advantage of its services closer to home,” said Bronx Borough President Ruben Diaz Jr.

“The Bronx is home to more than one and half million people and that number continues to grow,” said New York State Assembly Speaker Carl Heastie. “Having an Apple store in The Bronx would ensure that our many residents have access to the world renowned products and services that Apple has to offer. Over the past few years, The Bronx has seen billions of dollars in development and offers numerous potential retail locations for continued growth. A Bronx location would undoubtedly prove to be beneficial for both Apple and one and half million eager consumers here in the Bronx.”

“The Bronx is ripe for an Apple Store with major retailers locating here and a population of over a million eager shoppers looking to buy local. A Bronx Apple Store would draw consumers and boost business for your brand. I, along with my colleagues, hope you consider our home as a site for a new store,” said State Senate Co-Coalition Leader Jeff Klein.

“Apple is one of the most highly recognized and celebrated brands in the world. When people think of Apple, they think of cutting-edge products, incredible innovation, and success. Today, those words are just as often used to describe what’s happening in The Bronx, which over the past few years has seen unbelievable progress and growth. There is no question that the Bronx is the place to be in NYC, so it would only be fitting for Apple to make our borough their new home,” said Congressman Eliot Engel.   

“The Bronx is growing and booming. It's actually shocking that there is no Apple store to serve the 1.4 million Bronx residents,” said Assembly Member Jeffrey Dinowitz. “I am a purchaser of Apple products and do not like having to go outside The Bronx to shop. We all know that there is a tremendous untapped market here in The Bronx. Apple opening a store here would be good for The Bronx and good for Apple.”

“The opening of an Apple Store in The Bronx will serve as a further confirmation of the steady economic transformation that our borough has been going through in the last decades,” said State Senator Gustavo Rivera. “I urge Apple’s CEO, Tim Cook, to consider how this step would benefit thousands of Bronxites who are already Apple customers. I thank Borough President Diaz for working to invest and develop our borough's economy and, as a result, our communities.”

“The Bronx continues to grow with developments in all corners of our borough and an Apple store would continue this transformation,” said Council Member Andrew Cohen.  “The Broadway corridor in Kingsbridge is home to a number of recently developed shopping centers and would be the perfect location for a brand new Apple store.  I, along with Borough President Diaz Jr. and my colleagues, urge Apple to strongly consider expanding to the Bronx.”

“I strongly urge Apple to consider establishing a retail outlet in The Bronx. Here is a prime opportunity for this venerable consumer electronics brand to be at the vanguard of our borough's economic renaissance, as well as being a beacon for our burgeoning tech hub,” said Council Member Annabel Palma. “Apple's history symbolizes risk-taking and innovation; setting up shop in The Bronx would certainly continue this pursuit.”

“The Bronx has always been home to many world-renowned brands, vibrant businesses and economic opportunities,” said Council Member Ritchie Torres. “It makes sense for Apple to open a store in the Bronx and make its services available to the borough’s residents. Thousands of Bronx residents enjoy Apple’s products, just like residents from other areas of the City, so they should be able to access the company’s services in the borough where they live.” 

“We have a deep commitment to continue improving the economy of our borough by attracting quality businesses that bring goodwill to our neighborhoods,” said Marlene Cintron, President of the Bronx Overall Economic Development Corporation. “Apart from the great compensation and healthcare benefits the Apple Store provides for their employees, they also provide invaluable extensive training as well as attracting customers in large numbers, helping drive clientele to nearby businesses, and generating huge amounts in sales tax, which is great for the benefit of the community.”

Mount Vernon Tax Preparer Sentenced In White Plains Federal Court To 51 Months In Prison For Filing False Tax Returns

   Preet Bharara, the United States Attorney for the Southern District of New York, announced today that SAMUEL GENTLE, a tax preparer and the owner of tax preparation businesses named GenGen, Inc., and GenGen Financial, Inc., in Mount Vernon, New York, was sentenced today in White Plains federal court to 51 months in prison for obstructing the IRS and preparing false and fraudulent individual income tax returns for his clients.  GENTLE was found guilty in July 2016 after a one-week trial before U.S. District Judge Cathy Seibel.

Manhattan U.S. Attorney Preet Bharara said:  “As established at trial, Samuel Gentle abused his position as a tax preparer to file false tax returns on behalf of his clients, himself, and his businesses.  His fraud resulted in over half a million dollars in losses to the IRS, and now a sentence of 51 months in prison for Gentle.”

As established by the evidence at trial:

From 2010 through 2014, GENTLE operated a large and thriving tax preparation business that prepared and submitted to the IRS, on average, 3,200 tax returns each year.  These tax returns contained a pattern of false and fraudulently inflated deductions for business expenses and gifts to charity.  Numerous clients of GENTLE testified that they had not provided GENTLE with any information that he could have used to support the false or inflated deductions.

As part of the investigation of this matter, an undercover IRS agent posed as GENTLE’S client.  During the operation, the agent provided GENTLE with no records that he could have used to support any deductions.  But, consistent with his pattern, GENTLE included false and fraudulent deductions for business expenses and gifts to charity on the tax return he prepared for the undercover agent. 

GENTLE also failed to report on his own personal and business tax returns nearly half of the $1 million in receipts that he received for his tax preparation services from 2010 through 2014.  He spread the receipts across eight bank accounts at five banks, and he failed to issue required IRS forms to himself or his employees, further concealing from the IRS the amount of receipts he and his business had received.

As confirmed by IRS audits as well as the evidence at trial, GENTLE’s crimes resulted in a loss to the IRS of more than $550,000.

In addition to the prison term, GENTLE, 59, of Mount Vernon, New York, was sentenced to one year of supervised release and ordered to pay a $125,000 fine and to pay the IRS over $295,000 in back taxes.

Mr. Bharara praised the investigative work of the Internal Revenue Service, Criminal Investigation, and thanked the IRS for its assistance. 

Investment Adviser Pleads Guilty In Manhattan Federal Court To Insider Trading

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID HOBSON, who served as an investment adviser in the Providence, Rhode Island, offices of two different national broker-dealer and investment advisers (“Brokerage Firm-1” and “Brokerage Firm-2”), pled guilty to engaging in a scheme to commit insider trading in connection with deals involving a pharmaceutical company (the “Pharma Company”) at which Michael Maciocio, HOBSON’s friend and client, worked.  Maciocio, who had been employed by the Pharma Company, regularly possessed material, nonpublic information (“Inside Information”) concerning pending acquisitions and transactions under consideration by the Pharma Company.  From at least 2008 through April 2014, Maciocio breached his duty of confidentiality to the Pharma Company by providing Inside Information about potential acquisitions and transactions to his friend and long-time broker, HOBSON.  HOBSON, in turn, used the Inside Information to execute profitable securities trades for himself, for Maciocio, and for other clients of HOBSON’s.  

U.S. Attorney Preet Bharara said:  “As he admitted today, David Hobson exploited inside information provided by his friend and client Michael Maciocio to reap illegal profits for both of them.  With Maciocio’s earlier guilty plea, both participants in this illegal insider trading scheme have now admitted to their crimes.  Insider trading rigs the markets, and through prosecutions like this, we seek to make the securities markets fair.”

According to the allegations in the charging documents, including the Information and Indictment, and statements made in court proceedings:

From in or about May 2008 through in or about April 2014, Maciocio and HOBSON participated in a scheme to commit insider trading in advance of and in connection with acquisitions and transactions under consideration by the Pharma Company.  Maciocio and HOBSON were childhood friends and HOBSON had served as Maciocio’s investment adviser and broker for many years.

 Maciocio learned about the impending transactions through his role as a Master Planner in the Active Pharmaceutical Ingredient Supply Chain Group at the Pharma Company.  In that role, Maciocio was tasked with evaluating manufacturing demands and capacity within the Pharma Company, and was consulted about potential acquisitions, to assist in determining whether the Pharma Company would be able to manufacture any new product in-house.  Although Maciocio was not typically provided with the name of the target acquisition, he used the Inside Information he received – including the Pharma Company’s code name of the acquisition, the drug indication, the dosage, the phase of any clinical trial, and the chemical structure of the drug – to uncover the true identity of the target company.  He was at times aided in this task by HOBSON.

Having learned the Inside Information about these impending transactions, Maciocio, in breach of fiduciary duties and other duties of trust and confidence owed to the Pharma Company, traded on his own behalf and tipped HOBSON so that HOBSON could use the information to trade both for himself and for Maciocio.  HOBSON also used the Inside Information to trade in other of his clients’ accounts, first at Brokerage Firm-1 and later at Brokerage Firm-2.

HOBSON used the Inside Information that he received from Maciocio to make profitable trades in, among other securities: Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc.  As a result of the scheme, HOBSON reaped more than $350,000 in ill-gotten gains for himself, for Maciocio, and for certain of HOBSON’s other clients.  

HOBSON, 47, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million or twice the gross gain or loss from the offense;

Maciocio, 46, pled guilty on May 20, 2016, to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of securities fraud.  Count One carries a maximum sentence of five years in prison.  Counts Two through Four each carry a maximum sentence of 20 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.  

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentences for the defendants will be determined by the judge.

Mr. Bharara praised the work of the FBI, and thanked the SEC.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

Managing Director Of Venture Capital Firm Sentenced In Manhattan Federal Court In Connection With Multimillion-Dollar Ponzi Scheme

  Preet Bharara, the United States Attorney for the Southern District of New York, announced that GREGORY W. GRAY, JR., was sentenced today in Manhattan federal court to two years in prison for securities fraud and perjury charges stemming from his scheme to defraud an investor of approximately $5 million to cover up his mismanagement of other investor funds.  GRAY pled guilty on December 23, 2015, and was sentenced today by United States District Judge Sidney H. Stein.

Manhattan U.S. Attorney Preet Bharara said:  “Gregory Gray deceived investors, claiming he would use their funds to buy shares of high-flying technology companies like Twitter and Uber.  In reality, Gray did not make the investments he said he would, and later used new investor funds to pay back earlier investors.  In an attempt to cover his tracks, Gray then lied about his investments to the SEC.  Today, his federal crimes have led to a sentence of imprisonment.”

According to the allegations contained in the Information, the underlying criminal Complaint, and other statements made during court proceedings:

From at least in or about April 2014 through in or about February 2015, GRAY engaged in a Ponzi scheme to defraud investors who believed they had invested in funds GRAY controlled at Archipel Capital, LLC (“Archipel”), where GRAY was the Senior Managing Director.

Previously, from in or about June 2012 through in or about November 2013, GRAY raised over $5.2 million, from approximately 52 investors, for four Archipel “Social Media Funds.”  GRAY promised to use that capital to purchase shares of Twitter before the company’s initial public offering (“IPO”).  Based on GRAY’s representations to investors, GRAY promised to purchase over 200,000 pre-IPO Twitter shares.

GRAY frequently comingled funds between the various Archipel investment vehicles that he managed.  Ultimately, GRAY’s withdrawals from the Social Media Funds left those funds with insufficient money to purchase the full complement of pre-IPO Twitter shares he had promised investors.

On or about November 6, 2013, Twitter had its IPO and began trading on the New York Stock Exchange.  At that time, contrary to his representations to investors, GRAY had purchased only 80,000 pre-IPO Twitter shares for a total cost of $1,875,000.  GRAY accordingly owed his investors millions of dollars’ worth of Twitter shares.

In an attempt to make up the shortfall of Twitter stock, in or about April 2014, GRAY persuaded Investor-1 to invest $5 million in Archipel’s “Late Stage Fund,” which GRAY also controlled.  GRAY promised that, through that fund, he would use Investor-1’s $5 million investment to purchase a purported multimillion-dollar, privately held allotment of Uber shares.  However, instead of using the $5 million as promised, GRAY instead used the money to make cash payments to investors in the Social Media Funds and to purchase post-IPO Twitter shares for those same investors, including Investor-1 himself.

When Investor-1 requested documentation of the purchase of Uber shares as promised, GRAY provided Investor-1 with a fabricated stock transfer agreement (the “Uber Stock Transfer Agreement”) that purported to show that the Late Stage Fund had purchased 175,438 Uber shares.  In truth and in fact, and as GRAY well knew, the fund had not purchased any Uber shares.

On or about February 24, 2015, GRAY gave sworn testimony to the SEC.  During his testimony, GRAY falsely stated, in substance and in part, that the Uber Stock Transfer Agreement reflected a bona fide purchase of Uber shares by the Late Stage Fund.

In addition to the prison sentence, GRAY, 41, was sentenced to three years of supervised release.  The Court further ordered that GRAY forfeit $5,000,000 and pay $5,000,000 in restitution.

Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the SEC for its assistance. 

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.