Head Of Pakistani Drug Trafficking Network Pleads Guilty In Manhattan Federal Court To Conspiring To Import Heroin Into The United States

Shahbaz Khan Conspired to Send Tens of Thousands of Kilograms of Heroin to the United States for Distribution in New York City

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Raymond P. Donovan, Special Agent in Charge of the United States Drug Enforcement Administration (“DEA”) Special Operations Division, announced today that SHAHBAZ KHAN pled guilty to conspiring to import heroin into the United States, and to attempting to import heroin into the United States.  KHAN was taken into custody by Liberian authorities on December 1, 2016, and expelled to the United States later that same day based on a pending Complaint in this District.  He pled guilty today to a Superseding Indictment in Manhattan federal court before U.S. District Judge Lorna G. Schofield.   

U.S. Attorney Geoffrey S. Berman stated:  “Shahbaz Khan boasted to an undercover officer about his ability to smuggle drugs anywhere in the world without detection.  The DEA put the lie to that boast.  Khan has now admitted to conspiring and attempting to import massive quantities of heroin into the United States, and this international narcotics kingpin is now a convicted felon awaiting what could be a substantial sentence.”           

Special Agent in Charge Raymond P. Donovan stated:  “The arrest of Shahbaz Khan was a result of DEA’s relentless pursuit of global drug traffickers and other dangerous transnational criminal networks with our partners across the world.  Khan led a massive and sophisticated heroin network based in Afghanistan and Pakistan, where the vast majority of drug trafficking proceeds have historically been used to finance terrorist insurgencies against the U.S. and our global allies.  He agreed to send huge amounts of deadly drugs to American streets and neighborhoods, which would have fueled the current opioid epidemic and facilitated addiction and abuse by supplying huge amounts of heroin to New York and nationwide.  We are pleased he is facing American justice in a United States court of law.”

According to the, Complaint, the Superseding Indictment, statements made during the plea proceeding, and other filings in this case:

KHAN, a Pakistani national, was the leader of a drug trafficking organization (the “DTO”) based in Afghanistan and Pakistan that produced and distributed massive quantities of heroin around the world.  In 2007, KHAN was designated a Narcotics Kingpin under the Foreign Narcotics Kingpin Designation Act by then-president George W. Bush.  Between approximately August 2016 and October 2016, KHAN conspired to send tens of thousands of kilograms of heroin hidden in maritime shipping containers and air cargo shipments to New York City. 

Beginning in August 2016, KHAN began communicating in a series of telephone calls and in-person meetings in countries in Southwest Asia with individuals whom KHAN believed were heroin traffickers interested in purchasing kilogram quantities of heroin for importation into the United States.  Those individuals were, in fact, working at the DEA’s direction, and included an undercover law enforcement officer (the “UC”). 

In late September 2016, KHAN traveled to a country in Southwest Asia where KHAN met with the UC and others.  During the meeting, KHAN agreed to provide the UC with an initial shipment of five kilograms of heroin for importation into the United States.  KHAN informed the UC that, once the five kilograms of heroin successfully arrived in New York City, KHAN would begin supplying the UC with larger quantities of heroin on a regular basis, including up to 10,000 kilograms of heroin at a time.  KHAN assured the UC that the heroin KHAN would provide was 100% pure.  In describing his history as a narcotics trafficker, KHAN explained he had done work that “had not been done in the past hundred years,” including supplying 114 tons of heroin and hashish to a customer over a one-year period.  KHAN explained that he could ship drugs “anywhere in the word,” hidden in maritime shipping containers or in air-cargo shipments. 

In early October 2016, one of KHAN’s employees, acting at his direction, delivered the five-kilogram initial shipment of heroin in the same country in Southwest Asia.  Through a series of recorded telephone calls, KHAN confirmed with the UC that the heroin his employee had provided was KHAN’s, that the heroin was to be transported to New York City, and that KHAN would be paid for the heroin once it arrived in the United States.

In December 2016, KHAN traveled with the UC to Liberia to inspect a warehouse that could serve as a transshipment point for maritime heroin shipments between Pakistan and New York.  KHAN was arrested by Liberian authorities upon his arrival in Liberia and expelled to the United States. 

KHAN, 70, of Pakistan, pled guilty to one count of conspiring to import one kilogram and more of heroin into the United States, and to one count of attempting to distribute one kilogram and more of heroin, knowing and intending that it would be imported into the United States.  KHAN faces a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison.  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 a judge.  Sentencing is scheduled for October 9, 2018, before Judge Schofield. 

Mr. Berman praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit; the DEA Accra, Canberra, Sydney, Dubai, Islamabad, Kabul, Nairobi, and New Delhi Country Offices; the DEA New York Organized Crime Drug Enforcement Task Force Financial Investigative Team; the Government of Liberia; the Liberian Drug Enforcement Agency; the DEA Nairobi Country Office Kenyan Police Vetted Unit; the Australian Criminal Intelligence Commission; and the Maldives Police Service.  The defendant’s arrest and subsequent expulsion are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the Department of Justice’s Office of International Affairs.

A.G. Underwood Announces Criminal Indictment Of Queens Investment Advisor For Defrauding Elderly Clients Of Nearly $5 Million

Dean S. Mustaphalli — Owner And Operator of Mustaphalli Capital Partners Fund, LP — Arraigned On 99-Count Indictment Charging Securities Fraud, Grand Larceny, Forgery, and Scheme to Defraud

Underwood: Mustaphalli Deceived and Took Advantage of Clients’ Trust – Looting and Squandering Millions from Senior New Yorkers Who Relied on Those Savings

  Attorney General Barbara D. Underwood today announced a 99-count criminal indictment charging Queens investment advisor Dean S. Mustaphalli —  the owner and operator of Mustaphalli Capital Partners Fund, LP — with operating a multi-million dollar securities fraud scheme.  

Mustaphalli allegedly engaged in a scheme to defraud investors — many of whom were elderly and at or near retirement — out of their savings by investing them in his hedge fund without their knowledge or consent. During the relevant time period, Mustaphalli’s hedge fund collapsed, losing 92% of its value. The Attorney General’s indictment, unsealed in Queens County Supreme Court, charges Mustaphalli with Grand Larceny, Forgery, and Securities Fraud violations under the Martin Act, among other charges. If convicted, Mustaphalli faces up to 10 to 20 years in prison.

According to the Attorney General’s criminal indictment, Mustaphalli’s scheme brought in more than $5 million from 22 victims between June 2014 and March 2017 alone — including many southeast Queens residents, including a number who live in Rochdale Village, a Mitchell-Lama affordable housing complex. A separate civil lawsuit filed by the Attorney General’s office in June 2017 alleges that Mustaphalli fraudulently solicited an additional $7 million from prior investors between 2012 and 2014. In total, Mustaphalli allegedly fraudulently solicited his former clients to invest over $12 million – and lost over $11 million of their hard-earned money.

“New Yorkers should be able to trust the people they turn to for investment advice,” Attorney General Underwood said. “Yet, as we allege, Dean Mustaphalli deceived the clients that trusted him – looting and squandering millions from senior New Yorkers who relied on those savings. Our office will continue to crack down on unscrupulous financial advisors who scam and swindle New Yorkers out of their hard-earned money.”

In June 2017, after a years-long investigation, the Attorney General’s Investor Protection Bureau filed a civil complaint in New York County. In February 2017, the Attorney General’s Criminal Enforcement and Financial Crimes Bureau commenced a criminal investigation into Mustaphalli’s conduct, resulting in the 99-count criminal indictment.  

As set forth in court documents and according to statements made by prosecutors at arraignment, Mustaphalli’s scheme allegedly targeted elderly New Yorkers who had been his investment advisory clients for many years before he opened his own hedge fund, and who had very little prior investment experience.  As their investment advisor, Mustaphalli knew that these investors had relatively conservative investment objectives.   

Nevertheless, beginning in 2010, Mustaphalli allegedly moved his clients’ assets to a platform that would conceal his risky trading activity. Without explanation, and simply saying that the fund would be “better” for clients, Mustaphalli allegedly diverted his clients’ relatively safe investment portfolios to a hedge fund run solely by Mustaphalli.  

As further set forth in the civil complaint, Mustaphalli allegedly targeted his first wave of investors beginning in 2012, moving $7.1 million into his hedge fund, Mustaphalli Capital Partners Fund, LP (“MCPF”). Mustaphalli then allegedly engaged in a series of high-risk investment strategies, and by the end of that year, MCPF lost 92% of its value. In one instance, Mustaphalli allegedly bet $2.5 million on the volatility of the price of Mastercard stock, which lost his clients over $2 million in a single trade. By 2014, only $200,000 was left in the fund.  

As set forth in the criminal indictment and according to statements made by prosecutors at arraignment, after losing almost $7 million of investor monies, Mustaphalli then allegedly brought 22 new clients into his hedge fund by 2015, collecting $5 million in additional investor funds or monies’. Once again, Mustaphalli allegedly targeted mostly elderly individuals who had been his clients for many years and trusted him. To effect these transfers, Mustaphalli allegedly forged account opening documents and submitted fake email addresses for his clients, many of whom did not even know how to operate a computer. 

According to court filings and statements made by prosecutors, Mustaphalli’s clients allegedly had no idea that their retirement monies were being transferred into an extremely high-risk investment, much less to a hedge fund. To further his scheme, the defendant allegedly provided his clients with only the signature pages of fund documents, and forged his client’s initials next to the portion of the documents entitled “Accredited Investor Status,” which falsely stated the investors’ net worth was over $1 million dollars. In fact, almost none of the defendant’s clients had a net worth of over $1 million dollars; indeed, a few investors live in Rochdale Village, a Mitchell-Lama Cooperative located in Queens, which sets aside affordable housing for moderate and middle-income residents. Notably, it is a requirement that hedge fund investors meet the definition of an “accredited investor,” which is a person whose net worth exceeds $1 million.

By December 2015, MCPF had lost approximately 80% of its value, again because Mustaphalli allegedly engaged in extremely high-risk and unauthorized trading strategies, including speculative options trading.  

According to prosecutors, most of the 22 investors named in the indictment allegedly lost all or most of their retirement savings, with losses totaling over $4 million.   

Mustaphalli allegedly sought to deflect blame for the losses by telling investors that the losses were due to “oil, bad markets, and the election.” Mustaphalli allegedly promised one investor, “if Hillary wins, you’ll get your money back,” and told another that “Brexit” was to blame for the Fund’s losses.

In the aftermath of these devastating losses, Mustaphalli allegedly used shell companies that he created to divert $100,000 of the remaining fund balance to himself, leaving investors with at best 20 percent of their original investment.

The Attorney General’s 99-count criminal indictment, unsealed late yesterday in Queens Supreme Court, charges the defendant with: 18 counts of Grand Larceny in the Second Degree (a Class “C” felony); one count of Grand Larceny in the Third Degree (a Class “D” felony); 12 counts of Forgery in the Second Degree (a Class “D” felony); 23 counts of Criminal Possession of a Forged Instrument in the Second Degree (a Class “D” felony); 22 counts of  Falsifying Business Records in the First Degree (a Class “E” felony); 21 counts of securities fraud under the Martin Act (a Class “E” felony); and two counts of Scheme to Defraud in the First Degree (a Class “E” felony).

Mustaphalli was arraigned yesterday in Queens County Supreme Court before the Honorable Judge Wong. Bail was set in the amount of $2 million cash or bond, and the defendant was ordered to surrender any travel documents.

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

The Attorney General thanks the Financial Industry Regulatory Authority (FINRA) and, in particular, its Criminal Prosecution Assistance Group for their valuable assistance on this case. 

Engel on Trump Rolling Back Protections for Federal Workers

  Congressman Eliot L. Engel issued the following statement on President Trump issuing executive orders to roll back protections for federal workers:

"This move by the Trump Administration to crack down on Federal Workers' Unions is just their latest attempt to weaken workers' rights in this country. For decades, Republicans have sought to destroy unions because they believe corporate interests should be put before those of the American worker. It was shameful when Reagan did it in the 80's and it is just as shameful now with President Trump, who has a long history of stiffing working-class folks going back to his days in Atlantic City. 

"During my time in Congress, I have voted against amendments which sought to curtail official time, and against measures designed to expedite the firing of federal employees within the VA, because our federal workforce should be free from political pressures and whims. Labor has always been the backbone of our country and the true engine that drives our economic prosperity. Our leaders in government should be working to strengthen our unions, not bring them to their knees." 

TRANSCRIPT: MAYOR DE BLASIO, COMMISSIONER TROTTENBERG ANNOUNCE EXPANDED ACCESS TO CARSHARE

  Mayor Bill de Blasio: I want to start at the beginning and tell you what these signs really are going to mean for New Yorkers.

So look, if you live in any neighborhood of this city you deal with the reality of congestion. I want to make that really clear from the beginning. Some people I think harbor the assumption that congestion is just a Midtown, Manhattan problem. No, congestion is a New York City problem. Pollution is a New York City problem. These are things that we have to address every day, every way we can.

It’s about protecting our city and our people in so many different ways. We have to protect our environment, and our health. We have to make sure people can get around. We have to make sure that New Yorkers have more options for getting around. Right now the status quo isn’t acceptable. So our job is to create more and better options for New Yorkers to get around. And that’s why this announcement to me is very exciting, because for so many New Yorkers there is tremendous frustration when it comes to owning a car. And I experienced it myself, and I’ve talked to countless neighbors but also the people all over the city. When you own a car in this city you got a whole set of challenges that come with it. Obviously, the cost of insurance, fuel, repairs, but particularly the challenge of parking in New York City. There are just too many cars here. And to make matters worse, we’re growing, population is growing, number of jobs is growing, number of tourists is growing, everything is growing. I am thrilled we’re growing, there’s a lot of good things that come with that but there is also going to be even greater challenges in terms of addressing congestion.

So, we have to give people new options. We have to give people another way to get around. And if people only sometimes really need a car, let’s make it easier for them to get the car only when they need. And not have to pay all those other costs all year long for something they don’t need a lot of time, and certainly to get cars off the streets out of parking spaces. There is a lot of people who have their car in a parking space all week long and only use it really on the weekend. That’s not an optimal situation. So what we want to do is make it easier for people who only need a car a small amount of the time to have a great new option. And this is where this new initiative comes in. I think there is tremendous potential here. And I’ll just speak to some of the key points, and Commissioner Trottenberg will go into more of the details. But I am very excited about this because I am think it’s going to open up a whole new world of possibilities for eight million New Yorkers. Now, this is consistent with efforts we’ve made previously. And I want to thank all of the different leaders in this administration and all the agencies and all our partners – non-profit partners, private sector partners who have helped us to expand the number of options. Clearly that has happened with Citi Bike, it has happened with NYC Ferry. In a public sector way it’s happening with select bus service. These are all in the same vein - giving new options to New Yorkers making it easier for them to get around.

I want to thank everyone who’s been a part of that. And I want to offer some particular appreciation today to our partners in this initiative around car sharing.  I want to thank and they’re here with us – Paul Metz the CarShare group manager for Enterprise and Justin Holmes the director for of corporate communications and public policy for Zipcar. Thank you both for being here, and thank you for the great service that you’re providing to New Yorkers. Also, this as I mentioned is very important to our overall efforts to create sustainability, to protect our environment, to have a city that is more and more built for the future – for a sustainable future. So I want to thank the person who I rely on to help us do that kind of planning, the Director of the Mayor’s Office of Sustainability, Mark Chambers. And another important feature, because we believe in making opportunities like this available to a wide range of New Yorkers regardless of income. There is a great partnership here with these two companies and the New York City Housing Authority to make sure that housing authority residents have opportunity to take advantage of this service. I want to thank from the housing authority we have Executive Vice President for External Affairs Dave Pristin, I want to thank you for being with us as well. So, put this in the same vein. You’ve got Citi Bike, you’ve got NYC Ferry, you’ve got select bus service, now car sharing all pointed in the same direction. And it’s a really simple idea. You go online, you reserve a car, you go to where the car is, you unlock it, you drive away, couldn’t be simpler. It’s simple, it’s convenient, it allows people to get a car they need quickly and easily. It’s a lot less complex than traditional car rental systems are.

So in partnering with these two companies – this is something we’re going to start right away. So the partnership with Zipcar and with Enterprise literally begins Monday, this coming Monday more than 300 dedicated parking spots will be available around New York City. 24 of them in lots in the public housing developments and in addition, I mentioned for public housing developments I want to make these available and a good option. NYCHA residents will have the ability to join these car sharing services for free. The membership fee will be waived, and they will get discount rates. Also, for IDNYC holders they will get a one year free membership with Zipcar.

So, these are really great benefits. Also, in the category of news you can use, I want people to understand how affordable these services can be.

So, they start at $8 an hour and at $69 a day to rent these vehicles. And I can say as – from the early years of parenthood when Chirlane and I needed to, before we had a car, when we needed to do something with Chiara, our only choice was to call a car service and the car services were great but $8, you know $8 was for a ten-minute ride. You’re talking about here $8 for an hour, again, $69 for a day. This is a very affordable service for a lot of New Yorkers.

Again, the idea is you wouldn’t need a car that you have every day, all year round for when you only need to use it a few days a week or a few times during the week. It really makes sense. And here’s some of the example of what it could mean for the city going forward.

Every New Yorker – I guarantee you this, if you said to New Yorkers, what if we had a plan to get a lot of cars off the roads and off the streets and open up a lot more parking spaces, would you like that idea?

I bet you, you would get close to a universal yes. Here’s what studies have shown. For each shared car available, a city can take up to 20 cars off the road. Think about that. Twenty cars that will not be purchased or will no longer be necessary because the shared service is available.

Think about where that could lead us in terms of clearing up congestion, in terms of making more parking spaces available in the long term. So, this is very exciting and years from now if this goes well, I see tens of thousands – hundreds of thousands of New Yorkers using this service and not needing to have a car and that making this a much better city.

Commissioner Polly Trottenberg, Department of Transportation: Thank you, Mr. Mayor. I am excited and thank you for your enthusiasm. You have long been interested, I know, in seeing if the City could find a way to come up with an alternative that would enable people, perhaps, to give up owning cars but give them a practical and affordable way to use a car when they needed one. And we’re here with our leader from the Council – Council member Levine, who championed this legislation; Chairman Rodriguez; Borough President Brewer; my colleague from the Mayor’s Office of Sustainability; and our private sector colleagues, Justin Holmes and Paul Metz. It’s great to have you all here. We are excited about this partnership.

Under the legislation that Council member Levine got passed we are now going to be opening up 285 parking spaces across the four boroughs, 230 on street – and some of you saw today the Mayor stood at where those spaces will be here up on the Upper West Side – and another 55 spots in DOT municipal lots as well as the 24 NYCHA spots.

The pilot will really, we think, serve potentially two kinds of neighborhoods – one the Mayor sort of mentioned, a neighborhood where people are not using their cars to commute to work every day, they’re just using them occasionally on weekends but they’re keeping the car in the neighborhood, it’s very expensive, it’s very inconvenient. They’re very much a group that potentially could just benefit tremendously from Zipcar. And then in another neighborhoods, for example, like the Rockaways where there are fewer transit options, people perhaps don’t want to have the expense of owning a car but they need, from time to time, to have access to one.

Studies have shown that owning a car in New York City right now is about $9,000 a year with car payments, insurance, maintenance, as well as the hassles of parking, potential tickets, all the inconveniences of owning a car here.

So, these car sharing models give people potentially a chance to save dramatic amounts of money – just to put some math to what the Mayor said. The car-share prices can range from $8 to $15, $70 to $121 per day. So if you used a car, let’s say, four hours a week twice a month to run errands or visit family outside the city, you could be spending in the ballpark of about $1,500 a year as opposed to the $9,000 for owning a car full-time.

So that can be a real dramatic savings. And as the Mayor said, research has shown – and we’ve looked at a bunch of studies over the course of years – that in the long run car-share can induce people to give up cars. That eases congestion, tackles air quality problems, and we hope will really actually ease the competition for parking at the curb.

So, for those of you who saw today, we’ve put up specific signage at the curb and car-share companies will be parking their cars in those spaces. We’ve worked with local community stakeholders, community boards, elected officials to pick the areas. We went with a coalition of the will in neighborhoods that were very interested in doing this. And we will be doing a big effort of public outreach, social media, etcetera to make sure local residents are aware of the pilot.

This is going to be a two-year pilot. We will be evaluating as we go. We will be seeing how the cars are being used, talking to our private sector partners and of course obviously surveying the users and seeing if they’re liking the service and it’s working as well as it should be. And then over the course of the pilot, we’ll see if we’re interested in expanding or what steps we might take next.

I think, as the Mayor said, if the pilot goes well this has real potential to offer New Yorkers a much more affordable way to have access to a car when they need it. I just want to give a thanks particularly to a couple members of my team – Alex Keating and Laura MacNeil who did a lot of the yeoman’s work of putting this together, William Lee and Tony Galgan from our borough engineering shop as well.

So, thank you, Mr. Mayor. We are excited.

MAYOR DE BLASIO AND SPEAKER JOHNSON ANNOUNCE ADVISORY COMMISSION TO RECOMMEND REFORMS TO NEW YORK CITY’S PROPERTY TAX SYSTEM

Commission, to be co-chaired by Vicki Been and Marc Shaw, will develop proposals to make property taxes more fair, straightforward, and transparent

  Today, Mayor de Blasio and Council Speaker Johnson announced the formation of a new advisory commission, co-chaired by Vicki Been and Marc Shaw, to develop recommendations to reform New York City’s property tax system to make it simpler, clearer, and fairer, while ensuring that there is no reduction in revenue used to fund essential City services. The commission will solicit input from the public by holding at least 10 public hearings. The last in-depth review of the system by a government-appointed commission was in 1993.

The Commissioner of the Department of Finance Jacques Jiha, Director of the Office of Management and Budget Melanie Hartzog, Director of the City Council Finance Division Latonia McKinney, and Deputy Director and Chief Economist Council Finance Division Raymond Majewski will serve as non-voting ex-officio members. 

“To be the fairest big city, you need a fair tax system. For too long, New York City taxpayers have had to grapple with a property tax system that is too opaque, too complex, and just feels unfair,” said Mayor Bill de Blasio. “New Yorkers need property tax reform, and this advisory commission will put us on the road to achieve it.”

“This is an important first step towards addressing inequities in this city’s broken property tax system. It is crucial that we work to bring clarity and fairness to this process, which has long perplexed the public and left many feeling hoodwinked by the city government tasked with representing them. The Council looks forward to rolling up our sleeves and addressing this long-standing problem,” said Council Speaker Corey Johnson.

Vicki Been is the Boxer Family Professor of Law at NYU School of Law, an Affiliated Professor of Public Policy of the NYU Wagner Graduate School of Public Service and Faculty Director of NYU’s Furman Center for Real Estate and Urban Policy. Previously Been served for three years as Commissioner of Housing Preservation and Development for the City of New York, where she led the 2400-person agency in: designing and implementing Housing New York, a comprehensive strategy for addressing the City’s need for affordable housing. Been has written extensively about New York City’s property tax system and its primary abatement and exemption programs.

Marc V. Shaw is the Interim Chief Operating Officer for CUNY. Shaw also serves as the Senior Advisor to the Chancellor for Budget, Finance, and Fiscal Policy, as well as Chair of the CUNY Institute for State and Local Governance.  Previously, he served as a Senior Advisor to Governor David Paterson, Executive Vice President for Strategic Planning at Extell Development Company and First Deputy Mayor to Michael Bloomberg.

Also announced today, advisory commission members include:

Carol O’Cleireacain is an Adjunct Professor at the Milano Graduate School for Mangement & Urban Policy at the New School, a Senior Consultant to the Brookings Institution’s Task Force on the State Budget Crisis, and Of Counsel to the LIATI Group, a boutique merchant bank, which focuses on public infrastructure investments. O’Cleireacain has a long history in public service, with appointments as Deputy Mayor for Economic Policy Planning and Strategy (Detroit), Deputy State Treasurer (NJ), Director of the NYC Mayor’s Office of Management & Budget, and Commissioner of the NYC Department of Finance.

Felice Michetti is Chairperson and CEO of Grenadier Realty Corp, one of the largest affordable housing owner and operators in New York State. Michetti also serves on the board of the Community Preservation Corporation. Previously, she served as Commissioner of the Department of Housing Preservation under Mayors Dinkins and Giuliani. Michetti served as First Deputy Commissioner of the Department of Housing Preservation under Mayor Koch.

James Parrott is Director of Economic and Fiscal Policies at The Center for New York City Affairs at The New School. In previous positions, Parrott worked for the Fiscal Policy Institute, the Office of the State Deputy Comptroller for New York City, the City of New York (as chief economist for economic development), and for the International Ladies’ Garment Workers’ Union.

Gary Rodney is Chairman of City Real Estate Advisors (CREA LLC), a low-income housing tax credit syndicator. As Chairman, Rodney works with the senior management team of CREA and its partners to help finance quality affordable housing in cities across the country. Prior to assuming this role, Rodney served as the President of the New York City Housing Development Corporation.

Elizabeth Velez is President and Chief Contract Administrator of the Velez Organization and is on a number of construction-related boards, including the New York Building Congress, the National Hispanic Business Group, the Association of Minority Enterprises of New York (AMENY), the Mayor's Commission on Construction Opportunity, the Board of ACE Mentor of New York and the NYC Department of Business Services Advisory Board. 

The advisory commission will evaluate all aspects of the current property tax system with an eye to transparency, efficiency and fairness.  Its comprehensive review will include, but not be limited to:

·         The tax classification system;

·        The methods of determining property market values and        

       assessments;

·         Treatment of property value increases;

·         Relief for low-income and senior homeowners; and

·         Method of calculating tax rates.

The advisory commission’s recommendations may include changes that could be made at the City level, as well as those that would require state legislation.  The commission will also review comparable property tax systems across the nation, including different methods for property valuation and homeowner protections.

Property taxes are an important component of a local government’s tax base – in New York City, they make up 45 percent of the local tax base – and are essential to quality service delivery.  New York City’s current property tax system is set forth in state law and has been in existence for nearly four decades.  Its complex structure classifies properties into multiple categories, referred to as tax classes, and contains provisions that govern fractional assessments, market valuation restrictions, and caps on growth, among other things.  Application of the various provisions of state law can result in differences in taxes paid on properties, which may become more pronounced with the passage of time.

“New York City’s property tax system has long been the subject of criticism and controversy,” said Commission Co-Chair Vicki Been. “I look forward to the opportunity to work with Mayor de Blasio, the City Council, Co-Chair Marc Shaw, and this smart, thoughtful, balanced, and pragmatic group of experts to propose reforms to make the system fairer for all New Yorkers.”

“Twenty five years ago, I served on a joint commission to address the city’s tax system. Much has changed since then and many issues have arisen that need to be resolved. I applaud Mayor de Blasio and City Council Speaker Corey Johnson for committing themselves to the difficult task of reforming the system together. It won’t be easy, but the cooperative nature of this joint commission indicates to me that both sides are serious about the need for change. I am honored to be a part of this commission and excited to begin the hard work necessary to enact change,” said Commission Co-Chair Mark Shaw.

“As the Commissioner of the City agency responsible for administering the NYC property tax, I look forward to assisting the Commission in its mission to study the property tax system and make recommendations to make the property tax system fairer, more predictable and more transparent,” said Department of Finance Commissioner Jacques Jiha.

“The City is taking a hard look at our property tax system to ensure that hardworking taxpayers – our fellow New Yorkers – are being treated fairly. Our goal is to provide more transparency to a system that has for decades left New Yorkers in confusion,” said Office of Management and Budget Director Melanie Hartzog. “This commission will provide much needed clarity for homeowners and help us take steps to create a fairer city.”

“Property tax reform is one of the most pressing issues facing New York today and has been a focus of the Council Finance Division for decades. The current system is in many ways unfair and fails to meet the needs of everyday New Yorkers. This joint Commission will seek to answer the classic questions of tax policy; can we make the system fairer? Can we make it work better with the City’s economy? Can we make it more transparent and easier for the public to understand? We look forward to finding solutions that can have a direct impact for homeowners,” said Council Finance Division Director Latonia McKinney.

Chancellor Carranza Visits The Bronx Charter School for Excellence

  Chancellor Richard Carranza visited the Excellence Community Charter School located at 1960 Benedict Avenue in the Bronx to see the newly opened seven story building the charter school is now housed in. Several reporters including myself were able to accompany Chancellor Carranza as the CEO of Excellence Community Schools Dr. Charlene Reid took him on a tour of the new school. 

We visited a kindergarten class first where the children were immersed in learning. All of us then fit into the elevator to ride up to the seventh floor to see some older children. The school is a K - 8 school, with some children leaving in the seventh grade to go onto specialized schools. we saw algebra being taught in a seventh grade math class. We visited a computer room, music room, the gym, cafeteria, and almost every room in the school as Dr. Reid wanted to show how this charter school was working.  

A student has to apply to be admitted to a charter school, and there are a series of steps the charter school must go through before admitting students. The procedure is that any current student in the charter school has the right to stay in the school. the next step in admission is that any siblings of current students are given preference. the next step if there is room available is for the home district, then the city district, and lastly if there is room available any student from anywhere in New York State can be admitted. The last step or two rarely happens as space is very sought after in charter schools, and this school I was told has a wait list of almost one thousand applicants. 

After the tour Chancellor Carranza met privately with Dr. Reid, and then took some questions from reporters before leaving. There were questions from other reporters about the admission policy, what resources charter schools receive, and how they may differ from public schools. Having been a parent leader years ago I asked the new chancellor about poor student performance in most Bronx schools. I went into specific details about the Average Yearly Progression numbers now compared to before Mayoral Control, and received the answer "I am new here, we have to look at the numbers, they don't always tell the whole story etc." I heard that fifteen years ago from then Chancellor Joel Klein, and said that to current Chancellor Carranza. I offered my help as I did to Chancellor Klein, but parents want to know why their children have problems in public school. 

Above - Chancellor Carranza meets Dr. Reid.

Below they observe a kindergarten class.

Above - The pair check in on a computer lab room.

Below - The chancellor takes a selfie of himself under the college flag.

Above - Chancellor Carranza poses with students in front of the Honor Roll Board.

Below - The charter is so successful it has acquired space around the corner on Pugsley Avenue.

New Stringer Report: 90% of City Contracts for Human Services Submitted Late for Registration, After the Contract Start Date

Thousands of non-profits – many serving most vulnerable New Yorkers – go unpaid for months, forced to deliver services without a registered contract

HRA, DHS, DOE are worst offenders, submitting over 99% of their new contracts retroactively

Stringer calls for new, transparent tracking system for all contracts, strict agency timelines

  New York City Comptroller Scott M. Stringer released a new reportthat found pervasive delays in the City’s contracting system, particularly for human services contracts where 90.8 percent were submitted late for registration in Fiscal Year 2017 – half of them by six months or more. Moreover, all contract types had extensive delays – 81 percent of new and renewal contracts across all City agencies were submitted late in FY 2017.

The report highlighted “Type 70” contracts, which support programs for some of the City’s most vulnerable populations – including seniors, the homeless, and children – and found that some agencies, including the Human Resources Administration (HRA) and the Department of Homeless Services (DHS), submitted a shocking 100 percent of their contracts late in FY 2017, forcing cash-strapped non-profits to resort to taking loans and potentially putting themselves at financial risk.

Vendors can only be paid once a contract is registered, so “retroactive” contracts (or those registered after a contract’s start date has already passed) force vendors into a risky, catch-22 choice: wait to begin work, which can stall projects and drive up costs, or begin work without a registered contract, which can cause significant risk and financial burden to a vendor.

For human services providers, whose programs often support the City’s most vulnerable populations – such as delivering meals for seniors and providing shelter for homeless families – the stakes raised by retroactive contracts are particularly high. These services are critical and moreover, vendors are often non-profit organizations with limited budgets and cash flow. When contracts are registered retroactively, vital supports for communities are put at risk, while the non-profits themselves are often forced to take out loans to meet payroll and other expense needs.

“Behind every human services contract are people who need support from our City – food to eat, a roof to sleep under, or someone to care for them. But our slow contracting system is hurting the very organizations that the City’s most vulnerable communities depend on each day,” said Comptroller Stringer. “With non-profits already under pressure from Washington, here in New York City the bureaucratic process only makes their jobs harder. This comes down to our priorities as a city. We owe it to all our neighbors to deliver necessary services in a timely manner. And there’s a common-sense solution to this problem – hold City agencies accountable. We need to reform our contract system and make it more transparent. If a shipping company can track millions of packages as they cross the globe, we should be able to track a contract as it moves through City agencies.”

The City’s procurement process involves oversight from a number of agencies before a contract can be registered with the Comptroller’s office. While oversight is crucial to ensure that required procedures are followed and to root out corruption, waste, and fraud in City spending, the length of time it takes for a contract to work its way through all stages of review – most of which do not have deadlines – is a primary source of contract delays. Making matters worse, there is no public-facing system for tracking contracts as they make their way through the various stages of review, leaving vendors uninformed about the status of their contracts.

The Comptroller’s report includes an extensive analysis of City contracts for FY 2017, with a particular focus on human service contracts.

Vital Services Threatened by Retroactive Human Services Contracts

New York City relies on an extensive network of non-profit human service organizations to meet the needs of our diverse population. Despite their integral role in delivering City services, community-based non-profits struggle the most with delayed contract delays as their tight budgets and responsibility to deliver vital services stretches their organizations thin.

The Comptroller’s report examined Type 70 contracts – the designation for program contracts – among seven City agencies that contract for the majority of human services programs, finding for Fiscal Year 2017:

• Of the total 2,448 Type 70 contracts registered for the seven human service agencies, 2,224, or 90.8%, were retroactive by the time they reached the Comptroller’s Office.
• Moreover, the Comptroller’s analysis found that half of human service contracts were retroactive by over six months, with the average retroactive period at over 209 days.
• Retroactivity among human services contracts was higher than for other contracts. In FY17, 81% of all new and renewal contracts arrived at the Comptroller’s Office for registration after the contract start date had passed, and over one-third of all contracts were late by more than six months.
• These delays often force non-profit vendors to take loans from the City in order to make payroll and cover other expenses. In fact, in FY17, the City’s Returnable Grant Fund processed 751 loans for non-profits worth a combined total of $149.9 million – many necessitated by delayed contract awards.

Length of Retroactivity Among Registered Human Service Contracts

	Under 30 days	31 – 60 days	61 – 90 days	91 – 189 days	181 – 365 days	Over 1 year	Total
Number of contracts	428	158	155	371	709	403	2,224
% of total	19.2%	7.1%	7.0%	16.7%	31.9%	18.1%	100%
Average number of days retro	7.1	45.1	76.5	133.7	269.7	504.0	209.5

Four Agencies – HRA, DHS, DOE, DFTA – Worst Offenders

• Of the seven agencies the Comptroller’s report focused on, two agencies – the Human Resources Administration (HRA) and the Department of Homeless Services (DHS) – submitted 100% of their program contracts retroactively, meaning not one contract from these agencies arrived for registration prior to the contracted start date.
• The Department of Education (DOE) and the Department for the Aging (DFTA) did not do much better. DOE submitted all but one of its 406 program contracts retroactively (99.8%), and DFTA submitted 98.9% of its contracts retroactively, with only 3 of its 275 contracts registered before the contract start date.

Oversight Works but is Non-Existent for Most Agencies

While the Comptroller’s report found widespread problems in the agency contracting process, by comparison, the analysis found that once contracts are submitted to the Comptroller’s Office, they are processed and registered within 19 days on average. The vast majority, 96 percent, of contracts submitted to the Comptroller’s Office by the seven agencies examined were registered within an initial 30 days review window.

To help alleviate the burden placed on vendors that wait months for contracts to make it through the City’s review process, the Comptroller’s Office proposed two recommendations:

• Assign each City agency with a role in contract oversight a specific timeframe for their contract review work. By holding agencies to specific timeframes, the contracting process can be expedited and standardized.
• Create a public facing tracking system to allow vendors to monitor the progress of their contract through each stage of the contract process. Making the contract process more transparent would introduce real accountability to the City’s oversight agencies.

To read the full report, click here.