Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic April 27, 2021

 

3,184 Patient Hospitalizations Statewide

728 Patients in the ICU; 461 Intubated

Statewide Positivity Rate is 2.61%

Statewide 7-Day Average Positivity Rate Drops to 2.06%—Lowest Since November 7

26 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.

"New York is making progress in the footrace between the vaccination rate and the infection rate - we are continuing to make it even easier for residents to access the vaccine and at the same time New Yorkers are staying tough and practicing the safe behaviors we know stop COVID in its tracks," Governor Cuomo said. "All the arrows are pointing in the right direction, and we've been able to open even more sectors of our economy and increase capacity for several different industries, but we're not out of the woods yet. The virus is still here and we need all New Yorkers to follow the public health guidance for us to get through this pandemic and reach the light at the end of the tunnel together."

It is important to note that data, including test results and hospital rates, reported early in the week are often not completely reflective of the current situation due to lower discharges and testing volume over the weekend. Data trends over a period of time, such as using 7-day averages, are a preferred metric.

Today's data is summarized briefly below: 

• Test Results Reported - 103,675
• Total Positive - 2,704
• Percent Positive - 2.61%
• 7-Day Average Percent Positive - 2.06%
• Patient Hospitalization - 3,184 (+10)
• Net Change Patient Hospitalization Past Week - -689
• Patients Newly Admitted - 304
• Hospital Counties - 53
• Number ICU - 728 (-1)
• Number ICU with Intubation - 461 (+7)
• Total Discharges - 174,345 (+258)
• Deaths - 26
• Total Deaths - 41,875

Former White House Adviser Arrested For Stealing $218,000 From Charter Schools He Founded

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging SETH ANDREW with wire fraud, money laundering, and making false statements to a financial institution, in connection with a scheme in which ANDREW stole $218,005 from a charter school network that he founded.  ANDREW was arrested this morning in New York, New York, and will be presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create.  Andrew is not only alleged to have stolen the schools’ money but also to have used the stolen funds to obtain a savings on a mortgage for a multimillion-dollar Manhattan apartment.  Thanks to the FBI’s diligent work, Andrew now faces federal charges for his alleged scheme.”     

FBI Assistant Director William F. Sweeney Jr. said:  “Locking into the lowest interest rate when applying for a loan is certainly the objective of every home buyer, but when you don’t have the necessary funds to put down, and you steal the money from your former employer to make up the difference, saving money in interest is likely to be the least of your concerns. We allege today that Andrew did just that, and since the employer he stole from was a charter school organization, the money he took belonged to an institution serving school-aged children. Today Andrew himself is learning one of life’s most basic lessons – what doesn’t belong to you is not yours for the taking.”

As alleged in the Complaint unsealed today[1]:

In 2005, SETH ANDREW helped create “School Network-1,” a series of public charter schools then based in New York City.  In the Spring of 2013, ANDREW left School Network-1 and accepted a job in the United States Department of Education and, thereafter, as a senior adviser in the Office of Educational Technology at the White House.  While employed at the Department of Education, and at the White House, ANDREW was paid by School Network-1.  In November 2016, ANDREW left his role in the White House and, shortly thereafter, in January 2017, ANDREW officially severed his relationship with School Network-1.

School Network-1 comprises several charter schools throughout United States including several in New York City.  Pursuant to an agreement with the New York State Board of Regents, School Network-1’s New York-based charter schools must maintain an “escrow account” that may be accessed only if the school dissolves.  Three such escrow accounts, for three New York City-based School Network-1 schools, were opened by ANDREW and other School Network-1 employees at  “Bank-1” in 2009, 2011, and 2013.  As to each of those three accounts – Escrow Account-1, Escrow Account-2, and Escrow Account-3 – ANDREW was a signatory and had access to the funds in them.  However, pursuant to the charter agreement, the funds in the Escrow Accounts were reserved in case the school dissolved, and the funds could not be moved by ANDREW, or anyone, without proper authorization.

After he severed his relationship with School Network-1, on March 28, 2019, ANDREW entered a Bank-1 branch in New York City and closed both Escrow Account-1 and Escrow Account-2.  Bank-1 provided ANDREW a bank check in the amount of $71,881.23 made payable to “[School Network-1] Charter School” (“Check-1”) and a second bank check in the amount of $70,642.98 to “[School Network-1] Harlem Charter” (“Check-2”).  Check-1 and Check-2 represented the funds that were in Escrow Account-1 and Escrow Account-2, respectively.

The same day that ANDREW closed Escrow Account-1 and Escrow Account-2, ANDREW entered a Manhattan branch of a different FDIC-insured bank (“Bank-2”) and opened a business bank account in the name of “[School Network-1] Charter School” (“Fraud Account‑1”).  To open that account, ANDREW represented to a Bank-2 employee that he was a “Key Executive with Control of” School Network-1 Charter School, which was a lie.  ANDREW then deposited Check-1 into the account but, that day, ANDREW did not deposit Check-2.

Five days later, on April 2, 2019, ANDREW used an ATM machine in Baltimore, Maryland, to deposit Check-2 into Fraud Account-1.  It appears ANDREW waited to deposit Check-2 because it was made payable to “School Network-1 Harlem Charter” and not “School Network-1 Charter School.”  Had he tried to deposit Check-2 when he opened Fraud Account-1 it would not have been honored by Bank-2.

At the time ANDREW deposited Check-1 and Check-2 into a Bank-2 bank account, ANDREW was contemplating obtaining a mortgage from Bank-2 to purchase a residential property.  At that time, Bank-2 offered certain customers, as a promotion, more favorable mortgage interest rates if those customers maintained a certain amount of funds in Bank-2 accounts.  Specifically, for every $250,000 on deposit, up to a total of $1 million, Bank-2 would lower that qualifying customer’s mortgage interest rate by 0.125%.  Thus, in total, if a qualifying customer maintained $1 million or more of his/her funds in Bank-2 accounts that customer would receive a 0.5% interest rate deduction on a Bank-2 mortgage.  But to take advantage of the interest rate deduction promotion, Bank-2 required that the funds a customer deposited be funds owned by the customer or, in some instances, a business the customer owned, controlled or was lawfully associated with.  Bank-2 did not permit a customer to utilize money owned by someone else to gain the benefit of the interest rate deduction promotion.

By April 2019, because of the $142,524 ANDREW deposited in Bank-2, using the money he stole from two charter schools, ANDREW deposited a total of approximately $1,007,716 with Bank-2, and therefore became eligible to receive a 0.5% interest rate deduction – the largest deduction a customer could receive from Bank-2’s promotion.  Without the $142,524 deposited stolen funds, ANDREW would have been eligible for only a 0.375% interest rate deduction.  On August 21, 2019, ANDREW purchased a residential property located in New York, New York, for approximately $2,368,000.  To effectuate that purchase, ANDREW, and his spouse, obtained a mortgage from Bank-2 in the amount of $1,776,000 with an interest rate of 2.5% –  taking full advantage of the promotion Bank-2 offered. 

On October 17, 2019, ANDREW closed out Escrow Account-3 and received a check (“Check-3”) made payable to “[School Network-1] Endurance” in the amount of $75,481.10.

On October 21, 2019, ANDREW deposited Check-3 into an account that he opened at a third bank (“Fraud Account-2”).  Approximately one month later, ANDREW obtained a check from Bank-2 for $144,473.29, which constituted the funds stolen from Escrow Account-1 and Escrow Account-2, and ANDREW ultimately deposited those funds into Fraud Account-2.  Five days later, ANDREW rolled the funds in Fraud Account-2 into a certificate of deposit.  That certificate of deposit matured on May 20, 2020, which earned ANDREW $2,083.52 in interest.  ANDREW then transferred the funds from the certificate of deposit – including the funds stolen from the Escrow Accounts – into a bank account held in the name of a particular civic organization that ANDREW currently controls, thereby concealing the money’s association with School Network-1, and depositing the stolen money into an account under ANDREW’s complete control.

ANDREW, 42, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of making a false statement to a bank, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI.

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

[1] As the introductory phrase signifies, the entirety of the text 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.

MAYOR DE BLASIO, FIRST LADY MCCRAY, SCHOOLS CHANCELLOR PORTER, AND SPEAKER JOHNSON ANNOUNCE HISTORIC EXPANSION OF MENTAL HEALTH SUPPORTS FOR ALL SCHOOLS

 

An unprecedented investment in mental health staff, supports and training for students, teachers, and parents

 Mayor Bill de Blasio, First Lady Chirlane McCray, Schools Chancellor Meisha Porter, and Speaker Corey Johnson today announced an historic expansion in access to school-based mental health supports for school communities as they confront and heal the trauma caused by COVID-19. As part of this expansion, mental health supports are being integrated into Summer Rising, all schools will participate in social-emotional screening, and over 600 social workers, psychologists, and family support workers will be hired totaling over 6,000 mental health workers in our schools across the city. Additionally, mental health resources and training will be made available to parents through DOE’s Parent University and to early childhood educators. 

"Here in New York City, we are doing everything we can to make sure our children and their families feel supported. Given the trauma of the past year, we know that starts with building out and fortifying our City's mental health infrastructure," said Mayor Bill de Blasio. "Our message to children, parents, and guardians is clear: we will heal our city together."

“Social-emotional screenings at every public school marks a critical expansion of mental health support for our young people,” said First Lady Chirlane McCray. “These screenings are a preventive measure, with a focus on maintaining wellness. Children will have an opportunity to talk about how they are feeling, how they’re getting along with friends and family, and talk about anything big or small they may be experiencing. These are conversations they should be able to have in the best of times. But after the year we’ve had, these conversations are more important than ever as they manage the grief, anxiety and trauma triggered by the pandemic.”

 

“Since day one, we have prioritized access to mental health care for all students and fought to ensure our educators and families have the supports they need to confront the trauma caused by the pandemic,” said Schools Chancellor Meisha Porter. “This historic investment underscores our commitment to address the social-emotional needs of our children by providing wraparound supports and services to meet them where they are. Our future is brighter when our young people are thriving.”

 

“The past 13 months have been unimaginably difficult for our students. In addition to the already daunting normal stressors, they’ve endured intense emotional and mental trauma because of the pandemic. They need help. They need more social workers and other mental health resources to deal with these enormous challenges,” said Speaker Corey Johnson. “This City Council has fought to add social workers in schools in every budget, and I’m proud we are making that happen in this budget when they are needed more than ever.”

 

SUMMER RISING

 

Supporting the mental health and recovery of our students is ongoing over the course of the school year. For many students attending Summer Rising, this summer may be their first time back in school buildings. Under this initiative, every Summer Rising site will be staffed with social workers who will ease the transition of returning and provide students with individualized and group counseling. They will be crucial in ensuring students are getting the support they need over the course of the summer and as they get ready for in-person learning this fall. 

UNIVERSAL SOCIAL-EMOTIONAL SCREENING

 

To ensure there is a successful return and recovery this fall, our educators must have the resources and supports necessary to address the social-emotional needs of all students. To that end, a social-emotional screening tool will be made available citywide to all children from infants/toddlers through grade 12. Social-emotional screening assists educators in better understanding the development of children, identifying common signs of trauma and distress in students, and helping better plan next steps in providing care. To coincide with the screening expansion, the DOE’s successful staff training initiative will expand to reach all 30,000 early childhood staff members. This means that every early childhood staff member will have access to professional development in trauma-informed practices.

HIRING 500 NEW SOCIAL WORKERS

 

When educators identify a young person who needs additional support, over 600 newly hired mental health professionals will be on hand to provide care. This fall, 500 new school-based social workers will be hired, inclusive of the 150 social workers announced in December. 60 borough-based social workers, 90 school psychologists and 30 family support workers will also be hired to provide direct care for students in the 270 most high need schools. 

This means that every school will have at least one full-time social worker or school-based mental health clinic - in addition to other pre-existing supports like Community School programs and resources across the city, such as NYC Health + Hospitals and ThriveNYC. In total, over 6,000 social workers, guidance counselors, and school psychologists will provide support to schools this fall, in addition to community-based resources.

ENGAGING PARENTS

 

Parents are educators’ strongest partners in ensuring the City’s young people are thriving and parents must have access to the same resources educators do. The expansion of Parent University will include resources that help families understand if their child may need social-emotional and mental health support. In addition to school-based supports, parents will have access to a parent hotline, where counselors will be trained on the school social-emotional screener and can provide families with community-based options for care. 

Families of our youngest learners will also have expanded access to a 4-week family workshop series, “Parenting Through the Pandemic.” This workshop, facilitated by the DOE’s Division of Early Childhood Education social workers, provides families with community and connection as well as support in creating routines, managing stress, and supporting family wellbeing, with a focus on neighborhoods most impacted by COVID-19. To date, 2,000 families have been trained with a goal of training at least 2,000 parents annually.

 

Before the COVID-19 pandemic, supporting the mental health of our students was a central part of this Administration’s focus with the 2019 major investment in social-emotional learning and mental health. Additionally, since the pandemic began we launched several initiatives to address the unique trauma caused by this crisis: 

 

• Trauma 101: At the height of the pandemic, the DOE trained approximately 13,000 staff throughout the spring and summer in a Trauma 101 series focused on grief and loss, bereavement and self-care in a crisis. This included Crisis Team members, who respond to schools that experience a loss and provide mental health supports, school leaders and school support staff. 

 

• Trauma Responsive Educational Practices (TREP): Building on that, the DOE launched an online trauma-informed care professional learning platform, that builds adult capacity to recognize signs and symptoms of trauma, strengthen community and foster resilience, proactively support student needs, and respond appropriately when students require additional support. To date, over 75,000 DOE educators and community partners have participated in this opportunity. 

 

• Bridge to School: Prior to the reopening of schools, the administration announced the “Bridge to School” initiative, a multi-pronged focus on mental health supports for students and staff this fall that trained every school leader in trauma-informed practices, like how to create classroom structures that facilitate healing, identify students in crisis, and procedures for compassionately supporting students struggling with grief and bereavement.

 

• In October: NYC Health + Hospitals began directly connecting to 26 schools in the neighborhoods hardest hit by COVID-19 to outpatient mental health clinics, where children and adolescents can receive ongoing therapy, psychiatric evaluation, medication management, and other clinical services. Additionally, the City moved to transform School Mental Health Consultants, who previously worked with schools to develop mental health plans and capacity, into providers of direct clinical mental health care in 350 schools in those neighborhoods.

 

• In December: the City expanded these supports by launching mental health screeners in the neighborhoods hardest hit by COVID-19. A social emotional screening is an evidence-based tool that facilitates a check-in on how students are doing emotionally and assesses a general sense of wellbeing, based on the observations made by the adults in school that know them best. 

Governor Cuomo Announces New York State to Adopt New CDC Guidance on Mask Use For Fully Vaccinated People

 

New Guidance Issued by CDC Today Available Here

Guidance Reemphasizes the Importance of Getting Vaccinated for COVID-19

 Governor Andrew M. Cuomo today announced that New York State will adopt the Centers for Disease Control and Prevention's new guidance on mask use for fully vaccinated people. The guidelines state that fully vaccinated people, defined as two or more weeks after receiving the second dose of the Pfizer or Moderna vaccine or the single-dose Johnson & Johnson vaccine, no longer need to wear masks outdoors, except in certain crowded settings and venues. However, masks should still be worn indoors and should still be worn by people who are not fully vaccinated. This guidance reemphasizes the importance of getting vaccinated and closely adhering to public health guidance, particularly if you are not yet vaccinated. Fully vaccinated individuals with immunocompromising conditions should consult with their healthcare provider first.

"The CDC announced new guidance today saying that when Americans who are fully vaccinated are outside, biking, hiking, running, or in small gatherings, you don't need to wear a mask. That is liberating, especially now that the weather is getting warmer," Governor Cuomo said. "New York has adopted that guidance, so that's going to go into effect in the State also and we want to thank CDC for that. This news underscores the fact that if you get vaccinated, more freedom is available to you, and I encourage all eligible New Yorkers who have not yet received the vaccine to make an appointment today."

According to the new CDC guidance, fully vaccinated people can engage in more activities than unvaccinated people, which include:

• Fully vaccinated workers no longer need to be restricted from work following an exposure as long as they are asymptomatic
• Fully vaccinated residents of non-healthcare congregate settings no longer need to quarantine following a known exposure
• Visit with other fully vaccinated people indoors without wearing masks or physical distancing
• Visit with unvaccinated people (including children) from a single household who are at low risk for severe COVID-19 disease indoors without wearing masks or physical distancing
• Participate in outdoor activities and recreation without a mask, except in certain crowded settings and venues
• Resume domestic travel and refrain from testing before or after travel or self-quarantine after travel
• Refrain from testing before leaving the United States for international travel (unless required by the destination) and refrain from self-quarantine after arriving back in the United States.
• Refrain from testing following a known exposure, if asymptomatic, with some exceptions for specific settings
• Refrain from quarantine following a known exposure if asymptomatic
• Refrain from routine screening testing if asymptomatic and feasible (in nonhealthcare settings)

This modification will be noticed to the legislature but will take effect immediately using the exigency provisions of Ch. 71 of the laws of 2021, enacted earlier this year.

State Comptroller Thomas P. DiNapoli Statement on New York City's Executive Budget

“New York City’s $98.6 billion executive budget for FY 2022 and its financial plan for FY 2022-FY 2025 reflect a drastically improved short-term budget outlook, buoyed by more than $15 billion in federal relief since December and better-than-projected revenues.

“The city plans to help pace its recovery by stretching federal relief through FY 2025, avoiding new taxes, establishing short-term programs to aid businesses and individuals, restoring and adding certain city services, and reducing out-year gaps. The city has also reinstated a planned drawdown from its retiree health benefits trust of $1.6 billion.

“The financial plan reflects just how critical the economic recovery is to New York City’s ability to achieve structural balance. The city projects employment growth to double from January projections and reach 4.5 million jobs in FY 2021, but the timing of the return of real estate values, commuters and tourists leave forecasts uncertain. The city is projecting further improvement in both income and corporate taxes, while revising sales taxes downward and keeping property taxes flat. Any decline in these revenues due to a slower-than-expected recovery or behavioral changes related to increases in state income or corporate tax rates, which push the city’s combined income and corporate tax rates to the highest rates in the country, would widen the budget gaps.

“Despite historic federal relief, the plan would still leave the city with significant budget gaps in FY 2023 through FY 2025 and creates out-year risks by increasing baseline spending and using some federal aid for recurring operational costs, particularly for education, that are not directly related to COVID-19.

“The city no longer faces an immediate fiscal emergency and can avoid drastic actions for short-term savings. The restoration of planned cuts should be followed by renewed commitment to long-term initiatives that allow for recurring savings while addressing collective bargaining agreements, which will begin expiring in May.

“My office’s full analysis of the FY 2022 budget and the Mayor’s executive financial plan will be released in the following weeks.”

Former New York Giant On Home Confinement Under CARES Act Charged With Narcotics Trafficking

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, Raymond P. Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Marty Raybon, the Acting Director of the New York Office of Customs & Border Protection (“CBP”) announced that Clyde Hall, a/k/a “Peter,” was arrested on April 24, 2021, in New York, New York.  A criminal Complaint was subsequently filed in Manhattan federal court charging HALL with possessing with intent to distribute over five kilograms of suspected cocaine.  HALL, a former professional football player with the New York Giants, was previously sentenced in 2010 to 20 years in prison following his conviction for various financial fraud crimes.  HALL was serving his prison sentence and was recently released to home confinement by the Bureau of Prisons (“BOP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT”), which expanded the authority of the Director of the BOP to place federal prisoners on home confinement earlier than otherwise permissible.  HALL was arrested on the instant narcotics charge while on home confinement and will be presented today before United States Magistrate Judge Gabriel W. Gorenstein. 

As alleged in the Complaint unsealed in Manhattan federal court[1]:

On April 24, 2021, HALL was found in possession of approximately seven kilograms of suspected cocaine, which he attempted to sell to a confidential source.  In addition, HALL claimed that another five kilograms was on its way.

HALL, 82, of New York, NY, is charged with narcotics distribution, which carries a mandatory minimum sentence of 10 years and a maximum sentence of life imprisonment.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the DEA, HSI, NYPD, and CBP.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Ni Qian is in charge of the prosecution.

The charge 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 text 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.

Statement From Senior Advisor to the Governor Rich Azzopardi Re: New York Post Question of Governor Cuomo

 

"Once again the Post has willfully distorted and misreported the Governor's statement. The Post asked the Governor at a press conference yesterday about a New York Times story using blind sources to claim the Governor made anti-LGBTQ and anti-Semitic statements. The Post asked why these "people say those things" in the Times story. The Governor said "Who knows. People are venal, people want attention, people are angry, people are jealous. Who knows why people spread rumors?"  The Post then intentionally distorted this interaction to say that the Governor's response was to "accusers," presenting this exchange to readers as if it was about sexual harassment complaints. It was not. That was untrue and false reporting and should be corrected if they have any journalistic integrity."

Transcript provided below:

Bernadette Hogan, NYP: Governor, The New York Times put out a story a couple of weeks ago, where they interviewed 80 people either close to you or had worked with you, and they detailed accounts that you had said things like anti-trans slurs and also some to the effect of saying that Jews lived in F-ing tree houses. Did you say those things, and if not, why—

Governor Cuomo: I never said any such things and I told the Times that I never said any such thing. They printed slurs and slander, and you'd have to ask them why they did that.

Bernadette Hogan, NYP: Why would people say those things, that you had said them, if that's not true?

Governor Cuomo: People say a lot of things. People say a lot of things in politics.

Bernadette Hogan, NYP: Governor, also—

Governor Cuomo: That's, why do people say things? Who knows. People are venal, people want attention, people are angry, people are jealous. Who knows why people spread rumors?

Comptroller Stringer Investigation: City Lost $1.86 Million in Failed Effort to Purchase Ventilators During the COVID-19 Pandemic

 

Investigation shows how the City, having suspended contracting rules early in the pandemic, ignored early warning signs and pre-paid $8.26 million for 130 ventilators that it never received

Global Medical Supply Group LLC exploited the City’s public health emergency with a high-pressure sales pitch and false assurances, never delivered any ventilators, and failed to return $1.86 million of City tax money

Mayor’s suspension of City procurement rules exposed taxpayers to risk of fraud, waste, and abuse

Comptroller recommends emergency procurement procedures to enable the City to quickly purchase what it needs, while reducing risks of waste and fraud

Today, New York City Comptroller Scott M. Stringer released the findings of an investigation into the City’s full prepayment of $8.26 million to Global Medical Supply Group LLC (Global) in an unsuccessful attempt to purchase 130 ventilators during the initial COVID-19 surge in March 2020. Comptroller Stringer’s investigation found that Global, a business formed less than two weeks before the City’s prepayment, never delivered any ventilators and, even after protracted negotiations and litigation, failed to return $1.86 million of City taxpayers’ money—nearly a quarter of the City’s payment.

“Our investigation found that the City lost nearly $2 million on lifesaving equipment that it never received,” said Comptroller Stringer. “I am again calling on the City to immediately restore City procurement rules to protect taxpayers from abuse by unreliable vendors and from costly mistakes. While the pandemic took us by surprise, there is no excuse not to learn from our misfires going forward. If we fail to heed these findings and take sensible measures to safeguard taxpayer dollars for the next emergency, then the City will once again let New Yorkers down.”

Comptroller Stringer’s investigation found that City procurement officials at the Department of Citywide Administrative Services (DCAS), Mayor’s Office of Contract Services (MOCS), and other agencies were able to arrange the prepayment of $8.26 million to Global 36 hours after receiving its unsolicited proposal—with no price competition, no goods delivered, no security, no meaningful assessment of Global’s business history and reliability, and no signed contract—because the Mayor had issued an emergency executive order suspending City procurement laws and rules for COVID-19-related purchases. Global sent much of the City’s money to a bank account in China maintained by Global’s supposed ventilator supplier—a trading company that exported shoes—compromising the City’s ability to trace and recoup the remainder of what it is owed through the U.S. legal system.

In this case, with key procurement safeguards removed, City employees—pressed to acquire scarce items quickly for emergency use—were extraordinarily vulnerable to exploitation by unscrupulous actors and to mistakes and omissions that the rules might have prevented.

The investigation identified three factors that led to the City’s monetary loss: Mayor de Blasio’s March 2020 executive order suspending City procurement rules without substituting other controls; Global’s exploitation of the City’s emergency need for ventilators with a high-pressure sales pitch and false assurances of immediate delivery; and obvious warning signs of Global’s untrustworthiness that City officials missed or disregarded.

Comptroller Stringer’s investigation of the City’s payment of $8,261,500 to Global revealed the following:

• The suspension of City procurement rules for COVID-19-related purchases, including rules requiring vendors to disclose their business histories and those requiring signed contracts for multimillion dollar purchases, exposed the City to risks of waste, fraud, and abuse.
• Global exploited the City’s public health emergency with a high-pressure sales pitch and false promises of immediate delivery of 130 ventilators when the City was an epicenter of the first wave of the coronavirus pandemic and was publicly calling for 15,000 ventilators to help care for hospitalized patients at risk of death.
• Global engaged in an intensive marketing campaign—including at least 28 phone calls, 149 texts, and 60 emails in a four-day period centered around a weekend—to convince City decision makers to pay the full $8.26 million price in advance for 130 ventilators that Global promised would be shipped immediately.
• City officials ignored an early warning sign that Global’s assertions were unreliable, specifically, Global’s initial claim that it could “lock [the City] in” for “up to 20 million” brand-name, N95 respirator masks. A City official immediately alerted colleagues that the masks’ manufacturer had warned the City—just one day earlier—to be “wary” of “vendors claiming to have those types of numbers.”
• The City advanced $8.26 million to Global, even after finding the company’s existence “tough to confirm,” as one City official noted at the time. With procurement rules suspended, Global was not required to disclose basic background information, including its business history, and City officials knew little about the new company.
• The City also knew little about the company Global named as its “direct source” for the ventilators it offered to sell to the City. City officials reviewing Global’s proposal learned that its supposed source for the ventilators was a trading company that had previously exported footwear from China to a U.S.-based company. They found no evidence that it had ever dealt in medical equipment.
• City officials lacked a clear understanding of Global’s relationship with the factory where it claimed to have secured ventilators. When City officials requested evidence of Global’s access to the ventilators it was offering the City, Global provided a few photographs and video recordings of unknown origin and publicly available information about the product. A City official later acknowledged that in retrospect the ventilators shown in a video Global sent to the City “could have been anyone’s vents.”
• City officials missed two red flags in Global’s ventilator pitch—Global’s repeated, implausible claims that it could ship 20,000 brand name ventilators to the City from China at a rate of 1,000 per day, and Global’s far-fetched assertion that it had secured capacity for 80,000 of those ventilators at a single factory. Both claims were belied by public reporting at the time. The brand manufacturer later informed the Comptroller’s Office that its total production capacity in April 2020 (the month following Global’s ventilator proposal to the City) was less than 1,000 units per month.
• The City lost $1,859,068.94 in the Global transaction, even after concerted efforts to recover the funds, including a recently settled legal action the City filed in the U.S. District Court for the Southern Direct of Florida. In June 2020, the City recovered $3,977,594.28 and, under the recent settlement, has received or will receive an additional $2,424,836.78 from Global and others involved in the transaction. Upon collecting the settlement amount, the City will have recovered $6,402,431.06 of its $8,261,500 payment to Global for the ventilators it never received and will have lost $1,859,068.94. The City has also obtained a judgment in that loss amount against Global. However, according to the settlement agreement, Global has informed the City that its liabilities exceed the value of its assets.

Comptroller Stringer recommended seven measures to enable the City to purchase what it needs to address emergencies, such as the COVID-19 pandemic, while mitigating the associated risks of fraud, waste, and abuse. The recommendations urge the City to:

• Follow the City’s existing procurement rules, which already allow expedited emergency purchases, and amend them, if necessary, for additional speed and flexibility.
• Institute dollar limits and additional safeguards to mitigate the inherent risks of prepayments that might be necessary in emergencies.
• Develop a toolkit of resources for emergency procurements to help balance the need for speed with safeguards to prevent waste, loss, and abuse of City funds.
• Develop an adaptable short form contract with standard provisions to protect critical City interests when emergency procurements are necessary.
• Develop a short-form vendor-disclosure template to help expedite vendor responsibility determinations in emergency procurements.
• Create a centralized clearinghouse for expedited vendor responsibility determinations that all City agencies can use for emergency procurements.
• Develop guidelines for quick vendor responsibility determinations in emergency procurements.

Comptroller Stringer has repeatedly urged Mayor de Blasio to rescind Emergency Executive Order (EEO) 101, Section 2, which has suspended laws and regulations related to procurement in the City since March 17, 2020. Following two letters sent to the Administration in August and October of 2020 that yielded no response or action, Comptroller Stringer for the third time in March 2021 underscored the need to rescind the Mayor’s emergency suspension of procurement laws. The City Charter and the City’s Procurement Policy Board (PPB) Rules already provide for expedited emergency purchases but with safeguards and transparency mechanisms in place to protect the City’s interests. Under Mayor de Blasio’s emergency powers, the City has entered into 1,356 contracts totaling more than $6.1 billion in City funds since March 2020 without the crucial statutory oversight of the Comptroller’s Office.

To read Comptroller Stringer’s investigation of the City’s failed purchase of ventilators from Global Medical Supply Group LLC, click here.