311 SETS NEW RECORD WITH NEARLY 36 MILLION INTERACTIONS IN 2016

Nearly half of all interactions were digital; 311 mobile app use growing rapidly

   NYC311, New York City’s primary source of government information and non-emergency services, set another record for the most annual contacts with 35,982,514 customer requests for services or information in 2016 – surpassing the previous record in 2015 by 5 percent.

Increasingly, customer interactions are happening on digital channels – either through the website, mobile app, or social media – demonstrating 311’s adaptability and strong efforts to be available to New Yorkers in the digital spaces they use to communicate and find information. Digital interactions made up 46 percent of total 2016 contacts. Mobile app usage is growing quickly from year to year – in 2016, over 136,000 people downloaded the 311 app to their smartphones, a 44 percent increase in the total number of app users. Over a million of the 2016 customer contacts came through the mobile app, and over 15 million were from the 311 Online website.

“Whether they’re tweeting at 311 or using their smartphones to file complaints, New Yorkers are increasingly using digital means to contact the city or find information. And 311 has risen to the occasion, providing excellent service by phone, app, and the web as more and more New Yorkers are reaching out,” said Mayor Bill de Blasio.

“More and more customers are visiting us online or using the mobile app to get quick and easy information about City programs or file service requests. Our phones lines are always open, but we’re excited about the new ways New Yorkers can contact us digitally, and we’ll keep working to meet customers where they are and hold fast to our core mission – equitable service delivery for all New Yorkers,” said NYC311 Executive Director Joseph Morrisroe.

A customer contact is defined as any interaction with 311 that results in the customer receiving information or submitting a request – including a phone call, mobile app submission, social media interaction, or website visit. 311 contact growth was largely driven by customers’ increased digital engagement with the City. Digital contacts made up 46 percent of all 311 interactions in 2016 – a significant increase from 38 percent in 2015 and 26 percent in 2014. Digital interactions have increased as customers are increasingly using the City’s digital platforms to access government information, programs and file service requests. 311 social media has also grown in popularity as a way to keep in touch with City government through Twitter, Facebook and Instagram. NYC311 social media followers spiked 46 percent in 2016, with 316K total followers on the four managed accounts (NYC311 & NYCASP Twitter, Facebook and Instagram).

The City logged 2,827,672 service requests, and the top five categories were noise, apartment issues, illegal parking and blocked driveways. While the total service requests filed increased by 4.9 percent since 2015, apartment issues and noise complaints declined 7 percent and 4 percent respectively.The top inquiries to the call center and 311 Online were related to parking tickets. Customers called to get parking ticket information status and used the website to pay their tickets online. Additional top inquires for the call center ranged from finding a towed vehicle, getting property tax assistance, learning what bulk items can be thrown out and making an appointment for an IDNYC municipal ID card. Highly requested topics for 311 Online focused on City programs such as affordable housing, working for the City and the SNAP program.

Total Customer Contacts
Calls to 311	19378299
311 Online Visits	15259879
311 Mobile App	1135045
311-692 Text	119332
311 Chat	83064
311 Twitter	6895
Total	35982514
Total NYC Population	8550405
Average Contacts Per Resident	4.2
Top 5 Service Requests
Noise	370645
Apartment Maintenance	366047
No Heat/Hot Water	227959
Illegal Parking	122479
Blocked Driveway	119046
Total Service Requests Filed	2827672
As % of Total Contacts	7.90%

Top 5 Inquiries by Channel
Call Center	311 Online
Parking Ticket Status	Pay a Parking Ticket
Find a Towed Vehicle	Affordable Housing
Property Tax Account Assistance and Bill Information	New York City Housing Lottery
Bulk Item Disposal Information	NYC Jobs
IDNYC - Make an Appointment	Supplemental Nutrition Assistance Program (SNAP)

NYC311 aims to provide the public with quick, easy access to all New York City government services and information. New Yorkers can connect with 311 online, by text, phone, or social media. The agency works continuously to make government services more accessible to non-English speakers, with 311 Online available in more than 50 languages.

New Yorkers can connect with 311 by:

• Visiting 311 Online.
• Texting 311-692.
• Calling 311 or (212) NEW-YORK, (212) 639-9675, from outside New York City.
• Contact 311 using a Video Relay Service (VRS) at (212) NEW-YORK, (212) 639-9675.
• Contacting 311 using TTY or Text Telephone at (212) 504-4115.
• Following 311 on Twitter, Facebook, and Instagram.
• Downloading 311’s iPhone or Android app

"Since I personally use the NYC 311 app I know how convenient and effective it is," said Council Member Ben Kallos. "Whether you are reporting noise, parking issues or getting help for homeless individuals, New Yorkers should continue to report all non-emergencies to 311 to get New York City running even more efficiently." 

Bronx Dems 2017 Winter Networking Reception

Bronx Borough President Ruben Diaz Jr. - 2017 State of the Borough Address

You are cordially invited to Bronx Borough President Ruben Diaz Jr.'s 2017 State of the Borough Address. The Honorable Ruben Diaz Jr. President, Borough of The Bronx cordially invites you to The State of The Borough Address Thursday, February 23, 2017 11:30 a.m. John F. Kennedy Campus 99 Terrace View Avenue The Bronx seating is limited Click Here to R.S.V.P.

The Office of Bronx Borough President Ruben Diaz Jr. | 718-590-3500 webmail@bronxbp.nyc.gov |  bronxboropres.nyc.gov

Coming to a McDonald's Near You?

  At this McDonald's on White Plains Road just south of Allerton Avenue you will be soon placing your order from this new 'Order Taker Machine'. What with the minimum wage going up costs have to be kept down. This new OTM is only one of four such OTM's that have been placed in this McDonalds. After all it takes only pennies an hour to run this OTM, it will never ask for a raise, overtime, and call in sick. Plus with this OTM the owner will not have to pay unemployment, or even have to keep tax records for this new employee.  

  I was told that no employee is to be fired, but that would mean no new employees would be hired to take orders from customers. The new OTM will also never get into an argument with a customer, and like a bank ATM has a help button right in the lower middle section to assist a customer. There may still be a live order taker, again much like a bank with one live teller, but using the ATM or now OTM should get a customer out quicker. As for live help, people are still going to be needed to cook the food, package it, and give it to the customer. As for paying for the food ordered it may be done with a credit or debit card at the OTM, or even by paying cash when you pick up your order. 

As you can see in the photo on the left there are other OTM's in this McDonald's.

On the right is OTM number 4 by the entrance door.

Happy ordering.

Manhattan U.S. Attorney Settles Lending Discrimination Suit Against JPMorgan Chase For $53 Million

Settlement Includes Admissions by the Bank and Provides Compensation for Borrowers Harmed by the Discriminatory Lending Practices

   Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed and settled a federal civil rights lawsuit against JPMORGAN CHASE BANK, N.A. (“CHASE”) alleging discrimination on the basis of race and national origin in the conduct of its wholesale lending business, in violation of the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act (“ECOA”). The Consent Order between the parties was approved today by the Honorable Alison J. Nathan.

Manhattan U.S. Attorney Preet Bharara said: “Today’s settlement will compensate thousands of African-American and Hispanic borrowers who paid higher rates and fees on Chase mortgages than similarly situated white borrowers. In the settlement announced today, Chase admits the Government found that the bank’s wholesale lending brokers charged minority borrowers more than white borrowers in the same position. Such unequal treatment is not only unfair, but a violation of the Fair Housing Act.”

According to the stipulation of fact agreed to by the parties in the Consent Order, filed in federal court in Manhattan:

• Prior to January 2006 and continuing until early 2009, Chase originated and funded residential mortgage loans through a wholesale channel. Applications for these loans were brought to Chase by thousands of independent mortgage brokers throughout the United States who had entered into contracts with Chase for the purpose of bringing mortgage loan applications to it for origination and funding.

• From 2006 to 2009, approximately 360,000 wholesale mortgage loans were sourced by these independent brokers and brought to Chase. Of these, Chase reported that approximately 40,000 wholesale loans were made to African-American borrowers and that approximately 66,000 wholesale loans were made to Hispanic borrowers. Chase closed its wholesale channel in 2009.

• The government’s data model projects that, from at least 2006 through late 2009, certain of the approximately 106,000 African-American and Hispanic borrowers who obtained loans through independent mortgage brokers participating in Chase’s wholesale channel paid higher rates and fees on “wholesale” home mortgage loans compared to the rates and fees paid by similarly situated white borrowers who obtained loans through independent mortgage brokers participating in Chase’s wholesale channel. It projects that in thousands of instances, an African-American borrower entering into the same type of Chase wholesale mortgage as a white borrower paid higher loan rates and larger fees than such white borrower. Similarly, it projects that in thousands of instances, a Hispanic borrower entering into the same type of Chase wholesale mortgage as a white borrower paid higher loan rates and larger fees than such white borrower.

To compensate the estimated 50,000 African-American and Hispanic borrowers who paid higher rates and fees than similarly situated white borrowers, CHASE has agreed to create a settlement fund in the amount of approximately $53 million. CHASE has further agreed to retain an administrator to manage the settlement fund and to locate borrowers who may qualify for compensation. Borrowers who are African American and/or Hispanic and who obtained a mortgage through CHASE’s wholesale channel from 2006 through 2009 should be contacted by the administrator in the next several months, or can contact the United States Attorney’s Office directly, by contacting the Civil Rights Complaint Line at (212) 637-0840, using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/civilrights.html, or by sending a written claim to:

U.S. Attorney’s Office, Southern District of New York

86 Chambers Street, 3rd Floor

New York, New York 10007

Attention: Chief, Civil Rights Unit

Former FBI Employee Sentenced In Manhattan Federal Court To 24 Months In Prison For Acting As An Agent Of China

Kun Shan Chun, a/k/a “Joey Chun,” Provided Sensitive FBI Information to the Chinese Government

   Preet Bharara, the United States Attorney for the Southern District of New York, Mary B. McCord, Acting Assistant Attorney General for National Security, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that KUN SHAN CHUN, a/k/a “Joey Chun,” was sentenced to serve 24 months in prison and pay a $10,000 fine based on his conviction for acting in the United States as an agent of the People’s Republic of China (“China”), without providing prior notice to the Attorney General. CHUN pled guilty on August 1, 2016. U.S. District Judge Victor Marrero imposed today’s sentence.

Manhattan U.S. Attorney Preet Bharara said: “Kun Shan Chun, an FBI employee, was supposed to work to protect and serve the American people. But instead, he acted as a secret agent of China. For that betrayal, Chun has now been sentenced to federal prison.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “The FBI continues to be vigilant in an effort to warn American industries, businesses and institutions of the dangers posed by the insider threat. This investigation validates that we at the FBI are not immune to the threat of an insider. The FBI will continue to diligently protect its equities, and those of both our U.S. intelligence community partners and those in the private sector, from insiders looking to steal our information and use it against us.”

According to the Information filed against CHUN, other documents publicly filed in this case, and statements made during court proceedings, including today’s sentencing:

CHUN, a native of China and a naturalized citizen of the United States, began working at the FBI’s New York Field Office in approximately 1997 as an electronics technician assigned to the Computerized Central Monitoring Facility of the FBI’s Technical Branch. In approximately 1998, and in connection with his employment, the FBI granted CHUN a Top Secret security clearance, and his duties included accessing sensitive and, in some instances, classified information. As discussed in more detail below, in connection with a progressive recruitment process, CHUN received and responded to requests from Chinese nationals and at least one Chinese government official (“Chinese Official-1”), at least some of whom were aware that CHUN worked at the FBI.

On multiple occasions prior to his arrest in March 2016, while engaging in a prolonged and concerted effort to conceal from the FBI his illicit relationships with these individuals, CHUN disclosed to Chinese Official-1 – at minimum – information regarding the FBI’s personnel, structure, technological capabilities, general information regarding the FBI’s surveillance strategies, and certain categories of surveillance targets.

CHUN’s Purported Consulting for Zhuhai Kolion Technology Company Ltd.

Beginning in at least 2005, CHUN and certain of his relatives maintained relationships with Chinese nationals purporting to be affiliated with a company in China named Zhuhai Kolion Technology Company Ltd. (“Kolion”). CHUN maintained an indirect financial interest in Kolion, including through a previous investment by one of his relatives. In connection with these relationships, Chinese nationals asked CHUN to perform research and consulting tasks in the United States, purportedly for the benefit of Kolion, in exchange for financial benefits, including partial compensation for international trips as well as cash payments made to CHUN’s relative.

Between 2006 and 2010, CHUN’s communications and other evidence reflect inquiries to CHUN from purported employees of Kolion while CHUN was in the United States, as well as efforts by CHUN to collect, among other things, information regarding solid-state hard drives and printer cartridges.

CHUN’s Relationship with Chinese Official-1

CHUN was introduced to Chinese Official-1 in approximately 2007 and subsequently provided Chinese Official-1 with sensitive information from the FBI. During a trip to Italy and France in 2011, CHUN met with Chinese Official-1. Chinese Official-1 indicated that he worked for the Chinese government, and that he knew CHUN worked for the FBI. During subsequent private meetings conducted abroad between CHUN and Chinese Official-1, Chinese Official-1 asked questions about sensitive, nonpublic FBI information. During those meetings, CHUN disclosed, among other things, the identity and potential travel patterns of an FBI Special Agent.

In approximately 2012, the FBI conducted a routine investigation relating to CHUN’s Top Secret security clearance. In an effort to conceal his relationships with Chinese Official-1 and the other Chinese nationals purporting to be affiliated with Kolion, CHUN repeatedly lied on a standardized form related to the security clearance investigation. During the period between 2000 and CHUN’s termination, CHUN also reported to the FBI that he had traveled to the areas of Hong Kong and China approximately nine times, as well as additional trips to Canada, Thailand, Europe, Australia, and New Zealand. CHUN was required by FBI policy to disclose anticipated and actual contact with foreign nationals during his international travel, but he lied on numerous pre- and post-trip FBI debriefing forms by omitting his contacts with Chinese Official-1, other Chinese nationals, and Kolion.

Examples of CHUN’s Actions in the United States in Response to Requests from Chinese Official-1

Chinese Official-1 asked CHUN on multiple occasions for information regarding the internal structure of the FBI. In response to those requests, in approximately March 2013, CHUN downloaded an FBI organizational chart from his FBI computer in Manhattan. CHUN later admitted to the FBI that, after editing the chart to remove the names of FBI personnel, he saved the document on a piece of digital media and caused it to be transported to Chinese Official-1 in China.

Chinese Official-1 also asked CHUN for information regarding technology used by the FBI. In approximately January 2015, CHUN took photographs of documents displayed in a restricted area of the FBI’s New York Field Office, which summarized sensitive details regarding multiple surveillance technologies used by the FBI. CHUN sent the photographs to his personal cell phone, and later admitted to the FBI that he caused the photographs to be transported to Chinese Official-1 in China.

CHUN’s Admissions to an FBI Undercover Employee

In about February 2015, the FBI caused an undercover employee (the “UCE”) to be introduced to CHUN. The UCE purported to be employed by an independent contractor.

During a March 2015 recorded meeting, CHUN told the UCE about his relationship with Kolion and Chinese nationals. In a subsequent recorded meeting in March 2015, CHUN explained to the UCE that Kolion had “government backing,” and that approximately five years earlier a relative met a “section chief” who CHUN believed was associated with the Chinese government.

In June 2015, during a recorded meeting, CHUN told the UCE that he had informed his Chinese associates that the UCE may be in a position to assist them. CHUN said that he wished to act as a “sub-consultant” to the UCE and wanted the UCE to “pay” him “a little bit.” In July 2015, after coordinating travel in an effort to introduce the UCE to CHUN’s Chinese associates, CHUN met with the UCE twice. During one of the meetings, CHUN stated that he knew “firsthand” that the Chinese government was actively recruiting individuals who could provide assistance, and that the Chinese government was willing to provide immigration benefits and other compensation in exchange for such assistance. The UCE told CHUN that he had access to sensitive information from the United States government. CHUN responded that his Chinese associates would be interested in that type of information, but that CHUN expected a “cut” of any payment that the UCE received for providing information to the Chinese government.

CHUN’s Arrest by the FBI and Confession

CHUN was arrested by the FBI on March 16, 2016. He subsequently confessed to most of the foregoing activities, including having taken steps to collect sensitive FBI information in the United States in response to taskings from Chinese Official-1. CHUN explained that he was motivated in part by the financial benefits that he and others derived from these relationships, but also admitted that he understood that he had provided assistance to the Chinese government.

The Seizure of Additional Sensitive FBI Information from CHUN’s Residence

The FBI searched CHUN’s residence pursuant to a search warrant around the time of his arrest. Agents found a .40 caliber handgun and an AR-15 rifle in CHUN’s basement, neither of which was registered in New York. The FBI also seized from CHUN’s residence a thumb drive that contained three files with sensitive FBI information dating back to approximately 2006 and 2007. CHUN’s job at the FBI did not require him to work from home, and there is no legitimate reason for him to have possessed these files at his residence. One file – which had a “date modified” of January 19, 2007 – was marked with a security header that read “FBI SENSITIVE INFORMATION FOR OFFICIAL USE ONLY.” The document described technical details of FBI surveillance infrastructure, including specific information about networks used to store highly sensitive, classified data. The second file contained information relating to ways in which FBI employees could access raw intelligence information, and it included network details and unique usernames for ten FBI employees. The third file – which had a “date modified” of July 20, 2007 – contained a spreadsheet dated June 2, 2006, that included names and telephone numbers of FBI personnel with jobs similar to CHUN’s position, as well as telephone numbers for lines that Electronics Technicians such as CHUN would have used to configure or troubleshoot network issues with the FBI’s New York Office.

In addition to the prison sentence and fine, Judge Marrero also sentenced CHUN, 47, to one year of supervised release and to pay a $100 special assessment.

Mr. Bharara praised the outstanding investigative work of the FBI’s Counterintelligence Division. Mr. Bharara also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

California Man Pleads Guilty In Manhattan Federal Court To Defrauding A Native American Tribe And Investors Of Over $60 Million

   Preet Bharara, the United States Attorney for the Southern District of New York, announced that JASON GALANIS pled guilty today to defrauding a Native American tribal entity and the investing public of tens of millions of dollars in connection with the issuance of bonds by the tribal entity. GALANIS pled guilty to conspiracy to commit securities fraud, securities fraud, and conspiracy to commit investment adviser fraud before U.S. District Judge Ronnie Abrams.

U.S. Attorney Preet Bharara said: “As Jason Galanis admitted today in his guilty plea, he and his co-conspirators cheated their tribal clients by urging them to issue bonds, and then siphoning off the proceeds for their own personal use. The defendants then sold these bonds to unwitting investors, resulting in tens of millions of dollars in losses.”

According to the allegations contained in the Indictment filed against JASON GALANIS and his co-conspirators and statements made in related court filings and proceedings[1]:

From March 2014 through April 2016, JASON GALANIS, along with his co-conspirators Gary Hirst, John Galanis, a/k/a “Yanni,” Hugh Dunkerley, Michelle Morton, Devon Archer, and Bevan Cooney, engaged in a fraudulent scheme to misappropriate the proceeds of bonds issued by the Wakpamni Lake Community Corporation (“WLCC”), a Native American tribal entity (the “Tribal Bonds”), and to use funds in the accounts of clients of asset management firms controlled by JASON GALANIS and his co-defendants to purchase the Tribal Bonds, which the clients were then unable to redeem or sell because the bonds were illiquid and lacked a ready secondary market.

Documents governing the Tribal Bonds specified that an investment manager would invest the proceeds of the Tribal Bonds in investments that would generate annuity payments sufficient to pay interest on the Tribal Bonds and provide funds to the WLCC to be used for tribal economic development purposes. In fact, none of the proceeds of the Tribal Bonds were turned over to the investment manager specified in the closing documents. Instead, significant portions of the proceeds were misappropriated by JASON GALANIS and his co-defendants for their own personal use.

Specifically, the proceeds of the Tribal Bonds were deposited into a bank account in the name of Wealth Assurance Private Client Corporation (“WAPCC”), an entity controlled by Dunkerley and Hirst. Dunkerley transferred more than $38 million from the WAPCC account to an account controlled by JASON GALANIS, who then misappropriated more than $8.5 million of the proceeds for his personal use, including for expenses associated with his home, jewelry and clothing purchases, travel and entertainment, and restaurant meals.

There was no ready secondary market for the Tribal Bonds. Nonetheless, without prior notice to their clients, Morton and Hirst, acting at the direction of JASON GALANIS, used funds belonging to clients of two related investment advisers, Hughes Capital Management, Inc. (“Hughes”) and Atlantic Asset Management, LLC (“Atlantic”) to purchase the Tribal Bonds, even though JASON GALANIS, Hirst, and Morton were well aware that material facts about the Tribal Bonds had been withheld from clients in whose accounts they were placed, including the fact that the Tribal Bond purchases fell outside the investment parameters set forth in the investment advisory contracts of certain Hughes clients and of the Atlantic pooled investment vehicle in which the Tribal Bonds were purchased. When Hughes and Atlantic clients learned about the purchase of the Tribal Bonds in their accounts, several of them demanded that the Tribal Bonds be sold. However, because there was no ready secondary market for the Tribal Bonds, no Tribal Bonds have been sold from any Hughes or Atlantic client accounts. In addition, JASON GALANIS and his co-defendants failed to apprise clients of Hughes and Atlantic regarding substantial conflicts of interest with respect to the issuance and placement of the Tribal Bonds before the Tribal Bonds were purchased on these clients’ behalf.

In addition, a portion of the misappropriated proceeds was recycled and provided by JASON GALANIS to entities affiliated with Archer and Cooney in order to enable Archer and Cooney to purchase subsequent Tribal Bonds issued by the WLCC. As a result of the use of recycled proceeds to purchase additional issuances of Tribal Bonds, the face amount of Tribal Bonds outstanding increased and the amount of interest payable by the WLCC increased, but the actual bond proceeds available for investment on behalf of the WLCC did not increase.

JASON GALANIS, 46, of Los Angeles, California, 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; one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense; and one count of conspiracy to commit investment advisor 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. Sentencing before Judge Abrams has been scheduled for May 5, 2017.

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

The guilty pleas in this matter represent JASON GALANIS’s second conviction in this District in the past year. On July 21, 2016, JASON GALANIS pled guilty before the Honorable P. Kevin Castel to manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and to defrauding the shareholders of that company. JASON GALANIS is scheduled to be sentenced on February 15, 2017, in connection with his guilty plea in the Gerova matter.

Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. 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 visitwww.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.

 

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[1] As for the defendants who have not pled guilty (Gary Hirst, John Galanis, Hugh Dunkerley, Michelle Morton, Devon Archer, and Bevan Cooney) the description of the charges set forth herein constitute only allegations.

EDITOR'S NOTE:

This case was handled by the the United States Attorney for the Southern District of New York, because it involved the New York Stock Exchange.

Former Portfolio Manager Stefan Lumiere Convicted on All Counts In Manhattan Federal Court

   Preet Bharara, the United States Attorney for the Southern District of New York, announced today that STEFAN LUMIERE, a former portfolio manager at Visium Asset Management, was convicted of conspiracy to commit securities and wire fraud, securities fraud, and wire fraud in connection with a scheme to mismark securities held in a particular fund from 2011 to 2013 in order to overstate the net asset value (“NAV”) of the fund that was reported to investors on a monthly basis. LUMIERE was convicted following a six-day jury trial presided over by U.S. District Judge Jed S. Rakoff.

U.S. Attorney Preet Bharara said: “In a swift verdict, a federal jury convicted Stefan Lumiere, a former portfolio manager at Visium, of securities and wire fraud. For years, Lumiere mismarked securities in his portfolio, using sham broker quotes and fake purchase prices to vastly overstate the value of his fund. The securities Lumiere traded may have been complex, but his criminal scheme was simple: lie and make up numbers to make more money. As the verdict reflects, the jury quickly saw Lumiere’s conduct for what it was, criminal fraud.”

According to the allegations in the charging documents and statements made in court proceedings:

Visium Asset Management

At all relevant times, Visium Asset Management (“Visium”) managed hedge funds specializing in healthcare-related investments. Visium managed a credit fund (the “Credit Fund”), which operated from in or about 2009 until in or about September 2013, and invested primarily in debt instruments issued by healthcare companies.

The Scheme to Mismark Securities

From June 2011 through September 2013, LUMIERE and others participated in a scheme to defraud the Credit Fund’s investors and potential investors by deceptively mismarking each month the value of certain securities held by the Credit Fund. The objective of the scheme was two-fold: (1) to inflate the Credit Fund’s NAV; and (2) to mislead investors about the liquidity of the Credit Fund’s holdings. Visium assessed performance fees to be paid by investors each year based on the Credit Fund’s profits and losses. LUMIERE’s mismarking was in violation of Visium’s internal valuation procedures and contrary to Visium’s representations to investors. The effect of the scheme was to overstate the Credit Fund’s NAV, often by tens of millions of dollars as calculated at the end of each month to investors.

In order to carry out the scheme, LUMIERE and others solicited, obtained, and relied on false and fraudulent price quotes from employees of broker-dealers in order to improperly override prices calculated by the Credit Fund’s administrator and artificially inflate the Credit Fund’s NAV each month. For each month-end valuation, LUMIERE and others would begin by reviewing an inventory of the Credit Fund’s investments and proposed valuations for each prepared by the Credit Fund’s administrator and Visium’s back office. LUMIERE and others would then identify those relatively illiquid securities as to which they disagreed with or disliked the proposed price, and create a list reflecting the prices at which they wanted each security to be marked for month-end valuation purposes. That price was often significantly higher or lower than the price available from public price data. LUMIERE and others would then contact one or two “friendly” brokers and dictate to the friendly brokers the price quotes that they needed. The brokers would then parrot back the price quotes from their Bloomberg email account, giving the price quotes the appearance that they had come from an independent broker, and thus were in compliance with the Credit Fund’s pricing methodology. The friendly brokers’ sham quotes were then submitted to Visium’s accounting department as purportedly independent bases for that security’s valuation, for the eventual submission to the Credit Fund’s administrator.

By obtaining these sham quotes, LUMIERE and others caused a number of the Credit Fund’s securities to be misclassified in order to mislead investors about the liquidity of the securities (i.e., how actively traded the securities were). Specifically, for a number of illiquid bonds, LUMIERE and others fraudulently caused Visium to assign a classification that led investors to believe that the bonds were relatively liquid, when in fact they were entirely illiquid. This was done contrary to disclosures to investors about the Credit Fund’s percentage of illiquid investments, in order to induce investors to invest in or keep their money in the Credit Fund.

As another method to carry out the scheme, LUMIERE purchased additional quantities of certain securities – in which the Credit Fund had an established position – at a deceptively inflated price, markedly higher than the prevailing market was offering that security, in a practice known as “painting the tape.” The inflated price was then reported to Visium’s accounting department for NAV purposes. In both cases – the sham broker quotes and the inflated purchase prices – it was LUMIERE’s intent to increase the price of certain securities in order to inflate the Credit Fund’s month-end valuation.

LUMIERE, 46, of New York, New York, was convicted of one count of conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which also carries 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 sentencing of the defendant will be determined by the judge.

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

This case was 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 visitwww.StopFraud.gov.