Federal Tax Proposal Could Cost Homeowners $21 Billion More in Taxes: IDC Report

Senator Carlucci & IDC Step Up to Protect Taxpayers in ‘Taxing Times’

Senator David Carlucci and members of the Independent Democratic Conference released a policy report, “Taxing Times: Protecting New Yorkers from Bad Tax Policy in Washington,” examining how Washington’s proposal to eliminate one’s ability to deduct property taxes on the federal level deals taxpayers another blow on the state level. The federal change could wind up costing taxpayers a whopping $21 billion more in taxes.

Senator Carlucci also introduced legislation (S.6502) to protect New Yorkers’ ability to deduct property taxes on state income taxes in the event this bad federal policy becomes law.

“Donald Trump's tax plan would rob middle-class New Yorkers and force some residents who already pay the highest property taxes in the nation, to pay even more.  With State taxation rates impacted by federal policy, the elimination of this deduction would amount to a double tax on New Yorkers who struggle to make ends meet as it is.  If Washington's out of touch leadership takes this tax deduction away from New Yorkers, it would cost a shocking $21 billion throughout the State. Taxpayers can't afford to lose this deduction and New York has to continue to be a safety net to Washington's destructive direction,” said Senator Carlucci.

“The bad tax proposals coming from Washington will hurt millions of hardworking New Yorkers who already pay steep property taxes. This trumped-up tax plan only hurts our middle-class who could least afford to pay more taxes. The Independent Democratic Conference will act on a state level to protect taxpayers’ ability to continue to deduct their property taxes on a state level,” said IDC Leader Jeff Klein.

“This proposed change to federal tax policy would affect thousands of Central New Yorkers who claim a property tax deduction to reduce their tax burden. Asking hard-working families to pay more is wrong, and the IDC’s report explains the cost families would face if this policy is implemented,” said IDC Deputy Leader David Valesky.

“New Yorkers consistently face some of the nation's highest tax burdens at every turn. Another tax hit from Washington with the elimination of the property tax deduction is one that will cause our middle-class families to suffer most. The Independent Democratic Conference is taking a proactive and pragmatic step to ensuring New York homeowners can rest easier at night,” said Senator Diane Savino.

“It seems that every time President Trump puts a proposal forward, hardworking New Yorkers will be seriously hurt by it. His tax plan is no exception. My conference and I will do everything possible to ensure homeowners are capable of continuing to deduct their property taxes,” said Senator Jose Peralta.

“Residents of New York City and State are subject to some of the highest taxes in this nation. Being able to deduct state and local taxes from our taxable federal income is the only relief we see and losing this deduction would hit New Yorkers, particularly those in my District, exceptionally hard. This legislation being introduced by the IDC to protect taxpayers across the state will provide much-needed relief in the event of Donald Trump’s tax plan becoming law,” said Senator Tony Avella.

“‘Taxing Times’ shines a spotlight on a key area of policy where the wrong choice in DC could negatively impact millions of New York households. The Trump administration has a record of bringing forward unwise, unsound, and unreasonable policies and we need to be prepared for Trump’s total lack of judgement to appear in tax policy. Senator Carlucci’s legislation serves as an important step to help shield New Yorkers from a damaging change that has the potential to harm millions of our fellow New Yorkers. We must act in every area we can to meet faulty federal policy with wisdom here on the state level. Senator Carlucci’s legislation does precisely that,” said Senator Jesse Hamilton.

“The policies coming out of Washington are wrongheaded and disproportionately affect working people and states with high property taxes like New York. By unlinking state property tax deductions from federal deductions, we can minimize the blow to New York homeowners and HDFC owners of this regressive policy,” said Senator Marisol Alcantara.

The federal government allows taxpayers to deduct state and local taxes from their income when determining their taxable federal income. Currently, a third of New York filers claim this itemized deduction on their federal returns, with an average deduction of $21,000 based on 2014 numbers.

Unfortunately the Trump administration’s plan for “tax reform” includes cuts that would end this deduction, resulting in a net tax increase for New Yorkers and leaving them at risk to lose this important money saving tool. Similar plans from Congress would enact similar cuts.

The Independent Democratic Conference estimates a $21 billion increase in federal taxes for New Yorkers, based on an analysis of 2014 tax data, if this policy is enacted.

IDC Analysis of Value of State and Local Tax Deduction

Type of State or Local Tax	Total Deductions Claimed    (In Thousands of $)	Value of Deductions  (In Thousands of $)	Number of Filers claiming the deduction	Value per filers
Real property Taxes	$20,158,375.00	$5,266,850.86	2,375,850	$2,216.83
State and Local Income Taxes	$47,302,123.00	$15,045,552.51	2,839,750	$5,298.20
All State and Local Taxes	$68,400,903.00	$21,049,806.20	3,251,300	$6,474.27

If this federal itemized deduction were to be repealed, then state taxpayers would no longer be able claim a  property tax deduction on their state returns either. Current state law links the itemized deduction at the state level to federal itemized deductions.

In order to unlink the two, in the event a policy change, the IDC is introducing legislation that would enshrine New Yorkers’ ability to claim an itemized deductions for their property taxes on state returns.

It would not impact the state’s bottom line differently since this deduction already exists. Taxpayers saved $716.6 million in 2014 and this year they are expected to save $704 million in taxes. It is the second largest deduction after the mortgage and investment interest deduction at the state level. Over 1.6 million New Yorkers deducted property taxes in 2014, with an average deduction of $9,883.

If the state does not act, it could  cost taxpayers over $704 million this year on a state level.

Why I am marching in the National Puerto Rican Day Parade By Ruben Diaz Jr.

Why I am marching in the National Puerto Rican Day Parade
By Ruben Diaz Jr., Bronx Borough President

On Sunday, June 11, hundreds of thousands of my fellow Puerto Ricans and New Yorkers will come together along Fifth Avenue to celebrate our shared culture and heritage as part of the 60th Annual National Puerto Rican Day Parade.

I will be among them.

I will march as I have for each of the 20 years I have been an elected official. And I will celebrate like I have since I was a small child. I will shake hands will my fellow boricuas. I will proudly wave La Bandera Puertorriquena. I will not let the controversy surrounding one man become bigger than the hearts of millions of Puerto Ricans.

The National Puerto Rican Day Parade has never been about one person, but the more than five million Puerto Ricans who call the mainland United States their home. To suggest otherwise is to reduce our traditions and pride into the background noise of anovela. Reasonable people can disagree on the actions and impact of Oscar Lopez Rivera. Many in our city have invoked the specter of terrorism, especially in the wake of the tragedy of 9/11, as a reason why Rivera should not be honored by the parade, and I understand the passion of that argument.

Oscar Lopez Rivera served 35 years in federal prison. He was offered clemency by two different Presidents, Bill Clinton and Barack Obama. He served his time, and he was released legally.

That so many sponsors have chosen to pull their support from this parade is incredibly disheartening. This parade is not about any particular individual, but the pride—orgullo—of the Puerto Rican people. To remove financial resources that foster this celebration sends an awful signal to a loyal customer base. Are we not wanted?

The dispute surrounding this year’s parade accomplishes nothing. In fact, it is a distraction from the historic injustice people on the island have faced and continue to endure for more than a century. The fiscal crisis in Puerto Rico has not receded since last year’s parade. The island’s debt has risen to a massive $123 billion, forcing the commonwealth’s government to file for a form of bankruptcy protection. More than 200 schools are closing on the island due to lack of funds. People are dying because Puerto Rico has lost its doctors.

Arguing over who is honored at a parade will not help the 3.5 million residents of Puerto Rico deal with the crushing debt crisis that affects their island. They are American citizens who need our help, and who does or does not march in this year’s parade is inconsequential to the much weightier issue of their plight.

The fiscal crisis on Puerto Rico requires immediate federal action. The Trump administration and Congress cannot allow the island to sink under its debt. The status quo is unacceptable. In order to truly save Puerto Rico, there must be a permanent solution.

Bronx Borough President Ruben Diaz Jr. - Join us at the Bronx BP & Allies LGBTQ Pride Awards Ceremony!

Six Members Of National Drug Trafficking Organization Charged In Manhattan Federal Court

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Carl J. Kotowski, the Special Agent in Charge of the New Jersey Division of the Drug Enforcement Administration (“DEA”), announced today the unsealing of an Indictment charging six defendants with operating a national drug trafficking organization that distributed synthetic cannabinoids. In conjunction with the unsealing of the Indictment, search warrants were executed at locations in Illinois, Indiana, Kentucky, Missouri, and Wisconsin.

HIKMAT HAMED, a/k/a “Abu Amjad,” was arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge David D. Noce in St. Louis, Missouri.

MOHAMMAD ABDELELAH AL BARBARAWI, a/k/a “Abu Yazan,” and HATEM K. EL HAJ, a/k/a “Tug Tug,” were arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge Jeffrey Cole in Chicago, Illinois.

NEHAD THAHER, a/k/a “Nick,” SHADI SHUAIBI, and MAYTHEM AL ABOUDI were arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge Colin H. Lindsay in Louisville, Kentucky.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Trafficking of synthetic cannabinoids – sometimes called K2 or Spice – is on the rise and posing a serious threat to public health and safety. Packaged attractively to appeal to teenagers and young adults, synthetic cannabinoids are in reality a toxic cocktail that can be very dangerous to consume. As alleged, thanks to our partners at the DEA, a sprawling operation of alleged traffickers has been dismantled.”

DEA Special Agent in Charge Carl J. Kotowski said: “This multi-jurisdictional investigation puts an end to this alleged drug trafficking organization. This is just another example of an organization allegedly more concerned about making a profit selling their poison than they are about the safety of the public.”

According to the allegations in the Indictment unsealed today in Manhattan federal

court[1]:

Between October 2016 and May 2017, HIKMAT HAMED, a/k/a “Abu Amjad,” MOHAMMAD ABDELELAH AL BARBARAWI, a/k/a “Abu Yazan,” NEHAD THAHER, a/k/a “Nick,” SHADI SHUAIBI, HATEM K. EL HAJ, a/k/a “Tug Tug,” and MAYTHEM AL ABOUDI participated in a conspiracy to distribute and possess with the intent to distribute leaves treated with 5F-MDMB-PINACA and FUB-AMB, each of which is an analogue of a schedule I controlled substance. Many of the synthetic cannabinoids the defendants distributed were packaged in packets that contained inaccurate descriptions of their contents and were misleadingly labeled as “Potpourri Product,” “NOT FOR HUMAN CONSUMPTION,” and “complies with all federal and state legislation.”

Each of the defendants is charged with one count of conspiracy to distribute and possess with the intent to distribute controlled substance analogues, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to introduce misbranded drugs into interstate commerce with the intent to defraud and mislead, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge. The case is assigned to U.S. District Judge Katherine Polk Failla.

Mr. Kim praised the investigative work of the DEA Newark’s Tactical Diversion Squad. Mr. Kim also thanked the United States Postal Inspection Service, the Indiana State Police, the Louisville Metropolitan Police Department, the West Virginia State Police, as well as the United States Attorney’s Offices for the Northern District of Illinois, the Northern District of Indiana, the Southern District of Indiana, the Eastern District of Kentucky, the Eastern District of Missouri, the District of New Jersey, and the Eastern District of Wisconsin for their assistance in this investigation. He added that the investigation is continuing. 

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.

Former CEO And President Of Real Estate Investment Company Pleads Guilty To Embezzling $1.6 Million And Evading Taxes

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ROCKWELL GAJWANI pled guilty today to one count of wire fraud and three counts of tax evasion in connection with embezzling over $1.6 million from the Manhattan-based real estate investment company for which he had served as chief executive officer and president. As part of his plea, GAJWANI agreed to pay $1,975,068.04 in restitution and $1,612,841 in forfeiture. GAJWANI pled guilty before United States District Judge Loretta A. Preska.

Acting U.S. Attorney Joon H. Kim said: “As he admitted today, for years Rockwell Gajwani siphoned money from his employer’s accounts, lining his own pockets with more than $1.6 million. Instead of working diligently as his company’s CEO, Gajwani put his efforts into concealing his crimes and hiding his ill-gotten gains from the IRS. Thanks to the dedicated work of the Postal Inspection Service and the IRS, Gajwani will now be held to account for his crimes.”

According to the Complaint, the Indictment, and other statements made in open court:

From October 2011 through March 2013, GAJWANI was the chief executive officer and president of a real estate investment company based in Manhattan (the “Manhattan Real Estate Company”). During this period, GAJWANI took more than $1.6 million in company funds to which he was not entitled by, among other means, making wire transfers from the company’s bank account to his personal bank account, writing company checks to himself, and making cash withdrawals from the company’s bank account.

To accomplish this scheme, among other means, GAJWANI took steps to conceal his true salary and to conceal from the Manhattan Real Estate Company’s parent company (the “Parent Company”) the amount of money he had taken from the Manhattan Real Estate Company’s bank account.

Beginning in late 2012, the director of accounting for the Manhattan Real Estate Company (the “Director of Accounting”) asked GAJWANI for details regarding GAJWANI’s compensation on more than one occasion, and GAJWANI repeatedly said he would get such details to her, but failed to do so. On another occasion, in connection with a request from the Parent Company for financial information, GAJWANI told the Director of Accounting not to provide that information to the Parent Company. To further conceal the funds he had taken from the Manhattan Real Estate Company, GAJWANI directed employees of the Manhattan Real Estate Company to lump the compensation of all employees together in accounting materials provided to the Parent Company, so that GAJWANI’s compensation would not be listed separately from the aggregate figure. GAJWANI also directed certain employees of the Manhattan Real Estate Company not to communicate with employees of the Parent Company.

Over the course of his employment, GAJWANI wrote himself over $940,000 in checks from the Manhattan Real Estate Company’s bank account, and wired over $1.7 million to his personal bank account. Although some of these funds were purportedly for expenses, by the end of his employment GAJWANI had taken over $1.6 million more from the Manhattan Real Estate Company’s bank account than he was entitled to under his employment agreement.

GAJWANI also concealed his fraud on the Manhattan Real Estate Company. Specifically, on two occasions in May 2012, wrote checks to an employee of the Manhattan Real Estate Company (“Employee-2”) from the company’s bank account. wrote “expenses” in the memo line of each check, although neither check was meant to pay company expenses, and instructed Employee-2 to write a check in return directly to GAJWANI himself. Employee-2 did so on both occasions. In this manner, was able to secure over $30,000 in payments that GAJWANI appeared to receive from Employee-2 but in reality were funds GAJWANI had taken from the Manhattan Real Estate Company.

In addition to defrauding the Manhattan Real Estate Company, GAJWANI did not file tax returns or pay taxes for his legitimate salary or for the money he had secured through fraud. Ultimately, in July 2015, after he learned of a criminal investigation, GAJWANI filed tax returns for calendar years 2011, 2012, and 2013. Each of those returns included false representations. For tax year 2011, the federal income tax return that GAJWANI filed understated GAJWANI’s actual income by more than $480,000, and included over $85,000 in false, impermissible tax deductions. For tax year 2012, the federal income tax return that GAJWANI filed included over $260,000 in false, impermissible tax deductions. For tax year 2013, the federal income tax return that GAJWANI filed underreported GAJWANI’s actual income by $270,000.

GAJWANI, 53, of Darien, Connecticut, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and three counts of tax evasion, each of which carries a maximum sentence of five years in prison. 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. As part of his plea, GAJWANI agreed to pay $1,975,068.04 in restitution and $1,612,841.04 in forfeiture.

GAJWANI is scheduled to be sentenced by Judge Preska on September 12, 2017, at 4:00 p.m.

Mr. Kim praised the outstanding investigative efforts of law enforcement personnel at U.S. Postal Inspection Service and the Internal Revenue Service, Criminal Investigation Division.

A.G. Schneiderman Announces Sentencing Of Long Island Resident Who Stole $75K From Medicaid

Sonia Ponce Stole From Medicaid By Submitting False Timesheets And Forging Signatures For Services That Were Not Rendered

Schneiderman: We Will Continue To Protect The Integrity Of The Medicaid System

   Attorney General Eric T. Schneiderman today announced the sentencing of Sonia Ponce, 57, of Freeport, for stealing approximately $75,000 from Medicaid by causing claims to be filed with Medicaid that falsely stated that home-health care services were provided to two of her relatives by the Consumer Directed Personal Assistance Program (CDPAP), a home-care program funded by Medicaid. In March 2017, Ponce pleaded guilty to Forgery in the Third Degree and Petit Larceny, both class A misdemeanors. Today, the Honorable Anthony Paradiso in Nassau County District Court sentenced Ponce to one week in jail, three years’ probation, 150 hours of community service and a $1,000 fine.

“Taxpayer funds meant to care for our sick and disabled should not be abused by those taking advantage of the system,” Attorney General Schneiderman said. “We will bring to justice those who defraud Medicaid and continue to protect the integrity of the system.” 

The defendant exploited benefits meant for her relatives who received home-care aide services provided by CDPAP. CDPAP allows a representative of a physically disabled person, often a relative, to assume full responsibility for their home care and recruit, hire, supervise and fire the personal aides providing the care. The investigation conducted by the Attorney General’s Medicaid Fraud Control Unit (MFCU) uncovered that Ponce used the personal identification numbers (PINS) of the aides to record them logging in and out of work at times when the aides weren’t working, including several days when the aides were out of the country.

Ponce also falsified the aides’ timesheets and submitted them to Recco Home Care Services, the CDPAP fiscal agent. On several occasions, Ponce picked up the aides’ paychecks from Recco, forged the aides’ signatures on their paychecks and cashed them.  Ponce then used the cash to pay the aides for the work that they performed but kept the fraudulent portion of the check. 

The Attorney General would like to thank the Nassau County Department of Social Services for referring this matter to the Office and for its assistance in conducting the investigation.

A.G. Schneiderman Announces Additional Arrests Of City Workers In Ongoing AFLAC Insurance Fraud Investigation

  Attorney General Eric T. Schneiderman today announced the indictments of FDNY Emergency Medical Technicians Kathyleen Roman and Reynaldo Laruy, FDNY Firefighter Herman Tyson, and NYPD Traffic Enforcement Agent Ania Villalon in Bronx Supreme Court for allegedly committing insurance fraud and grand larceny against the American Family Life Assurance Company (“AFLAC”). The defendants allegedly stole thousands from AFLAC by forging physicians’ or supervisors’ signatures to file false insurance claims. These charges follow eight arrests in Queens and five in Brooklyn as part of an ongoing investigation of insurance fraud committed by City employees.

The defendants arraigned today are accused of the following:

• Herman J. Tyson, 35, of the Bronx. Tyson is accused of stealing $46,370 and is charged with Grand Larceny in the Third Degree and Insurance Fraud in the Third Degree, both D felonies. 

• Reynaldo LaRuy, 47, of Stroudsburg, PA. LaRuy is accused of stealing $60,503 and is charged with Grand Larceny in the Second Degree and Insurance Fraud in the Second Degree, both C felonies.

• Ania Villalon, 47, of the Bronx. Villalon is accused of stealing $11,040 and is charged with Grand Larceny in the Third Degree and Insurance Fraud in the Third Degree, both D felonies. 

• Kathyleen Roman, 36, of the Bronx and Stroudsburg, PA. Roman is accused of stealing $36,503 and is charged with Grand Larceny in the Third Degree and Insurance Fraud in the Third Degree, both D felonies.

To date, six defendants have pleaded guilty to felony counts of insurance fraud and/or grand larceny. They have agreed to pay the following in restitution:

• Marc Criado Mastros, $118,630;
• Kenneth Lambert, $91,000;
• Devon Graham, $71,000;
• Caleb Laues, $41,000;
• Mourad Touati, $31,000; and
• Jose Solis, $27,000

Marc Criado-Mastros, was sentenced on March 9, 2017 before Judge Latella in the Supreme Court of Queens County. Mr. Criado-Mastros was sentenced to five years felony probation, restitution of $118,630, and an additional $5,931 in surcharges after pleading guilty to Grand Larceny in the Second Degree and Insurance Fraud in the Second Degree, both class C felonies. The remaining defendants are awaiting sentencing or trial.

“New York consumers should not have to pay higher insurance rates because of the acts of dishonest individuals,” said Attorney General Schneiderman.“We will continue to crackdown on this scheme which has cost insurance companies hundreds of thousands in unnecessary payouts. We will not allow public employees to abuse their position of trust to skirt the rules.”

With offices around the state, and a jurisdiction that is not limited by county, the OAG is uniquely positioned to simultaneously prosecute defendants in multiple venues in cases like this one.

The Attorney General would like to thank the New York City Department of Investigation and the New York State Department of Financial Services for partnering with the OAG on this investigation.

Financial Services Superintendent Maria T. Vullo said, “The Department of Financial Services is proud to have worked with the Attorney General on this investigation. Insurance fraud is a crime that not only impacts the industry but also the rates that consumers pay for insurance. DFS will continue to protect insurers and consumers to keep New York’s insurance market strong and fair for all.”

DOI Commissioner Mark G. Peters said, “These arrests are the result of our continuing investigation into insurance fraud by City employees, including members of the police and fire departments, which had previously exposed more than a dozen employees for various schemes. Public servants, especially those working in our uniformed services, should be examples of integrity and upholding the law. Our investigation with the Attorney General is ongoing.”

The charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty in a court of law.

Investigators from the Department of Investigation included Assistant Inspector General Sara Levinson who was the lead investigator under the supervision of Inspectors General Shannon K. Manigault and Frank J. Carine, Assistant Commissioner Michael Healy, Deputy Commissioner/Chief of Investigations Michael Carroll and First Deputy Commissioner Lesley Brovner. The investigation also received assistance from DOI’s Office of the Inspector General for NYPD. The New York State Department of Financial Services’ senior investigator, Cindy Licata, participated in key interviews of witnesses and crucial verification processes that helped lead to the indictments.

A.G. Schneiderman Announces $33 Million Multi-State Settlement With Johnson & Johnson To End Deceptive Marketing Practices Concerning The Quality Of Over-The-Counter Drugs

Agreement With 42 States And D.C. Requires Johnson & Johnson Subsidiary To Reform Marketing Practices

New York State To Receive $1.3 Million

A.G. Schneiderman: My Office Is Holding Drug Manufacturers Accountable For The Health And Wellbeing Of New York Consumers

  Attorney General Eric T. Schneiderman today announced that 42 states and the District of Columbia have reached a $33 million settlement with Johnson & Johnson and Johnson & Johnson Consumer Inc., resolving allegations that the company’s subsidiary, McNeil-PPC, Inc., employed deceptive practices to market and promote numerous popular over-the-counter (“OTC”) drugs. In addition to reforming these practices, the corporation has agreed to pay New York State a total of $1.3 million.

Between 2009 and 2011, McNeil-PPC, Inc.—then a wholly-owned subsidiary of Johnson & Johnson—manufactured and distributed OTC drugs that purported to comply with federally mandated current Good Manufacturing Practices (“cGMP”). However, an investigation conducted by the FDA and Attorneys General across the country revealed that a number of McNeil manufacturing facilities and the medications they produced did not meet the national cGMP standards.

The investigation’s findings resulted in the recall of several adulterated McNeil drugs that were initially introduced to the market in batches. The recalled medication included Tylenol, Motrin, Benadryl, St. Joseph Aspirin, Sudafed, Pepcid, Mylanta, Rolaids, Zyrtec, and Zyrtec Eye Drops—several of which are indicated for pediatric use.   

“This is common sense: over-the-counter drugs, especially those used to treat children, must be manufactured in accordance with federally mandated standards,” said Attorney General Schneiderman. “Drug companies that use deceptive practices threaten New Yorkers' health and wellbeing - and we won't hesitate to hold them accountable."

In a complaint filed today in New York County Supreme Court, Attorney General Schneiderman alleges that Defendants, acting through McNeil, violated state consumer protection laws by misrepresenting the cGMP compliance and the quality of their OTC drugs, as well as falsely reporting that these OTC drugs had sponsorship, approval, characteristics, ingredients, uses, benefits, quantities, or qualities that they did not possess.

In addition to the monetary penalties, the consent judgment requires McNeil to reform its marketing and promotional practices. Under the terms of the agreement, McNeil must not:

• Advertise on its websites that McNeil’s OTC drug product facilities meet cGMP if the drug has had a Class I or Class II recall within the previous 12 months. Class I recalls involve a reasonable probability that use or exposure to the drug may result in serious detrimental health consequences or death. Class II recalls involve potential temporary or reversible health consequences or where potential adverse health consequences are unlikely.

• Fail to follow internal operating procedures regarding whether to take corrective or preventive action for OTC drugs during the manufacture of an OTC drug; and

• Fail to identify or provide information to participating Attorneys General within 60 days of a written request about vendors or warehouses in which recalled OTC drugs were distributed in their state. 

The following states participated in the settlement: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin.