MAYOR DE BLASIO ANNOUNCES NEW COMMITMENTS TO FURTHER BLACK ENTREPRENEURSHIP IN NEW YORK CITY

 

Mayor de Blasio today announced new commitments to further invest in Black entrepreneurs in all five boroughs. The BE NYC initiative is a first-of-its-kind model, which aims to increase the number of Black-owned businesses in New York City with a focus on growing businesses in high-growth industries. As part of the City’s commitment to close the racial wealth gap and support Black-owned businesses, the Department of Small Business Services is releasing the landmark Black entrepreneurship report and using its partnerships to launch four new programs for Black business owners. 

 

“Black entrepreneurs built New York City,” said Mayor Bill de Blasio. “This historic public-private partnership will ensure we can come together to support them, and give them the recognition they have deserved for so long.”

 

“Black-owned businesses are certainly struggling, and helping them grow is part of the broader struggle for racial justice,” said J. Phillip Thompson, Deputy Mayor for Strategic Policy Initiatives and Co-Chair of the Racial Inclusion and Equity Taskforce. “The commitments made today will provide significant opportunity for these small business owners to grow in new economies and lay the foundation for a more equitable future.”

 

"NYC-based businesses form the backbone of our city's economy, and I commend SBS for this important initiative," said Deputy Mayor for Housing and Economic Development Vicki Been. "Thank you to Mastercard, Ernst & Young, and Brooklyn Navy Yard for contributing resources that foster Black entrepreneurship and business ownership in our communities."

 

“Black entrepreneurs are an essential part of the fabric of New York City, and equity and opportunity are at the core of the work we do at SBS. These values lay the foundation for BE NYC,” said Jonnel Doris, Commissioner of the Department of Small Business Services. “Working together with business, academic, government and community leaders, we are striving to create a fairer and more equitable city where Black-owned businesses can grow and thrive.”

 

“We look forward to the release of this final report which is a close analysis of the many challenges facing Black Businesses based on an in depth conversation with those very businesses,” said Maggie D. Austin, Senior Advisor and Director of the Mayor’s Office of M/WBEs. “Over the past year our partners at SBS have developed this critical tool for understanding challenges in the market place and some long term solutions that the City can leverage or provide such as access to capital and mentorship opportunities. Although the work began long before the timing of this report is crucial as COVID-19 has wrought new obstacles and deepened longstanding ones. New York wins when black businesses succeed and thrive.”

 

Blueprint for Investing in Black-Owned Businesses

Informed by more than 1,500 current and aspiring Black entrepreneurs, business leaders, community leaders and advocates, SBS is publishing Advancing Black Entrepreneurship in NYC - a blueprint for advancing Black entrepreneurship in all five boroughs. The report highlights the challenges Black entrepreneurs face when starting and growing their businesses and offers recommendations in four key areas:

• Provide equitable access to financing
• Strengthen connections within NYC’s Black entrepreneurial community
• Scale Black businesses for long-term success
• Meet the challenges of the economy of tomorrow

 

To view the full report and to learn more, visit nyc.gov/benyc.

 

BE NYC’s inaugural partners will work together with the City to address the key challenges and respond to the recommendations in the report. The commitments made today are just the beginning. The City is dedicated to working with partners in the private and philanthropic sectors to deepen our reach into communities of color and make sure our resources are being distributed equitably.

 

Providing Access to World-Class Business Experts

Less than 40% of Black entrepreneurs reported that they had access to mentors and advisors. As the Covid-19 pandemic continues to disproportionately impact the health and economic welfare of Black communities across the city, time with advisors has become even more scarce—and even more important. To address this need, the City has partnered with Ernst & Young (EY) to connect Black entrepreneurs with world-class resources and guidance. In this new, three-part program, EY has committed to: 

• Creating a resource hub that will allow Black entrepreneurs to access materials from entrepreneurship experts
• Hosting interactive online group learning sessions, providing face-to-face interaction and support from experts while promoting peer-to-peer learning and network building among participants
• Offering 2,000 hours of one-on-one consulting on business planning, operational improvements, and financial planning for Black business owners. 

 

“Black-owned businesses of all sizes are part of the fabric of New York City,” said Kelly Grier, EY US Chair and Managing Partner and Americas Managing Partner. “But Black entrepreneurs have not always had access to the resources, capital and networks to equitably succeed and contribute to economic recovery and resiliency. Our hope is that by collaborating with the City of New York, we will guide Black entrepreneurs and connect them to helpful resources. When every entrepreneur succeeds, we all succeed.”

 

Access to Capital and Business Education

The top challenges identified by Black entrepreneurs were access to capital (40%), lack of preparation and background on how to run a business (15%) and a lack of reliable resources to help (13%). Goldman Sachs 10,000 Small Businesses has a decade long track record of addressing these gaps and providing underserved small businesses with the resources to grow. Goldman Sachs is a crucial partner to BE NYC in delivering the opportunities that Black entrepreneurs need.

 

“Black entrepreneurs face outsized challenges in accessing the resources, network and capital they need to thrive,” said Asahi Pompey, President of the Goldman Sachs Foundation and Global Head of Corporate Engagement. “The pandemic has laid bare the inequities faced by the Black community, and Goldman Sachs 10,000 Small Businesses is proud to support the City’s efforts to create meaningful opportunity for Black-owned businesses.” 

 

Building upon its longstanding partnership with the City, Goldman Sachs 10,000 Small Businesses will support BE NYC by facilitating access to affordable financing and business education. Goldman Sachs 10,000 Small Businesses is committed to advance the solutions outlined in Mayor de Blasio and Commissioner Doris’ blueprint to support Black-owned businesses across New York City.

 

Closing the Digital Divide

More than 70% of Black business owners indicated that they want assistance reaching more customers and growing their sales. In this current moment, where virtual storefronts and e-commerce are more important than ever, Mastercard will join New York City in its efforts, helping to ensure that Black entrepreneurs survive and thrive in a post-COVID economy by providing the resources they need and deserve to launch and maintain their business, as well as expand and improve their online presence. This includes:

 

·         Delivering tailored business education and mentorship designed exclusively with and for the Black business community of NYC to address the challenges they face, including the ability to reach and sell to customers online. 

·         Providing access to the Mastercard Main Street Resource Center including its suite of services and Digital Doors™ initiative, to further provide the digital tools needed to run their business.

·         Helping Black entrepreneurs establish virtual storefronts and providing effective cyber-security safeguards at no cost. 

 

“It’s time to acknowledge that starting and growing a business is hard enough without the additional challenges of a system that feels built to hold you back, ” said Ajay Banga, Chief Executive Officer of Mastercard. “We have to stack the deck in favor of success for everyone. That means doing our part in pulling down the road blocks and giving NYC’s Black-owned businesses the tools and resources they need to take hold of the opportunities before them now and the power to grow and thrive into tomorrow. Joining Mayor de Blasio and Commissioner Doris in this effort is just one way we can help level the playing field and close the digital divide so that the digital economy really can benefit everyone, everywhere.”

 

Launching a BE NYC Accelerator 

Through an initial $3 million investment of capital and operating funds from the City Council, the Brooklyn Navy Yard, The Young Men's Initiative, and SBS will launch a BE NYC accelerator to help cultivate businesses for the economy of tomorrow. This effort will include meeting space and technical assistance focusing on launching and growing local Black-owned businesses. The Brooklyn Navy Yard will identify partners to build out the space, curate an active community and product programming for participants.

 

“The Brooklyn Navy Yard continues to invest in initiatives that address the need for racial equity including expanded access and resources for underserved communities,” said David Ehrenberg, President & CEO of the Brooklyn Navy Yard Development Corporation. “The BE NYC accelerator will directly support Black entrepreneurs as the Yard continues to do its part to rebuild and reshape the City's economy — one that values and celebrates the contributions of women and our Black and Brown neighbors. We thank the de Blasio administration for including us as we re-envision the future of the business community in New York City.”

 

“As Black entrepreneurs, we know firsthand the sacrifice and determination needed to start a business or work in a corporate office and understand the challenges our community faces as they embark on that journey,” said the BE NYC Cabinet. “The BE NYC initiative not only highlights the barriers in a milestone report , but also actively works to dismantle them through innovative, collaborative solutions. We know that eradicating a system built on hate can only be done through partnership and we are delighted with this incredible opportunity to help shape the future of Black business and the future of NYC.”

 

Governor Cuomo Announces Two Additional States Added to Travel Advisory

 

Eleventh Straight Day with Infection Rate Below 1 Percent

Alaska and Delaware Meet Metrics to Qualify for Travel Advisory 

0.98 Percent of Yesterday's COVID-19 Tests were Positive 

8 COVID-19 Deaths in New York State Yesterday

SLA and State Police Task Force Visits 976 Establishments and Does Not Observe Any Violations of State Requirements

Confirms 655 Additional Coronavirus Cases in New York State - Bringing Statewide Total to 426,571; New Cases in 40 Counties

  Governor Andrew M. Cuomo today announced that two additional states meet the metrics to qualify for the travel advisory requiring individuals who have traveled to New York from those states, all of which have significant community spread, to quarantine for 14 days. The newly-added states are Alaska and Delaware. No areas have been removed.

The governor also announced that for the 11th straight day, New York State's rate of positive tests was below 1 percent. Governor Cuomo also updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. The number of new cases, percentage of tests that were positive and many other helpful data points are always available at forward.ny.gov.

"New York State is moving forward in the face of a continuing crisis throughout the nation and around the world—we've gone from one of the nation's worst infection rates to one of its best and have an infection rate below 1 percent for the 11th straight day—but that's no excuse for getting complacent as we add two more states to our travel advisory," Governor Cuomo said. "Our success in this fight is determined, more than anything, by the actions each of us takes in daily life—washing our hands, properly social distancing and wearing masks—and by the willingness of local governments to be competent partners and to enforce state guidance. We continue to move in the right direction, but it's up to all of us to slow the spread and stay safe." 

The full, updated list of states on the travel advisory is below:

• Alaska
• Alabama
• Arkansas
• Arizona
• California
• Delaware
• Florida
• Georgia
• Hawaii
• Iowa
• Idaho
• Illinois
• Indiana
• Kansas
• Kentucky
• Louisiana
• Maryland
• Minnesota
• Missouri
• Mississippi
• Montana
• North Carolina
• North Dakota
• Nebraska
• Nevada
• Oklahoma
• Puerto Rico
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• Virgin Islands
• Wisconsin

Yesterday, the State Liquor Authority and State Police Task Force visited 976 establishments in New York City and Long Island and did not observe any establishments that were not in compliance with state requirements.

Today's data is summarized briefly below:

• Patient Hospitalization - 537 (+3)
• Patients Newly Admitted - 52
• Hospital Counties - 31
• Number ICU - 126 (-7)
• Number ICU with Intubation - 60 (-4)
• Total Discharges - 74,258 (+51)
• Deaths - 8
• Total Deaths - 25,264

Governor Cuomo Announces Insurance Fraud Action Against Two International Opioid Manufacturers

 

DFS Files Administrative Charges Against Teva and Allergan in Connection with the Opioid Crisis

DFS Claim Alleges Teva and Allergan Engaged in Fraudulent Marketing and Promotional Campaigns That Misrepresented the Safety and Efficacy of Opioid Drugs to Expand the Opioid Market and to Promote Their Drugs — Perpetuating the Opioid Crisis and Leading to a Dramatic Increase in Insurance Costs for New York Consumers 

Read DFS Statement of Charges for Teva and Allergan on the DFS Website Here

  Governor Andrew M. Cuomo today announced the New York State Department of Financial Services has filed charges and initiated administrative proceedings against Teva Pharmaceutical Industries, Ltd., and its subsidiaries, Teva Pharmaceuticals USA, Inc., Cephalon, Inc., Watson Laboratories, Inc., Actavis Pharma, Inc., Actavis LLC, and Actavis Elizabeth LLC; and against Allergan PLC and its subsidiary Allergan Finance LLC. These charges are the third set to be filed in DFS's ongoing investigation into the entities that created and perpetuated the opioid crisis. 

Teva has been a prolific manufacturer of opioids in the United States, manufacturing approximately 20% of the opioid products that flooded New York from 2006 to 2014. Teva manufactured both its own branded opioids as well as generic opioids through its Actavis subsidiaries. Allergan also manufactured opioid products from 2006 to 2014. 

"New York will continue to aggressively investigate the bad actors that caused the opioid crisis - an American tragedy that has taken too many lives and caused irrevocable harm to communities in our state and across the country," Governor Cuomo said. "Everyone who has been affected by opioids deserves justice and we will make every effort to deliver it to them by pursuing the companies that defraud the public and holding them accountable to the fullest extent of the law." 

The DFS Statement of Charges alleges that, like other opioid manufacturers, Teva and Allergan each knowingly furthered false narratives to legitimize dangerously powerful opioid products as appropriate for a broad spectrum of pain. In particular, the companies' messaging greatly downplayed the drugs' long-known addictive nature and risks. This strategic effort by the opioid industry caused an increased acceptance of opioids as medically legitimate, necessary, and appropriate painkillers by both patients and medical professionals. As a result, demand for opioids soared to unprecedented levels as did the predictable crisis of addiction and abuse that resulted from this overprescribing. 

The allegations include the following:  

• Contrary to FDA prescribing guidelines, Teva through its subsidiary Cephalon intentionally marketed its branded fentanyl drugs for off-label use — meaning any use not specified in an application and approved by FDA — and misrepresented their risks while doing so. Fentanyl is an incredibly powerful opioid that is 100 times more potent than morphine. This off-label strategy succeeded. For example, the FDA approved Cephalon's first fentanyl drug, Actiq, only for the treatment of cancer pain. Through the off-label marketing strategy, however, Actiq sales skyrocketed from $16 million in 2000 to an excess of $590 million by 2006, at which time only 8% of patients were taking the drug for cancer pain. After Actiq was retired, Cephalon continued off-label promotional practices with its new fentanyl lozenge, Fentora.  

• Teva through its Cephalon subsidiary also crafted template "letters of medical necessity" for doctors to send to insurers to justify off-label use and get the prescriptions reimbursed. These letters were used by sales representatives to further entice healthcare providers into prescribing these powerful opioids to patients for increasingly broader use. 

• Allergan also misrepresented its drugs in marketing materials. In 2010, the FDA sent the company a warning letter concerning brochures the company had released for its drug Kadian. The FDA warned Allergan about the brochures' omission and minimization of risk information, their failure to state the drug's full indication, as well as unsubstantiated claims of efficacy and superiority over other opioid drugs. 

• Both Teva and Allergan used various third party "front groups" and doctors called "key opinion leaders" to disseminate unbranded and misleading messaging regarding the safety and efficacy of opioids in general. Such communications included medical education courses as well as pamphlets, websites, and books that targeted both patients and prescribers. Among other things, these materials downplayed the risks of addiction of opioids, labelled legitimate concerns by prescribers over those risks as "opiophobia," and dismissed patients' clear signs of addiction as "pseudoaddiction." 

According to DFS's Statement of Charges, Teva and Allergan violated two New York Insurance Laws. Section 403 of the New York Insurance Law prohibits fraudulent insurance acts and carries with it penalties of up to $5,000 plus the amount of the fraudulent claim for each violation; DFS alleges that each fraudulent prescription constitutes a separate violation. Section 408 of the Financial Services Law prohibits intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service, which includes health insurance and carries with it penalties of up to $5,000 per violation; once again, DFS alleges that each fraudulent prescription constitutes a separate violation. 

Read a copy of the DFS Statement of Charges for Teva and Allergan on the DFS website.

The hearing will be held at the office of the New York State Department of Financial Services, One State Street, New York, New York, beginning on October 26, 2020. 

Acting Manhattan U.S. Attorney Announces Charges In $7 Million Scheme To Defraud Loan Programs Intended To Help Small Businesses During COVID-19 Pandemic

 

Taiwanese National Arrested for Misrepresenting Employee Payroll Figures for Multiple Companies to Receive COVID-19 Loan Funds; Spent Over $275,000 of Loan Proceeds on Personal Luxury Expenses

  Audrey Strauss, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Kevin Kupperbusch, Special Agent-in-Charge of the Eastern Region Office of the Inspector General of the U.S. Small Business Administration (“SBA”), and Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the arrest of SHENG-WEN CHENG, a/k/a “Justin Cheng,” a/k/a “Justin Jung,” a Taiwanese national residing in New York, New York, for a fraudulent scheme to obtain over $7 million in government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic.  In connection with loan applications for relief available from the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program, CHENG used the identities of other individuals to falsely represent to the SBA and five financial institutions that companies controlled by him had a total of over 200 employees and paid $1.5 million in monthly wages, when, in fact, his companies appear to have a total of no more than 14 employees.  Of the approximately $2.8 million in PPP loan proceeds that CHENG has received to date, CHENG transferred over $880,000 abroad, withdrew approximately $360,000 in cash and/or cashier’s checks, and spent over $275,000 on personal expenses.  CHENG was charged with several counts of fraud, including major fraud against the United States, wire fraud, and bank fraud, as well as one count of aggravated identity theft for forging the electronic signature of a payroll company employee in payroll documents provided to financial institutions.  CHENG was arrested this morning and will be presented later today before U.S. Magistrate Judge Stewart D. Aaron.

Acting U.S. Attorney Audrey Strauss said:  “At a time when so many small businesses and their employees are facing dire financial straits, Sheng-Wen Cheng allegedly saw not an emergency lifeline but a gravy train.  As alleged, Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially strapped by the COVID-19 pandemic.  Cheng allegedly lied to the Small Business Administration and several financial institutions about ownership of his companies, the number of people the companies employed, and how any loan proceeds would be applied, and he used forged and fraudulent documents in the process.  Of the nearly $3 million he actually received, Cheng allegedly transferred nearly $1 million to overseas accounts, and spent nearly $300,000 on personal luxury items such as an 18-carat gold Rolex, a $17,000-a-month luxury condo, and a Mercedes.  The paid vacation ended with his arrest this morning.”

FBI Assistant Director William F. Sweeney Jr said:  “While small business owners throughout the country sought loans from the Paycheck Protection Program in order to pay employee wages and maintain basic business functions, Justin Cheng, a self-proclaimed ‘serial entrepreneur,’ acquired more than $3 million in financial relief, which he then used for personal benefit, as alleged today. True entrepreneurs who have been trying to keep their businesses afloat during these trying times are directly affected by this type of fraud, while the taxpaying citizens of this country are indirectly impacted by all those who siphon money illegitimately from this multibillion-dollar program. This isn’t the first case of SBA fraud we’ve seen, and it won’t be the last, but rest assured those who try to buck the system will be met with federal criminal charges wherever and whenever possible.”

SBA Special Agent-in-Charge Kevin Kupperbusch, said:  “This is a critical time for our nation’s small businesses.  Our Office will continue to combat fraud schemes that involve SBA’s programs for personal gain and greed.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.” 

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “As alleged in the criminal complaint, Mr. Cheng fraudulently took advantage of programs meant to help those in need during a world-wide pandemic. IRS-CI will continue to prioritize investigations where criminals seek to steal money from well-deserving citizens amidst this ongoing public health crisis.”    

According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court:

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s PPP.  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs.  Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application.  The CARES Act also expanded the separate EIDL Program, which provided small businesses with low-interest loans that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.  To qualify for an EIDL Program loan under the CARES Act, the applicant must have suffered “substantial economic injury” from COVID-19.

CHENG, a Taiwanese national who entered the United States on a student visa, is a self-proclaimed “serial entrepreneur” who earned a Bachelor’s Degree from Pennsylvania State University (“Penn State”).  From at least in or about April 2020 through at least on or about August 13, 2020, CHENG appears to have used the identities of other individuals to submit online applications to the SBA and at least five financial institutions for a total of over $7 million in government-guaranteed loans through the SBA’s PPP and EIDL Program for several companies controlled by CHENG, namely Alchemy Finance, Inc., Alchemy Guarantor LLC d/b/a “Celer Offer,” Celeri Network, Inc., Celeri Treasury LLC, and Wynston York LLC (collectively, the “Cheng Companies”).  In connection with these loan applications, CHENG represented, among other things, that other individuals were the sole owners of the Cheng Companies and that the Cheng Companies together had over 200 employees and paid a total of approximately $1.5 million in wages to those employees on a monthly basis.  In fact, however, the Cheng Companies appear to have a total of no more than 14 employees. 

In order to support the false representations in the loan applications about the number of employees at and the wages paid by the Cheng Companies, CHENG submitted fraudulent and doctored tax records that were never actually filed with the IRS, and payroll records containing the forged electronic signature of a payroll company employee.  CHENG also submitted a payroll summary for one of his companies that listed the names of more than 90 purported employees, several of whom are current and former athletes, artists, actors, and public figures.  For example, the list of purported employee names included a co-anchor on Good Morning America, a former National Football League player, and a prominent Penn State football coach who is now deceased.

Based on the fraudulent PPP loan applications submitted by CHENG, a total of more than $3.7 million in PPP loans were approved for the Cheng Companies and approximately $2.8 million in PPP loan proceeds were deposited into bank accounts solely controlled by CHENG as of on or about August 13, 2020.  Based on bank records received to date, instead of using the PPP loan proceeds for payroll costs, mortgage interest, rent, and/or utilities for the purported Cheng Companies as required by the PPP, CHENG used a portion of the $2.8 million in loan proceeds he received as follows: 

• A total of at least approximately $881,000 in PPP loan proceeds was transferred to accounts of different individuals and entities located at banks based in Taiwan, the United Kingdom, South Korea, and Singapore.

• A total of at least approximately $360,000 in PPP loan proceeds appears to have been withdrawn in cash and/or cashier’s checks.
   
• A total of at least approximately $279,000 in PPP loan proceeds was spent on personal expenses, including the purchase of an 18-carat gold Rolex watch for approximately $40,000, rent and move-in fees for a $17,000 per month luxury condominium for CHENG, approximately $50,000 of furnishings for CHENG’s condominium, at least approximately $80,000 toward the purchase of a 2020 S560X4 Mercedes, and purchases totaling approximately $37,000 at Louis Vuitton, Chanel, Burberry, Gucci, Christian Louboutin, and Yves Saint Laurent.
   
• A total of at least approximately $160,000 in PPP loan proceeds was transferred to Alchemy Marketplace, another company owned and controlled by CHENG, in international accounts.

CHENG, 24 of New York, New York, is charged with one count of bank fraud, one count of wire fraud, and one count of making false statements to a bank, each of which carries a maximum sentence of 30 years in prison; one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison; one count of making false statements, which carries a maximum sentence of five years in prison; one count of making false statements to the SBA, which carries a maximum sentence of two years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison to be served consecutively to any other sentence imposed.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any businesses or individuals who believe they may have been a victim in this investigation or have information regarding this investigation should call the FBI at 1-800-CALL-FBI (225-5324).

Ms. Strauss praised the investigative work of the FBI, SBA-OIG, and IRS-CI, and noted that the investigation remains ongoing.  Ms. Strauss also thanked U. S. Customs and Border Protection and the New York State Department of Labor for their assistance with the investigation.

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

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

Operators Of Global Cryptocurrency Ponzi Scheme And Attorney Charged With Fraud And Money Laundering

 

Defendants Defrauded Victims of Tens of Millions of Dollars

  Audrey Strauss, Acting United States Attorney for the Southern District of New York,  and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the unsealing of an indictment charging PABLO RENATO RODRIGUEZ, GUTEMBERG DOS SANTOS, SCOTT HUGHES, CECILIA MILLAN, and JACKIE AGUILAR for their roles in an internationally coordinated fraud and money laundering ring involved in defrauding individuals through investments in AirBit Club, a purported cryptocurrency mining and trading company.

The case has been assigned to U.S. District Judge George B. Daniels.  RODRIGUEZ and HUGHES are expected to be presented today before U.S. Magistrate Judge John Early of the Central District of California, MILLAN is expected to be presented today before U.S. Magistrate Judge L. Patrick Auld of the Middle District of North Carolina, and AGUILAR is expected to be presented today before U.S. Magistrate Judge Christine A. Nowak of the Eastern District of Texas.  DOS SANTOS was arrested in Panama City, Panama, and is pending extradition to the United States. 

Acting United States Attorney Audrey Strauss said:  “As alleged, the defendants put a modern-day spin on an age-old investment scam, promising extraordinary rates of guaranteed return on phantom investments in cryptocurrencies.  Thanks to HSI, the defendants are in custody and facing serious criminal charges.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “Those arrested today have not only been charged with running a multimillion-dollar cryptocurrency investment fraud and money laundering ring, but also for allegedly spending their victim’s money on luxury cars, jewelry, and homes. These alleged fraudsters pulled out all the stops to sell their scheme to their victims with enticing recruitment events, then shamelessly used proceeds of their scheme to recruit additional victims through even more aggressive and lavish marketing pitches. As today’s arrests show, HSI New York’s El Dorado Task Force investigates financial crimes of every type, and will stop those who prey on unsuspecting investors who entrust their hard-earned savings to so-called financial advisors.  Those who violate this trust for their personal gain will face consequences for their actions.”

According to the allegations in the Superseding Indictment unsealed today:[1]   

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and AGUILAR participated in a coordinated scheme in which victim-investors (the “Victims”) were induced to invest in AirBit Club based on the promise of guaranteed profits in exchange for cash investments in club “memberships” (the “AirBit Club Scheme” or the “Scheme”).  Beginning in late 2015, AirBit Club, through its founders, RODRIGUEZ and DOS SANTOS, as well as its promoters (the “Promoters”), including MILLAN and AGUILAR, marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry.  Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that Victims would earn passive, guaranteed daily returns on any membership purchased.

RODRIGUEZ, DOS SANTOS, HUGHES, MILLAN, and AGUILAR traveled throughout the United States, and around the world to places in Latin America, Asia, and Eastern Europe, where they hosted lavish expos and small community presentations aimed at convincing Victims to purchase AirBit Club memberships.  In furtherance of the AirBit Club Scheme, the Victims were induced to buy memberships in cash, including in the Southern District of New York.  Following a Victim’s investment, a Promoter provided the Victim with access to an online AirBit Club portal to view the purported returns on memberships (the “Online Portal”).  While Victims saw “profits” accumulate on their Online Portal, those representations were false: no Bitcoin mining or trading on behalf of Victims in fact took place.  Instead, RODRIGUEZ, DOS SANTOS, MILLAN, and AGUILAR enriched themselves, and spent Victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more Victims. 

HUGHES, an attorney licensed to practice law in California, had previously represented RODRIGUEZ and DOS SANTOS in a Securities and Exchange Commission investigation related to another investment scheme known as Vizinova before aiding RODRIGUEZ and DOS SANTOS in perpetrating the AirBit Club Scheme by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet. 

In many instances, as early as 2016, Victims who attempted to withdraw money from the AirBit Club Online Portal and complained to a Promoter were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal, if they were able to make any withdrawal at all.  In one instance, AGUILAR told one Victim of the AirBit Club Scheme who was complaining about her inability to withdraw AirBit Club returns that she should “bring new blood” into the AirBit Club Scheme in order to receive her returns.

In April 2020, another victim received a notice on the AirBit Club Online Portal that his account was closed – and principal investment lost – due to “execution of financial sustainability Reserve, policy #34 of the Airbit Club Terms and Conditions, due to the economic and financial crisis caused by (Covid-19).”

RODRIGUEZ, DOS SANTOS, HUGHES, and MILLAN sought to conceal the AirBit Club Scheme, as well as their respective control of the proceeds of that Scheme, by requesting that Victims purchase memberships in cash, using third-party cryptocurrency brokers, and by laundering the Scheme’s proceeds through several domestic and foreign bank accounts, including an attorney trust account managed by HUGHES (the “Hughes Trust Account”).  The Hughes Trust Account was ostensibly intended to maintain custody of HUGHES’s law practice’s client funds.  Instead, the Hughes Trust Account was used by RODRIGUEZ, DOS SANTOS, HUGHES, and MILLAN to conceal the nature and origin of the AirBit Club Scheme’s illicit proceeds.  Through that account, HUGHES directed Victim funds to the personal expenses of RODRIGUEZ, DOS SANTOS, MILLAN, and himself, and funded promotional events and sponsorships designed to further promote the AirBit Club Scheme.  In total, the defendants laundered at least $20 million in proceeds of the Scheme through these various methods.

RODRIGUEZ, 37, of Irvine, California, DOS SANTOS, 45, of Panama City, Panama, and MILLAN, 37, of Greensboro, North Carolina, are each charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit bank fraud, and one count of conspiracy to commit money laundering.   HUGHES, 44, of Newport Beach, California, is charged with one count of conspiracy to commit bank fraud and one count of conspiracy to commit money laundering.  AGUILAR, 55, of Plano, Texas, is charged with one count of conspiracy to commit wire fraud.

The wire fraud conspiracy and money laundering conspiracy charges each carry a maximum term of 20 years in prison, and the bank fraud conspiracy charge carries a maximum term of 30 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge. 

Ms. Strauss praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force, HSI Panama, the HSI Panama City Transnational Criminal Investigative Unit, and HSI New Orleans.  Ms. Strauss further thanked the attorneys and investigators at the Securities and Exchange Commission whose expertise and diligence were integral to the development of this investigation.

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 Superseding Indictment and the description of the Superseding Indictment set forth herein constitute only allegations and every fact described should be treated as an allegation.

AOC Backs Sanders for President, Ignores Biden in Brief Remarks

In one of the shortest speeches of the convention, progressive star Rep. Alexandria Ocasio-Cortez did not endorse Biden for president Tuesday but instead nominated his 2020 rival, Bernie Sanders. 

Her appearance was a part of the procedure of the convention to give a nod to the person who came in second place in the delegate count. 

“In a time when millions of people in the United States are looking for deep systemic solutions to our crises of mass evictions, unemployment, and lack of health care, and espíritu del pueblo and out of a love for all people, I hereby second the nomination of Senator Bernard Sanders of Vermont for president of the United States of America,” she said. 

Watch Rep. Alexandria Ocasio-Cortez's full remarks at the 2020 DNC

AUG. 18, 202001:37

It’s not a surprise that Ocasio-Cortez, who has spoken explicitly about her morals driving her politics, backed Sanders, who she also endorsed during the primaries. The self-described Democratic Socialist, known for stinging her critics on social media, is one of the most outspoken, progressive and youngest members of Congress. 

She spoke to those who are actively participating in social justice protests around the country and those who want a nationwide movement that fights for “social, economic, and human rights,” including health care for all, tuition-free higher education, a higher minimum wage and protecting unions. Ocasio-Cortez notably did not mention by name any of the signature policies that she and Sanders champion, including the Green New Deal or Medicare for All. She also does not mention Biden or Trump by name.

Bob King, the former president of the United Auto Workers union, nominated Bernie Sanders for president during the Democratic National Convention on Tuesday, as Sanders has delegates from the primary that allow for him to be nominated as a purely symbolic act. 

"Bernie’s moral clarity has emboldened the Democratic Party’s fight for justice," King said in nominating Sanders. "The grassroots energy of his supporters has cemented important advances in our platform. Bernie will continue to lead a movement that helps defeat Trump and delivers transformational change."

Mayor de Blasio on Measures Being Taken to Keep COVID-19 Cases Low

 

Mayor Bill de Blasio: Good morning, everybody. Something all New Yorkers should be proud of – people all around this country, all around this world are looking at New York City right now. And New York City is regarded as a major success story in the fight against the coronavirus. We were down for the count, we were the epicenter, and we have come back in a remarkable fashion because of you. I want to always be clear. The credit goes to New Yorkers. It goes to every single one of you who did the hard work of fighting back this disease. And we have been, throughout, guided by data, guided by science. We've done this the right way because we actually paid attention to the facts. We've talked to you about the facts and you listened and you acted. So, this is what we need to keep doing. We need to be vigilant. We need to be focused on continuing this fight until it's done.

 

Now, what I want to talk about today is a new phase that we're announcing, in the way we're going to provide you with the information to keep fighting this fight, to give you the best, most accurate information about what's happening, and to do it in a way that helps you recognize what you have to do because that's what's been the key ingredient. Now, the success we've had is absolutely connected to the level of testing that we've achieved. And it's been hard work. And it's often been lonely work for New York City because we haven't gotten the support we needed from the federal government. But New Yorkers have been getting tested and we want to double down on that because it's been crucial to our success. So, we need everyone to go get tested and we are today doing a special effort, a special outreach effort, a special blitz – Get Tested Tuesday. Everyone who has not yet got tested, especially who has not been tested at all, please get tested. If you haven't been tested in a long time, it's a good time to get tested. We have testing locations available at, check this out, over 200 sites across the five boroughs. There are lots and lots of options. Every single one of them will give you that test for free. It is easy. It is safe. So, we want to get this word out in every way we can. I'll be out there flyering today to let people know how important it is, to engage my fellow New Yorkers. But today, Get Tested Tuesday, a great day, if you haven't done so, to go out there and get that test.

 

Now, we, obviously, are focused every hour, every day on keeping the infection level low in New York City. That's what's been working for us and New Yorkers are doing great, but we have a real concern about travel. We have a concern about people coming in from outside, from the states and the areas that have been most deeply affected. We have a concern about New Yorkers going to those places and then coming home. So, look, let's start at the beginning. We've come so far and we need to, once and for all, defeat this disease. I'm going to urge all New Yorkers at this point to avoid travel to any of the states that are having a particularly bad problem with the coronavirus. Now, again, I understand for some people there's an emergency situation, a family crisis, or something they have to do for business, and they don’t have a choice, but I just want to urge people, if you have a choice, go to a place – if you're going to travel, go to a place that is not on the New York State list of states that are experiencing a profound coronavirus problem. If you have a choice in travel, don't go where the problem is for your own safety, for your family’s safety, for all New Yorkers’ safety because, of course, if you go there, there's a chance you bring that disease back. Now, if you do go, take the law seriously. You have to quarantine upon your return. So, we're focused on New Yorkers who travel and come back and we're obviously focused on folks who come in from outside New York City for whatever reason, that everyone has to focus on the mandatory 14-day quarantine.

 

Now the Sheriff's Office, as a lot of you know, has been doing extraordinary work to address this law, to make sure people know it is their obligation, been out there at checkpoints around the city, reminding people that it is the law to fill out that questionnaire about their travel, to give us a way to contact them and then to comply with the quarantine. And I want to remind everyone that failure to comply with the quarantine is a Class-B misdemeanor. It's serious stuff, but clearly, it's been talked about a lot in recent days. A lot of people haven't gotten the message. A lot of people don't necessarily take it as seriously as they need to. So, we're going another step today. Today I'll be signing an executive order and that will require hotels and short term rentals to have travelers from the restricted states fill out these forms before giving them access to their room. So, I want to be very clear about this – under this executive order that I'm about to sign any hotel, any short term rental must get that form from the traveler complete with the contact information and if they don't have that form from the traveler, they should not give them access to their room. Period. This is going to be now a rule here in New York City, because we have to get serious about the fact that there's a real danger here. We have to confront it. We have the right tool to confront it, which is the quarantine, but now people have to take that seriously. So, this executive order would be another step to make clear to everyone how serious it is. And there are real consequences for those who don't comply.

 

[Mayor de Blasio signs executive order]

 

Okay. Now, the executive order will add another tool to our arsenal, the ways we are going about making this very clear to folks. And, again, this is going to be part of a series of stepped up actions to make clear just how serious this quarantine is. And you're going to see the sheriff and his team out there a lot around New York City. They're doing an extraordinary job. Here to tell you what else we'll be doing to make sure that people quarantine appropriately, Sheriff Joe Fucito.

 

New York City Sheriff Joseph Fucito: Thank you, Mr. Mayor. I wanted to make a very brief statement. Keeping New York infection rates low is one of the most critical public safety and health initiatives facing the city, and we must continue to do our part, to keep each other safe. For New Yorkers, I offer simple advice, avoid traveling to areas with high rates of coronavirus and if travel is necessary, comply with the quarantine requirements. For travelers to New York City, the new executive order is designed to safeguard the health of all residents. The Sheriff's Office in coordination with the Department of Health and Mental Hygiene wants to have a measured response that gives visitors all the convenience to complete the state travelers forms and comply with the quarantine and all the authority of law to ensure it's obeyed. Failure to comply with the Mayor's emergency order is a Class-B misdemeanor and noncompliance with completing the form or following the quarantine mandate is a crime. In addition to criminal penalties and monetary fines, you may be subject to civil commitment until you comply with these important provisions of law. For travelers, this is a threshold moment. What you do and how you act can save someone's life. So, please take a moment and put a stranger's needs before your own desires. Thank you for your anticipated cooperation and please be governed accordingly. Now, the Mayor has asked me to describe a little bit of what our enforcement actions will consist of. We are going to continue to have checkpoints throughout different entry points into New York City. And we're also going to investigate large gatherings that are illegal even before COVID-19 hit New York City. It is important to note that we must work together to stop the coronavirus and that means following social distancing mandates. Thank you.

 

Mayor: Thank you very much, Sheriff. Again, thank you to you and your team. The work you're doing literally is life saving and we're so appreciative for it. Now, everyone, again, what's important is to use the laws, use these rules to fight back this disease, keep the infection rate low. That’s what's going to save lives, that's what's going to allow us to bring back New York City, to give people back their livelihoods. It all connects. So, we are doing all this to get us to a better place. What we're absolutely certain of is that the information we share with the public has been crucial. The public, in this case, has been so deeply desirous of more and more information, more clarity. People all over New York City want to know what's going on, they want transparency, they want clarity. It's helping them make the right decisions. So, one of the things that we've been focused on throughout this crisis is how to present the best possible information to all New Yorkers.

 

Starting today, we're going to provide a bigger timeframe for the information we provide. We're going to show the last four weeks of data together. It'll be broken out into categories that make it a lot clearer what's going on and where we stand in the battle against the coronavirus. Now, right now, New York City makes more data available in a more transparent fashion than any city in America. And I think that is directly related to the success we've had. The fact that people take that information and they act on it. So, we will continue to improve it and update it. And one of the areas we've looked at is our indicators. Now, basically from the beginning of this crisis, we've used more or less the same type of indicators. But as we've looked at the situation, we recognize that there is a changing reality. Some of the thresholds we have set in the past, need to be tightened up because we need to go farther. It's great that we fought back the coronavirus this far, but we're not done. We want to push it down even more. So, we're going to be changing some of our approach to the indicators to make clear what we need in this moment and to give you the most accurate information. Here to tell you about the changes, our Health Commissioner, Dave Chokshi.

 

Commissioner Dave Chokshi, Department of Health and Mental Hygiene: Thank you, Mr. Mayor. From the beginning, core components of our response have been transparency and data. We set indicators that we have watched like hawks. However, thanks to what New Yorkers have done the context has changed. With lower transmission we need more precise indicators that allow us to zero in on how COVID is spreading. So, we will be making changes to the data on the Health Department's website starting today. First, we will keep hospital admissions for COVID-like illness on our dashboard as a general marker of disease activity. But we will add the percent of patients with COVID-like illness who actually test positive to make this indicator more precise. As we head into flu season, we need to be able to distinguish flu patients who often have COVID-like symptoms from COVID patients to have an accurate read of what is happening in our communities. Precision is the name of the game. And so, we will also change reporting of the percent of COVID tests that are positive to include two decimal places. For example, you'll see 1.80 percent rather than two percent. And we'll lower the threshold for positive test results from 15 percent to five percent. The higher threshold was an appropriate benchmark for reopening as we transitioned to lower levels of disease transmission. The new lower milestone will alert us earlier if we need to be concerned. We will also add an indicator on new daily cases reported in the city. We'll use a seven-day average to smooth out day to day fluctuations in this new indicator. Along with the percent positive results, this will give us a more complete view of COVID circulating in our city. We want to see the absolute number of new cases remain as low as possible. Other indicators do not have the utility that they once had, like the Health + Hospitals ICU capacity.

 

I do want to take a moment to emphasize how much removing this indicator means to me. Having served at H + H during the peak, I remember how tested our ICU capacity was. It's a marker of our progress that we're able to change out this indicator. The current context is also informing updates to our website. To date, we have shared aggregate numbers that span the duration of the pandemic, which we will continue to do, but we recognize that there's interest in knowing what is happening in the more recent past, both at the city, as well as the neighborhood level. So, we will present case and fatality numbers and rates for the most recent four-week period. Our website will also soon feature antibody test results by ZIP code, with the capacity to organize the data by age, borough, neighborhood, poverty, and sex. We will be the first jurisdiction in the nation to present our antibody data this way. While there is still much to learn about the science of COVID-19 antibody testing, it is an important element to consider when understanding the epidemiology of COVID.

 

Finally, I just want to recognize the staff at the Health Department who work incredibly hard to make this data available to New Yorkers. Sound data is the lifeblood of our response and it can save lives. So, thanks to my staff and thank you to all of you for getting this information to New Yorkers.

 

Mayor: Thank you so much, Dave. And Dave, to you and your whole team, thank you. This is really good work and I know work you've put yourself into immediately to figure out what is the best way to give information to all New Yorkers and the best way to present our reality as it continues to evolve. And thank God it has been evolving in a good direction because everyone's hard work. So, here are our newest indicators.

 

Indicator one, daily number of people admitted to New York City hospitals for suspected COVID-19 – so, again, the threshold remains 200 patients, today's report only 44 patients. That's great. And now we'll be talking every day about the actual percent testing positive for COVID-19. That is 13.3 percent. So, again, folks come into the hospital, present symptoms, might be COVID, we're using the overall number of the people who present symptoms, but then we're also giving you the updated number once the tests are provided to see what we came up with. So, 13 percent actually testing positive for COVID-19 within that group.

 

Okay. A new metric now, number two, new reported cases over a seven-day average. Okay, so this is brand new. We're setting a threshold here of 550 cases [inaudible] over time, of course, daily counts of how many new cases of people testing positive for COVID-19. This one works simply, we take seven days of data and divide by seven, come up with a daily average and report the most recent daily average. So, threshold of 550, today's report 328 cases.

 

And then finally, percentage of people tested positive citywide for COVID-19, new threshold, five percent. So, again, we've gone from 15 percent down to a much more stringent five percent. We think this is now the right threshold for our current condition, where we want to keep beating this disease back even more. Happy to say today's report, 1.56 percent. So, these new indicators I think will give us a really good clear picture. And today that picture is a very positive one thanks to all of you.