DE BLASIO ADMINISTRATION ANNOUNCES HEATING IMPROVEMENTS FOR NYCHA RESIDENTS IN ADVANCE OF WINTER

New strategy to reduce outages and restore heat faster by installing new boilers, hiring more heating staff and external contractors, as well as improving resident communication

  The de Blasio Administration announced the result of heating improvements made across NYCHA this summer and fall to prepare for cold weather. In response to last year’s record cold temperatures, NYCHA’s new leadership has developed a comprehensive strategy to reduce outages and restore heating faster this winter. Systemwide, NYCHA residents now have more heating staff, more mobile boilers on hand for emergencies and better handling of their heat complaints. And 87,000 residents at developments that had chronic heating issues last year have received target improvements, ranging from new boilers to new third-party experts that will manage heating plants to reduce outages.

  

“Every NYCHA resident deserves heat in the winter. Our new leadership at NYCHA have delivered major improvements that will reduce outages and get the heat back on faster,” said Mayor Bill de Blasio. “This plan will benefit all 400,000 New Yorkers who call NYCHA home, and is the only the beginning of more improvements to come."

“In preparation for this winter season, we have been fully dedicated to ensuring real improvements to keep residents warmer,” said NYCHA Interim Chair and CEO Stanley Brezenoff. “While there is no magic wand, our operations team, under the leadership of our General Manager Vito Mustaciuolo, is tackling problems we have immediate control over while looking to the future when we can have more reliable heating throughout our portfolio for all New Yorkers who rely on us.”

“After joining NYCHA in the height of the heating problems last winter, I committed from day one to ensure that we were better prepared when this winter season came around,” said NYCHA General Manager Vito Mustaciuolo. “With unprecedented support from Mayor de Blasio, we have achieved operational improvements, streamlined capital timelines and better technology both internally and for resident communication, so when the winter freeze comes, we will be able to respond faster and get boilers up and running quicker.”

Last winter in New York City was one of the coldest on record, bringing NYCHA’s aging infrastructure to a brink. Approximately half of NYCHA developments experienced one or more heat service interruptions lasting longer than 24 hours last heat season. This winter, NYCHA is targeting investments towards the worst performing heating systems. 

The citywide improvements for the 2018-19 heating season include:

• More Heating Staff: NYCHA has added 50 new heating technicians this heating season, and added more contracts with skilled laborers to provided additional expertise if needed. These staffing expansions will improve maintenance and speed response times.
• Better Customer Service: When NYCHA makes heating repairs, it will now robocall all affected residents before closing out work orders. Any resident that has not experienced heat restoration will be able to immediately respond through the call to keep staff on site to address their issue.
• New Mobile Boilers: 5 additional mobile boilers are ready to deploy during emergencies to keep heat running.

The targeted improvements affected 87,000 residents include:

• New Boilers: 12 developments have had boilers replaced since last winter with three more under repair now, improving heating service for 9,100 residents. Six developments, with 7,300 residents, have received dedicated mobile boilers. 
• Outside Experts to Monitor and Manage Boilers: For 41 scattered sites or high-tech heating plants, third-party agencies will provide faster and better fixes, helping 70,000 residents experience better heat this season. Further developments will be transferred to third party managers over the course of the heating season.

• Better Windows: 7,600 senior apartments received new window balances, a key issue in last year’s struggles to keep the cold out. These repaired windows will lock in the heat more securely for NYCHA’s elderly residents.

Below is a list of sites that are receiving targeted improvements:

New Boilers

·         104-14 Tapscott Street

·         Claremont Rehab (Group 2)

·         Claremont Rehab (Group 4)

·         Coney Island I (Site 1B)

·         Coney Island (Sites 4&5)

·         Fort Washington Avenue Rehab

·         Hope Gardens

·         Ingersoll

·         International Tower

·         Lower East Side I

·         Manhattanville Rehab (Group 2)

·         Manhattanville Rehab (Group 3) *

·         Melrose*

·         Ocean Hill-Brownsville

·         Rehab Program (Wise Rehab)

·         Robinson *

·         Rutland Towers*

·         Sutter Avenue-Union Street

·         Taft*

·         Washington Heights Rehab

·         Wyckoff Gardens*

Note: The locations with an asterisk are receiving a mobile boiler.

Third Party Management

·         303 Vernon Avenue

·         Albany

·         Albany II

·         Astoria

·         Beach 41ST Street

·         Brownsville

·         Conlon Lihfe Towers

·         Cooper Park

·         Corsi Houses

·         East River

·         Elliot

·         Fiorentino Plaza

·         Glenmore Plaza

·         Highbridge Gardens

·         Howard

·         Hughes Apartments

·         International Tower

·         Jefferson

·         Kingsborough

·         Kingsborough Extension

·         Lexington

·         Long Island Baptist Houses

·         Low Houses

·         Pink

·         Queensbridge North

·         Queensbridge South

·         Rangel

·         Roosevelt I

·         Roosevelt II

·         Shelton House

·         Sumner

·         Tilden

·         Unity Plaza (Sites 17,24,25A)

·         Unity Plaza (SITES 4-27)

·         Van Dyke I

·         Van Dyke II

·         Vandalia Avenue

·         Wagner

·         Washington

·         Williamsburg

·         Woodson

Better Windows

·         Armstrong I

·         Baruch Houses Addition

·         Betances I

·         Bethune Gardens

·         Borinquen Plaza I

·         Boston Road Plaza

·         Bronx River Addition

·         Brown

·         Cassidy-Lafayette

·         Chelsea Addition

·         Claremont Parkway- Franklin Avenue

·         College Avenue – East 165^th Street

·         Conlon Lihfe Towers

·         Corsi Houses

·         Davidson

·         East 152^nd Street- Courtlandt Avenue

·         Fort Washington Avenue Rehab

·         Garvey (Group A)

·         Glebe Avenue- Westchester Avenue

·         Haber

·         Harborview Terrace

·         Hope Gardens

·         International Tower

·         Kingsborough Extension

·         La Guardia Addition

·         Leavitt Street- 34^th Avenue

·         Lower East Side I

·         Marshall Plaza

·         Meltzer Tower

·         Middletown Plaza

·         Mitchel

·         Morris Park Senior Citizens Home

·         Morrisania Air Rights

·         Palmetto Gardens

·         Public School 139 (Conversion)

·         Randall Avenue-Balcom Avenue

·         Rehab Program (College Point)

·         Reid Apartments

·         Robbins Plaza

·         Roosevelt I

·         Shelton House

·         Stuyvesant Gardens II

·         Surfside Gardens

·         Twin Parks East (Site 9)

·         Union Avenue – East 163^rd Street

·         Upaca (Site 5)

·         Upaca (Site 6)

·         Van Dyke II

·         Vandalia Avenue

·         West Brighton II

·         West Tremont Avenue – Sedgewick Avenue

·         White

·         Woodson

The de Blasio Administration has made an unprecedented commitment to preserve and strengthen public housing. This investment is part of the Administration’s total commitment to $2.1 billion to support NYCHA’s capital infrastructure from Fiscal Year 2014 to Fiscal Year 2027 and $1.6 billion to support NYCHA’s operations from Fiscal Year 2014 to Fiscal Year 2022. This investment includes $1.3 billion to fix over 900 roofs, over $500 million to repair deteriorating exterior brickwork at nearly 400 buildings, and $140 million to improve security at 15 NYCHA developments.

The City waived NYCHA’s annual PILOT and NYPD payments to the City, relieving NYCHA of nearly $100 million in operating expenses a year. In January 2018, the Mayor announced $13 million to improve NYCHA’s response to heating emergencies this winter, followed by an additional $200 million for long-term heating improvements at 20 NYCHA developments. 

Bronx CB 7 General Board Meeting | Annual Budget Public Hearing FY20 | Tuesday, October 23, 2016 | 6pm

Annual Budget Public Hearing FY20 -  Review of Community Board 7's FY20 Budget Priorities and Requests

  *   Tuesday, October 23, 2018 @ 6:00 pm

Location

Montefiore Hospital Medical Center

Cherkasky Auditorium

110 East Gun Hill Road

Bronx, NY 10467

________________________________

Bronx CB 7 General Board Meeting

  *   Tuesday, October 23, 2018 @  6:30 pm

Location

Montefiore Hospital Medical Center

Cherkasky Auditorium

110 East Gun Hill Road

Bronx, NY 10467

Parkchester/Van Nest Public Workshop/Open House

  

Please join us and help plan around coming Metro-North service in your neighborhood!

Parkchester/Van Nest
Public Workshop and Open House

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Join us for a public workshop/open house and help plan around future Metro-North service in your neighborhood! The interactive self-paced event is an important opportunity for the community to join city agencies to plan around future Metro-North service – share your local expertise, hear from your neighbors, contribute your ideas to improve Tremont Avenue, plan for the station area, consider what the service means for jobs, health, housing, youth and more.  Activities will be self-paced and participants can come when they wish and stay for as long as they are able to.

WHEN Saturday, October 27, 2018 10AM–1PM: Workshop/Open House 1PM–1:30PM: Group Visioning Activity (Self-paced activities. Come when you wish and stay for long as you are able to.)

WHERE St. Raymond’s Elementary School Monsignor Tierney Auditorium (Enter at corner of E Tremont Ave and Purdy St.)

Light refreshments will be provided. For any questions or special needs, please email bmns@planning.nyc.gov or call 718 220 8500

Find Out More

Join us for a public workshop/open house and help plan around future Metro-North service in your neighborhood! The interactive self-paced event is an important opportunity for the community to join city agencies to plan around future Metro-North service – share your local expertise, hear from your neighbors, contribute your ideas to improve Tremont Avenue, plan for the station area, consider what the service means for jobs, health, housing, youth and more.  Activities will be self-paced and participants can come when they wish and stay for as long as they are able to.

Join us for a public workshop/open house and help plan around future Metro-North service in your neighborhood!

The interactive self-paced event is an important opportunity for the community to join city agencies to plan around future Metro-North service – share your local expertise, hear from your neighbors, contribute your ideas to improve Tremont Avenue, plan for the station area, consider what the service means for jobs, health, housing, youth and more. 

Activities will be self-paced and participants can come when they wish and stay for as long as they are able to.

WHEN Saturday, October 27, 2018 10AM–1PM: Workshop/Open House 1PM–1:30PM: Group Visioning Activity (Self-paced activities. Come when you wish and stay for long as you are able to.)

WHEN

Saturday, October 27, 2018
10AM–1PM: Workshop/Open House
1PM–1:30PM: Group Visioning Activity
(Self-paced activities. Come when you wish and stay for long as you are able to.)

WHERE St. Raymond’s Elementary School Monsignor Tierney Auditorium (Enter at corner of E Tremont Ave and Purdy St.)

WHERE

St. Raymond’s Elementary School
Monsignor Tierney Auditorium
(Enter at corner of E Tremont Ave and Purdy St.)

Light refreshments will be provided. For any questions or special needs, please email bmns@planning.nyc.gov or call 718 220 8500

Light refreshments will be provided. For any questions or special needs, please email bmns@planning.nyc.gov or call 718 220 8500

Find Out More

Find Out More

DE BLASIO ADMINISTRATION ANNOUNCES NEW STEPS TO INCREASE ACCESS TO BIRTH CONTROL IN CITY HOSPITALS

First Lady Chirlane McCray calls on cities across the U.S. to follow NYC’s lead

  First Lady Chirlane McCray and NYC Health + Hospitals today announced a new initiative aimed at increasing access to birth control in the City’s public hospitals, doubling down on the City’s commitment to be a national leader in reproductive rights.

This fall, the City’s public health system — the largest in the nation — will increase its stock of long-acting reversible contraceptives at all 11 of the city’s hospitals and its six ambulatory care centers, making these contraceptive devices available to women who request them during their primary care visit. Nearly half of all pregnancies in the United States are unintended. Long-acting reversible contraceptive methods, like intrauterine devices (IUD) that are implanted in women, are over 99 percent effective and can be removed at any time.

“With our constitutional rights at serious risk, it’s time for cities and states to step up to protect the health and well-being of women and their families,” said First Lady Chirlane McCray, co-chair of New York City’s Commission on Gender Equity. “These new steps will help prevent unintended pregnancy in New York City and allow women to care for themselves and their loved ones. Beyond that, we are sending a clear message: New York City will not stop fighting for the health and wellness of women and families. Cities across the country can and should follow our lead.”

“Having effective contraceptive methods readily available ensures that women and families in New York City face fewer barriers to the critical reproductive health care they want and need,” said Dr. Herminia Palacio, Deputy Mayor for Health and Human Services. “These new initiatives demonstrate our City’s continuing commitment to streamline and ultimately increase women’s access to birth control, at a time when the Trump administration is making clear attempts to roll back access.”

“While I made my choice to specialize in OB/GYN many years ago, my passion for the field — and its important role in helping women make life-altering decisions — is just as strong today, which is why I’m excited about our enhanced commitment to greater and easier access to all classes of contraception, including the most efficient and reliable,” said Dr. Machelle Allen, chief medical officer of NYC Health + Hospitals. “Each woman is different, having differing needs and lifestyles. We at Health + Hospitals are committed to providing choice, which implies access to all options. As women’s reproductive options are being challenged across the country, I’m proud that we in New York continue to expand, not contract, these options.”

Under its initiative, Health + Hospitals will purchase 13,000 contraceptive devices over the next three years – more than doubling the system’s current supply. Health + Hospitals currently serves approximately 113,000 female patients of reproductive age (13 –49 years) across the public health system’s ambulatory care centers and neighborhood clinics in the five boroughs. The increase in contraceptives will help protect nearly 5,000 more women against unwanted pregnancy. The initiative will also include:

·  “Pregnancy intention” screenings for women of reproductive age: This screening will become a routine part of primary care, with the aim of connecting women as early as possible to the appropriate pre-pregnancy care, prenatal care, or birth control of their choice.

· “Health readiness” assessments for women planning a pregnancy: The screenings will help identify and manage chronic medical conditions – such as obesity, diabetes and hypertension – that increase the risk of maternal complications and deaths. 

· Faster access to contraceptive devices for adolescents: Women ages 13 to 18 will be able to get same-day access to intrauterine devices in ambulatory clinics that offer women’s health services. The current process requires adolescents first visit a pediatrician then be referred to a gynecological specialist to get an IUD.

·  Additional Staff: A new women’s health Nurse Practitioner and support staff will be added to the family planning clinics at each of the 11 hospitals and six large community-based health centers.

“Every New Yorker has the right to access comprehensive, affordable, and culturally-competent reproductive rights services,” said Jacqueline Ebanks, Commissioner of NYC’s Commission on Gender Equity. “We applaud First Lady McCray and the de Blasio Administration for putting the reproductive rights of New Yorkers first, and helping ensure more people have control over their reproductive health care, regardless of their gender identity or expression.”

Gang Leader Convicted Of Racketeering And Related Offenses, Including Attempted Murder In Subway Station

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL WHITE, a leader of two violent street gangs, “MBG,” and the “Young Gunnaz,” was convicted of racketeering conspiracy, attempted murder and assault with a deadly weapon in aid of racketeering, and a firearms offense.  WHITE was convicted following a two-week trial before U.S. District Judge Robert W. Sweet. 

U.S. Attorney Geoffrey S. Berman said:  “Michael White, a leader of two gangs, committed a spree of shootings in and around New York City Housing Authority’s Mill Brook Houses.  He shot rival gang members in front of a public school, in a community center, and in a subway station.  Now he stands convicted for his crimes.  We thank the New York City Police Department and the Drug Enforcement Administration for their tireless efforts to secure this important conviction.”

According to the evidence presented in court during the trial:

From 2007 through October 2017, WHITE was a member of MBG, also known as “Money Bitches Guns,” a local gang based in the Mill Brook Houses.  From 2010 through October 2017, WHITE was a member of the Young Gunnaz set of the YGz gang also based in the Mill Brook Houses.  As part of his membership in both gangs, WHITE shot seven people.  Specifically, on January 25, 2010, WHITE shot and injured a 16-year-old rival on a street corner in the Mill Brook Houses.  On January 31, 2010, WHITE shot and injured an 18-year-old rival at a baby shower.  Later on January 31, 2010, WHITE shot a rival gang member near a building in the Mill Brook Houses, causing the individual to suffer life threatening injuries.  On February 12, 2010, WHITE shot and injured an 18-year-old rival outside a public school.  On October 28, 2012, WHITE shot and injured three individuals in the Cypress Avenue Subway Station.

WHITE, 30, of the Bronx, New York, was convicted of two counts of racketeering conspiracy, each of which carries a maximum sentence of 20 years in prison; one count of violent crime in aid of racketeering, which carries a maximum sentence of 20 years in prison; and one count of use of a firearm during a violent crime, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the New York City Police Department and the Drug Enforcement Administration.  

Senior FinCen Employee Arrested And Charged With Unlawfully Disclosing SARs

Natalie Mayflower Sours Edwards Illegally Photographed SARs and Other Sensitive Government Information and Transmitted Them To Reporter In Connection With Approximately 12 News Articles Over 1-Year Period

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), and Eric M. Thorson, Inspector General for the Department of Treasury, announced today the filing of a criminal complaint charging NATALIE MAYFLOWER SOURS EDWARDS, a/k/a “Natalie Sours,” a/k/a “Natalie May Edwards,” a/k/a “May Edwards,” who is a Senior Advisor at the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), with unlawfully disclosing Suspicious Activity Reports (“SARs”) and conspiracy to do the same.  EDWARDS was arrested yesterday and will be presented this afternoon in the United States District Court for the Eastern District of Virginia.

U.S. Attorney Geoffrey S. Berman said:  “Natalie Mayflower Sours Edwards, a senior-level FinCEN employee, allegedly betrayed her position of trust by repeatedly disclosing highly sensitive information contained in Suspicious Activity Reports (SARs) to an individual not authorized to receive them.  SARs, which are filed confidentially by banks and other financial institutions to alert law enforcement to potentially illegal transactions, are not public documents, and it is an independent federal crime to disclose them outside of one’s official duties.  We hope today’s charges remind those in positions of trust within government agencies that the unlawful sharing of sensitive documents will not be tolerated and will be met with swift justice by this Office.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “In her position, Edwards was entrusted with sensitive government information.  As we allege here today, Edwards violated that trust when she made several unauthorized disclosures to the media.  Today's action demonstrates that those who fail to protect the integrity of government information will be rightfully held accountable for their behavior.”

Treasury Department Inspector General Eric Thorson said:  “Our criminal investigators have been at the center of this investigation as a core part of our responsibility to detect and prevent threats to the integrity and efficiency of Treasury programs and operations.  We are committed to working with our law enforcement partners and with FinCEN and other Treasury officials, and appreciate their cooperation and support.”

Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said:  “Protecting sensitive information is one of our most critical responsibilities, and it is a role that we take very seriously.  We have fully and proactively supported Treasury’s Office of Inspector General’s investigation of leaks of protected information, and thank them for their hard work with the U.S. Attorney’s Office to hold accountable those responsible.”

According to the Complaint[1] filed today in Manhattan federal court:

The mission of FinCEN is to “safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”[2]  Among other things, FinCEN manages the collection and maintenance of SARs regarding potentially suspicious financial transactions, which, under the Bank Secrecy Act, U.S. financial institutions and other parties are required by law to generate and deliver to FinCEN.  Under the BSA and its implementing regulations, willful disclosure of a SAR or its contents by government employees or agents except as necessary to fulfill official duties is a felony.

Beginning in approximately October 2017, and lasting until the present, EDWARDS unlawfully disclosed numerous SARs to a reporter (“Reporter-1”), the substance of which were published over the course of approximately 12 articles by a news organization for which Reporter-1 wrote (“News Organization-1”).  The illegally disclosed SARs pertained to, among other things, Paul Manafort, Richard Gates, the Russian Embassy, Mariia Butina, and Prevezon Alexander.  EDWARDS had access to each of the pertinent SARs and saved them – along with thousands of other files containing sensitive government information – to a flash drive provided to her by FinCEN.  She transmitted the SARs to Reporter-1 by means that included taking photographs of them and texting the photographs to Reporter-1 over an encrypted application.  In addition to disseminating SARs to Reporter-1, EDWARDS sent Reporter-1 internal FinCEN emails appearing to relate to SARs or other information protected by the BSA, and FinCEN non-public memoranda, including Investigative Memos and Intelligence Assessments published by the FinCEN Intelligence Division, which contained confidential personal, business, and/or security threat assessments. 

At the time of EDWARDS’s arrest, she was in possession of a flash drive appearing to be the flash drive on which she saved the unlawfully disclosed SARs, and a cellphone containing numerous communications over an encrypted application in which she transmitted SARs and other sensitive government information to Reporter-1.

EDWARDS, 40, of Quinton, Virginia, is charged with one count of unauthorized disclosures of suspicious activity reports and one count of conspiracy to make unauthorized disclosures of suspicious activity reports, both of which carry a maximum sentence of five years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, the Treasury Department, and the Treasury Department’s Office of Inspector General.  He also thanked the United States Attorney’s Office for the Eastern District of Virginia for its assistance with the investigation.

Former Energy Company Executive Sentenced In Connection With The Bribery Scheme Of Former Executive Deputy Secretary To The Governor Of New York

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PETER GALBRAITH KELLY JR., a former executive at Competitive Power Ventures (“CPV”), was sentenced to 14 months in prison for defrauding CPV by misrepresenting that the former Executive Deputy Secretary to the Governor, Joseph Percoco, had obtained state ethics approval for his wife to work at CPV.  Co-defendants Percoco and Steven Aiello were convicted of charges relating to bribery on March 13, 2018, after an eight-week jury trial.  The jury was deadlocked on the charges against KELLY.  Joseph Gerardi, who was acquitted of all charges at the trial with Percoco, was convicted of all charges in a related trial earlier this year.  KELLY pled guilty on May 11, 2018, to one count of conspiracy to commit wire fraud before U.S. District Judge Valerie E. Caproni, who imposed today’s sentence.

U.S. Attorney Geoffrey Berman said:  “Braith Kelly admitted to giving the spouse of one of the most powerful men in Albany, Joseph Percoco, a low-show job at his company in order to ingratiate himself and his company with Percoco.  Many consider this type of behavior to be ‘the way things are done’ in government.  But our Office does not, and neither does the court.” 

In imposing today’s sentence, Judge Caproni stated:  “I hope the sentence will be heard in government affairs offices everywhere…you have to play by the rules.”

According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:

KELLY hired Percoco’s wife to a low-show job at CPV, and ran monthly payments to Percoco and his wife through a consultant who worked for CPV in order to disguise the source of the payments.  KELLY also made sure that Percoco’s wife’s photograph and full name were not included in promotional materials for CPV, and he falsely told his superiors at CPV – on two separate occasions – that Percoco had obtained an ethics opinion from the Governor’s Office approving of Percoco’s wife’s employment with CPV, when in fact no such opinion existed.  

In addition to the prison term, KELLY, 55, of Canterbury, Connecticut, was sentenced to three years of supervised release.  He was also ordered to pay $247,000 in restitution to CPV.

On September 20, 2018, Judge Caproni sentenced Percoco to six years in prison.  Aiello is scheduled to be sentenced on November 29, 2018.  Gerardi is scheduled to be sentenced on December 6, 2018.

U.S. Attorney Berman praised the work of the Buffalo Field Office of the Federal Bureau of Investigation and New York Office of the Internal Revenue Service-Criminal Investigation, which jointly conducted this investigation with special agents from the U.S. Attorney’s Office. 

Former PCAOB Inspections Leader And KPMG Executive Director Pleads Guilty To Scheme To Steal Confidential PCAOB Information In Order To Fraudulently Improve KPMG’s PCAOB Inspection Results

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CYNTHIA HOLDER, a former Public Company Accounting Oversight Board (“PCAOB”) Inspections Leader and KPMG Executive Director, pled guilty today to participating in a scheme to defraud the Securities and Exchange Commission (the “SEC”) and the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing so that KPMG could improve its performance in PCAOB inspections, the results of which were shared with, and utilized by, the SEC in carrying out its governmental functions.  HOLDER pled guilty before the U.S. District Court Judge J. Paul Oetken.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “In the wake of the accounting fraud scandals of the early 2000s, Congress passed important laws to ensure the quality and accuracy of auditing work performed on publicly traded companies so that investors could have confidence in the reported financial results of those companies.  The SEC was vested with the responsibility and authority of executing these laws and the PCAOB was created to play a key role:  To audit the auditors.  HOLDER undermined the work of the SEC and the PCAOB by stealing confidential inspection information from her former employer, the PCAOB, and helping insiders at her new employer, KPMG, to cheat the regulatory system put in place to protect the investing public.  This was a revolving door tainted by fraud and today we hold the defendant accountable for her conduct.”

According to the allegations contained in the Indictment filed against HOLDER, along with her co-conspirators, David Middendorf, David Britt, Thomas Whittle, and Jeffrey Wada, and statements made in related court filings and proceedings:[1]     

The PCAOB is a nonprofit corporation overseen by the SEC that inspects the audit work performed by registered accounting firms (“Auditors”) with respect to the financial statements of publicly traded companies (“Issuers”).  The PCAOB inspects the largest U.S. accounting firms on an annual basis.  As part of the inspection process, the PCAOB chooses a selection of audits performed by the accounting firm for a closer review.  Until shortly before an inspection occurs, the PCAOB does not disclose which audits are being inspected, or the focus areas for those inspections, because it wants to ensure that an Auditor does not perform additional work or modify its work papers in anticipation of an inspection.  Following the completion of an inspection, the PCAOB issues an Inspection Report containing any negative findings or “comments” with respect to both the specific audits reviewed and the accounting firm more generally.  The PCAOB transmits these Inspection Reports to the SEC, which utilizes them in carrying out its agency functions.     

KPMG is one of the largest accounting firms in the world.  In recent years, KPMG fared poorly in PCAOB inspections and in 2014 received approximately twice as many comments as its competitor firms.  By 2015, KPMG was engaged in efforts to improve its performance in PCAOB inspections, including but not limited to recruiting and hiring former PCAOB personnel such as HOLDER and HOLDER’s co-conspirator, Brian Sweet. 

KPMG’s efforts to improve inspection results, however, were not limited to legitimate means.  Instead, between 2015 and 2017, HOLDER, Middendorf, Whittle, Britt, Wada, and Sweet worked to illicitly acquire valuable confidential PCAOB information concerning which KPMG audits would be inspected, in an effort to game the system and improve inspection results.  For example, after Sweet began employment at KPMG, but while HOLDER was still employed by the PCAOB, HOLDER fed Sweet confidential PCAOB information about certain pending inspections.  HOLDER did so while simultaneously seeking employment at KPMG.  During the pendency of her efforts to obtain employment at KPMG, HOLDER – in violation of PCAOB rules – continued to work on KPMG inspections at the PCAOB.  Once she secured a job at KPMG, HOLDER stole valuable confidential information on her way out of the PCAOB and then passed it on to Sweet, her new boss at KPMG.     

In March 2016, HOLDER obtained the PCAOB’s confidential 2016 inspection selections for KPMG from Wada, who was still working at the PCAOB but who had recently been passed over for a promotion.  Wada – who was not responsible for KPMG inspections at the PCAOB – accessed and stole valuable confidential information from the PCAOB and passed it on to HOLDER.  HOLDER, in turn, provided the 2016 inspection selections to Sweet, who passed them to Middendorf, Whittle, and Britt.  Middendorf, Whittle, Britt, and Sweet then agreed to launch a stealth program to “re-review” the audits that had been selected.  In order to cover up their illicit conduct, Britt gave other KPMG engagement partners a false explanation for the re-reviews.  The stealth re-review program allowed KPMG to double-check its audit work, strengthen its work papers, and, in some cases, identify deficiencies or perform new audit work that had not been done during the live audit.

In January 2017, Wada, who had again been passed over for promotion at the PCAOB, again stole valuable confidential PCAOB information, misappropriating a preliminary list of confidential 2017 inspection selections for KPMG audits and passing it on to HOLDER.  At the same time, Wada provided Holder with his resume and sought her assistance in helping him to acquire employment at KPMG.  Sweet shared the preliminary inspection selections provided by Wada with Whittle and Britt, while noting that the information was only preliminary.  Whittle’s response was to ask Sweet to confirm that they would get the final list as well.

In February 2017, Wada texted HOLDER saying, “I have the grocery list. . . . All the things you’ll need for this year.”  Wada then spoke to HOLDER and provided her with the full confidential 2017 final inspection selections.  HOLDER again shared the stolen information with Sweet, who shared it with Middendorf, Whittle, and Britt.  Middendorf, Whittle, Britt and Sweet agreed to inform engagement partners on the list so that extra attention could be paid to these audits in light of the forthcoming PCAOB inspections. 

In 2017, a KPMG partner who received early notice that his/her engagement was on the confidential 2017 inspection list reported the matter, as a result of which KPMG’s Office of General Counsel launched an internal investigation.  Thereafter, HOLDER and Sweet took a number of steps to destroy or fabricate evidence relevant to the investigation.  For example, HOLDER deleted a number of relevant text messages, emails, and documents, and said she was going to purchase a “burner phone” so her conversations could not be monitored.  Similarly, Sweet burned evidence of the 2017 inspection list and provided a falsified version of the list to KPMG counsel.

HOLDER, 52, pled guilty to one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and two counts of wire fraud, which each carry a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  Sentencing is scheduled for April 5, 2019 at 10:30 a.m. 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

Trial against the remaining defendants is scheduled to begin on February 11, 2019, before the Honorable J. Paul Oetken.

Mr. Berman praised the investigative work of the United States Postal Inspection Service and also thanked the Securities and Exchange Commission, which has brought an administrative proceeding against the defendants. 

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

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