Former Controller Of College Of New Rochelle Pleads Guilty To Securities Fraud And Failing To Pay Over More Than $20 Million In Payroll Taxes

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that KEITH BORGE, the former controller of the College of New Rochelle (“CNR”), pled guilty today before U.S. Magistrate Judge Judith C. McCarthy to one count of failing to pay over federal payroll taxes and one count of securities fraud in White Plains federal court.  The case has been assigned to United States District Judge Vincent L. Briccetti. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “By covering up CNR’s true financial condition, Keith Borge deprived CNR’s leaders of the opportunity to address the college’s financial problems for two years.  Borge defrauded CNR’s bondholders and left CNR with a $20 million tax liability.  He committed federal crimes for which he will now pay the price.” 

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Investors rely on accurate financial reporting when deciding on where to invest their hard-earned money.  When executives create and distribute inaccurate financial statements, investors are unknowingly steered into making poor investment choices.  The United States Postal Inspection Service is committed to protecting American investors and bringing those who manipulate the financial system to justice.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “As the tax filing deadline looms, it’s important for the American taxpayer to have confidence that when they are paying their taxes, their neighbor and co-workers are doing the same. And for those individuals who are considering evading their tax duty, they should consider the consequences which include potential imprisonment and civil penalties.”

According to the allegations contained in the Information and other publicly filed documents:

From in or about 2011 to in or about August 2014, BORGE was the Vice President for Financial Affairs at CNR, a private college with its main campus in New Rochelle, New York.  From in or about August 2014 to in or about June 2016, BORGE was CNR’s controller.  CNR had approximately 500 to 900 paid employees, depending on the time of year.  CNR withheld both federal income tax and its employees’ contributions to Social Security and Medicare from its employees’ pay.  Federal law required that the college pay over those withheld taxes and contributions within one week of the day it paid its employees.  During that one-week period, CNR held those withheld taxes and contributions in trust for the federal government.

As controller, BORGE managed CNR’s financial affairs and was responsible for paying over withheld payroll taxes and contributions.  From the third quarter of 2014 through the second quarter of 2016, BORGE failed to do so.  By the end of the second quarter of 2016, BORGE had failed to pay over more than $20 million in combined federal and state payroll taxes and contributions.

BORGE also made false entries in CNR’s books and records to conceal the college’s actual financial condition.  As a result, CNR’s financial statements for its fiscal year ending June 30, 2015, reported the college had net assets of $25 million, which was overstated by at least $24 million.  Among other things, BORGE caused the financial statements to understate CNR’s liability for federal and state payroll taxes by approximately $11 million; to overstate accounts receivable by approximately $9.2 million by recognizing pledged donations twice; to understate accounts payable by at least $1.5 million by failing to enter unpaid vendor invoices into CNR’s books and records; and to overstate investment assets by at least $2.2 million by recognizing assets that did not exist and by failing to enter his withdrawals from CNR’s investment accounts into the college’s books and records.

BORGE caused CNR’s inaccurate financial statements for the fiscal year ending June 30, 2015, to be released to the public by, among other things, providing the financial statements to the Municipal Securities Rulemaking Board for publication on the Electronic Municipal Market Access web site, where they could be reviewed by the investing public.  As a result, investors in bonds issued by the college through the City of New Rochelle Industrial Development Agency were defrauded by BORGE’s materially false and misleading statements in CNR’s financial statements. 

BORGE, 62, of Valley Cottage, New York, is charged with one count of failing to pay over payroll taxes, which carries a maximum sentence of five years in prison, and one count of securities fraud, 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 sentence will be determined by the court.  BORGE is scheduled to be sentenced July 11, 2019, before Judge Briccetti. 

In a related case, the U.S. Securities and Exchange Commission brought a civil action today against BORGE in U.S. District Court in White Plains."

Mr. Berman praised the outstanding investigative work of the Postal Inspection Service and IRS-CI.  Mr. Berman also thanked the SEC for their investigative work. 

BP DIAZ CALLS FOR CRIMINAL JUSTICE REFORMS

Today, Bronx Borough President Ruben Diaz Jr. sent a letter to Albany leadership urging them to pass necessary criminal justice reforms in this legislative session

In a letter to leaders in the State Capitol, including Governor Andrew M. Cuomo, New York State Assembly Speaker Carl E. Heastie and State Senate Majority Leader Andrea Stewart-Cousins, Borough President Diaz lays out his support for a variety of reforms to the criminal justice system. This includes the elimination of cash bail in New York State, as well as discovery reforms and speedy trial reforms

“Simply put, common-sense criminal justice reform protects all of our residents and communities,” wrote Borough President Diaz. “With criminal justice reforms, we will ensure that our community members benefit from a fair system where residents are more likely to engage positively and productively with law enforcement when their cooperation is in the interest of justice.”

Borough President Diaz noted that ending cash bail was of critical importance, given the urgent need to close Rikers Island and the ongoing debate regarding the siting of a new jail in The Bronx.

“By eliminating cash bail for most crimes, we can remove individuals from detention within our jails and enact a long overdue measure of justice while also decreasing the jail population by a significant amount,” said Borough President Diaz.

The full letter can be read at https://on.nyc.gov/2JP9FJV.

Attorney General James Files Nation's Most Comprehensive Suit Against Opioid Distributors And Manufacturers

Alleges that 6 Manufacturers and Sackler Family Engaged in False, Deceptive Marketing Practices About the Dangers of Opioids; Distributors Egregiously Failed their Duties to Avoid Unlawful Diversion 

  Today, Attorney General Letitia James filed the nation’s most extensive lawsuit against the manufacturers, Sackler Family, and distributors of opioids for their role in the opioid epidemic that has taken hundreds of thousands of lives and devastated families and communities. The lawsuit alleges that through years of false and deceptive marketing, and by ignoring their duties to prevent the unlawful diversion of controlled substances, these six national prescription opioid manufacturers, the Sackler Family, and four national prescription drug distributors are largely responsible for creating the opioid epidemic that has ravaged New York, causing widespread addiction, overdose deaths, and suffering. This lawsuit breaks new ground by setting forth an extensive set of facts alleging that prescription drug distributors failed to exercise their duties to detect and report diversion of opioids through poorly designed, poorly resourced, and poorly executed suspicious order monitoring programs. 

The amended complaint expands an earlier lawsuit filed by the Office of the Attorney General against Purdue Pharma, and sets forth the Attorney General’s findings from a multi-year, industry-wide investigation of these opioid market participants. 

The manufacturers named in the amended complaint include Purdue Pharma and its affiliates, members of the Sackler Family (owners of Purdue) and trusts they control, Janssen Pharmaceuticals and its affiliates (including its parent company Johnson & Johnson), Mallinckrodt LLC and its affiliates, Endo Health Solutions and its affiliates, Teva Pharmaceuticals USA, Inc. and its affiliates and Allergan Finance, LLC and its affiliates. The distributors named in the complaint are McKesson Corporation, Cardinal Health Inc., Amerisource Bergen Drug Corporation, and Rochester Drug Cooperative Inc.  

“The opioid epidemic has ravaged families and communities across New York,” said Attorney General Letitia James. “We found that pharmaceutical manufacturers and distributors engaged in years of deceptive marketing about the risks of opioids and failed to exercise their basic duty to report suspicious behavior, leading to the crisis we are living with today. As the Sackler Family and the other defendants grew richer, New Yorkers’ health grew poorer and our state was left to foot the bill. The manufacturers and distributors of opioids are to blame for this crisis and it is past time they take responsibility.” 

Specifically, the complaint alleges that the opioid epidemic is especially destructive to New York because of the fraud, willful misconduct, and gross negligence of the distributors who buy controlled substances in bulk from the manufacturers and sell to individual pharmacies and other licensed dispensers. These systemic failures led to massive shipments of opioids to specific pharmacies in New York that showed numerous “red flags,” such as a high percentage of prescriptions paid for in cash or written by a relatively small number of  providers who have been charged with, or convicted of, illegal prescribing. 

The complaint also alleges that manufacturers implemented a common “playbook” to mislead the public about the safety, efficacy, and risks of their prescription opioids. Manufacturers pushed claims that opioids could improve quality of life and cognitive functioning, promoted false statements about the non-addictive nature of these drugs, masked signs of addiction by referring to them as “pseudoaddiction” and encouraged greater opioid use to treat it, and suggested that alternative pain relief methods were riskier than opioids, among other grossly misleading claims. They utilized a vast network of sales representatives (“detailers”) to push these dangerous narratives and to target susceptible doctors, flood publications with their deceptive advertisements, and offer consumers discount cards and other incentives to entice them to request treatment with their products.  

The Attorney General’s lawsuit further asserts that the manufacturers and distributors obtained their licenses to sell opioids and other controlled substances in New York by representing, falsely, that they had complied with state requirements governing the distribution of these products, and that their licenses may be revoked. The complaint also sets forth detailed False Claims Act allegations based on opioid prescriptions that were paid under state health programs due to the defendants’ misconduct, with specific examples of overprescribing by New York providers directly exposed to the manufacturer’s deceptive marketing.  

The public health crisis that has ensued has taken the lives of thousands of New Yorkers and left many more addicted to opioids, whether prescribed by health care providers or obtained on the streets. The complaint alleges that because of their false and deceptive marketing of opioids and flooding New York with opioid pills, manufacturers and distributors bear responsibility for much of the human toll of this crisis.  

Each day, more than 130 people in the United States, about nine of whom live in New York, die as a result of opioid related overdoses. In 2017 alone, more than 3,200 New Yorkers died from opioid overdose. From 2000 to 2011, the number of prescriptions for opioid drugs produced by the manufacturers in this complaint more than quadrupled nationwide, despite no scientific basis for any significant increase in opioid treatment as medically necessary or appropriate. These prescriptions have proven to be an incredibly dangerous gateway to forms of illicit drugs - research shows that up to 80% of heroin users first became addicted as a result of exposure to prescription pills.  

Through their illegal actions, the amended complaint alleges that manufacturers and distributors have harmed New York financially by causing the state to spend hundreds of millions of dollars on services related to addiction treatment and support programs, antidote treatments and training, and medications and services to treat the additional physical morbidities that accompany opioid use disorder. The state has also had to pay false claims for inappropriate opioid prescriptions through its Medicaid program, its employee and retiree health plans, and its Workers’ Compensation Program. 

“Opioid dependency and related overdoses are a public health crisis that must be tackled from every angle,” said Joshua D. Lee MD, MSc, Associate Professor of Population Health and Medicine/General Internal Medicine and Clinical Innovation at the NYU School of Medicine and Director of the NYU Fellowship in Addiction Medicine. “As we seek to find the best interventions for opioid use disorders, those who fueled this crisis, marketing useful but addictive drugs into the market without disclosing the risks, must be held responsible. I thank Attorney General Letitia James for taking this bold action so we can beat this epidemic.”   

“The opioid crisis has had a devastating impact on our state – each day, we treat hundreds of New Yorkers and their families struggling with addiction,” said Gary Butchen, LCSWR, CASAC, SAP; Executive Director, Bridge Back to Life Center, Inc. “In 30 years of providing services, we have seen an exponential increase this decade in patients seeking assistance for opioid addiction compared to alcohol and other drugs. With Attorney General Letitia James’ lawsuit, those who made these lethal, addictive drugs so widely available may finally be held accountable.” 

The litigation team on this matter is headed by David Nachman, Counsel for Opioids and Impact Litigation, and includes John Oleske, Senior Enforcement Counsel; Christopher Leung and Sara Mark, Special Counsel in the Health Care Bureau; Elizabeth Chesler, Carol Hunt, Diane Johnston, Michael Reisman, Jennifer Simcovitch and Paulina Stamatelos, Assistant Attorneys General in the Health Care Bureau; Lawrence Reina, Assistant Attorney General in the Labor Bureau; Conor Duffy, Assistant Attorney General in the Civil Rights Bureau; Health Care Bureau Legal Assistant David Payne; and Corey Nugent in the IT Practice Technology Group. The Health Care Bureau is overseen by Bureau Chief Lisa Landau. 

Significant analysis was provided by the Research and Analytics Department, principally Data Scientist Katie Rosman, with additional assistance from Data Scientist Gautam Sisodia, Data Analyst Anushua Choudhury and other staff and interns under the leadership of Deputy Director Megan Thorsfeldt and Director Jonathan Werberg.  

MAYOR DE BLASIO SIGNS EXECUTIVE ORDER TO REDUCE CITY’S VEHICLE FLEET, REDUCE ENVIRONMENTAL IMPACT

Executive Order will help reduce congestion and furthers City’s commitment to use alternative fuels to continue increasing fuel economy

 Mayor Bill de Blasio signed an executive order today that will reduce the size of the City’s on-road vehicle fleet, deepening its commitment to address climate change and reduce emissions 80 percent by 2050. The City will eliminate least 1,000 vehicles from its fleet by June 2021 – about the same number of cars parked on the street around about eight Manhattan blocks. The order will also reduce the number of take-home vehicles by at least 500 vehicles, curtail the reliance of SUVs in the City fleet and promote greater vehicle efficiency by using advanced data collection. With the order, the City estimates 10 million fewer miles will be driven by City vehicles each year, resulting in reduced congestion, cutting the City’s annual fuel consumption by 500,000 gallons, and decreasing annual emissions by 6,300 metric tons of CO2, the equivalent of burning nearly seven million pounds of coal. The City’s fleet currently has 25,690 on-road vehicles.

“Sustainability isn’t about maintaining the status quo, it’s about changing the way we live and get around,” saidMayor Bill de Blasio. “Eliminating unnecessary vehicles from our streets and replacing gas-guzzling SUVs with electric cars will bring us one step closer to our carbon emission reduction goals, which means a cleaner New York City for all.”

“The climate crisis is real and it’s urgent, and that is why we are scaling back and greening up the City’s vehicle fleet,” said Lisette Camilo, Commissioner of the NYC Department of Citywide Administrative Services. “To support Mayor de Blasio’s vision for a cleaner and safer New York, we are using new technology to right-size the City’s fleet and to more efficiently use the cars we do need.”

“Leading the charge against climate change means constantly finding new ways to increase efficiency and decrease emissions,” said Mark Chambers, Director of the Mayor’s Office of Sustainability. “This executive order uses a thorough, data-driven approach to make the nation’s greenest fleet even greener.”

This executive order is based on a data-driven approach. By removing 1,000 vehicles under the order, the City will review every agency’s fleet to ensure the vehicles are being used efficiently and will reduce the fleet size as needed. The City will increase its goal for daily vehicle usage rate from 67 percent to 80 percent. This means at least 80 percent of the City’s fleet should be used daily, except for certain emergency, specialized, or seasonal vehicles.

The Department of Citywide Administrative Services (DCAS) will also review every take-home car currently in the fleet and use data vehicle data to identify usage patterns. Take-home vehicles that are underused will be re-assigned to the agency’s fleet pool, which can be used my multiple employees.

The executive order will also direct DCAS to replace at least 250 SUVs with electric plug-in sedans. In addition to environmental benefits, electric sedans have significantly lower maintenance costs.

This latest move that builds upon the Mayor’s commitment to transform the City’s vehicle fleet into a more green and carbon-neutral fleet:

• The City now operates over 1,750 on-road electric vehicles, the largest network for any municipal government.
• The City operates a network of over 568 electric vehicle charging stations, including the largest network of solar-powered vehicle chargers, with 65 in use.
• Last year the City began using renewable diesel, a 99 percent petroleum-free diesel alternative made of organic material.
• Light-duty fleet vehicles purchased during the most recent Fiscal Year achieved an average fuel economy equivalent of 100 miles per gallon (MPG).
• The City has ordered its first 190 hybrid pursuit rated police vehicles.

“CALSTART salutes Mayor de Blasio and the Fleet Services division at the Department of Citywide Administrative Services for continued leadership in the clean transportation sector,” said Bill Van Amburg, Executive Vice President at CALSTART, the nation’s leading clean transportation consortium. “The NYC Fleet is a global example for addressing congestion, clean air, climate and fuel efficiency. By adopting advanced vehicle technologies, using low-carbon fuels, and right-sizing the fleet and streamlining its vehicle demands, it is showing us how to save fuel, money and make a more livable, sustainable city – all at the same time.”

Council Member Ruben Diaz Sr. - CONSIDERING A RUN FOR CONGRESS

WHAT YOU SHOULD KNOW

By Councilman, Rubén Díaz Sr.

District 18 Bronx County, New York

  You should know that earlier this week, U.S. Congressman Jose Serrano announced that due to medical reasons he will not seek reelection. 

 

Those of us who know Congressman Serrano are very sorry to hear that he is going through this. The ministers at the New York Hispanic Clergy Organization, as well as the congregants at the Christian Community Neighborhood Church, where I serve as the Senior Pastor, will be praying for Jose Serrano and his family during this difficult time.

 

It is important that you know that since Jose Serrano was first elected to the House of Representatives in 1990, he has never forgotten his roots as a native of Puerto Rico.  During his 29 years in Congress, Jose Serrano has served honorably the people of his district here in the South Bronx.

 

As I look across the political landscape and consider who might have the political experience necessary to serve the needs of our senior citizens, families, business, community in New York’s poorest Congressional District, I am praying for guidance, consulting friends, community leaders, and family members, at this time considering if I should throw my cowboy hat into a run for Congress.

 

I am NYC Councilman Rev. Ruben Diaz Sr. and this is what you should know.

MAYOR DE BLASIO APPOINTS OMAR KHAN AS DIRECTOR OF THE MAYOR’S PUBLIC ENGAGEMENT UNIT AND SENIOR ADVISOR

  Mayor Bill de Blasio today appointed Omar Khan as Director of the Mayor’s Public Engagement Unit (PEU) and Senior Advisor. In his role as Director of PEU, Khan will lead PEU’s efforts to proactively engage New Yorkers in need of a broad range of City services, from healthcare to housing, making them more accessible for everyone. As Senior Advisor, Khan will advise City Hall and City agencies on policies and practices that will make even more of the City’s services accessible to New Yorkers. He also will support the City’s 2020 Census outreach efforts.

Omar Khan brings years of experience leading public engagement programs, building coalitions and serving as a senior official in federal government. As the Director of PEU, Khan will work collaboratively with agency commissioners and senior staff across City Hall to increase civic participation and access to important City services. Khan’s official start date is April 8, 2019.

“Omar Khan holds years of experience conducting public outreach and striking government partnerships to improve people’s lives and to increase fairness across a number of communities,” said Mayor Bill de Blasio. “We’re lucky to have him lead the Public Engagement Unit as we continue to do unprecedented outreach to ensure that New Yorkers are getting the healthcare coverage they deserve and the tenant protections that keep them in the city they call home. I look forward to working with Omar to further our commitment to create a fairer city for all New Yorkers.”

“Omar has led teams across the nation to make a significant difference in the lives of the most vulnerable members of our communities,” said Deputy Mayor for Strategic Policy Initiatives Phillip Thompson. “We are thrilled to welcome him to the Public Engagement Unit so we can continue to improve our engagement strategies around data, organizing techniques and grassroots campaigns to affirmatively bring government assistance at the doors of New Yorkers who need it most.”

“I am honored and excited to lead this group of dedicated outreach specialists in our fight to address inequality and make New York City more accessible to everyone who calls this great city their home,” said Omar Khan, Director of the Mayor’s Public Engagement Unit. “I look forward to building on Mayor de Blasio’s unique philosophy of proactively reaching vulnerable New Yorkers to ensure no one is left behind and make this the fairest city in the country.”

About Omar Khan

Omar Khan is an experienced government and civic leader, having previously served in several senior positions in the Obama Administration, including as the Director of Public Engagement at the U.S. Environmental Protection Agency.

Khan most recently worked at Mercury Public Affairs as a Senior Vice President in the New York City Office, where he provided counsel for clients in public affairs, advocacy, policy and political campaigns. Prior to joining Mercury, he held several senior roles in the Obama Administration. As the Assistant Trade Representative for Intergovernmental Affairs he led stakeholder and public engagement, and managed outreach to non-governmental organizations and state and local governments to address inequality in employment opportunities and promote job creation. He also served as the Director of Public Engagement at the Environmental Protection Agency and as the Director of Congressional and Intergovernmental Relations for President Obama’s Hurricane Sandy Task Force. In this role, Khan built strategic partnerships with state and local governments affected by Hurricane Sandy to develop policy recommendations that were implemented and continue to guide the rebuilding efforts.

In addition to his work in government, Khan has significant experience working on political campaigns, where he championed expanding voting rights and more inclusive and representative elections. He has worked in various local, state, and national elections, including as the National Associate Political Director in President Obama’s 2012 re-election campaign and as campaign manager for Charlie Crist’s 2014 gubernatorial campaign.

About the Mayor’s Public Engagement Unit

The Public Engagement Unit was created by Mayor de Blasio in 2015 to proactively engage New Yorkers and provide them with individualized assistance in accessing key City services. PEU uses innovative tools, outreach methods and case-management strategies, in addition to multilingual and multimedia advertising campaigns, to help individual New Yorkers understand what services may be available to them and streamline their enrollment process. To date, PEU has reached hundreds of thousands of New Yorkers through targeted outreach and by working collaboratively with other government agencies, community organizations and elected officials.

PEU’s work centers around five teams:

•    The Tenant Support Unit, which knocks doors and partners with community groups to inform tenants in targeted zip codes of their housing rights, identify housing-related issues and connect them with a range of resources, including HRA’s anti-eviction legal assistance and HPD’s home repairs program;

•    The Rent Freeze team, which goes door to door, makes phone calls and holds community events to enroll senior citizens and people with disabilities in the Department of Finance’s rent freeze and homeowner tax exemption programs;

•    The Universal Access to Counsel team, which partners with HRA’s Office of Civil Justice and community-based legal services providers to connect New Yorkers facing eviction in housing court or NYCHA proceedings to free legal assistance;

•    The Home Support Unit, which partners with DHS and community-based organizations to identify and facilitate the rental of affordable, long-term housing to New Yorkers who receive rental subsidies and are transitioning out of shelter; and

•    GetCoveredNYC, which provides free in-person health insurance enrollment assistance and promotes access to primary and preventive care.

Bronx Borough President Ruben Diaz Jr. - Greek American Heritage Month Celebration

PUBLIC ADVOCATE WILLIAMS - STATEMENT ON PASSAGE OF MARIJUANA JUSTICE RESOLUTIONS

New York City Public Advocate Jumaane D. Williams released the following statement today after the City Council approved two resolutions, of which he was the prime sponsor, focused on Marijuana Justice Reform. They include  Res. 0641, which would expunge the records of all city misdemeanor marijuana convictions, and Res. 0296, which adds the unlawful possession of marijuana and criminal procession of marijuana in NYCHA facilities to the 4th and 5th degrees to its list of overlooked offenses.

"New York lags far behind states across the country in enacting a marijuana justice platform, but the passage of today's resolutions in the City Council sent a clear message that the time for Albany to act is now. For far too long our city has witnessed how disciplinary actions and criminal penalties for marijuana possession disproportionately affect low income communities and communities of more color.  My resolutions passed today demand that we right those wrongs by expunging records of those whose lives have been ruined by a conviction and protecting against NYCHA residents losing their homes because of marijuana usage. It is time to stop treating marijuana with inordinate hysteria and apply common sense to our laws.

"I would also like to thank all of those who are now vocally advocating for this cause I've long championed, and I urge Albany to act."