Former Embraer Sales Executive Pleads Guilty To Foreign Bribery And Fraud Charges

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced that COLIN STEVEN pled guilty to Foreign Corrupt Practices Act, wire fraud, money laundering, and false statement charges arising from his role in paying bribes to a foreign official in exchange for assistance in obtaining business for STEVEN’s employer, Embraer S.A. (“Embraer”).  STEVEN, a former executive in Embraer’s Executive Jets Division, arranged for Embraer to pay over $1.5 million in bribes to an official at the state-owned and state-controlled national oil company of Saudi Arabia (the “Saudi Arabia Company”), and ultimately received a kickback from a portion of the bribe proceeds.  STEVEN pled guilty today before U.S. District Judge Alison J. Nathan.

According to the allegations contained in the Information to which STEVEN pled guilty, and statements made during the plea and other court proceedings:

Embraer, an aircraft manufacturer based in Brazil, has operations and subsidiaries in various locations around the world, including the United States and the Middle East.  Embraer manufactures commercial, executive, and defense aircraft for governmental and private customers throughout the world.  STEVEN, a British national, was an executive responsible for overseeing the generation of sales for a particular Embraer division in regions that included the Middle East.

In approximately 2006, STEVEN learned that the Saudi Arabia Company was interested in purchasing aircraft, and for a period of three years after that STEVEN and a salesperson who reported to him had occasional contact with employees of the Saudi Arabia Company to discuss the potential sale of three Embraer jets.  In late 2009, STEVEN met with an official of the Saudi Arabia Company (the “Saudi Arabia Official”) in London, England.  The Saudi Arabia Official offered to help Embraer win the aircraft contract from the Saudi Arabia Company, and to ensure that the Saudi Arabia Company would buy new – not used – jets from Embraer, in exchange for a payment.  STEVEN agreed to cause Embraer to pay the Saudi Arabia Official $550,000 per aircraft, for a total bribe amount of $1.65 million.

In late 2009 and early 2010, STEVEN developed a plan to use a company based in South Africa (the “South Africa Company”) as a purported agent on the transaction, which would result in Embraer paying the South Africa Company $1.65 million in “finders fees,” when in fact the South African Company would perform no work on the transaction and would be used to facilitate and to disguise the payment to the Saudi Arabia Official.

In early 2010, on the Saudi Arabia Official’s recommendation, a committee at the Saudi Arabia Company approved the purchase of three new aircraft from Embraer for $93 million.  A subsidiary of Embraer also entered into an agreement with the South Africa Company, pursuant to which the South Africa Company would purportedly promote the sale of Embraer aircraft to a subsidiary of the Saudi Arabia Company.  In reality, the South Africa Company provided no services to Embraer other than serving as a conduit to funnel payments to the Saudi Arabia Official.  An Embraer subsidiary subsequently wired $1.65 million to the South Africa Company, in December 2010 and February 2011.  Between February 2011 and April 2011, the South Africa Company wired approximately $1.4 million to bank accounts in Switzerland and Bahrain held by an individual who was acting as an intermediary for the Saudi Arabia Official.

STEVEN also developed a plan to take a portion of the bribe proceeds as a kickback, and ultimately received approximately $130,000 in wire transfers from the South Africa Company in October and December 2011.

STEVEN was later interviewed by an agent of the Federal Bureau of Investigation in December 2014, and falsely stated that a wire transfer he received from the South Africa Company in 2011 was for the purpose of buying real estate in connection with a potential business venture between STEVEN and an executive of the South Africa Company.

The guilty plea entered today follows the execution in October 2016 of a deferred prosecution agreement between the Department of Justice and Embraer, under which Embraer agreed to pay a $107 million penalty as part of a $205 million global resolution to investigations by the Department, the Securities & Exchange Commission, and Brazilian authorities related to corrupt conduct in several countries, including Saudi Arabia.  The agreement acknowledged Embraer’s cooperation with the investigations.

STEVEN, 61, resides in Dubai, United Arab Emirates.  A chart listing the maximum sentences relating to the charges in the Information is below.  As part of his plea agreement, STEVEN is also required to pay forfeiture and restitution.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  STEVEN is scheduled to be sentenced by Judge Nathan on June 21, 2018.

The FBI’s International Corruption Squads, based in Miami, Florida, and Los Angeles, California, investigated the case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.  The Office also appreciates the cooperation and assistance provided by authorities in Brazil, the Dominican Republic, South Africa and Switzerland in this matter.

Count	Charge		Maximum sentence
One	Conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), 18 U.S.C. § 371		Five years in prison
Two	Violation of the FCPA, 15 U.S.C. §§ 78dd-1 and 78ff(c)(2)(A), and 18 U.S.C. § 2		Five years in prison
Three	Conspiracy to commit wire fraud, 18 U.S.C. § 1349		20 years in prison
Four	Wire fraud, 18 U.S.C. §§ 1343 and 2		20 years in prison
Five	Conspiracy to commit money laundering, 18 U.S.C. § 1956(h)		20 years in prison
Six	Money laundering, 18 U.S.C. §§ 1956(a)(2)(A) and 2		20 years in prison
Seven	False statements, 18 U.S.C. § 1001		Five years in prison

Postal Worker Arrested For Stealing Valuable Items From U.S. Mail

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Special Agent-in-Charge Eileen Neff of the Northeast Area Field Office, U.S. Postal Service Office of Inspector General (“USPS-OIG”), announced the arrest of JOSEFINA SALAS, an employee of the U.S. Postal Service for over eighteen years, on charges of mail theft.  SALAS was presented yesterday in Manhattan federal court before the Honorable Sarah Netburn.

Acting U.S. Attorney Joon H. Kim said:  “During the holiday season when the spirit of giving abounds, Josefina Salas, a postal employee, was allegedly interested only in taking and stealing. Salas allegedly used her access to U.S. mail to steal valuable items from people who trusted their mail would be delivered safely. We thank the U.S. Postal Service for their work to halt postal theft and insure the integrity of the mail.” 

Special Agent-in-Charge of USPS-OIG Eileen Neff said:  “If an employee of the Postal Service abuses their position and the public’s trust, as alleged in this matter, OIG agents thoroughly and vigorously investigate to resolve the situation.”

According to the allegations in the Complaint sworn out in Manhattan federal court:[1]

Over the course of approximately a year, SALAS, who was employed as an elevator operator at the USPS Processing and Distribution Center (“PDC”) located at 341 Ninth Avenue in New York, New York, stole various items from the United States mail, including cash, gift cards, jewelry, clothing, and a phone.  SALAS was previously captured on video using a box-cutter to open mail packages and then stealing the contents of those packages.  SALAS was arrested yesterday at the end of her shift at the PDC. 

SALAS, 66, of the Bronx, New York, is charged with one count of mail theft by a U.S. Postal Service employee, which carries a maximum sentence of 5 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the USPS-OIG.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900, or Wendy.Olsen@usdoj.gov

(link sends e-mail)

For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html. The USPS OIG Hotline can be reached by phone 888-USPS-OIG and online at www.uspsoig.gov. 

The charge contained in the Complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Juan Thompson Sentenced In Manhattan Federal Court To 60 Months In Prison For Cyberstalking And Making Hoax Bomb Threats To JCCs And Other Victim Organizations

Juan Thompson Admitted to Threatening Jewish Community Centers as Part of a Campaign to Harass and Intimidate His Victim.

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JUAN THOMPSON was sentenced today by U.S. District Judge P. Kevin Castel to 60 months in prison for cyberstalking and making hoax bomb threats as part of THOMPSON’s campaign to harass and intimidate a particular woman (“Victim-1”).  Over a period of months in 2016 and 2017, THOMPSON, among other things, communicated at least 12 threats to Jewish Community Centers (“JCCs”) and other Victim Organizations in Victim-1’s name and his own name and made false allegations about Victim-1 to Victim-1’s employer.  THOMPSON was arrested by the Federal Bureau of Investigation (“FBI”) on March 3, 2017, and pled guilty before Judge Castel on June 13, 2017.

Acting U.S. Attorney Joon H. Kim said:  “Today, Juan Thompson was held to account and justly punished for his efforts to harass an ex-girlfriend by sending disturbing and dangerous hoax threats to Jewish Community Centers and other organizations across the country in her name.  Thompson’s harassment and threats caused severe distress to both his victim and to Jewish communities around the country.  We thank our partners at the FBI for their excellent work on this important case.”

According to the Complaint, the Information, and statements made at sentencing:

In July 2016, THOMPSON began a months-long campaign of harassment targeting Victim-1 after Victim-1 ended their relationship.  THOMPSON’s conduct culminated with a series of hoax threats, including hoax bomb threats, targeting JCCs, organizations that provide service to and on behalf of the Jewish community, schools, and police departments.

THOMPSON started his campaign of harassment of Victim-1 in 2016.  In July of that year, an email was sent to Victim-1’s employer, which made false allegations about Victim-1, including that she had broken the law, using an internet protocol (“IP”) address that THOMPSON had previously used to access his social media account.  On October 15, 2016, an IP address that traced back to THOMPSON’s residence was used to falsely report that Victim-1 possessed child pornography.  When confronted by law enforcement on November 22, 2016, THOMPSON claimed that his email account had been hacked a few weeks earlier. 

THOMPSON also made at least 12 hoax threats targeting JCCs.  For instance, on February 21, 2017, the Anti-Defamation League (“ADL”) received an emailed threat at their midtown Manhattan office that indicated that “[Victim-1’s name and birthdate] is behind the bomb threats against jews. She lives in nyc and is making more bomb threats tomorrow.”  The next day, the ADL received a phone call claiming that explosive material had been placed in the ADL’s midtown Manhattan office. 

Some of THOMPSON’s threats were made in his own name, as part of an apparent effort to claim that Victim-1 was trying to frame THOMPSON for a crime.  For instance, on or about February 7, 2017, a JCC in Manhattan received an emailed bomb threat from an anonymous email account, which stated: “Juan Thompson [THOMPSON’s birthday] put two bombs in the office of the Jewish center today.  He wants to create Jewish newtown tomorrow.”  The email’s use of the phrase “Jewish newtown” appeared to refer to a December 2012 school shooting in Newtown, Connecticut, in which a gunman murdered 26 victims.

In February 2017, a Twitter account used by THOMPSON (the “Thompson Twitter Account”) was used to accuse Victim-1 of responsibility for the JCC Threats and claim that Victim-1 was trying to frame THOMPSON for her crimes.  For instance, on February 24, 2017, the Thompson Twitter Account posted: “[s]he [Victim-1], though I can’t prove it, even sent a bomb threat in my name to a Jewish center, which was odd given her antisemitic statements.  I got a visit from the FBI.  So now I’m battling the racist FBI and this vile, evil, racist white woman.”  On February 26, 2017, the Thompson Twitter Account posted: “The hatred of Jews goes across all demos.  Ask NYC’s [Victim-1’s employer].  They employ a filthy anti-Semite in [Victim-1].  These ppl are evil.”

In addition to the prison term, THOMPSON, 32, of St. Louis, Missouri, was sentenced to  three years of supervised release.

Mr. Kim praised the outstanding investigative work of the FBI, and thanked the United States Secret Service, New York City Police Department, and Saint Louis Police Department for their ongoing investigative assistance. 

A.G. Schneiderman Announces Unprecedented Consent Decree With NYC Landlord Steven Croman

Consent Decree Forces Croman to Pay $8 Million in Restitution to Tenants – Largest-Ever Monetary Settlement with an Individual Landlord

Over 100 Croman Properties will be Run by New Independent Management for 5 Years; Monitor will Oversee Compliance with Settlement and Report to AG for 7 Years – Longest-Ever Monitorship in a Tenant Harassment Case

Croman Currently Serving a Year in Jail, Paid $5 Million Settlement for Separate Criminal Charges Brought by AG Schneiderman

  New York Attorney General Eric T. Schneiderman announced an unprecedented settlement with Steven Croman, a major New York City landlord, for engaging in illegal conduct, including harassment, coercion, and fraud, to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units.

The consent decree requires Croman to pay $8 million into a Tenant Restitution Fund – the largest-ever monetary settlement with an individual landlord. The settlement also requires over 100 Croman residential properties to be run by a new, independent management company with no ties to Croman, for five years – the longest-ever term for independent management in OAG history. Moreover, the settlement requires seven years of a monitor who will oversee compliance with the terms of the consent decree and provide regular reporting to the Attorney General – the longest-ever monitorship required in any tenant harassment case.

Croman is currently serving one year in jail and paid a separate $5 million settlement as a result of criminal charges brought by Attorney General Schneiderman.

“Over and over again, Steven Croman acted as though he was above the law, putting profits before his tenants’ safety and wellbeing. Earlier this year, we put Mr. Croman in jail for an elaborate scheme that was intended to push out rent-regulated tenants. And today, we’re ensuring tenants get the restitution and protections they deserve – including the largest-ever settlement with an individual landlord, and unprecedented independent management and monitoring at his properties,” said Attorney General Schneiderman. “New Yorkers are already struggling with high rents. We have zero tolerance for those who try to boost their bottom line by disregarding the welfare of their tenants. My office will continue to ensure that all landlords play by the rules, and aggressively pursue anyone who doesn’t to the fullest extent of the law.”

Eligible tenants will be able to apply for restitution; the Office of the Attorney General (OAG) will announce details of a claims process early next year. Tenants will be eligible for restitution if they are or were a tenant in a rent-stabilized or rent-controlled apartment owned by Croman between July 1, 2011 and the date of the agreement (December 20, 2017); they received a buyout of less than $20,000, not including any amount that purported to cover rent or arrears; and no other tenant in their apartment received money from the restitution fund.

The Attorney General’s office will approve both the independent management company and the monitor. The independent management company will oversee operations and institute new policies at the Croman properties to ensure full compliance with the law and correction of all past violations. It will also post a comprehensive set of Tenants Rights in every building it manages.  The monitor will provide quarterly reports to the Attorney General, which will include at minimum any complaints received from tenants and actions taken; the total number of rent-regulated apartments that became deregulated during the reporting period, the reason for deregulation, and all supporting documents; and the monitor’s assessment as to whether Croman has complied with the consent decree.

The consent decree also ensures that Anthony Falconite – another defendant in the Attorney General’s lawsuit whom Croman allegedly referred to as his “secret weapon” in intimidating rent-regulated tenants – will have no interaction with any Croman tenants.

In addition to the $8 million Tenant Restitution Fund, Croman is responsible for covering the costs of the management company and monitor, as well as any outstanding government fines.

Click here to read the consent decree.

In May 2016, Attorney General Schneiderman filed a civil lawsuit against Croman and Falconite for allegedly engaging in illegal, fraudulent, and deceptive conduct in connection with Croman’s real-estate business. The lawsuit alleged that Croman directed an illegal operation that wielded harassment, coercion, and fraud to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units. The lawsuit further alleged that Croman deployed Falconite, a former New York City police officer, to frighten and intimidate rent-regulated tenants into surrendering their apartments.

The civil lawsuit, which was the product of an independent investigation, alleged that Croman used the following illegal tactics to push working-class and low-income tenants out of their homes:

• Harassing tenants into surrendering their apartments—and their rights under the rent-stabilization laws—in exchange for “buyouts,” which are often no more than a few thousand dollars or a few months of free rent.
• Incentivizing his employees and agents to obtain buyouts, at the expense of their other responsibilities. Employees allegedly referred to rent-regulated tenants as “targets” and competed with each other to obtain the most buyouts. In one characteristic exchange, Falconite allegedly wrote to a property manager that obtaining buyouts was a “team sport,” to which the property manager responded, “I know that!! Who’s our next target? We have to start lining them up!!!”
• Pressuring tenants into surrendering their apartments by repeatedly filing baseless lawsuits against them. In internal emails, company employees acknowledged that such lawsuits would “aggravate” tenants or pressure them to accept buyouts. In some cases, Croman’s employees allegedly created a false record for litigation by refusing to acknowledge receipt of tenants’ rent checks and then suing them for unpaid rent—a deliberate fraud upon the court.

The lawsuit also alleged that Falconite, whom Croman referred to as his “secret weapon,” used deceptive and frightening tactics to intimidate rent-regulated tenants, including using false pretenses to gain access to tenants’ apartments, often posing as a repairman or building manager.

In addition, the lawsuit alleged that Croman, in his rush to flip vacant rent-regulated apartments into high-rent units, presided over a disturbing pattern of illegal and hazardous construction. The lawsuit alleged numerous examples of illegal construction, including the following:

• On at least 175 occasions, Croman’s companies allegedly performed construction without obtaining permits.
• Croman allegedly regularly directed his employees to flout stop-work orders and conceal unlawful construction from Department of Building inspectors.
• Croman allegedly filed false documents with the Department of Buildings on dozens of occasions in an attempt to avoid stricter oversight of his construction projects and elude tenant protection measures.
• Croman and his companies allegedly violated lead-safety laws repeatedly, exposing numerous tenants to lead-contaminated dust. On more than 20 occasions, the Department of Health (DOH) found impermissibly high levels of lead dust in Croman’s buildings, including levels up to 65 times the legal threshold.
• Croman allegedly defied DOH orders to address the lead hazards. On one occasion, after DOH ordered Croman to stop all work and begin lead-abatement measures, Croman directed his property manager to postpone the lead abatement so that the construction could continue.
• Croman’s alleged illegal construction had devastating consequences for tenants. As alleged in the lawsuit, DOH identified lead-dust hazards in the apartment of a tenant who cared for her young grandsons, ages three and nine, both of whom were disabled. The tenant had to move her grandsons out of the apartment because of the dangers posed by the construction and lead dust and was forced to sue Croman to obtain repairs.

In addition, Croman allegedly repeatedly defied court orders to make repairs and address intolerable living conditions. The lawsuit alleged that throughout his portfolio, Croman had been issued hundreds of “hazardous” and “immediately hazardous” violations, which he had failed to correct. The suit further alleged that, on six occasions, the city has sued Croman’s companies for falsely certifying that they corrected violations on his properties.

In October, Croman was sentenced to a year in jail and paid a $5 million tax settlement following separate criminal charges brought by Attorney General Schneiderman for fraudulent refinancing of loans and tax fraud. Rarely, if ever, has a landlord been sentenced to serve time in jail for engaging in these practices.

Earlier this year, the Attorney General Schneiderman formally introduced new legislation aimed at holding the city’s most unscrupulous landlords criminally accountable for Harassment of a Rent Regulated Tenant. Current state law demands prosecutors reach an inexplicably high bar in order to criminally charge landlords with that crime—which is why in the past twenty years, not a single landlord has ever been convicted of the crime of Harassment of a Rent Regulated Tenant.

The Attorney General’s legislation would set a more reasonable standard that removes the need to prove physical injury to a tenant, and opens the door to Harassment of a Rent Regulated Tenant prosecutions arising out of more commonplace and insidious tactics, such as turning off heat and hot water, exposing young children to lead dust, and making rent-stabilized buildings deliberately uninhabitable for current tenants and their families.

The Attorney General has taken a number of other steps to combat tenant harassment and illegal practices by landlords across New York City, including:

• Enhancing and streamlining the office’s resources to combat tenant harassment, deceptive lending practices, deed theft, bank fraud, and other housing issues facing constituents.
• Filing additional felony charges against a landlord for committing mortgage fraud.
• Forming the Tenant Harassment Prevention Task Force with city and state officials.

The Attorney General would like to thank the NYC Department of Buildings, NYC Department of Housing Preservation and Development, NYC Department of Health, and NY State Homes and Community Renewal for vital assistance in this case.

A.G. Schneiderman Announces $13.5 Million Multi-State Agreement With Boehringer Ingelheim Pharmaceuticals, Inc. For Deceptive Marketing Practices And Promotion Of Prescription Drugs For Unapproved Uses

Agreement Secures Nearly $500,000 For New York

Pharmaceutical Manufacturer Will End Promotion Of Unauthorized Uses For Prescription Drugs Micardis, Aggrenox, Atrovent, and Combivent 

  Attorney General Eric T. Schneiderman announced a $13.5 million agreement with Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI), resolving alleged deceptive and misleading marketing regarding drug usage beyond what is indicated on the labeling of four of its prescription drugs: Micardis®, Aggrenox®, Atrovent®, and Combivent®. The settlement, joined by all 50 states and the District of Columbia, requires BIPI to reform its advertising practices. New York’s share of the settlement is $490,341.

“Drug companies that misrepresent their products dangerously jeopardize patients’ health in order to increase profits,” said Attorney General Schneiderman. “Consumers should be able to trust that the advertised benefits of prescription drugs are supported by scientific evidence, not exaggerated claims.”  

Aggrenox, a combination of aspirin and dipyridamole, is an antiplatelet drug that was approved by the U.S. Food and Drug Administration in 1999 to reduce the risk of secondary stroke in patients who have had a “mini-stroke” known as a Transient Ischemic Attack (TIA). Micardis (Telmisartan) belongs to a class of drugs called angiotensin receptor blockers (ARBs) and is indicated to treat hypertension (high blood pressure) and to reduce cardiovascular risks in patients unable to take angiotensin-converting-enzyme (ACE) inhibitors. Atrovent (ipratropium bromide) and Combivent (ipratropium bromide and albuterol) are bronchodilators indicated to treat bronchospasms (airway narrowing) associated with chronic obstructive pulmonary disease (COPD).

In a complaint filed today in New York County Supreme Court, Attorney General Schneiderman alleges that BIPI: (1) misrepresented that its antiplatelet drug, Aggrenox®, was effective for many conditions “below the neck”, such as heart attacks and congestive heart failure, and that it was superior to Plavix without evidence to substantiate that claim; (2) misrepresented that Micardis protected patients from early morning strokes and heart attacks, as well as treated metabolic syndrome; (3) misrepresented that Combivent could be used as a first-line treatment for bronchospasms associated with COPD and (4) falsely asserted that Atrovent and Combivent could be used at doses that exceeded the maximum dosage recommendation in the product labeling and that they were essential for COPD treatment.   

The settlement requires BIPI to ensure that its marketing and advertising practices do not unlawfully promote these prescription drug products. Specifically, BIPI will: 

• Limit product sampling of the four drugs to health care providers whose clinical practice is consistent with treatments indicated on the product labeling;
• Refrain from offering health care providers financial incentives for sales that may indicate unapproved use of any of the four drugs;
• Ensure clinically relevant information is provided in an unbiased manner that is distinct from promotional materials; and
• Refer requests for unapproved usage information regarding any of the four drugs to BIPI’s Medical Division. 

New Comptroller Stringer Report: NYC’s Economy More Diversified Since 2000, But May Not Be Less Susceptible to Future Economic Downturns

Despite increased diversification, wages and middle-class job growth remain concerns for the City’s economy

As New York City approaches the 10-year anniversary of the 2008 financial crisis, Comptroller Scott M. Stringer today released a first-of-its-kind report that looks at the diversification of the city’s economy. The report, “New York City’s Economy Has Become More Diverse: So What?” highlights that, although the City economy is more diversified than it was in 2000, it is not necessarily better positioned to weather future downturns or deliver long-term, robust economic benefits to working- and middle-class New Yorkers.

The new report examines the old adage that “when Wall Street sneezes, the City catches a cold” — and it examines the theory that a more diversified economy is less vulnerable to both industry-specific shocks, such as a financial market crash or a broader economic downturn. The report finds that New York City’s diversification since 2000 will likely yield stronger job growth in the future.  At the same time, however, the analysis concludes that job growth will not necessarily be more stable, because many of the new jobs are just as vulnerable to an economic downturn as the jobs they replaced. The report also notes that middle class job growth has lagged behind lower wage sectors, where many of the new jobs are being created.

“We need to build a robust, thriving middle-class. Wall Street is still a big part of our economy, but we must keep nurturing burgeoning sectors that allow working New Yorkers to move up the economic ladder with good-paying jobs. From tech to healthcare, from education to the arts, industries that support working New Yorkers matter. We have to keep diversifying so that we aren’t too reliant either on Wall Street or jobs that would be susceptible to being lost in the event of a downturn. But we have to embrace a thoughtful approach,” said New York City Comptroller Scott M. Stringer. “While we’ve made extraordinary job gains since the Great Recession, we’re facing new challenges. This analysis shows that diversification by itself is not a panacea. The industries that are growing today are just as vulnerable as Wall Street. Our affordability crisis is mounting, wage growth is stagnant, and underemployment remains a concern. That’s why we need to take smart, strategic steps to build the resilient economy of the future, with higher wages, better working standards, and strong jobs for everyone.”

Specifically, the report found:

New York City’s Economy Has Diversified Since 2000

• Between 2000 and 2016, New York City’s economy has become modestly more diversified.
• Job growth has been strong:  Since the 2008 recession, the number of jobs in New York City has increased by 15.8%, while the number of jobs on Wall Street has fallen by 5%.
• Despite the increase in economic diversification, New York City still lags behind many other major metro areas — ranking 22nd out of the 30 largest metro areas, behind a number with significantly smaller economies, including Orlando, FL; Charlotte, NC; Cleveland, OH; Phoenix, AZ; Pittsburgh, PA; and Kansas City, MO.

The City Is Less Diversified than Many Other Major Metropolitan Areas

The analysis found that the increase in New York City’s diversification since 2000 occurred due to faster job growth in industries that were less concentrated, such as food services and ambulatory healthcare, and slower growth in those with higher concentrations (like finance and social assistance).

Diversification of the City Economy by Sector

Increased Economic Diversity Does Not Make New York City Less Vulnerable to Economic Downturns

Studies of major metro area economies have shown a connection between greater economic diversity and smaller employment and wage fluctuations during an economic downturn. This report examined if New York City’s increased economic diversity would lead to less vulnerability.

• The analysis found that the current composition of employment in New York City is expected to result in only minimally less volatility in the event of another economic downturn.
• Employment volatility declined from 2.2% in 2000 to 2.1% in 2016. This is because jobs in historically volatile sectors, such as finance (4.6% volatility), have largely been replaced by an even greater number of jobs in sectors that are almost as volatile, such as food services (3.3% volatility).
• The volatility of wage growth declined by a slightly larger margin, from 5.3% in 2000 to 5.0% in 2016. This is primarily due to the fact that the security industry’s share of jobs has decreased.

Diversification is Projected to Lead to Higher Job Growth

• The report found that the more-diversified New York City economy of 2016 resulted in projected annual job growth of 1.4 percent, compared to 1.1 percent under the less-diversified 2000 economy.

A More Diverse Economy Has Not Brought Higher Wages

• Job growth, however, doesn’t tell the full story. While the security industry is more volatile, it also has a far higher average wage, $375,000, compared to a citywide average of $86,000.
• As the city’s economy became more diversified between 2000 and 2016, the number of low-paying jobs skyrocketed. Specifically:
  • The number of low paying jobs, with incomes below $45,000 a year, grew by 39.2%;
  • The number of middle-income jobs, paying between $45,000 and $100,000 a year, grew 12%; and
  • The number of high paying jobs, with incomes over $100,000 a year, grew just 7.6%.
• The Comptroller’s Office conducted an analysis to examine what the average income in the City would be in 2016 if the ratio of high, middle, and low paying jobs had not changed from 2000. Due to the larger number of high-paying Wall Street jobs in 2000, the average wage would have been approximately $92,000 in 2016 if the 2000 job composition had remained unchanged — higher than the actual 2016 average of $86,000.

Low-Pay Jobs Have Grown Most Rapidly

The Export Sector Has Declined, While Local Industries Boomed

• The report also found that the number of jobs in “traded” or “export” industries — like finance and media in New York City, which provide goods and services outside the local economy — fell by 69,000 from 2000 to 2016.
• At the same time, the number of local sector jobs, which provide services within the New York City economy, grew by 620,000.

• In 2016, the average job in a traded industry made $80,000 more than one in the local sector.

• Overall, traded industries represented 39% of employment and 53% of wages in 2000. In 2016, those rates had fallen to 31% and 48%, respectively.

The report concludes that as diversification has increased, the City’s economy has not necessarily become less volatile and wages for working- and middle-income New Yorkers have not grown significantly — despite continually rising job growth. It also highlights a number of policy focuses for the City in response to both the positive and negative aspects of our more diversified economy. They include:

• The City should continue to promote sectors that have existing strengths and can grow the middle class, such as tech, professional and business services, higher education, and finance.
• The city’s income distribution is becoming more U-shaped, with concentrations of high- and low-income households and fewer middle-income ones. The City must focus on keeping and creating more middle-income jobs and training New Yorkers to succeed in them.

To read the full report, click here.

Council Member Ydanis Rodriguez Congratulates Council Member Corey Johnson as the Next Council Speaker

  "After many months of hard work sharing my vision for our city as a candidate for Speaker of the New York City Council, today I am proud to congratulate my colleague and friend Council Member Corey Johnson on securing the support of the majority of our colleagues. It has been a pleasure to know and work with Corey the last four years. His leadership at both as Co-Chair of the Manhattan Delegation and  Health Committee have been vital in pushing our city to create policies that give access to all. I am sure that his historic election as City Council Speaker will serve to make our city and the Council so much stronger. 

In Corey, I know we will have a Speaker that will work day and night to ensure that the interest of the most vulnerable New Yorkers is top priority. I am confident that in the next four years my colleagues and I under the leadership of Council Member Corey Johnson will usher in a new path for our city. I look forward to working with Corey in shaping a vision for a transparent and inclusive New York City for all.

Sincerely,

Ydanis Rodriguez

BP DIAZ HOSTS ANNUAL CHESS CHALLENGE

  On December 19, 2017, Bronx Borough President Ruben Diaz Jr., AT&T and Chess in the Schools co-hosted the Bronx Borough President’s Annual Chess Challenge at the Bronx County Building’s Veterans’ Memorial Hall.

More than 200 students from all over The Bronx participated in the tournament, which featured chess aficionados from grades 3-8 testing their skills against one another. Winners in each division were presented awards by Borough President Diaz, AT&T Northeast Region President Marissa Shorenstein and Chess in the Schools President & CEO Debbie Eastburn at the event’s conclusion.

“This is one of my favorite events I love to host because these young chess-masters are learning the importance coming up with a long-term strategy, thinking several steps ahead as far as implementing that strategy, and the patience that goes with adjusting to your opponent’s moves,” said Bronx Borough President Ruben Diaz Jr. “Chess reinforces mental discipline on and off the chessboard, and these participants are learning lessons that will carry with them as they grow up and become the future leaders of our great borough. I want to thank AT&T and Chess in the Schools for their continued support of this wonderful event.”

"As a lifelong chess player myself, I know how valuable these skills are to young, developing minds. AT&T supports the Bronx Borough President’s Chess Challenge with Chess in the Schools each year to help give the most underserved students in the Bronx the knowledge and confidence that chess provides, and which they need to succeed in school and beyond," said Marissa Shorenstein, President, Northeast Region, AT&T. “We look forward to continuing to work with Borough President Diaz on this initiative as well as so many other events serving the Bronx community.”

“Chess education is thriving in the Bronx! Our students are thrilled to play in the beautiful Bronx Borough Hall and to meet their Borough President, Ruben Diaz Jr.!,”said Debbie Eastburn, President & CEO of Chess in the Schools.

Chess in the Schools has been teaching and empowering more than a half-million students in the most underserved communities throughout New York City, since 1986, helping students learn to use chess as an educational tool to promote learning and critical thinking.