STATEMENT BY DOI COMMISSIONER MARK G. PETERS

  James McGovern, who I appointed to conduct an independent investigation of whistleblower claims by Anastasia Coleman and Daniel Schlachet, has informed me that he has substantiated their claims. He recommended and determined the following: (1) That they be restored to their prior employment and provided with back pay; (2) I exceeded my authority by integrating the office of the Special Commissioner of Investigation within the Department of Investigation and that all actions in that regard should be reversed; (3) I erred in my conduct and should be disciplined in the form of a letter of apology. I will accept and follow Mr. McGovern’s recommendations. 

 Accepting oversight, even when you are the subject of that oversight, is critical for good government. Now that this process is complete, I look forward to continuing the systemic and important oversight work of DOI, the City’s Inspector General.

Comptroller Stringer Releases Investigative Survey of NYCHA Doors

  Unlocked doors, missing latches, and broken locks were found at 65 percent of developments located in every borough

61 developments found severely vulnerable – with over half their entrances unlocked

  Today, New York City Comptroller Scott M. Stringer released the results of a survey of NYC Housing Authority building doors that revealed over 1,000 broken and defective doors at 195 NYCHA developments. When tested, the doors swung open – or were held open by rope, tape, or chains.

The Comptroller’s audit and investigations team visited 299 NYCHA developments, including 3,538 buildings within them. 65 percent of developments had unsecured doors. Further, 61 developments were severely vulnerable, with over half of their entrance doors unlocked. 47 percent of all front entrances were not equipped with security cameras.

The Comptroller launched the comprehensive, citywide review after a NYCHA resident spoke out at a town hall about safety concerns. She reported that her building lacked a working door for 19 years, the entire life of her grandson.

“All New Yorkers should feel safe in their own homes – but hundreds of broken latches, busted locks, and doors held open by chains and rope leave NYCHA families without that basic sense of security,” said Comptroller Stringer. “Unsecured doors are unacceptable. NYCHA must promptly secure, repair and replace broken doors.”

The Comptroller’s comprehensive building-by-building review of NYCHA’s exterior door security was conducted in summer 2018. The full findings include the following:

Nearly 200 Developments Affected

• Auditors visited 299 developments citywide, pushing or pulling on over 4,551 exterior building doors – and found that 195 developments were affected by unsecured doors:62 percent of Bronx developments had at least one door unsecured; including 14 developments where over half of the doors were open to intruders.
  • 73 percent of Brooklyn developments had at least one door unlocked; including 13 developments where over half of the doors were open to intruders.
  • 59 percent of Manhattan developments had at least one door unlocked; including 32 developments where over half of the doors were open to intruders.
  • 67 percent of Queens developments had at least one door unlocked; including 2 developments where over half of the doors were open to intruders.
  • 89 percent of Staten Island developments had at least one door unlocked; no developments had more than half their doors open.

Over One Thousand Broken, Tampered, Open Doors Across All Boroughs

• Citywide, 1,023 building doors were broken, tampered with, or unlockable, leaving developments open to intruders, including roughly 23 percent of all front doors and 21 percent of all rear or side doors.
  • In Manhattan, 37 percent of the developments’ 761 front doors were open and 33 percent of 269 rear or side doors were unlocked;
  • In the Bronx, 24 percent of the developments’ 767 front doors were open and 20 percent of 276 rear or side doors were unlocked;
  • In Staten Island, 19 percent of the developments’ 108 front doors were open and 21 percent of 28 rear or side doors were unlocked;
  • In Queens, 18 percent of the developments’ 470 front doors were open and 9 percent of 81 rear or side doors were unlocked; and,
  • In Brooklyn, 17 percent of the developments’ 1,432 front doors were open and 14 percent of 359 rear or side doors were unlocked.

Roughly Half of All Front Doors Unmonitored

• Auditors also searched for security cameras by front doors, and found that just 53 percent (1,887) of all 3,538 entrance doors had cameras placed by the entrance.

Following the auditors’ citywide review, Comptroller Stringer called on NYCHA to immediately assess its security measures, and recommended that NYCHA improve residents’ safety by taking the following steps:

• Repair or replace all damaged exterior doors identified in this Citywide review and equip them with sturdy, functional hardware;
• Regularly inspect all exterior doors and maintain all doors and locks in good working order;
• Ensure that security cameras are operational and located at all publicly accessible entrances and exits; and,
• Conduct a top-to-bottom review of its security and maintenance systems and procedures to ensure that when exterior doors are obstructed or unsecured, staff are made immediately aware of the conditions, and the doors are promptly fixed.

“Thank you Comptroller Scott Stringer for bringing the importance of our entrance doors to be secured as a priority. Residents safety should always be first,” said Rhonda Bennett, Tenant Association President of Polo Ground Towers.

“We want NYCHA to be more transparent and responsive on this issue. For example, the front door leading to the vestibule has been broken for the last three months. We thank NYC Comptroller Scott Stringer and his office for doing the work on this issue. We look forward to working with them in ensuring this gets addressed,” said Neva Harper, President of Shelton Houses Residents Association.

“Residents in Lehman Village complain about how the front doors don’t lock in the lobby and how people are getting robbed. We as residents should be able to live in a safe and healthy environment,” said Patricia Burns, Tenant Association President at Lehman Village.

“Bronx River is compiled of eleven buildings, with two of them being senior buildings. As residents we don’t feel safe because none of the entrance doors lock properly and the lighting is very dim. We have had seniors getting robbed in the buildings because doors do not lock. Doors are of poor quality and are mostly broken. NYCHA set up for Bronx River to have intercom and it has yet to happen. Please, we are in need of help with security/safety improvements and we hope this report sheds light and puts pressure on the importance of this matter,” said Norma Saunders, Bronx River Resident Association President.

To read results from the investigative survey, click here.

CONGRESS MEMBERS SMITH, ENGEL, AND SCHIFF JOINT STATEMENT DEMANDING ACTION ON THE DISAPPEARANCE OF SAUDI JOURNALIST JAMAL KHASHOGGI

  Today, House Armed Services Committee Ranking Member Adam Smith (D-WA), House Foreign Affairs Committee Ranking Member Eliot Engel (D-NY), and House Intelligence Committee Ranking Member Adam Schiff (D-CA) released the following joint statement in response to the disappearance of Jamal Khashoggi:

“As attacks on the press have proliferated in Turkey, Saudi Arabia, and other countries around the world, the disappearance and possible death of Saudi journalist Jamal Khashoggi is deeply alarming. If the reports detailing the involvement of the Saudi government are true, the United States should not be afraid to take bold action to demonstrate to the world that we will not stand by in the face of such an appalling violation of international human rights. 

“We fully support the Senate Foreign Relations Committee’s letter to the administration invoking the Global Magnitsky Human Rights Accountability Act to trigger an investigation and determination of sanctions. If Saudi Arabia is found to have been involved in the disappearance of Mr. Khashoggi, inaction is simply not an option. The United States should leverage our support and strong relationship with Saudi Arabia to advocate for respect for human rights and push back against these types of actions, which isolate Saudi Arabia. As Congressional leaders, we must show that the United States will stand up against injustices and human rights violations in any country, including our partners. We wish the administration would do the same.”

CITY TARGETS OVER 1,000 BUILDINGS FOR NEW TENANT PROTECTION PROGRAM

The Certification of No Harassment pilot is a new tool to shield New Yorkers from tenant harassment

  Today, the de Blasio Administration announced the implementation of the Certification of No Harassment (CONH) Pilot Program, a new law that requires buildings that meet certain criteria to certify that no tenant harassment has taken place before being granted construction permits to significantly alter their properties. Today, the City also published the listof more than 1,000 buildings with approximately 26,000 units that will now be subject to the CONH program.

“New York City is stopping tenant harassment in its tracks,” said Mayor de Blasio. “We are taking a proactive approach to enforcement and targeting at-risk buildings for increased scrutiny in order to protect affordability across the city.”

Owners of buildings included on the program list will be required to apply for a Certification of No Harassment before they are approved for construction permits by the Department of Buildings. The Department of Housing Preservation and Development will conduct the investigation to certify that no tenant harassment has taken place. Owners denied a CONH will not be able to significantly alter their buildings for five years, unless they provide permanently affordable housing to be built without City subsidy, tax benefits, or inclusionary housing. The list of flagged CONH properties will be updated by HPD and included on HPD’s and DOB’s websites.

“This administration has been working on multiple fronts to proactively and aggressively combat tenant harassment, while preserving affordable housing at record pace.  Now, the City has a new tool to root out harassment that will be applied to more than 1,000 buildings, including 26,000 apartments in neighborhoods identified as most at risk,” said HPD Commissioner Maria Torres-Springer. “I want to thank the City Council, in particular Councilman Brad Lander, for their leadership, and the many advocacy groups who partnered with us to take another strong step to protect tenants and ensure New York remains a city for everyone.”

“We look forward to working with our partners at HPD to prevent bad-actor landlords from getting construction permits. This new effort builds upon our agencies’ work together in the city-state Tenant Harassment Prevention Task Force, which has secured unprecedented penalties, including jail time, for landlords who abuse their tenants,” said Buildings Commissioner Rick D. Chandler, PE.

“The Council is proud to have worked with HPD and DOB to make this Certification of No Harassment Pilot a reality,” said New York City Council Speaker Corey Johnson. “In the midst of an affordability crisis, tenants in New York have enough to deal with without worrying about harassment from unscrupulous landlords. I will continue to fight for tenants and expansion of tenant protection laws.”

Two versions of the CONH program have been in place in Hell’s Kitchen since 1974 and for Single-Room Occupancy buildings (SROs) citywide, but the program was significantly expanded thanks to the City Council’s 2017 CONH legislation. The broadened 36-month pilot includes buildings that meet the following criteria:

·  Buildings which meet a threshold of distress within 11 community board districts throughout the city.  The Community Boards have either undergone city-sponsored neighborhood-wide rezonings or have a high concentration of distressed buildings

      Any building citywide where a full vacate order has been issued, or where a building is enrolled in HPD’s Alternative Enforcement Program (AEP) and remained active in the program for more than four (4) months.

·   In addition, any building citywide where there has been a final determination of harassment in court, or by NYS Homes and Community Renewal (HCR) within the preceding five years will be added to the list and will automatically be denied a CONH upon application. 

Once a building owner subject to the program applies for a Certification of No Harassment, HPD will notify tenants, community groups, the community board, and local elected officials. HPD will then conduct an investigation into whether tenant harassment has taken place at the property within the last five years. If HPD determines that there is evidence of harassment, a hearing will be held at the Office of Administrative Trials and Hearings and the building owner can be potentially barred from seeking DOB permits.  If no evidence of tenant harassment is found, HPD will grant the building a Certification of No Harassment.

The expanded CONH program is the product of a working group led by Council Member Brad Lander and HPD.   The group was comprised of a wide range of stakeholders, including government agencies, City Council members and staff, the Association for Neighborhood and Housing Development, Cypress Hills LDC, Los Sures, United Neighborhood Housing Program, Urban Justice Center, Make the Road, Fifth Avenue Committee, Mobilization for Justice, Housing Conservation Coordinators Inc., The Legal Aid Society, Legal Services NYC, Faith in NY, New York State Association of Affordable Housing, Rent Stabilization Association, Community Housing Improvement Program, Real Estate Board of New York, NYU Furman Center, Northern Manhattan Improvement Corp., and other experts interested in identifying ways to further deter harassment. 

Working with members of the group, the City continued to analyze data to find characteristics of buildings where tenant harassment was suspected, reported, or confirmed. The group looked at many factors and learned that buildings that are physically distressed or recently sold may be associated with reports of harassment.

  

BP DIAZ & HUD ADMINISTRATOR PATTON VISIT NYCHA

  Bronx Borough President Ruben Diaz Jr. and United States Department of Housing and Urban Development Regional Administrator Lynne Patton toured various South Bronx NYCHA Houses and visited the Patterson Houses, a New York City Housing Authority (NYCHA) development.

The Patterson Houses “temporary” boilers have been installed since 2011, despite having been fully funded for replacement. During last winter’s severe cold snap the boilers became a symbol of the inability of NYCHA to properly address the heat crisis that faces its more than 400,000 residents during the colder months.

Above - Bronx BP Ruben Diaz Jr. talks about the problems at the Patterson Houses where funding was provided in 2011 to install new boilers, but to date nothing but temporary boilers have been placed at the Patterson Houses.

Below - HUD Regional administrator Lynne Patton says that the federal government gives the city $2.5 Billion dollars for NYCHA every year, but it seems that very little gets done and there is little if any accounting for the monies that NYCHA gets. She added that she spoke recently with the acting head of NYCHA, and was disappointed to hear his response that NYCHA only has enough money to handle emergency situations. 

Above - The temporary boilers in the street in front of the Patterson Houses that have been there since 2011.

Below - New temporary boilers being added in the yard behind one building that will be burning oil to provide heat. A furnace is being built along side this building to let the fumes from the boiler go above the building. 

BP Diaz and HUD Regional administrator Lynne Patton look inside one of the new temporary boilers being installed at the Patterson Houses.

REPRESENTATIVE ADRIANO ESPAILLAT HOSTS DISTRICT CAREER FAIR

  Join Representative Adriano Espaillat (NY-13) on Thursday, October 18^th from 4:00 p.m. to 7:00 p.m. at the Mural Pavilion – Harlem Hospital Center located at 512 Lenox Avenue for a career fair open to job seekers and employers throughout New York’s 13^th congressional district.

“New York has a thriving business community, and I’m hosting this career fair to help individuals looking to make a career transition or who are searching for part-time, full-time, or seasonal positions meet local and national business leaders seeking to fill available opportunities within their respective companies,” said Rep. Espaillat (NY-13).

Employers are encouraged to register and may download the registration form and email the completed form to Michelle.Booker@mail.house.gov or Laurie.Tobias-Cohen@mail.house.gov by Thursday, October 11, 2018. Interested companies may also call 212 - 663 - 3900 to reserve space.

This event is open to the public.

Manhattan U.S. Attorney Announces Charges Against 5 Doctors And 2 Other Medical Professionals For Illegally Distributing Oxycodone

Coordinated Arrests Made in 6 Cases Aimed at Cutting Off the Supply of Diverted Opioids

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), James D. Robnett, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), Scott Lampert, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (“HHS-OIG”), James P. O'Neill, Commissioner of the New York City Police Department (“NYPD”), and Mark G. Peters, Commissioner of the New York City Department of Investigations (“DOI”), announced today the unsealing five Indictments and a criminal Complaint in Manhattan federal court charging a total of 10 defendants with illegally distributing oxycodone.

U.S. Attorney Geoffrey S. Berman said:  “These doctors and other health professionals should have been the first line of defense against opioid abuse, but as alleged in today’s charges, instead of caring for their patients, they were drug dealers in white coats.  They hid behind their medical licenses to sell addictive, dangerous narcotics.  This Office will do everything in its power to bring to justice anyone responsible for fueling the opioid epidemic that has taken so many lives.”    

DEA Special Agent-in-Charge James J. Hunt said:  “From drug cartels to street distributors, law enforcement is targeting all levels of drug traffickers amidst the worst drug crisis in American history.   The worst villains in the fight against drug abuse are doctors whose criminal actions fuel addiction and overdoses.  As a result of separate investigations from three DEA offices, five doctors, a pharmacist, a nurse practitioner and three associates have been arrested for their role in distributing millions of unnecessary oxycodone pills, allegedly. SAC Hunt commends the men and women from DEA’s Tactical Diversion Squads, our law enforcement partners and Southern District of New York for their commitment and hard work.” 

IRS-CI Special Agent-in-Charge James D. Robnett said:  “Medical professionals and others callously placed individuals in harm’s way simply because of greed. It takes a special kind of person to prey on the sick and vulnerable. The special agents of IRS Criminal Investigation will continue their mission to disrupt the flow of ill-gotten gains from these criminals.” 

HHS-OIG Special Agent-in-Charge Scott Lampert said:  “These individuals allegedly engaged in a greed-fueled scheme that put lives at risk and callously contributed to the opioid epidemic that continues to plague our society.  These charges should serve as a warning to medical professionals that act like drug dealers and profit off of the vulnerable individuals they should be helping.  Along with our law enforcement partners we are committed to ending the illegal distribution of opioids in this country and protecting the public’s health and welfare.”

NYPD Commissioner James P. O’Neill said:  “Our entire country is suffering through an opioid abuse crisis, and we need to do everything we can to save as many lives as possible.  We need to help people from falling into a black hole of addiction and fatal overdoses.  We have to push New York City and our nation to thrive, and to turn this epidemic around.  A good step in that direction is to investigate and put away the criminals who have so clearly betrayed their professional oaths – who have put illegal profits above their own integrity, and above the well-being of their fellow man.  I commend each of our law enforcement partners on the Drug Enforcement Task Force, and all the New Yorkers who alert the police when they suspect criminality.  This is how each of us – cops, prosecutors, and all the people we serve – are sharing the responsibility for public safety.  And this is how we are making our way forward.”    

DOI Commissioner Mark G. Peters said: “These joint investigations demonstrate the scourge that opioid abuse has on our community and the emphatic response from law enforcement: Any individual who seeks to promote prescription fraud and drug abuse will be exposed, arrested and prosecuted. DOI stands firmly with its federal partners on this serious issue and we will continue to work together to stop this crime and save lives.”

According to the allegations in the five Indictments and one Complaint unsealed today: [[1]]

DANTE A. CUBANGBANG, JOHN F. GARGAN, MICHAEL KELLERMAN, and LOREN PIQUANT, who together operated a medical clinic in Queens, were arrested yesterday evening and will be presented in Manhattan federal court today.   According to the allegations in the Indictment unsealed today, CUBANGBANG, a physician, and GARGAN, a nurse practitioner, prescribed over 6 million oxycodone pills to individuals they knew did not need the medication for any legitimate medical reason.  CUBANGBANG and GARGAN prescribed more than twice as many oxycodone pills that were paid for by Medicare and Medicaid than the next highest prescriber in New York.  CUBANGBANG and GARGAN doled out these prescriptions during office visits that lasted no more than a few minutes and involved little to no physical examination.  Together with KELLERMAN and PIQUANT, who worked in the clinic and recruited patients, the defendants collected more than $5 million in all-cash office visit fees, which they laundered and divided amongst themselves. 

CARL ANDERSON, a Staten Island physician, and ARTHUR GRANDE were arrested yesterday evening and will be presented in Manhattan federal court today.  According to the allegations in the Indictment unsealed today, ANDERSON prescribed nearly a million oxycodone pills to patients he knew had no legitimate medical need for the medication, including GRANDE, who sold the pills on the streets of New York.  ANDERSON often saw his patients, some of whom displayed visible signs of drug addiction, without appointments and with little notice, in the middle of the night, and required that they pay hundreds of dollars in cash for each prescription.  Noisy crowds of pill-seeking patients often gathered outside of ANDERSON’s office and in his waiting room, prompting occasional 911 calls from neighbors.  Even after some of ANDERSON’s patients died of drug overdoses, he did not alter his prescribing practices. 

ANTHONY PIETROPINTO, a psychiatrist residing in Manhattan, was arrested this morning and will be presented today before Magistrate Judge James L. Cott.  According to the allegations in the Complaint unsealed today in Manhattan federal court, PIETROPINTO wrote thousands of medically unnecessary oxycodone prescriptions in exchange for $50 to $100 in cash per visit.  PIETROPINTO wrote these prescriptions to drug-addicted individuals, including one patient who overdosed on drugs, and who had previously been prescribed by PIETROPINTO both oxycodone and naloxone, a medication used to block the effects of opioid overdoses, because PIETROPINTO was aware of, but disregarded, that patient’s addiction issues.  PIETROPINTO saw these patients in a rented office space after hours, and instructed his patients to not fill prescriptions at large chain pharmacies because pharmacists at those pharmacies would call and question PIETROPINTO about why he wrote prescriptions for large amounts of oxycodone. 

NKANGA NKANGA, a Staten Island physician, was arrested this morning and will be presented in Manhattan federal court today.  According to the allegations in the Indictment unsealed today, in exchange for cash payments, NKANGA wrote thousands of oxycodone prescriptions for patients, some of whom displayed visible signs of drug addiction, without conducting any physical examination, or even seeing them in an examination room.  NKANGA also wrote prescriptions in the names of patients who did not even visit his medical office.  On one occasion, for instance, NKANGA asked a patient, “how many people are you representing today,” and then wrote prescriptions in the names of people, even though three were not present.  NKANGA regularly prescribed over 100 oxycodone pills per patient per month until July 2018 when he reduced all patients’ monthly allotment, telling one patient he was “very worried” about scrutiny from law enforcement.    

NADEM J. SAYEGH, a physician with offices in the Bronx and Westchester, was arrested this morning and will be presented in Manhattan federal court today.  According to the allegations in the Indictment unsealed today, SAYEGH maintained a corrupt relationship with a co-conspirator, issuing oxycodone prescriptions in his name, variations of his name, his family members’ names, and the names of other individuals in exchange for thousands of dollars in cash, expensive dinners, high-end whisky, cruises, and all-expense-paid trips.  SAYEGH wrote some of these prescriptions, for which there was no legitimate medical purpose, for individuals who did not visit his medical office, including a patient who was overseas and another patient who was incarcerated.        

MARC KLEIN, a pharmacist in White Plains, was arrested this morning and will be presented in Manhattan federal court.  According to the allegations in the Indictment unsealed today, KLEIN filled oxycodone prescriptions that he knew were illegitimate, including prescriptions filled by a customer in multiple variations of his name and date of birth, and prescriptions filled in the names of individuals who never were present in the pharmacy.  KLEIN filled thousands of these oxycodone prescriptions, “fronted” controlled substances, and made false reports to New York State authorities, in exchange for cash payments and a vacation.   KLEIN admitted, in substance, that he and his employees could be called “licensed drug dealers” because “oxy pays the bills” at KLEIN’s pharmacy. 

CUBANGBANG, 50, of Franklin Square, New York, GARGAN, 62, of Manhattan, New York, KELLERMAN, 54, of Queens, New York, and PIQUANT, 37, of Bronx, New York, have been charged in an Indictment with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison.  CUBANGBANG, GARGAN, and KELLERMAN are also charged with one count of conspiracy to commit health care fraud, which carries a maximum sentence of 10 years in prison, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

ANDERSON, 57, of Staten Island, New York, and GRANDE, 53, of Staten Island, New York, have been charged in an Indictment with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison. 

PIETROPINTO, 80, of Manhattan, New York, has been charged in a Complaint with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison, and two counts of distribution of controlled substances, each of which carries a maximum sentence of 20 years in prison.

NKANGA, 65, of Staten Island, New York, has been charged in an Indictment with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison, and four counts of distribution of controlled substances, each of which carries a maximum sentence of 20 years in prison.

SAYEGH, 64, of Yonkers, New York, has been charged in an Indictment with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison; one count of distribution of controlled substances, which carries a maximum sentence of 20 years in prison; one count of health care fraud, which carries a maximum sentence of 10 years in prison; making false statements, which carries a maximum sentence of five years in prison; and aggravated identity theft, which carries a two year mandatory minimum prison sentence to be served consecutive to any other term of imprisonment. 

KLEIN, 47, of White Plains, New York, has been charged in an Indictment with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of 20 years in prison, and 14 counts of distribution of controlled substances, each of which carries a maximum sentence of 20 years in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by their respective judges. 

Mr. Berman praised the investigative work of the DEA Tactical Diversion Squads in New York, Long Island and Newark as well as HHS, DOI and IRS.  DEA’s Tactical Diversion Squad, New York (Group TDS-NY) comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services and New York City Department of Investigation.  DEA’s Long Island Tactical Diversion Squad (LIDO –TDS) comprises agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, Suffolk County Police Department, Port Washington Police Department and Internal Revenue Service.  Newark Tactical Diversion Squad (Newark-TDS) comprises agents and officers from the DEA, Elizabeth Police Department, Essex County Sheriff’s Office, Toms River Police Department, Clinton Police Department, West Orange Police Department, Pohatcong Police Department, Long Branch Police Department, and Marlboro Police Department.  Assistance was also provided by the Yonkers Police Department and Greenburgh Police Department.

Parts of this cases were conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state, and local law enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

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

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

2 Florida Men Plead Guilty To Multimillion-Dollar Credit Card Fraud Scheme

Defendants Used Companies to Cause More Than $7 Million in Unauthorized Charges to Thousands of Consumers

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMES BECKISH and JOSEPH ANTHONY DEMARIA pled guilty to one count of conspiracy to commit wire fraud in connection with a scheme to make unauthorized charges on credit cards through sham companies that purportedly offered nutraceutical products for sale over the internet.  BECKISH and DEMARIA pled guilty before United States District Judge Edgardo Ramos.

According to the Complaint, the Information to which BECKISH and DEMARIA pled guilty, and statements made during the proceedings today:

Between 2013 and 2017, BECKISH, DEMARIA and others, created and operated dozens of companies that purported to sell dietary supplements and similar products called “nutraceuticals” over the internet.  The websites of the defendants’ companies purported to sell products like dietary supplements but, in reality, were primarily used to repeatedly bill consumers who never ordered their products, or even if they did, almost never received them.  The defendants used these websites as a cover for unauthorized and recurring charges that were placed on thousands of credit card numbers that the defendants had purchased or obtained, or had acquired from consumers who had attempted to order the products in question.  For example, in one email, DEMARIA asked BECKISH: “Are we shipping these guys actual nutra products? Lol.”  To which BECKISH responded:  “Nope.” 

BECKISH, DEMARIA, and others created these different companies and websites, because they knew that credit card processors would stop doing business with them over time as consumers noticed the unauthorized charges and sought refunds.  These refunds, called “chargebacks” by credit card processors, are generally low for legitimate businesses but reached extremely high percentages for many of the companies associated with the defendants’ scheme.  In certain instances, the chargeback rates quickly approached or even exceeded 20 percent – that is, consumers were seeking refunds of more than 20 percent of the charges placed by certain of the defendants’ companies.  Credit card processors, in turn, paid millions of dollars in refunds for fraudulent charges associated with the defendants’ companies between 2013 and 2017 in attempts to refund affected consumers.

In total, BECKISH and DEMARIA both pled guilty to causing more than $7 million in loss during the duration of the scheme.  

 BECKISH, 32, of Miami, Florida, and DEMARIA, 33, of Miami, Florida, each plead guilty to one count of conspiracy, which carries a maximum sentence of five years in prison.  BECKISH and DEMARIA also agreed to pay restitution and to forfeit $7,231,878.  Sentencing for BECKISH is scheduled for January 16, 2019 at 12:30 p.m. before Judge Ramos. Sentencing for DEMARIA is scheduled for January 18, 2019 at 12:30 p.m. before Judge Ramos.

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentence imposed on the defendants will be determined by the judge.

Mr. Berman praised the investigative work of the Secret Service.