Attorney General Wins More Than $1 Million in Rent Credits for Harassed Tenants, Secures Placement of Homeless Tenants

 

AG James’ Investigation Found Private Equity Lender Madison Realty Capital to Have Aided and Abetted Notorious Landlord by Lending More Than $100 million

Madison Knew Landlord Toledano Was Engaging in Fraud and Tenant Harassment

 New York Attorney General Letitia James today announced an agreement that secures more than $1 million in rent credits for harassed tenants and provides housing placements for 10 homeless families. The agreement with private equity firm Madison Realty Capital comes after Attorney General James found that the company aided and abetted tenant harassment and other fraud by notorious landlord Raphael (Rafi) Toledano.

“Today’s agreement stands up for all the tenants harassed and pushed out of their homes by a fraudulent landlord and the lender that financed his unlawful operation,” said Attorney General James. “Madison Realty Capital aided one of our city’s worst landlords in his unlawful scheme, but we’re holding the company to account and delivering real relief to the many victims through rent credits and housing placement. My office will continue to stand up for tenants who rely on affordable, rent-stabilized housing by stopping dishonest landlords and their unscrupulous financiers dead in their tracks.”

With the financial backing of Madison Realty Capital, Toledano harassed tenants through coercive buyouts; executed illegal construction practices; and failed to provide tenants with utilities, repairs, and other necessary services. Even with this track record, in 2015, Madison Realty loaned Toledano over $100 million to purchase a 15-building portfolio in the East Village, despite his limited experience in managing a portfolio of this size, evidence of prior tenant harassment, and plans to continue to vacate rent-stabilized tenants and renovate units in violation of law.

Attorney General James’ investigation found that Madison Realty Capital knew or should have known of Toledano’s history, that the proposed conversions were unlawful, and that the aggressive schedule for buyouts and renovations was likely to result in tenant harassment. As a result of the loan that allowed Toledano to take over management of the East Village Properties, Toledano did exactly that — harassing hundreds of tenants, engaging in dangerous construction practices, and failing to provide basic services. In March 2017, the East Village properties filed for bankruptcy.

Under the terms of this agreement — which also resolves claims filed against Toledano’s former business entities in New York bankruptcy court — Madison Realty Capital must now take ownership of the 15 buildings in the East Village portfolio subject to $1.05 million in rent credits. These rent credits will be shared among the remaining tenants who suffered through Toledano’s mismanagement of these properties. The owners of the buildings will also ensure placement of 10 formerly-homeless families and will adhere to Tenant Health and Safety Protections During Construction there. Almost 200 of the 280 apartments in the portfolio will be registered with the New York state Division of Homes and Community Renewal (NYSHCR) at or below a rent of $2,000 per month (50 will be registered at or below $1,000 per month). The Office of the Attorney General (OAG) will also receive $150,000 to use for restitution of harms caused by Madison Realty Capital and Toledano, including the loss of affordable housing in New York City. Madison Realty Capital has also agreed to abide by the New York state Department of Financial Services’ guidelines for state-chartered banks if it lends to an owner of regulated housing in the future. 

Attorney General James’ investigation of Madison Realty Capital grew out of her investigation — done in partnership with the NYSHCR’s Tenant Protection Unit — of Toledano’s tenant harassment, unsafe construction, and other illegal conduct. 

“Tenants Taking Control applauds Attorney General James for investigating Madison Realty Capital and standing up for the tenants harmed by the company’s conduct,” said Liz Haak, a member of Tenants Taking Control (TTC), formerly Toledano Tenants Coalition. “Prior to AG James’ intervention, Madison Realty Capital planned to profit from Mr. Toledano’s illegal harassment of tenants. We are grateful that she was able to negotiate this agreement. TTC does have ongoing concerns about Madison Realty Capital's management of our buildings, but we hope this settlement will pave the way for a mutually beneficial working relationship as Madison Realty Capital takes full ownership of our homes.”

“Madison Realty Capital funded Raphael Toledano’s harassment and illegal efforts to push tenants out of rent-stabilized apartments,” said Greg Baltz, a staff attorney at TakeRoot Justice. “Through their organizing, the members of Tenants Taking Control exposed both landlords and lenders' incentives to harass rent-stabilized tenants. Thank you to Attorney General James and her staff for zealously pursuing their investigation of Madison Realty Capital and ensuring that the company follows New York guidelines and laws in all future multi-family lending.”

“Raphael Toledano’s campaign to displace long-term, rent-regulated Lower East Side tenants en masse would not have been made possible without the funding he received from Madison Realty Capital,” said Liam Reilly, an housing organizer at Cooper Square Committee. “Unfortunately, however, for both Toledano and Madison Realty Capital, vigilant and well-organized tenant coalitions, like Tenants Taking Control, provide an example for how strong a community’s defenses become when it stands together to push back against aggressive landlords and real estate speculation. Attorney General James and her team's investigation into Madison Realty Capital deserve applause not only for its advocacy on behalf of tenants, but also for its efforts to encourage more responsible multi-family lending in New York in the years to come.”

The OAG reached a civil agreement with Toledano in June 2019 after finding that he had engaged in a pattern of fraudulent and illegal conduct throughout his work as a landlord and real estate developer.  

Co-Founder Of Cryptocurrency Company Who Defrauded Ico Investors Sentenced To Prison

 

 Ilan T. Graff, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ROBERT JOSEPH FARKAS, a/k/a “RJ,” was sentenced on December 15 to one year and one day in prison, in connection with his participation in a scheme to induce victims to invest more than $25 million dollars’ worth of digital funds in Centra Tech, Inc. (“Centra Tech”), a Miami-based company he co-founded and that purported to offer cryptocurrency-related financial products.  FARKAS previously pled guilty to conspiring to commit securities fraud and wire fraud in connection with his and his co-conspirators’ use of material misrepresentations and omissions to solicit investors to purchase securities, in the form of digital tokens issued by Centra Tech, through an initial coin offering (“ICO”) beginning in approximately July 2017.  U.S. District Judge Lorna G. Schofield imposed the sentence in Manhattan federal court.

Mr. Graff said: “Farkas and his co-conspirators created fictitious executives and fabricated business relationships with legitimate institutions to dupe investors into handing over millions of dollars for a fraudulent ICO.  We will continue to aggressively pursue frauds like this one, whether they involve traditional securities or newer financial instruments and crypto-assets.”

According to statements in the Superseding Information, and other filings and statements at public court proceedings in the case:

In or about July 2017, FARKAS, along with co-defendants Sohrab Sharma and Raymond Trapani, founded a company called Centra Tech that claimed to offer cryptocurrency-related financial products, including a purported debit card, the “Centra Card,” that supposedly allowed users to make purchases using cryptocurrency at establishments accepting Visa or Mastercard payment cards.  From approximately July 30, 2017, through October 5, 2017, FARKAS and his co-defendants solicited investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech (“Centra tokens” or “CTR tokens”), through a so-called “initial coin offering” or “ICO.”  As part of this effort, FARKAS and his co-defendants represented, in oral and written offering materials that were disseminated via the internet: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; (b) that Centra Tech had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard; and (c) that Centra Tech had money transmitter and other licenses in 38 states, among other claims.  Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens.  In or about October 2017, at the end of Centra Tech’s ICO, those digital funds raised from victims were worth more than $25 million.  At certain times in 2018, as the defendants’ fraud scheme was ongoing, those funds were worth more than $60 million.

The claims that FARKAS and his co-conspirators made to help secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” and another supposed member of Centra Tech’s executive team were fictional people who were fabricated to dupe investors, Centra Tech had no such partnerships with Bancorp, Visa, or Mastercard, and Centra Tech did not have such licenses in a number of those states.

In 2018, this Office and the Federal Bureau of Investigation (“FBI”) seized, pursuant to judicially authorized seizure warrants, 100,000 Ether units, consisting of digital funds raised from victims who purchased digital tokens issued by Centra Tech during its ICO based on fraudulent misrepresentations and omissions.  The United States Marshals Service sold the seized Ether units for approximately $33.4 million earlier this year.  Following entry of a final order of forfeiture, these funds and other forfeited fraud proceeds will be available for potential use in a remission program that the Department of Justice intends to create to compensate victims of the Centra Tech fraud.

FARKAS, 34, of Bay Harbor Islands, Florida, was also sentenced to three years of supervised release.  He was further ordered to forfeit $347,062.58 and a Rolex watch purchased with fraud proceeds.  

Mr. Graff praised the investigative work of the FBI and thanked the U.S. Securities and Exchange Commission for its assistance.

AG James Takes Action to Force For-Profit Queens Detention Facility to Comply with Ongoing Investigation into Insufficient COVID-19 Protocols

 

Petition to Compel Filed After The GEO Group, Inc. Fails to Produce Subpoenaed Documents

 New York Attorney General Letitia James took legal action today in an ongoing civil investigation into potentially inadequate protocols taken by The GEO Group, Inc. (GEO), a private detention management company, to protect staff and detained individuals at the Queens Detention Facility (QDF) amidst the COVID-19 pandemic. This year, Attorney General James opened an investigation into GEO after red flags were raised through public reporting, complaints, and court affidavits regarding failures to put sufficient protections in place.  

“Far too often, for-profit detention facilities, like GEO, prioritize their bottom line, and not transparency, accountability, or the wellbeing of incarcerated individuals,” said Attorney General James. “GEO has a clear responsibility to the staff and detained individuals in the Queens Detention Facility to promote a safe environment that follows the COVID-19 city, state, and federal guidelines and laws. Our facilities, both public and private, must have proper protocols and procedures in place, and I will continue to launch legal actions to compel GEO to comply with our office’s lawful subpoenas so that we can get the answers we need to uncover the truth.”

During the investigation, the Office of the Attorney General (OAG) learned of complaints that GEO failed to separate symptomatic detainees or provide enough protective wear or medical care at QDF, raising concerns that COVID-19 safety procedures were insufficient to prevent or detect infections. Also, GEO has reported testing only 13 detainees out of approximately 160 for COVID-19 since mid-April, which is another source of concern that an outbreak may go unchecked. By comparison, government-run jails in the city have tested thousands of individuals.  

GEO, which houses federal detainees on behalf of the United States Marshals Service, has claimed that it is shielded from the subpoenas as a federal contractor. But the OAG argues that Executive Law § 63(12) gives the OAG broad powers to investigate illegality, including subpoenaing GEO for information about its practices at QDF in order to protect detainees, prison staff, and New York state residents from a possible threat to health and safety.  

The petition to compel, filed today in the New York Supreme Court, seeks an order compelling GEO’s compliance with the subpoenas. The OAG has reached no conclusions in this matter, and the investigation remains ongoing.  

Attorney General James has long called for substantive reforms to the for-profit prison system. During her tenure as New York City Public Advocate, she successfully championed efforts for New York City to become the first municipality in the nation to divest its public pension system from private prisons. Additionally, the then-Public Advocate James called on J.P. Morgan Chase to end its financial relationship with two private prison companies, GEO and CoreCivic, due to its profiting from aggressive immigration enforcement policies.  

Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic - DECEMBER 15, 2020

 

5,982 Patient Hospitalizations Statewide

1,065 Patients in the ICU; 580 Intubated

Statewide Positivity Rate is 5.33%

128 COVID-19 Deaths in New York State Yesterday

 Governor Andrew M. Cuomo today updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic.

"Everything we have done from the start of this pandemic has been based on the facts, and the facts are that COVID cases, hospitalizations and deaths are all on the rise all across the country. We are on an unsustainable trajectory and if we don't act now, hospitals could become overwhelmed come January," Governor Cuomo said. "Right now, New York is focused on growing hospital capacity through our Surge and Flex program and requiring hospital systems to begin working together so they are prepared. As those operations continue, it's on all of us to be smart, tough, and do what we know stops the spread - socially distance, wear masks and wash our hands. The goal is to avoid another shut down and we will only be able to do that if we all do our part."

Today's data is summarized briefly below:

• Test Results Reported - 194,188
• Positive Test Results - 10,353
• Positivity - 5.33%
• Patient Hospitalization - 5,982 (+270)
• Patients Newly Admitted - 743
• Hospital Counties - 56
• Number ICU - 1,065 (+25)
• Number ICU with Intubation - 580 (+8)
• Total Discharges - 92,136 (+376)
• Deaths - 128
• Total Deaths - 28,002

EDITOR'S NOTE:

Governor Andrew Cuomo, you have stopped indoor eating in New York City, and are about to call another pause like you did at the beginning of 2020, where you also postponed all special elections to the June Primary date. 

Governor Cuomo, why are you allowing the special election in the 12th City Council to continue when it and all other special elections the mayor has called, and will call after January 1, 2021 when some City Council seats become vacant should be postponed to the June primary 2021 as you did in 2020.

How many voters must get COVID-19 as they crowd into the poll sites.

CONSUMER ALERT: NYS DIVISION OF CONSUMER PROTECTION REMINDS CONSUMERS OF NEW YORK STATE’S REFUND POLICY PROTECTIONS

 

When Buying Gifts, Protect Your Wallet by Taking Note of Return Policies

Businesses are Required to Post Their Refund Policies or You Will Have 30 Days to Return

 As part of its seven-part consumer alert holiday series, the Division of Consumer Protection is today reminding consumers that New York State law covers refunds. NY General Business Law §218-a requires stores to clearly post their refund policies. When no refund policy is posted, consumers will have 30 days from the purchase date to receive a full refund or a credit (at the consumer’s option), with receipt or any other confirmation given to show that 30 days has not elapsed and as long as the merchandise has not been used or damaged.

“Around the holidays, gift givers and receivers often change their minds,” said New York Secretary of State Rossana Rosado, who oversees the Division of Consumer Protection. “It is important New Yorkers understand businesses are required to post their policies and let their customers know their refund options. Whether shopping online or in person this holiday season, I encourage all New Yorkers to check a store’s refund policy to be sure you are comfortable with the terms.”

A store’s refund sign must include the following information (at a minimum):

(a) Whether the store gives refunds and under what circumstances, including:

• on merchandise which had been advertised as “sale” merchandise or marked “as is”;
• on merchandise without a proof of purchase;
• at any time or not beyond a point in time specified;  
• in cash, or as credit or store credit only; or
• subject to any fees, including a restocking fee, and the dollar or percentage amount of each fee; and

(b) Consumers are entitled to a written copy of the store's refund policy upon request.

Be an informed consumer and follow these savvy holiday shopping tips:

• Ask for a copy of the refund policy.
• Ask if the store imposes a restocking fee for returned merchandise.
• Ask if the merchandise has to be in a certain condition for the return to be accepted.
• Save all receipts for purchases to allow for ease of returns.
• Ask for details about the advertised rebate.
• Does the store offer rainchecks? If yes, find out the terms and when it expires.
• How does the store notify the customer when the product is available?

Consumers having trouble obtaining a store refund are encouraged to file a complaint with the New York State Division of Consumer Protection.

The Division of Consumer Protection provides voluntary mediation, between the consumer and business, when the consumer has been unsuccessful at reaching a resolution on their own. The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumerprotection. To view consumer alerts, consumers can visit https://www.dos.ny.gov/about/newsroom.html. The Division can also be reached via Twitter at @NYSConsumer or Facebook at www.facebook.com/nysconsumer.

Third Avenue Business Improvement District - Snow // Opposition to Council Bills // Resources

 

We put small businesses and families first. During a global pandemic which has decimated entire industries Third Avenue Business Improvement District continues to put small businesses and families first.  Today, we joined leading business organizations and employers, large and small, for profit and non-profit, across multiple industries, to demand relief and smart policies from our NYC, NYS, and federal elected officials.  It is time to put politics aside and focus on smart governing. We demand resources in the form of rent relief and grants, we have and continue to implore City Hall for less red tape and more opportunities for small businesses and entrepreneurs. Your neighborhood organization will continue to be here - we will continue to advocate for you.  You will always have a partner in the Third Avenue Business Improvement District. On behalf of the representatives of New York City’s employers, large and small, for profit and non-profit, across multiple industries, we are writing to oppose NYC City Council Intros. 1396 and 1415. These outrageous and unlawful bills will shutter struggling businesses across the city. The elimination of at-will employment and mandating that business owners use length of employment as the defining factor for layoffs is an inappropriate and illegal overreach by the City Council.    Should the City Council pass these bills, there will be significantly less employment opportunity in the quick service restaurant industry, long known as a generator of jobs to vulnerable populations who may face substantial barriers to employment. This includes non-English speakers, immigrants, formerly incarcerated individuals, working parents and students.   We hope the City Council will consider our thousands of employees and the most economically vulnerable New Yorkers. As so many people in our city are already struggling to stay afloat and so many businesses are struggling to keep their door open due to the pandemic’s impact, now is not the time to target small businesses again.   As the Governor and the Mayor continue to impose devastating restrictions on the restaurant industry, the Council’s bills would only cause greater hardship and force more New Yorkers into unemployment. The language contained within both pieces of legislation is reminiscent of collective bargaining language, which should be hammered out at the bargaining table and which the City Council has no legal right to impose on business owners. We implore the City Council to reconsider the very serious consequences of this legislation. We request that these bills be pulled from this week’s agenda before any further action is taken. Problems with the 32BJ Bills as written - CLICK HERE NYC Save Small Business Press Conference footage - CLICK HERE There is a snow advisory for #NYC with projected snowfall in excess of 8 inches. Third Avenue Business Improvement District will be out during the storm: ✅ Clearing crosswalks and pedestrian cuts ✅ Salting public space and stairways ✅ Clearing catch basins to prevent flooding.   If you see any unsafe conditions, please report it to 311 and the BID office at jmedina@thirdavenuebid.org or if an emergency 911. This is a reminder that all business owners are responsible for shoveling in front of their establishment. If a property is vacant, the property owner is responsible for snow removal. For more information, click here

Comptroller Stringer Calls on SEC to Investigate Tyson Foods’ Worker Health and Safety Disclosures Amid COVID-19 Pandemic

 

False and misleading statements by Tyson in its annual report paint inaccurate picture of the company’s health and safety measures

Tyson reportedly failed to properly enforce social distancing and protective face coverings, leading to widespread infections, hospitalizations and worker deaths

Calls persistent failure to protect workplace health and safety “unsustainable” and urges complete and accurate reporting to protect investors

 New York City Comptroller Scott M. Stringer called on the U.S. Securities and Exchange Commission (SEC) to open an investigation into Tyson Foods Inc. for making misleading disclosures to investors, including the New York City Retirement Systems, regarding its worker health and safety protections, and resulting risks, amid the COVID-19 pandemic. Tyson’s slow and minimal pandemic response and the resulting infections, hospitalizations, and deaths among its workforce are well-documented; however, Tyson’s annual disclosure paints an inaccurate and misleading picture of the company’s safety culture and its claims that it continues to implement safety measures recommended by the Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration (OSHA).

“Tyson is flagrantly misrepresenting its poor pandemic response,” said Comptroller Stringer. “There is human cost to Tyson’s failures – preventable deaths, hospitalizations and sick workers. These failures have material impacts on its business operations that carry serious risks for shareholders. I am calling on the SEC to immediately open an investigation into Tyson’s misleading and dubious claims that they are adhering to OSHA and CDC safety guidelines, because shareowners need a full and transparent accounting into Tyson’s workplace safety and the risks to both workers and investors amid the COVID-19 pandemic.”

Tyson’s COVID-19 pandemic response was slow and insufficient as the virus spread through its facilities. Any steps that the company took to protect its workers were nominal and ultimately ineffective, including allowing workers to wear bandanas and sleep masks as ‘protective’ face coverings, which provide little to no defense against airborne COVID-19 transmission. Tyson’s severe downplaying of the severity of COVID-19 in its largest pork plant led to 1,000 workers becoming infected, as well as hospitalizations, deaths, and ultimately the plant’s closure. The company’s sick policy was similarly inadequate: pausing its policy of penalizing workers who call in sick only for a few months while incentivizing workers to continue working with $500 bonuses, then in June resuming penalizing workers who take sick leave.

As of December 3, 2020, Tyson has the highest number of COVID-19 cases of any company in the meatpacking industry, and more than three times as many cases as the second-highest ranking company, JBS, the nation’s largest meatpacking company, according to the non-profit Food Environment Reporting Network.

Tyson’s health and safety record was already problematic even before the pandemic began. In 2017, Tyson had the fourth highest number of reported severe injuries out of 14,000 companies from 2015-2016, and was fined more than $700,000 for health and safety violations in 2016 alone. In 2019, Tyson was ranked fifth by Human Rights Watch for reported severe injuries out of tens of thousands of meat and poultry plants. A shareholder resolution urging greater transparency on Tyson’s human rights record was supported by 37% of the non-insider, Class A shares that were voted at the February 2020 annual meeting.

To read Comptroller Stringer’s letter to the Securities and Exchange Commission, click here.

MAYOR DE BLASIO STATEMENT ON CONGRESS’ STIMULUS NEGOTIATIONS

 

Mayor Bill de Blasio today released the following statement on stimulus negotiations in Congress:

 

“A deal that sidelines local aid is a deal that sidelines our recovery. The latest proposal out of Washington abandons New York City and cities across the country, ignoring that we are America’s economic engine.

 

The entire point of a stimulus is to spur economic growth and help working class families. This proposal fails to do exactly that.”