A.G. Schneiderman Sues U.S. Department Of Education For Unlawful Collection Activity Targeting Defrauded Student Loan Borrowers

Multistate Lawsuit Also Alleges that Trump Administration Unlawfully Failed to Act on Loan Discharge Applications Submitted by Defrauded Students; Since July, Unreviewed Claims Ballooned from 65,000 to 95,000

   Today, Attorney General Eric T. Schneiderman, together with the Attorneys General of Massachusetts and Illinois, filed a lawsuit against the U.S. Department of Education (the “Department”) and Secretary Betsy DeVos for unlawfully pursuing collection actions against federal student loan borrowers who were victimized by Corinthian College, Inc. (“Corinthian”). The complaint also alleges that the Department has unlawfully delayed review of the thousands of pending loan discharge applications that have been submitted by defrauded students that were victimized by a variety of for-profit colleges.

“Despite finding that Corinthian engaged in widespread fraud, the Department of Education continues to seize tax refunds and withhold the wages of victims of Corinthian’s fraud,” said Attorney General Schneiderman. “The Department has also failed to act on the thousands of loan discharge applications submitted by defrauded students, leaving many fraud victims with growing interest, ruined credit, and insurmountable debt.  The Department of Education is failing to do its job and protect student borrowers – so we are suing to hold the federal government accountable.”

Click here to read the complaint.

After intense scrutiny by various government entities, Corinthian abruptly ceased operation in 2015. Corinthian owned and operated Everest Institute Rochester in Rochester, New York, as well as online and in-person programs based outside of New York that enrolled New York students. The Department’s own investigation of Corinthian concluded that Corinthian made widespread misrepresentations about post-graduation employment rates for certain programs, including programs that enrolled New York borrowers. 

Federal law provides that federal student loan borrowers may assert a defense to repayment of their loans where a school’s conduct violates state law. This law reflects the common-sense conclusion that defrauded students should not be required to pay for loans when their schools engaged in fraud to induce them to enroll. After the collapse of Corinthian in 2015, the Department received thousands of loan discharge applications. The Department approved discharges for more than 30,000 borrowers. However, after the transition to the Trump Administration, the Department stopped approving pending borrower defense claims. 

The number of total claims awaiting review has ballooned from 65,000 in July to over 95,000 in November. More than 1,600 of these claims are from New York borrowers, including approximately 900 New York borrowers who attended Corinthian. Defaulted borrowers with pending claims are significantly harmed by this delay because interest on the loans continues to accrue, borrowers’ credit reports remain marred, and borrowers’ are often unable to get additional financial aid to return to school.

In April 2017, Attorney General Schneiderman reached out to Corinthian students who attended certain programs at Corinthian Colleges to notify them about the loan discharge process.

Attorney General Schneiderman has been active in working to secure relief for victims of predatory for-profit colleges. In June 2017, Attorney General Schneiderman joined 18 attorneys general in demanding that the Department stop delaying loan discharges for defrauded students. In July 2017, Attorney General Schneiderman joined a coalition of attorneys general in filing a lawsuit against the Department for unlawfully delaying the Borrower Defense Rule, which was designed to hold abusive higher education institutions accountable for cheating students and taxpayers out of billions of dollars in federal loans.  

In October 2017, Attorney General Schneiderman joined a coalition of attorneys general in filing a lawsuit against the Department for unlawfully delaying the Gainful Employment Rule, a Rule that is designed to protect students and taxpayers from predatory for-profit schools.       

Attorney General Schneiderman has also obtained restitution and debt relief for victims of predatory for-profit colleges, including $2.25 million restitution for DeVry students who were misled about employment and salary prospects and $2.4 million in loan forgiveness for students that took out private loans offered by Aequitas Capital Management to attend Corinthian Colleges.

STATEMENTS ON THE FCC DECISION TO REPEAL NET NEUTRALITY RULES

Today, Congressman Adriano Espaillat released the following statement on the Federal Communications Commission (FCC) decision to repeal net neutrality protections.

“An open internet is an empowering, enabling platform, one that allows communities across the country to fulfill their economic and educational potential,” said Rep. Espaillat. “Without net neutrality, broadband internet providers would be able to charge more for access and create a tiered system in which wealthy and powerful corporations can pay to have their content delivered to consumers at a faster speed. Smaller websites with less money would be left with slower loading times and consumers would have less access to the internet. This favors the wealthy and powerful, and particularly harms communities of color who rely on an open internet as a level playing field.

“Net neutrality has a broad range of support from a coalition of small businesses, artists, church leaders, students, and many more from around the country, and the FCC received more than 4 million statements of support during its public comment period. Simply, the FCC’s net neutrality rule protects Americans’ freedom of speech by maintaining an open internet for all.

“I stand firm in my belief that the internet should remain open and available to all Americans, regardless of their class, status, or geographic location. I strongly oppose FCC Chairman Ajit Pai’s efforts to roll back net neutrality protections, and vow to continue my work to ensure first amendment rights for all.”

Engel Calls FCC Decision to Repeal Net Neutrality "Outrageous, Terribly Disappointing"

Congressman Eliot Engel, a member of the House Energy and Commerce Committee, issued the following statement on the Federal Communication Commission’s (FCC) net neutrality vote:

“I am terribly disappointed by today’s outrageous FCC vote to overturn net neutrality protections. This stunning example of regulatory overreach is bad for consumers and will have a chilling impact on American innovation. As such, Congress must now begin working on a legislative solution to reverse the FCC’s decision.

“Open Internet access is the foundation of freedom and innovation in the 21st century. Yet, the FCC’s dangerous assault on net neutrality gravely jeopardizes that freedom by punishing entrepreneurs and small businesses, throttling competition, and stifling the innovation that drives our economy. The FCC’s rule change could hit consumers with higher costs and less choice, and put control of their browsing experience into the hands of big providers.

“Millions of Americans across the country have raised their voices in the growing fight to protect net neutrality. Unfortunately, the Republican-controlled FCC has decided to ignore those voices. 

“Now is not the time to be silent. We must continue to make our voices heard on the street, in the media, in the halls of Congress, and ultimately at the polls. I will continue working with my colleagues to overturn this misguided decision.”

STATEMENT FROM BRONX BOROUGH PRESIDENT DIAZ

“Today's vote by the FCC to roll back Net Neutrality is a complete catastrophe. Technology, data and free access to both is ingrained into every facet of our lives, and this vote is the first step towards an impending system crash for New York City and in fact the entire nation. Congress needs to intervene to protect freedom and preserve equal access to the Internet.

“If the Republican-led Congress should refuse to act, New York State, including the Public Service Commission, should analyze what can be done now that the FCC has failed to protect a free and fair Internet. This should include the creation of a ‘State Uniform Telecommunication Code’ where states can together create a single standard for ISPs that protects the rights of consumers and the principles of Net Neutrality.

“It’s time to ask the question: ‘How can states protect Net Neutrality and a free Internet?,’” said Bronx Borough President Ruben Diaz Jr.

DEPUTY BOROUGH PRESIDENT GREENE ANNOUNCES RETIREMENT

Deputy Bronx Borough President Aurelia Greene announced that she would be retiring at the end of the year, following more than four decades of dedicated public service to the people of The Bronx and the State of New York.

“My life’s greatest reward was being able to serve the constituents of The Bronx,” said Deputy Bronx Borough President Aurelia Greene. “My time working with Borough President Diaz has been a major highlight of my career, and I appreciate the opportunity to have served.”

“For more than eight years, Aurelia Greene has been my partner in borough hall. She stood with me every step of the way as we brought new investment and new attention to our borough, helping to guide my office’s agenda through the benefit of her considerable experience as a legislator and community activist,” said Bronx Borough President Ruben Diaz Jr. “The people of The Bronx have always had a strong advocate in Aurelia Greene as both Deputy Borough President and as a member of the New York State Assembly. Her passion for service will be truly missed, and I wish her nothing but the best in her retirement.”

A native Bronxite, Deputy Bronx Borough President Aurelia Greene served as New York State Assembly Member representing the 77th District from 1982 to 2009, which includes the communities of Highbridge, Claremont, East/West Concourse and Morris Heights. Prior to her election to the New York State Assembly, Ms. Greene served as the Female Democratic District Leader for the 76th Assembly District and was an active civic leader in the South Bronx.

During her 27 year career in the New York State Assembly, Ms. Greene used her urban planning skills to negotiate for affordable housing and effective tenant groups, quality education, employment opportunities, affordable healthcare and housing, senior services, youth services, economic development and worked hard for a strengthened business community. She was a regular sponsor of educational and informational seminars to aid her constituents on issues of current concern. As the first woman to chair the Assembly’s Committee on Banks, she passed landmark legislation to fight predatory lending.

During her legislative career, Ms. Greene introduced a number of important bills which later became state law to improve the quality of life for residents of New York State. After many years of rising through the ranks of the New York State Assembly, in January 2006, Ms. Greene was elevated to the position of Speaker Pro Tempore. The first African-American to hold this prestigious position, Ms. Greene became responsible for officiating over the Assembly session proceedings in the absence of the speaker.

At the close of her tenure in the New York State Assembly, Ms. Greene served as a member of the Rules, Ways & Means, Social Services and Cities Committees and was Ranking Member of the Education Committee. Ms. Greene also served as the Chair of the State Assembly’s Bronx Delegation and, prior to becoming Deputy Bronx Borough President, was the longest serving Member of the Assembly in Bronx County.

As Deputy Bronx Borough President, Ms. Greene regularly chaired meetings of the Bronx Borough Board. Additionally, she assisted in the office’s management of both the budget and community board process, and was an invaluable source of guidance and advice to staff members in every department.

Ms. Greene has taught at Antioch College, as well as lectured at numerous universities and colleges in the metropolitan area. She has also served as a major proposal writer and experienced social counselor for numerous organizations.

Greene is a graduate of Livingston College at Rutgers University, where she majored in Community Development; and a former Public Agency Administrator. She was married to the late Reverend Jerome A. Greene, a prominent minister, administrator and educator in The Bronx. Ms. Greene is the proud mother of two children, Rhonda and Russell, and grandmother of five.

An announcement regarding the selection of a new Deputy Bronx Borough President will be made in the coming weeks.

EDITOR'S NOTE:

We are sorry to see Deputy BP Greene retire, and we also thank her for her outstanding career in politics.  We await the choice to replace her hoping that the new Deputy BP will be of the same caliber as Ms. Greene.

Bronx Elected Officials Host Annual Christmas Party

The phone number is - 718-991-3151

Former Ramapo Town Supervisor Christopher St. Lawrence Sentenced To 30 Months In Prison In Municipal Bond Securities Fraud Case

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that CHRISTOPHER ST. LAWRENCE, the former Ramapo Town Supervisor, was sentenced to 30 months in prison today in connection with his scheme to defraud investors in municipal bonds issued by the Town of Ramapo (the “Town”) and the Ramapo Local Development Corporation (the “RLDC”).  ST. LAWRENCE was found guilty of 20 counts of fraud and conspiracy following a four-week trial last May before United States District Judge Cathy Seibel in federal court in White Plains.  It was the first conviction for securities fraud in connection with municipal bonds.

Acting U.S. Attorney Joon H. Kim said:  “For years, Christopher St. Lawrence, as Ramapo Town Supervisor, misled municipal bond investors about the state of Ramapo’s finances.  At a trial earlier this year, the jury quickly saw through his years lies, and today, he was sentenced to time in federal prison.  The integrity of the $3.7 trillion municipal bond market must be protected, and prosecutions like this one should put on all on notice that misleading investors in that market through fraud and deception will lead to prosecution and jail.”

According to the allegations contained in the Indictment and the evidence presented in court during the trial:

As of August 2015, the Town had more than $128 million in outstanding bonds that had been issued for various municipal purposes, while the RLDC, a corporation created and owned by the Town under state law, had issued $25 million in bonds to pay for the construction of Provident Bank Park, a minor league baseball stadium in Ramapo.

While the fraud predated the construction of the stadium, the Town’s financial problems were caused largely by the $58 million total cost of the stadium.  The Town paid more than half of that cost, despite the rejection of the Town’s guarantee of bonds to pay for construction of the stadium in a Town-wide referendum in 2010 and ST. LAWRENCE’s public statements that no public money would be used to pay for the stadium.

The Indictment charged that ST. LAWRENCE lied to investors in the Town’s and RLDC’s bonds in order to conceal the deteriorating state of the Town’s finances and the inability of the RLDC to make scheduled payments of principal and interest to holders of its bonds from its own money.  ST. LAWRENCE lied to investors primarily by making up false assets in the Town’s General Fund. 

The General Fund is the Town’s primary operating fund.  The accumulated difference over time between how much money the Town receives in taxes and fees and how much it spends in a year is the fund’s balance.  The fund balance is a cushion that can be spent during difficult financial times.  The size of the fund balance relative to the amount of the fund’s revenue and trends in the Town’s General Fund balance over time are the primary indicators of the Town’s financial health. 

According to the Indictment and the evidence, ST. LAWRENCE lied to the RLDC’s bond rating service in January 2013 when he told them in a telephone call that the 2012 fund balance would remain unchanged from the 2011 balance.  Immediately after that call ended, ST. LAWRENCE told Town employees “to do [an upcoming] refinancing of the short term debt as fast as possible because . . . we’re going to have to all be magicians to get to some of those numbers.”

When the RLDC issued $25 million in bonds to build the stadium building itself in 2011, ST. LAWRENCE inflated the size of the Town’s General Fund by including a false $3.6 million receivable in the General Fund.  The Town’s financial condition was important to investors in the RLDC’s bonds because the Town guaranteed the payments of principal and interest on the bonds.  Without that fake asset, the General Fund’s balance would have been negative in that year.

In addition, ST. LAWRENCE inflated the General Fund with another fake receivable for $3.08 million from 2010 through 2015.  It first went on the Town’s books when the RLDC agreed to buy property known as The Hamlets from the Town for $3.08 million.  That sale never closed because the land turned out to be a habitat for rattlesnakes.  Rather than take the receivable off the Town’s books – and reduce the size of the General Fund balance by $3.08 million, thereby pushing it into negative territory – ST. LAWRENCE claimed the receivable had to do with the RLDC’s purchase of another property from the Town that had already taken place.  To keep it on the books, ST. LAWRENCE then caused the Town Attorney to tell the Town’s auditors over a period of years that the receivable would be paid back within a year, which was required if the receivable were going to stay in the General Fund.  Without this fake receivable alone, the Town’s General Fund balance would have been negative for years. 

In May 2013, the FBI searched Town Hall in connection with this investigation.  Less than 10 days later, ST. LAWRENCE inflated another receivable in the General Fund – this one for money from FEMA to reimburse the Town for expenses from Hurricanes Irene and Sandy.  ST. LAWRENCE claimed that the Town was going to receive $3.145 million from FEMA when the Town hadn’t even submitted those claims to FEMA yet.  Without ST. LAWRENCE’s inflation of this receivable alone, the projected General Fund balance for 2012 would have been negative when the Town sold bonds in May 2013.

Finally, the Indictment alleged and the evidence showed that ST. LAWRENCE told investors in the Town’s and RLDC’s bonds that the RLDC was making the payments on its bonds from its operating revenue, meaning money it was making from its ordinary business of running the baseball stadium and selling condominiums at a development it had built.  That was important to investors because it led them to believe that the Town would not have to pay off the RLDC’s $25 million bonds.  It also made the RLDC’s bonds look less risky.  The RLDC actually made those payments from money it borrowed from the bank or money it got from the Town.  

In addition to the prison term, ST. LAWRENCE, 67, of Wesley Hills, New York, was sentenced to three years of supervised release and a $2,000 special assessment.  Restitution, if any, will be determined at a future date.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and the Rockland County District Attorney’s Office.  Mr. Kim also thanked the Securities & Exchange Commission for its substantial assistance in the investigation and trial.

A.G. Schneiderman Releases New Details On Investigation Into Fake Net Neutrality Comments

New Analysis Shows as Many as 2 Million Comments Stole Real Americans’ Identities; To Date, Over 5,000 People Have Filed Reports with the AG’s Office at ag.ny.gov/FakeComments

FCC is Scheduled to Vote on Net Neutrality Tomorrow, Based on Corrupted Public Comment Process

In New Letter, A.G. Schneiderman Urges Postponement of Vote, Tells FCC: “Moving forward with this vote would make a mockery of the notice and comment process… and reward those who perpetrated this fraud”

  Today, New York Attorney General Eric T. Schneiderman released new details of his office’s investigation into fake comments submitted during the net neutrality comment process, with a new analysis showing that two million of the comments stole real Americans’ identities.

“Millions of fake comments have corrupted the FCC public process – including two million that stole the identities of real people, a crime under New York law,” said Attorney General Schneiderman. “Yet the FCC is moving full steam ahead with a vote based on this corrupted process, while refusing to cooperate with an investigation. As we’ve told the FCC: moving forward with this vote would make a mockery of our public comment process and reward those who perpetrated this fraud to advance their own hidden agenda. The FCC must postpone this vote and work with us to get to the bottom of what happened.”

To date, over 5,000 people have filed reports with the Attorney General’s office regarding identities used to submit fake comments to the Federal Communications Commission on the repeal of net neutrality, on which the FCC is scheduled to vote tomorrow, December 14, 2017. People can check whether their identity was misused and report it to the Attorney General’s office at ag.ny.gov/FakeComments. Examples of the over 5,000 reports already submitted to the Attorney General’s office can be found below.

Attorney General Schneiderman’s latest analysis shows that as many as two million comments misused the identities of real Americans, including over 100,000 comments per state from New York, Florida, Texas, and California. A map can be found below, highlighting the number of fake comments submitted using stolen identities by state.

Despite widespread evidence that the public comment process was corrupted, the FCC’s General Counsel has said that the agency will not cooperate with the Attorney General’s investigation into the impersonation of New Yorkers, and that it will move forward with tomorrow’s scheduled vote.

In a new letter to the FCC, Attorney General Schneiderman directly rebuts the excuses for refusing to cooperate with an investigation of illegal conduct that could constitute, among other violations, criminal impersonation under New York law.

“Moving forward with this vote would make a mockery of the notice and comment process mandated by the Administrative Procedure Act and reward those who perpetrated this fraud in service of their own hidden agenda,” Attorney General Schneiderman wrote. “None of the assertions in your letter justify the FCC’s refusal to share evidence of who committed these illegal acts.”

Examples of Reports to Attorney General’s Office via ag.ny.gov/FakeComments –

“This person is my aunt. She never filed this. She is an elderly woman; someone is using her identification.” – Bronx, NY

“This is a 13 year old child – she did not post this comment, nor did anyone else in her household.” – Rochester, NY

“This comment was made on July 11th, 2017. This is a fake comment... I am her son, and can confirm it was not her. [She] died of cancer on June 8th, 2017.” – Albany, NY

Bronx Borough President Ruben Diaz Jr. host Chanukah celebration at Riverdale Y

   In observance of the Jewish festival of lights, Bronx Borough President Ruben Diaz Jr.  held a Chanukah celebration and Menorah lighting ceremony in Riverdale. The event took place at the Riverdale YM-YWHA, and featured musical performances by students from the Kinneret Day & Riverdale Y Nursery Schools. The event was co-sponsored by the Bronx Jewish Community Council. See the photos below. 

Above - Students from the Kinneret Day School got the audience into the festival mood by singing some traditional Chanukah songs.

Below - Children from the Riverdale Y Nursery School also gave a very heart warming performance.

Above - After saying the Chanukah Prayer Rabbi Israel Greenberg has Bronx Borough President light the middle (or Helper Candle) first. That candle is then used to help light the other candles on the menorah one by one as another candle is added each night until all eight candles are lit.

Below - Rabbi Greenberg now guides BP Diaz to light the first candle on the menorah.

Above - Rabbi Greenberg says another prayer now that the candles for the day have been lit.

Below - Rabbi Greenberg is with his two favorite Andy's. Councilman Andy Cohen representing Riverdale and Councilman Andy King representing Coop-City.

State Senator Jeff Klein and Assemblyman Mark Gjonaj Light the Bronx House Menorah

  Normally the giant menorah at Bronx House is lit outside, but due to the inclement weather the celebration of Chanukah was held inside this year for day one of the eight days of Chanukah.

  Bronx House Executive Director Howard Martin introduced Senator Klein who said what Chanukah means to him, and then Senator Klein introduced Assemblyman Mark Gjonaj to say a few words in his last few days as the 80th A.D. Assemblyman. Assemblyman Gjonaj said that while he is leaving the state assembly, beginning in January he will still be representing the area around Bronx House as the new Councilman from the district. Rabbi Israel Greenberg was then introduced who gave a little history of the holiday of Chanukah. 

 Rabbi Greenberg then said the three prayers said on the first day of Chanukah, and Senator Klein and Assemblyman Gjonaj lit the first light of the eight lights on the menorah. Each day another light is added until all eight lights are lit to symbolize the eight days of the small amount of oil that burned for eight days.

Above - State Senator Jeff Klein tells what the eight days of Chanukah means to him and others of the Jewish faith. 

Below - Rabbi Israel Greenberg Thanks Senator Klein for being with the community all his years in office, while also thanking Assemblyman Mark Gjonaj for his support also. The children in the background were from Bronx House, and provided songs after the menorah was lit.

Rabbi Greenberg says the three prayers for the first day of Chanukah, as Senator Klein and Assemblyman Gjonaj await to turn the first light on. The middle or ninth light is already lit, because when candles are used that candle lights the others.