Manhattan Doctor Sentenced To More Than 17 Years In Prison For Bribery And Kickback Scheme, And For Distributing Oxycodone And Fentanyl For No Legitimate Medical Purpose

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, announced that GORDON FREEDMAN, a doctor who practiced in New York, New York, was sentenced today in Manhattan federal court to 121 months in prison for participating in a scheme to receive bribes and kickbacks in the form of fees for sham educational programs (“Speaker Programs”) from pharmaceutical company Insys Therapeutics in exchange for prescribing millions of dollars’ worth of Subsys, a potent fentanyl-based spray manufactured by Insys, among other offenses (the “Insys Bribery Offenses”).  FREEDMAN was convicted of the Insys Bribery Offenses following a jury trial.  FREEDMAN was also sentenced to 210 months in prison, to run concurrently to the other sentence, for distributing oxycodone and fentanyl to a patient for no legitimate medical purpose (the “Diversion Offense”).  That patient ultimately died of a fentanyl overdose from drugs FREEDMAN illegally prescribed him.  FREEDMAN pled guilty to the Diversion Offense in December 2019.  

FREEDMAN was sentenced by United States District Judge Kimba M. Wood.

U.S. Attorney Audrey Strauss said: “Dr. Gordon Freedman, a prominent Manhattan physician, allowed his medical judgment to be corrupted by hundreds of thousands of dollars in bribes that he accepted from Insys in return for prescribing Subsys, a potent fentanyl painkiller.  These payments were made to appear like legitimate speaker program fees, but as the evidence at Freedman’s trial revealed, the speaker programs were a sham and were simply a way for Insys to line Freedman’s pockets.  In addition, Freedman prescribed excessive quantities of oxycodone and fentanyl to one of his patients for no legitimate medical purpose.  The patient overdosed and died from fentanyl prescribed by Freedman.  Freedman will now be serving a long prison sentence for accepting bribes and prescribing medically unnecessary opioids.”           

According to the allegations contained in the Indictments against FREEDMAN, the evidence presented in Court during the trial related to the Insys Bribery Offenses, and filings in related proceedings:

Insys manufactured Subsys, a powerful painkiller approximately 50 to 100 times more potent than morphine.  The U.S. Food and Drug Administration (“FDA”) approved Subsys only for the management of breakthrough pain in cancer patients.  Prescriptions of Subsys typically cost thousands of dollars each month, and Medicare and Medicaid, as well as commercial insurers, reimbursed prescriptions written by the defendants.  In or about August 2012, Insys launched a “Speakers Bureau,” purportedly aimed at educating practitioners about Subsys.  In reality, however, Insys used its Speakers Bureau to induce doctors to prescribe large volumes of Subsys by paying them Speaker Program fees.  At each Speaker Program, speakers were supposed to conduct a slide presentation for other health care practitioners regarding Subsys.  However, many of the Speaker Programs led by the speakers paid by Insys were predominantly social affairs where no educational presentation occurred.  Attendance sign-in sheets for the Speaker Programs were frequently forged by adding the names and signatures of health care practitioners who had not actually been present.

FREEDMAN, a doctor certified in pain management and anesthesiology, owned a private pain management office on Manhattan’s Upper East Side and was an associate clinical professor at a large hospital in Manhattan (“Hospital-1”).  FREEDMAN received approximately $308,600 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys.

In March 2013, a Regional Sales Manager for Insys sent an email to FREEDMAN informing him that he would receive more Speaker Programs in the coming months because Insys wanted prescriptions of Subsys to increase, and urging FREEDMAN to put more patients on Subsys.  FREEDMAN responded, in part, “Got it,” and significantly increased his Subsys prescriptions in the following months, during which he received approximately $33,600 in Speaker Program fees. 

In 2014, FREEDMAN’s prescriptions of Subsys rose even further, and he was the fourth-highest prescriber of Subsys nationally in the final quarter of 2014, accounting for approximately $1,132,287 in overall net sales of Subsys in that quarter.  During 2014, FREEDMAN was the highest-paid Insys Speaker in the nation, receiving approximately $143,000. 

During the period in which FREEDMAN was receiving kickbacks from Insys, he was also distributing powerfully addictive prescription drugs to a particular patient (“Patient-1”) with no legitimate medical purpose.  From in or about 2013 through in or about May 2017, FREEDMAN prescribed enormous quantities of oxycodone and fentanyl to Patient-1.  For example, in 2013 alone, FREEDMAN prescribed Patient-1 approximately 85,427 oxycodone pills –  an average of approximately 234 oxycodone pills per day – containing a total of approximately 2,422,435 mg of oxycodone.  On or about April 13, 2017, FREEDMAN gave Patient-1 prescriptions for approximately 150 doses of a drug containing fentanyl, and for approximately 950 oxycodone pills containing approximately 30 mg of oxycodone per pill.  On or about May 4, 2017, Patient-1 died of a fentanyl overdose after ingesting a quantity of the drug prescribed by FREEDMAN on or about April 13, 2017.

In addition to the prison sentence, FREEDMAN, 61, of New York, New York, was sentenced to three years of supervised release, ordered to forfeit $308,600 and ordered to pay a total fine across the two cases of $75,000.

FREEDMAN was one of five Manhattan doctors convicted for participating in the Subsys bribery conspiracy.  Todd Schlifstein was convicted upon a guilty plea and sentenced by Judge Wood on October 28, 2019, principally to a term of two years in prison.  Alexandru Burducea was convicted upon a guilty plea and sentenced by Judge Wood on January 27, 2020, principally to a term of 57 months in prison.  Dialecti Voudouris was convicted upon a guilty plea and sentenced by Judge Wood on March 5, 2020, principally to time served.  Jeffrey Goldstein was convicted upon a guilty plea and sentenced by Judge Wood on June 16, 2021, principally to a term of 57 months in prison.

Ms. Strauss praised the outstanding investigative work of the Federal Bureau of Investigation and thanked the U.S. Department of Health and Human Services - Office of the Inspector General for its participation in the investigation.

176 Days and Counting

 

Water, Water everywhere yesterday, but where was I your mayor for 176 more days, not in New York City. Charlene and I are taking a weekend vacation in Connecticut taking the weekend off. If there are any problems, go talk to your new Mayor Eric Adams. I heard he had lunch with Republican leaders like John Catsimatidis yesterday. It was in that newspaper I call a rag the New York Post. 

Charlene and I have gone some place where we want to be alone. Now don't bother us unless there is a real emergency.

Senator Rivera on Rhode Island’s Authorization to Open First Overdose Prevention Center in the Nation

 

"I applaud Rhode Island Governor Daniel McKee for authorizing the establishment of a 2-year “Harm Reduction Center” pilot program. 

It is critical that New York swiftly follows suit by opening our own overdose prevention centers - a public health measure that has been proven to save lives and help those struggling with substance abuse disorders. 

This is not the time for half measures. To effectively combat our State’s opioid crisis, which continues to wreak havoc in our communities, we need to either pass my bill or continue to push for Governor Cuomo to keep his promise and authorize them through executive action.”

EDITOR'S NOTE:

We wonder what location(s) State Senator Gustavo Rivera, and State Senator Alessandra Biaggi may have in mind for such a Pilot Program in New York, New York City, and especially the Bronx. 

Governor Cuomo Updates New Yorkers on State's Progress During COVID-19 Pandemic

 

Statewide 7-Day Average Positivity is 0.73%

40,642 Vaccine Doses Administered Over Last 24 Hours

3 COVID-19 Deaths Statewide Yesterday

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

"New Yorkers are strong and have carried our state through an unprecedented pandemic. Every day we advance closer to the end of the tunnel, but it is important to remember we still need to be vigilant against the virus," Governor Cuomo said. "If you haven't already, get your COVID vaccination to better protect yourself and your loved ones against this beast."

 

Today's data is summarized briefly below:

• Test Results Reported - 86,906
• Total Positive - 817
• Percent Positive - 0.94%
• 7-Day Average Percent Positive - 0.73%
• Patient Hospitalization - 349 (+2)
• Patients Newly Admitted - 52
• Patients in ICU - 73 (-7)
• Patients in ICU with Intubation - 37 (-2)
• Total Discharges - 185,293 (+42)
• Deaths - 3
• Total Deaths - 43,006
• Total vaccine doses administered - 21,483,696
• Total vaccine doses administered over past 24 hours - 40,642
• Total vaccine doses administered over past 7 days - 239,325
• Percent of New Yorkers ages 18 and older with at least one vaccine dose - 70.2%
• Percent of New Yorkers ages 18 and older with completed vaccine series - 64.9%
• Percent of New Yorkers ages 18 and older with at least one vaccine dose (CDC) - 72.9%
• Percent of New Yorkers ages 18 and older with completed vaccine series (CDC) - 66.3%
• Percent of all New Yorkers with at least one vaccine dose - 58.5%
• Percent of all New Yorkers with completed vaccine series - 53.7%
• Percent of all New Yorkers with at least one vaccine dose (CDC) - 60.7%
• Percent of all New Yorkers with completed vaccine series (CDC) - 55.0%

Head Of Telemarketing Operation Charged In $19 Million Credit Card Laundering Scheme

 

Defendant Charged with Using Phony Merchant Accounts to Obtain Credit Card Processing for His Deceptive Business

 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 Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of STEVEN SHORT, the former head of E.M. Systems & Services, LLC, and affiliated companies (“E.M. Systems”), on charges of fraudulently obtaining credit card processing services for his deceptive Florida-based telemarketing operation.  As alleged in a superseding indictment unsealed today, which also contains charges previously announced against Brandon Becker, the former CEO of CardReady, LLC (“CardReady”), SHORT and Becker fraudulently carried out a credit card laundering scheme that provided access to the credit card system for SHORT’s underlying telemarketing scheme.  From about 2012 through 2015, according to the Indictment, SHORT and E.M. Systems generated over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens in exchange for fees of up to $1,495.  The telemarketing operation resulted in hundreds of complaints of fraud and deceptive tactics, and requests for millions of dollars in refunds and chargebacks.  The charges include that, from approximately 2012 through 2015, SHORT, Becker and their co-conspirators carried out a fraudulent credit card processing scheme, processing credit card charges for SHORT’s telemarketing operation, even though applicable contracts prohibited the processing of credit card charges for purported “debt consolidation” and “interest rate reduction” services.  SHORT and Becker are charged with accomplishing this processing fraud by creating dozens of sham merchant accounts and false merchant applications, concealing the true nature of SHORT’s telemarketing operation, and defrauding an associated credit card processing company and a federally insured bank into processing more than $19 million in payments for the scheme.

SHORT was arrested this morning in Tampa, Florida, and is scheduled to be presented in Tampa before U.S. Magistrate Judge Sean Flynn.  Becker was originally arrested at Los Angeles International Airport on September 22, 2019.  The case is assigned to Judge Preska, and is scheduled to go to trial on January 31, 2022.

U.S. Attorney Strauss said:  “Steven Short and his codefendant allegedly preyed on people already in debt in order to enrich themselves, using a web of sham companies to perpetuate and conceal their conduct.  As credit cards and electronic payments become an ever more central part of our society and our economy, both consumers and corporations have every right to expect truthfulness and fair dealing in the marketplace – not fraud and deception.”

FBI Assistant Director William F. Sweeney Jr. said: "As alleged, Becker and Short created more than $19 million in illegitimate profits, derived from victims who were deliberately targeted due to their debt-laden status. They entered into this scheme together and will exit in much the same way—facing a federal indictment that carries significant charges of its own."

According to the Indictment unsealed today:[1]

SHORT controlled E.M. Systems and its affiliates, based in Florida.  Beginning in 2012, SHORT sought to use E.M. Systems to carry out a telemarketing scheme targeting people with outstanding debt, and to offer them purported financial services.  In order to charge for such purported services via credit cards, SHORT sought access to the credit card processing market, through Becker and CardReady.  

Becker was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, such as SHORT, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (“ISO”), referred to in the Indictment as the “New York ISO.”  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts up the chain to Payment Processor-1 and to Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.

In or about 2012, SHORT negotiated a deal with Becker, to obtain credit card processing for SHORT and E.M. Systems.  Under this deal, CardReady would keep approximately one-third of the credit card sale transactions of SHORT and E.M. Systems, in exchange for providing them access to the credit card processing network.  For roughly the next two years, SHORT and E.M. Systems carried out a telemarketing scheme in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt.  The cold-callers offered the customers services, including debt consolidation and interest rate reduction on their debts, which were prohibited by the applicable guidelines from Bank-1 and associated processing entities (the “Guidelines”), and which – as SHORT and Becker knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

In securing payment card processing for E.M. Systems, SHORT and Becker concealed that E.M. Systems was the true underlying merchant.  Instead, SHORT, Becker and their co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no businesses of their own, and knew little or nothing about E.M. Systems’ business.  In return for signing paperwork, the signers were paid a nominal fee from CardReady.  SHORT, Becker, and their co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1.  These false merchant applications also concealed the Sham Merchants’ true association with E.M. Systems.

By steering E.M. Systems’ payment processing through these Sham Merchant Accounts, SHORT and Becker accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for E.M. Systems to conceal its identity from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.  SHORT and Becker then caused CardReady to quickly replace the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of Telemarketer-1 and other high-risk merchants.  Second, the fraudulent processing scheme enabled E.M. Systems to spread out its charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  SHORT and Becker thus enabled E.M. Systems to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

SHORT, 44, of Tampa, Florida, is charged in Counts One and Four of the Indictment, with conspiracy to commit wire fraud and bank fraud, and bank fraud.  Count One and Count Four each carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.

Becker, 50, of Los Angeles, California, is charged in four counts, conspiracy to commit wire fraud and bank fraud, conspiracy to make false statements to a bank, wire fraud, and bank fraud.  Count One and Count Four each carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.  Count Two and Count Three each carries a maximum sentence of 20 years in prison, and a maximum fine of $250,000 or twice the gross gain or loss from the offense. 

The maximum potential sentences for each defendant are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Ms. Strauss praised the extraordinary work of the FBI and thanked the Federal Trade Commission for its assistance.

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

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

Just Days after winning the Democratic Primary for Mayor Eric Adams Breaks Bread with Republican Heavyweights.

 

https://nypost.com/.../eric-adams-dines-with-gop.../...

NYPOST.COM

Eric Adams breaks bread with GOP heavyweights at Rao’s

Just days after winning the Democratic nomination for mayor, Eric Adams broke bread at storied Italian eatery Rao’s with billionaire Republican John Catsimatidis.

Disbarred Attorney Pleads Guilty To Securities Fraud In Connection With Fraudulent Opinion Letter Scheme

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that RICHARD RUBIN, a disbarred attorney, pled guilty in Manhattan federal court to securities fraud.  RUBIN’s guilty plea results from his involvement in a fraudulent scheme in which he falsely represented that he was a licensed attorney in signing certain attorney opinion letters, which enabled the relevant securities to be sold to the investing public.  In addition, RUBIN engaged in the fraudulent scheme with Thomas Craft, a licensed attorney, who falsely represented that he had undertaken certain legal work in connection with other attorney opinion letters, when in truth and in fact, RUBIN, despite his disbarment, had undertaken all of the legal work attested to in the letters.

RUBIN was arrested on December 2, 2020, and pled guilty today before U.S. District Judge Paul A. Engelmayer. 

Manhattan U.S. Attorney Audrey Strauss said: “As he admitted today, Richard Rubin falsely represented in attorney opinion letters that he was a licensed attorney, giving false comfort to the investing public that an attorney, acting as a gatekeeper, had performed certain work in connection with securities.  Now he stands guilty of securities fraud and awaits sentencing for his crime.”

As alleged in the Indictment filed against RUBIN, as well as his co-conspirator Craft,[1] and other statements made in open court:

Securities Registration Requirements and SEC Rule 144

Under the Securities Act of 1933 (the “Securities Act”), anyone seeking to sell a security must first register that security unless an exemption applies.  See 15 U.S.C. § 77e.  This registration requirement protects investors by promoting disclosure of information pertinent to informed investment decisions. 

A company registering new securities must complete a registration statement known as U.S. Securities and Exchange Commission (“SEC”) Form S-1 before the securities can be listed on a national exchange and publicly traded.  SEC Form S-1 contains information pertinent to informed investment decisions, including, among other things, information on the company’s business operations, the company’s financial condition, and a description of the company’s management.  In connection with SEC Form S-1, the company is required to file an opinion letter (the “Form S-1 Opinion Letter”) from a licensed attorney attesting that the statements in the SEC Form S-1 are true and correct.  A company’s SEC Form S-1 and the Form S-1 Opinion Letter are available to the public on the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”).

“Restricted securities” refers to securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer, with “affiliate” meaning a person who directly or indirectly controls, or is controlled by, or is under common control with, an issuer.  Affiliates can also include an executive officer or a director or large shareholder who is in a relationship of control with respect to the issuing company.  Restricted securities bear a legend indicating that the securities may not be resold in the marketplace unless they are registered with the SEC or are exempt from such registration requirements.

Securities Act Rule 144 (“Rule 144”), codified at 17 C.F.R. § 230.144, provides a registration exemption for restricted securities.  Specifically, it permits the public resale of restricted securities if a number of conditions are met, including conditions relating to how long the securities are held, the way in which they are sold, the public information available to investors about the securities, and the amount that can be sold at any one time.  Pursuant to Rule 144, however, even if these conditions are met, the sale of restricted securities to the public is still not permitted until a transfer agent removes the “restricted” legend from the security. 

The term “transfer agent” refers to a company that keeps track of individuals and entities that own the stocks and bonds of a given company that has publicly traded securities.  Among other things, transfer agents issue and cancel certificates to reflect changes in ownership, serve as the company’s intermediary for payouts, exchanges, or mailings, and handle lost, destroyed, or stolen certificates.  Transfer agents also, when appropriate, remove the “restricted” legend from securities. 

A Rule 144 Seller’s Representation Letter, or “Seller’s Representation Letter,” is a letter from an affiliate seller (that is, a seller in a relationship of control with the issuer, such as an executive officer, a director, or a large shareholder) of restricted securities to a transfer agent to establish certain facts underlying a legal opinion that the securities at issue can be sold publicly pursuant to Rule 144.  The issuer’s consent to the removal of a legend typically comes in the form of an opinion letter from the issuing company’s attorney, the Seller’s Representation Letter, indicating that the securities at issue satisfy the conditions of Rule 144.  Seller’s Representation Letters contain multiple attestations that are required by law prior to the restricted legend being removed.  The transfer agent relies on the Seller’s Representation Letter in determining whether to remove the restricted legend from a security.

Over-the-Counter Securities and OTC Markets Group

Over-the-counter (“OTC”) securities are securities that are traded between two counterparties outside of a formal securities exchange.  OTC Markets Group (“OTC Markets”) is a securities market headquartered in New York, New York, that provides price and liquidity information for OTC securities.

OTC Markets requires issuers seeking to be listed on OTC Markets to hire a licensed attorney to review company records and submit a letter to OTC Markets (an “OTC Markets Attorney Letter”) regarding whether information publicly disclosed by the issuer is in compliance with the condition in SEC Rule 144 governing the public information available to investors about the issuer.  OTC Markets relies on the OTC Markets Attorney Letter to determine whether an issuer’s security may be listed on OTC Markets.  OTC Markets Attorney Letters are available to the public on the OTC Markets website. 

The Scheme to Defraud

From at least in or about 2011 through at least in or about September 2018, RUBIN and Craft participated in a fraudulent scheme in which Craft falsely represented that he had undertaken certain legal work in connection with Seller’s Representation Letters, OTC Markets Attorney Letters, and S-1 Opinion Letters, all of which enabled the relevant securities to be sold to the investing public.  In addition, in connection with the securities of certain issuers, Rubin, the defendant, falsely represented that he was an attorney in Seller’s Representation Letters and OTC Markets Attorney Letters, all of which enabled the relevant securities to be sold to the investing public.  The false representations were in letters pertaining to over a dozen companies.

RUBIN, 79, of Brooklyn, New York, pled guilty to one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

RUBIN will be sentenced on November 2, 2021.

Ms. Strauss praised the investigative work of the Office of Inspector General of the SEC and also thanked the SEC Division of Enforcement for its assistance. 

The charges against Craft are pending, and he is presumed innocent unless and until proven guilty.

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

Attorney General James Announces Indictment of Long Island Man for Deed Theft and Mortgage Fraud

 

Joseph Makhani Allegedly Stole Two Harlem Brownstones in Complex Scheme to Defraud Owners by Using Forged Deeds and Other Falsified Real Estate Documents

 New York Attorney General Letitia James announced the indictment and arrest of Joseph Makhani, 58, of Kings Point, Long Island for stealing two brownstones located in Harlem at 107 West 118^th Street and 135 West 131^st Street. Makhani targeted the two Harlem brownstones using forged and falsified documents, numerous limited liability corporations under his control, multiple property transfers, an unethical attorney, and abused court processes. Makhani stole the two Harlem brownstones in 2012, and, according to New York state real estate tax filings, he claimed to have only paid $10 for each. Today, the two brownstones have an estimated value of $2.29 million and $1.9 million, respectively. After illegally taking over the two properties, Makhani used forged and falsified documents to cover up his fraud and maintain control of the properties from the true owners’ claims. To this day, Makhani still fraudulently possesses the West 118^th Street brownstone, but he lost possession of the West 131^st Street brownstone in December 2018 due to unpaid tax liens. 

“Homeownership is a critical part of every community, but far too often, individuals like Joseph Makhani conduct elaborate schemes designed to steal New Yorkers’ homes,” said Attorney General James. “Deed theft continues to be a crime that permeates our neighborhoods, and preys upon our most vulnerable, leading to a cycle of displacement and grief. New Yorkers should never have to fear that their homes will be targeted by predatory individuals. My office will continue to collaborate with our government and community partners to bring these schemers to justice and protect these homes.”

“The Sheriff’s Office is strongly committed to investigating criminal activity concerning real property fraud,” said New York City Sheriff Joe Fucitto. “These crimes are financially devastating to the victims and their families, many of whom are elderly and have spent a lifetime working hard and saving to buy a home. The Sheriff’s Office looks forward to working collaboratively with Attorney General Letitia James and her team.”

West 118^th Street Property

Makhani allegedly used forged deeds and other falsified documents to steal the brownstone located on West 118^th Street from an elderly disabled owner. In a New York state tax filing used to further his scheme, a Makhani-controlled corporation claimed to have paid only $10 for the brownstone in 2012. Makhani also falsely claimed that he paid $975,000 for the brownstone when he obtained a $650,000 construction line of credit on the property. Additionally, Makhani fraudulently received a $1.2 million mortgage loan by claiming he had a legitimate title to the stolen brownstone. The elderly and disabled owner of the brownstone never received any money from Makhani for the brownstone, which is now valued at approximately $2.29 million. In 2016 — after renovating the apartments from single room occupancy units to full apartments — Makhani rented each unit out for between $3,000 and $3,400 per month, allowing him to collect a monthly rent income of more than $12,000.

West 131^st Street Property

Makhani allegedly illegally transferred ownership of the West 131st Street property in Harlem through the use of fraudulent deeds, shell companies, and strawmen, and by abusing court processes. Prior to Makhani's fraudulent take over, the last true deed recorded on this property was in the name of an elderly owner who died soon after the deed was recorded in 1975. Allegedly, a beneficiary of the estate looked after the building until his death in 2010. Soon after, a tenant of the building was approached by Makhani, who later returned and told the tenant he had purchased the brownstone. Makhani — through the guise of offering the tenant a job — fraudulently obtained the tenant’s signature in order to misrepresent the tenant as the owner. The tenant, who had not purchased the property and was never the owner of the brownstone, later learned that his signature was forged on a fraudulent deed that had been filed with the City Register’s Office, transferring the brownstone to Makhani’s company, One 35 West Corporation. The Real Property Transfer Report — filed along with the fraudulent deed created by Makhani — falsely listed the sale price of the brownstone as $10. When the tenant questioned the validity of the deed in a housing court case, Makhani filed a new forged deed showing that the purported heirs of the last recorded owner from 1975 had transferred the property to Makhani’s One 35 West Corporation. In 2013, the transfer tax documents filed with this deed contained a fake social security number listed for a man who was one of the purported heirs and the seller of the brownstone to Makhani. That social security number, however, belonged to a woman born in 1902. In 2015, Makhani’s One 35 West Corporation and Makhani were fined over $1 million for their failure to install a roof, upgrade the electrical wiring system, and implement an extermination plan for the rodents and cockroaches in the Harlem brownstone. In early 2015, Makhani eventually abandoned the property after the New York City Department of Housing Preservation & Development issued a $1 million judgment. The property was later transferred to a not-for-profit after a tax foreclosure action. Today, the value of the property is estimated at $1.9 million.

Makhani was yesterday charged with one count of Criminal Possession of Stolen Property in the first degree with respect to the brownstone located at 107 West 118th Street; one count of Criminal Possession of Stolen Property in the second degree with respect to the brownstone located at 135 West 131st Street; one count of Residential Mortgage Fraud in the First Degree and one count of Residential Mortgage Fraud in the Second Degree, both with respect to the two residential mortgage loans he obtained for the West 118th Street brownstone; two counts of Falsifying Business Records submitted to a New York bank; and one count of Scheme to Defraud in the First Degree between August 7, 2012 and June 28, 2021 for engaging in a scheme constituting a systematic and ongoing course of conduct to obtain property from more than one person by false or fraudulent pretenses.

The charges are merely accusations and the defendant is presumed innocent unless and until proven guilty in a court of law. 

In 1998, Makhani pleaded guilty in federal court to taking part in a scheme involving the bid rigging of foreclosed properties in Queens and for submission of a false tax return, for which he was fined and sentenced to two months in prison. In 2008, Queens LLC, HPD LLC, and Floor One, LLC — three companies allegedly owned by Joseph Makhani — pled guilty to Falsifying Business Records in the First Degree, a class “E” felony. The criminal complaint alleged that Makhani, personally or through one of his corporations, forged signatures on deeds filed with the New York City Department of Finance to unlawfully gain control of three properties in Queens from their legal owners. 

The Office of the Attorney General (OAG) wishes to thank the Social Security Administration, the Office of the Inspector General, and Special Agent Gilberto Camilo for their assistance on this case.  

The OAG also wishes to thank the New York City Sheriff’s Office and the New York City Register’s Office for their assistance. 

Deed theft has become a common tool of career criminals and unscrupulous real estate developers to illegally obtain real estate so they can sell it at a huge profit in high-demand housing markets. This illegal scheme especially affects people of color, the elderly, and other vulnerable homeowners who are scammed into signing over the deeds to their homes to con artists. Deed theft usually happens when scammers forge deeds to look like they purchased the home, or when homeowners are tricked into signing their homes over to a scammer without knowing what they are doing. Scammers then seek to evict the homeowner and sell the house to a third party at a significant profit. 

In January 2020, Attorney General James launched the office’s “Protect Our Homes” initiative, a program that uses prevention and enforcement actions to combat deed theft in New York City. The OAG also formed an interagency deed theft taskforce with members that include the district attorneys from all five boroughs in New York City and the Office of the Sheriff of the City of New York. The anti-displacement program builds off these efforts by focusing on the neighborhoods most at-risk of deed fraud, enlisting community members to talk about deed theft with their neighbors, and educating community members about how to spot deed fraud scams. 

Those who believe they have experienced deed theft are encouraged to contact the OAG by calling the office's help line at 1-800-771-7755, emailing deedtheft@ag.ny.gov, or filling out the online complaint form.