Attorney General James Secures $615,000 from Companies that Supplied Fake Comments to Influence FCC’s Repeal of Net Neutrality Rules

 

Three Companies Supplied Fake Comments to FCC Impersonating Millions of Americans Without Their Knowledge or Consent to Influence Internet Policy

New York Attorney General Letitia James today secured $615,000 from three companies, LCX, Lead ID, and Ifficient, that supplied millions of fake public comments to influence a 2017 proceeding by the Federal Communications Commission (FCC) to repeal net neutrality rules. Net neutrality prohibits broadband providers from blocking, slowing down, or charging companies to prioritize certain content on the internet. An investigation by the Office of the Attorney General (OAG) found that the fake comments used the identities of millions of consumers, including thousands of New Yorkers, without their knowledge or consent. Collectively, the three companies have agreed to pay $615,000 in penalties and disgorgement. This is the second series of agreements secured by Attorney General James with companies that supplied fake comments to the FCC.

“Public comment opportunities are a chance for Americans to give their input on important government policies, and these companies abused that for their own selfish purposes,” said Attorney General James. “No one should have their identity co-opted by manipulative companies and used to falsely promote a private agenda. Through this agreement, we are holding three more companies accountable for impersonating Americans without their knowledge or consent. We will always fight to ensure that consumers’ identities are protected and fraudulent companies are stopped.”

Today’s agreements are the result of an investigation by OAG that uncovered widespread fraud and abusive practices surrounding efforts to sway the FCC in the agency’s 2017 net neutrality rulemaking proceeding. As detailed in a report by OAG, the nation’s largest broadband companies funded a secret campaign to generate millions of comments to the FCC in 2017. These comments provided “cover” for the FCC to repeal net neutrality rules. 

To help generate these comments, the broadband industry engaged commercial lead generators that used advertisements and prizes, like gift cards and sweepstakes entries, to encourage consumers to join the campaign. However, nearly every lead generator that was hired to enroll consumers in the campaign instead simply fabricated consumers’ responses. As a result, more than 8.5 million fake comments that impersonated real people were submitted to the FCC, and more than half a million fake letters were sent to Congress. 

Two of the companies, LCX and Lead ID, were each engaged to enroll consumers in the campaign. Instead, each independently fabricated responses for 1.5 million consumers. The third company, Ifficient, acted as an intermediary, engaging other lead generators to enroll consumers in the campaign. Ifficient supplied its client with more than 840,000 fake responses it had received from the lead generators it had hired.

The OAG’s investigation also revealed that the fraud perpetrated by the various lead generators in the net neutrality campaign infected other government proceedings as well. Several of the lead generation firms involved in the broadband industry’s net neutrality comment campaigns had also worked on other, unrelated campaigns to influence regulatory agencies and public officials. In nearly all of these advocacy campaigns, the lead generation firms engaged in fraud. As a result, more than 1 million fake comments were generated for other rulemaking proceedings, and more than 3.5 million fake digital signatures for letters and petitions were generated for federal and state legislators and government officials across the nation.

LCX and Lead ID were responsible for many of these fake comments, letters, and petition signatures. Across four advocacy campaigns in 2017 and 2018, LCX fabricated consumer responses used in approximately 900,000 public comments submitted to the Environmental Protection Agency (EPA) and the Bureau of Ocean Energy Management (BOEM) at the U.S. Department of the Interior. Similarly, in advocacy campaigns between 2017 and 2019, Lead ID fabricated more than half a million consumer responses. These campaigns targeted a variety of government agencies and officials at the federal and state levels.

The agreements announced today require the three companies and their principals to pay penalties and disgorgement. LCX and its principals will pay $400,000 in penalties and disgorgement to New York and $100,000 to the San Diego District Attorney’s Office. Lead ID and its principal will pay $30,000 in penalties and disgorgement to New York. Ifficient will pay $63,750 in penalties and disgorgement to New York, and $21,250 to Colorado. 

The OAG wishes to thank the offices of the Attorney General of Colorado and the San Diego District Attorney for their assistance in this matter.

Former Employee Of Technology Company Sentenced To Six Years In Prison For Stealing Confidential Data And Extorting Company For Ransom

 

Defendant Also Caused the Publication of Misleading News Articles About the Company’s Handling of the Breach the Defendant Perpetrated, Resulting in Loss of Over $4 Billion in Company’s Market Capitalization

 Damian Williams, the United States Attorney for the Southern District of New York, announced that NICKOLAS SHARP, a former employee of a public New York-based technology company (“Company‑1”) was sentenced today to six years in prison.  In December 2020, SHARP secretly stole gigabytes of Company-1’s data.  While purportedly working to remediate the security breach he created, SHARP extorted the company, as an anonymous hacker, for nearly $2 million for the return of the files and the identification of a remaining purported vulnerability.  SHARP subsequently re-victimized his employer by causing the publication of misleading news articles as a purported anonymous whistleblower about the company’s handling of the breach that he perpetrated, which were followed by the loss of over $4 billion in Company-1’s market capitalization.  SHARP previously pled guilty to intentionally damaging a protected computer, wire fraud, and making false statements to the Federal Bureau of Investigation (“FBI”) before U.S. District Judge Katherine Polk Failla, who imposed today’s sentence.

According to the Indictment, court filings, and statements made in court:

At all times relevant to the Indictment, Company-1 was a technology company headquartered in New York that manufactured and sold wireless communications products and whose shares were traded on the New York Stock Exchange.  SHARP was employed by Company-1 from in or about August 2018 through on or about April 1, 2021.  SHARP was a senior developer who had access to credentials for Company-1’s Amazon Web Services (“AWS”) and GitHub Inc. (“GitHub”) servers.

In about December 2020, while interviewing for a position at another company, SHARP repeatedly misused his administrative access to download gigabytes of confidential data from his employer.    During the course of this cybersecurity incident (the “Incident”), SHARP caused damage to Company-1’s computer systems by altering log retention policies and other files in order to conceal his unauthorized activity on the network.  SHARP modified session file names to attempt to make it appear as if other coworkers were responsible for his malicious sessions. 

In or about January 2021, while working on a team remediating the effects of the Incident, SHARP sent a ransom note to Company-1, posing as an anonymous attacker who claimed to have obtained unauthorized access to Company-1’s computer networks.  The ransom note sought 50 Bitcoin — which was the equivalent of approximately $1.9 million, based on the prevailing exchange rate at the time — in exchange for the return of the stolen data and the identification of a purported “backdoor,” or vulnerability, to Company-1’s computer systems.  After Company-1 refused the demand, SHARP published a portion of the stolen files on a publicly accessible online platform.

On or about March 24, 2021, FBI agents executed a search warrant at SHARP’s residence in Portland, Oregon, and seized certain electronic devices belonging to SHARP, including a laptop SHARP had used to steal Company-1’s data.  During the execution of that search, SHARP made numerous false statements to FBI agents.

Several days after the FBI executed the search warrant at SHARP’s residence, SHARP caused false news stories to be published about the Incident and Company-1’s response to the Incident.  In those stories, SHARP identified himself as an anonymous whistleblower within Company-1 who had worked on remediating the Incident and falsely claimed that Company-1 had been hacked by an unidentified perpetrator who maliciously acquired root administrator access to Company-1’s AWS accounts.  In fact, as SHARP well knew, SHARP himself had taken Company-1’s data using credentials to which he had access, and SHARP had used that data in a failed attempt to extort Company-1 for millions of dollars.

Following the publication of these articles, between approximately March 30, 2021, and March 31, 2021, Company-1’s stock price fell approximately 20%, losing over $4 billion in market capitalization.  SHARP also attempted to cause domestic and foreign regulators to investigate Company-1 based on his false allegations about the security breach he secretly caused.

SHARP, 37, of Portland, Oregon, pled guilty on February 2, 2023, to one count of transmitting a program to a protected computer that intentionally caused damage, one count of wire fraud, and one count of making false statements to the FBI.  In addition to the prison sentence, SHARP was sentenced to three years of supervised release and ordered to pay restitution of $1,590,487 and to forfeit personal property used or intended to be used in connection with these offenses.

Mr. Williams praised the outstanding investigative work of the FBI.

Governor Hochul Joins President Biden and Delivers Remarks

 

Governor Hochul: "New York is the beating heart of the U.S. economy. So, you mess around with the debt ceiling, you're hurting New York. You're hitting us hard . . . It'll put us closer to a recession, cause unemployment to go up. It'll be devastating."

Hochul: "My message is: Stop playing games with the American people. Stop playing games with the American economy. Stop playing games with our farmers. Stop playing games with our citizens. Stop playing games with our small businesses and just do your jobs. Thank you, President Biden for being our leader."

Earlier today, Governor Kathy Hochul joined President Biden and delivered remarks at SUNY Westchester Community College. 

I am so delighted to be here once again with some extraordinary individuals, my partners in government. And you'll be hearing from someone that we're so proud is the President of the United States, and that is President Joe Biden will be here in a couple minutes. Our Senator, Kirsten Gillibrand has joined us. Congressman Jamaal Bowman has joined us as well.

We are also so fortunate to have the Majority Leader of the New York State Senate, Andrea Stewart-Cousins. I believe that we also have Congressman Mike Lawler in the house. County Executive George Latimer is here. The Mayor of White Plains, Tom Roach is here. Mayor of Mount Vernon, Shawyn Patterson-Howard is here. Brian Sullivan, teacher at Highlands Middle School is here. I want to thank Dr. Belinda Miles for hosting us here today. Thank you.

We also know that the Majority Leader of the United States Senate, Chuck Schumer is working right now - working right now with the future Speaker of the House Representatives, so that would be our very own, from Brooklyn as well, Hakeem Jeffries.

They're both working together, working with our President - working being the operative word here. You get elected, you work together to do the job. And having to encounter a lot of opposition - from guess who? Republicans don't want us to work together. They don't want us to do what we're required to do, and that's called paying your bills.

I'm sure a lot of you would like the chance to like, run up some debt, pay for things you need. You've got to pay for your house, you've got to pay for your electric bill, you've got to pay for the diapers, and tuition, all these other things.

And if you could walk away from paying your bills after just having a couple of fights, probably be interesting wouldn't it? But we don't do that. We're responsible. We do what we're supposed to do.

And so, you come to New York, New York is the beating heart of the U.S. economy. So, you mess around with the debt ceiling, you're hurting New York. You're hitting us hard. And not just the state in general, but let's think about who. How about the students right here at SUNY Westchester who will have their financial assistance unavailable to them.

It'll put us closer to a recession, cause unemployment to go up. It'll be devastating. It also shakes the confidence of the rest of the world in the United States of America. And we don't need that at this time. We need friends. We don't want people to question our ability to govern.

And brinkmanship is their attempt, Republicans attempt, to just bring it right to the edge. Make everybody all anxious - affect the stock market because they don't care. They don't care. This is going to play out in their political games. And I've got a message for them, it doesn't work.

In 2011, I was elected as a Democrat in the most Republican district in the State of New York. Clearly there were a lot more Republicans than Democrats in that district. How did I do that? I talked about issues that people cared about regardless of their party.

Because here's the message to Republicans, when you think you have a great political strategy, I'm telling you now it's going to backfire. There actually are Republican seniors who don't want you to mess with Medicare and Social Security. There are Republican veterans who don't want you to affect their benefits. There are Republican students who don't want you to mess with their student loans. There are Republican businesspeople in particular who aren't real excited about you playing around with this.

So the message is, you might think it's a political strategy, I'm here to tell you it is going to backfire because the people in this nation and in this state, Democrats and Republicans, want you go and do the job you're elected to do. And that's exactly what President Biden wants to do.

Let's get this done. What's the big deal? This is what we're supposed to do. And so, this is an attempt to focus attention, to say 'You have to do what we want you to do.' But it's going to fail. It's going to be a cataclysmic failure because the longer this plays out, the more uncertainty, the more volatility, the more anxiety - not just in the markets, not just around the world, but in people's houses, at their kitchen table. Because they need to know that the confidence that their government is actually going to work together.

So that's what we're just saying. That's what President Biden is saying. Come on. Let's roll up our sleeves, we can get this done. It's not complicated and there's no reason to play these games at this time.

So here we go. My message is: Stop playing games with the American people. Stop playing games with the American economy. Stop playing games with our farmers. Stop playing games with our citizens. Stop playing games with our small businesses and just do your jobs. Thank you, President Biden for being our leader. Thank you very much.

NYC PUBLIC ADVOCATE PUSHES FOR CHARGES AND CHANGE AFTER JORDAN NEELY'S KILLING

 

"Jordan Neely deserved to live. We have known this, we have shouted it, and today, the Mayor acknowledged it and spoke to his humanity. At the same time, Jordan’s death was not a passive or incidental act. He was killed, while pleading for help, and there continues to be hesitance from our leaders to acknowledge aspects of that heartbreaking reality. 

"I hope they will now support charges which would show there are consequences for killing a Black homeless man in a mental health crisis. A charge is not a conviction, it’s simply the start of the process, and in other cases there has not been such delay in commenting early on. 

"We are waiting for charges, and we are waiting for change, and while we hear promised change to how our city supports New Yorkers facing mental health crises and other dire needs, we also heard this months ago, and called for it years ago. I was glad to hear the Mayor voice support for improving the city’s mental health infrastructure, and will work to make sure it is reflected in the coming budget, as well as push for state funding. 

"Real support has to come with investment – in the capacity to meet people with beds and other services, and in the continuum of care that extends after leaving the hospital. As I’ve long argued, just as important as getting people the healthcare they need in hospital settings is what happens when they leave and re-enter a world conditioned to dehumanize and devalue people most in need – people like Jordan Neely."

Congressman George Santos Charged with Fraud, Money Laundering, Theft of Public Funds, and False Statements

Santos Allegedly Embezzled Contributions from Supporters, Fraudulently Obtained Unemployment Benefits, and Lied in Disclosures to the House of Representatives 

 A 13-count indictment was unsealed today in the United States District Court for the Eastern District of New York charging George Anthony Devolder Santos, better known as “George Santos,” a United States Congressman representing the Third District of New York, with seven counts of wire fraud, three counts of money laundering, one count of theft of public funds, and two counts of making materially false statements to the House of Representatives.

The indictment was returned yesterday under seal by a federal grand jury sitting in Central Islip, New York. Santos was arrested this morning and will be arraigned this afternoon before U.S. Magistrate Judge Arlene R. Lindsay at the federal courthouse in Central Islip, New York.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Anne T. Donnelly, District Attorney, Nassau County, announced the charges.

“This indictment seeks to hold Santos accountable for various alleged fraudulent schemes and brazen misrepresentations,” stated United States Attorney Peace.  “Taken together, the allegations in the indictment charge Santos with relying on repeated dishonesty and deception to ascend to the halls of Congress and enrich himself.  He used political contributions to line his pockets, unlawfully applied for unemployment benefits that should have gone to New Yorkers who had lost their jobs due to the pandemic, and lied to the House of Representatives. My Office and our law enforcement partners will continue to aggressively root out corruption and self-dealing from our community’s public institutions and hold public officials accountable to the constituents who elected them.”

“The Criminal Division’s Public Integrity Section is committed to rooting out fraud and corruption, especially when committed by our elected officials,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “As alleged, Santos engaged in criminal conduct intended to deceive and defraud the American public. As this indictment reflects, the Department of Justice will hold accountable anyone who engages in such criminality.”

“As today's enforcement action demonstrates, the FBI remains committed to holding all equally accountable under the law.  As we allege, Congressman Santos committed federal crimes, and he will now be forced to face the consequences of his actions.  I would like to commend the diligent efforts of the investigative and prosecutorial teams in this matter,” stated FBI Assistant Director-in-Charge Driscoll.

“At the height of the pandemic in 2020, George Santos allegedly applied for and received unemployment benefits while he was employed and running for Congress,” stated District Attorney Donnelly.  “As charged in the indictment, the defendant’s alleged behavior continued during his second run for Congress when he pocketed campaign contributions and used that money to pay down personal debts and buy designer clothing. This indictment is the result of a lengthy collaboration between law enforcement agencies, and I thank our partners at the U.S. Attorney’s Office, the Department of Justice and the Federal Bureau of Investigation for their dedication to rooting out public corruption.” 

Mr. Peace also thanked the U.S. Department of Labor, Office of Inspector General, the New York State Department of Labor (NYS DOL), and the Queens County District Attorney’s Office for their assistance.

As alleged in the indictment, Santos, who was elected to Congress last November and sworn in as the U.S. Representative for New York’s Third Congressional District on January 7, 2023, engaged in multiple fraudulent schemes.

Fraudulent Political Contribution Solicitation Scheme

Beginning in September 2022, during his successful campaign for Congress, Santos operated a limited liability company (Company #1) through which he allegedly defrauded prospective political supporters.  Santos enlisted a Queens-based political consultant (Person #1) to communicate with prospective donors on Santos’s behalf.  Santos allegedly directed Person #1 to falsely tell donors that, among other things, their money would be used to help elect Santos to the House, including by purchasing television advertisements. In reliance on these false statements, two donors (Contributor #1 and Contributor #2) each transferred $25,000 to Company #1’s bank account, which Santos controlled.

As alleged in the indictment, shortly after the funds were received into Company #1’s bank account, the money was transferred into Santos’s personal bank accounts—in one instance laundered through two of Santos’s personal accounts.  Santos allegedly then used much of that money for personal expenses.  Among other things, Santos allegedly used the funds to make personal purchases (including of designer clothing), to withdraw cash, to discharge personal debts, and to transfer money to his associates.  

Unemployment Insurance Fraud Scheme

Beginning in approximately February 2020, Santos was employed as a Regional Director of a Florida-based investment firm (Investment Firm #1), where he earned an annual salary of approximately $120,000.  By late-March 2020, in response to the outbreak of COVID-19 in the United States, new legislation was signed into law that provided additional federal funding to assist out-of-work Americans during the pandemic.

In mid-June 2020, although he was employed and was not eligible for unemployment benefits, Santos applied for government assistance through the New York State Department of Labor, allegedly claiming falsely to have been unemployed since March 2020.  From that point until April 2021—when Santos was working and receiving a salary on a near-continuous basis and during his unsuccessful run for Congress—he falsely affirmed each week that he was eligible for unemployment benefits when he was not.  As a result, Santos allegedly fraudulently received more than $24,000 in unemployment insurance benefits.

False Statements to the House of Representatives

Finally, the indictment describes Santos’s alleged efforts to mislead the House of Representatives and the public about his financial condition in connection with each of his two Congressional campaigns.

Santos, like all candidates for the House, had a legal duty to file with the Clerk of the House of Representatives a Financial Disclosure Statement (House Disclosures) before each election.  In each of his House Disclosures, Santos was personally required to give a full and complete accounting of his assets, income, and liabilities, among other things.  He certified that his House Disclosures were true, complete, and correct.

In May 2020, in connection with his first campaign for election to the House, Santos filed two House Disclosures in which he allegedly falsely certified that, during the reporting period, his only earned income consisted of salary, commission, and bonuses totaling $55,000 from another company (Company #2), and that the only compensation exceeding $5,000 he received from a single source was an unspecified commission bonus from Company #2.  In actuality, Santos allegedly overstated the income he received from Company #2 and altogether failed to disclose the salary he received from Investment Firm #1.

In September 2022, in connection with his second campaign for election to the House, Santos filed another House Disclosure, in which he allegedly overstated his income and assets.  In this House Disclosure, he falsely certified that during the reporting period:

• He had earned $750,000 in salary from the Devolder Organization LLC, a Florida‑based entity of which Santos was the sole beneficial owner;
• He had received between $1,000,001 and $5,000,000 in dividends from the Devolder Organization LLC;
• He had a checking account with deposits of between $100,001 and $250,000; and
• He had a savings account with deposits of between $1,000,001 and $5,000,000. 

As alleged in the indictment, these assertions were false: Santos had not received from the Devolder Organization LLC the reported amounts of salary or dividends and did not maintain checking or savings accounts with deposits in the reported amounts.  Further, Santos allegedly failed to disclose that, in 2021, he received approximately $28,000 in income from Investment Firm #1 and more than $20,000 in unemployment insurance benefits from the NYS DOL.

The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of the charges, Santos faces a maximum penalty of 20 years in prison for the top counts.  A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case with assistance from the Nassau County District Attorney’s Office and the IRS-Criminal Investigation.

The government’s case is being prosecuted by the Office’s Public Integrity Section, the Long Island Criminal Division, and the Criminal Division’s Public Integrity Section.  Assistant United States Attorneys Ryan Harris, Anthony Bagnuola, and Laura Zuckerwise, along with Trial Attorneys Jolee Porter and Jacob Steiner, are in charge of the prosecution with assistance from Paralegal Specialist Rachel Friedman. Senior Litigation Counsel Victor R. Salgado of the Criminal Division’s Public Integrity Section provided substantial contributions to the prosecution.

Here is the link to the full 20 page indictment  Indictment  

https://www.justice.gov/d9/2023-05/santos.indictment.pdf

Speaker Adrienne Adams, Council Members, Advocates Outline Solutions for the City’s Early Childhood Education System Together with Parents and Children

 

Speaker Adrienne Adams, alongside Council Members Rita Joseph, Shekar Krishnan, Kevin Riley, Althea Stevens, and Jennifer Gutiérrez, education advocates, providers, and parents and children, outlined a framework of solutions to improve the Department of Education’s administration of New York City’s early childhood education system. The changes are designed to better meet the needs of families, ensure provider stability, and bolster the community-based provider workforce.

“Early childhood education is one of the best investments we can make for our children, working families, and New York City’s economy,” said Speaker Adrienne Adams. “But the city’s 3-K and early childhood education systems are broken and beset by issues from the Department of Education’s administration of them that need to be urgently resolved. The City needs to correct course to address the gaps in our weakened system so we can provide stability for this critical sector. The Council is prepared and eager to work closely with the administration and all stakeholders to right the ship, because when our children and working families succeed, New York City succeeds.”

FRAMEWORK

Course Correction

1. Increase the number of extended-day, extended-year seat options to meet the needs of working families
   1. The Council’s Budget Response calls for the Administration to allocate an additional $15 million to convert 1,000 school day/school year 3-K seats into extended day/extended year seats. This funding would also include signing bonuses to help attract and retain the necessary staff.
2. Allow community-based providers to enroll families directly with them without the need to go through the Department of Education’s centralized process.
3. Put forth an expanded, coordinated outreach and marketing effort to expand enrollment and bring awareness to availability of early childhood education programs.

Sector Stability

1. Fast track all late payments for Fiscal Years ‘22 and 23 and ensure on-time payments for Fiscal Year ‘24.
2. Maintain DOE rapid response teams for future fiscal years.
3. Extend providers’ ability to batch and submit multiple months of invoices for payment.
4. Ensure proper staffing at city agencies including the Department of Health and Mental Hygiene, Department of Buildings, Administration for Children’s Services, Human Resources Administration and Fire Department to allow timely licensing, permitting, inspections, background checks and eligibility verification that providers need.

Workforce

1. Increase contract to allow community-based providers to offer compensation on par with their DOE counterparts.
   1. The Council calls on the Administration to provide $46 million in additional funding to enable these community-based providers to offer higher wages to their employees commensurate with early childhood educators employed by the DOE.
2. Hire additional staff at the Department of Health and Mental Hygiene to expedite the Comprehensive Background Check process to allow prospective employees to be cleared and hired.

“High-quality early childhood education can be a game changer for children’s education and must be available to the children who need it most. We appreciate Speaker Adams’ attention to strengthening early childhood education and look forward to working with the Council to ensure that the City has seats in the places where they are needed; that families, including those living in shelters and immigrant families, get information and support to enroll; and that preschoolers with disabilities get the services they have a right to receive,” said Kim Sweet, Executive Director, Advocates for Children of New York.

“New York City’s Early Care and Education system functions as a vital resource for children and families, promoting not only young child development and school readiness, but offering critical support to working parents,” said Jennifer March, executive director at CCC. “Sadly, despite great unmet need, thousands of publicly funded child care, 3-K and UPK seats remain open and parents face daunting barriers accessing programs that meet their needs, with limited options for full-day and year-round care and a cumbersome application and enrollment process. We thank the City Council for their leadership championing solutions to these challenges and building a more sustainable path to universal early care and education in New York City.”

“Settlement houses are pioneers in providing high quality early childhood education programming in New York City, and the last few years have underscored the need for bold action to support these programs. Now is the time to support NYC’s families with options that match their preferences, work hours, budgets, and neighborhoods; and to support the early childhood education workforce through every avenue possible, most crucially through salary parity between community-based organization and DOE staff. We thank Speaker Adams and the New York City Council for addressing this important issue and for fighting for children, families, and educators across the city,” said Susan Stamler, Executive Director, United Neighborhood Houses.

U.K. Citizen Extradited and Pleads Guilty to Cyber Crime Offenses

 A U.K. citizen pleaded guilty in New York to his role in cyberstalking and multiple schemes that involve computer hacking, including the July 2020 hack of Twitter.

Joseph James O’Connor, aka PlugwalkJoe, 23, was extradited from Spain on April 26.

“O’Connor’s criminal activities were flagrant and malicious, and his conduct impacted multiple people’s lives. He harassed, threatened, and extorted his victims, causing substantial emotional harm,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Like many criminal actors, O’Connor tried to stay anonymous by using a computer to hide behind stealth accounts and aliases from outside the United States. But this plea shows that our investigators and prosecutors will identify, locate, and bring to justice such criminals to ensure they face the consequences for their crimes.”

“O’Connor has left an impressive trail of destruction in the wake of his wave of criminality,” said U.S. Attorney Ismail J. Ramsey for the Northern District of California. “This case serves as a warning that the reach of the law is long, and criminals anywhere who use computers to commit crimes may end up facing the consequences of their actions in places they did not anticipate.”  

“O’Connor used his sophisticated technological abilities for malicious purposes – conducting a complex SIM swap attack to steal large amounts of cryptocurrency, hacking Twitter, conducting computer intrusions to take over social media accounts, and even cyberstalking two victims, including a minor victim,” said U.S. Attorney Damian Williams for the Southern District of New York. “O’Connor’s guilty plea today is a testament to the importance of law enforcement cooperation, and I thank our law enforcement partners for helping to bring to justice those who victimize others through cyber-attacks.” 

“This guilty plea is confirmation that the FBI’s strategy to counter cyber crime is working. It’s also indicative of what can be accomplished when we work closely with our partners to bring these perpetrators to justice and make the cyber ecosystem more secure,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “O'Connor's extradition is as a warning to all dangerous cyber criminals that the FBI will work tirelessly to find them and hold them accountable wherever in the world they may try to hide.”

NDCA Case

According to court documents, between 2019 and 2020, O’Connor participated in a variety of crimes associated with exploitation of social media accounts, online extortion, and cyberstalking.

In July 2020, O’Connor participated in a conspiracy to gain unauthorized access to social media accounts maintained by Twitter Inc. (Twitter). In early July 2020, O’Connor’s co-conspirators used social engineering techniques to obtain unauthorized access to administrative tools used by Twitter to maintain its operations. The co-conspirators were able to use the tools to transfer control of certain Twitter accounts from their rightful owners to various unauthorized users. In some instances, the co-conspirators took control themselves and used that control to launch a scheme to defraud other Twitter users. In other instances, the co-conspirators sold access to Twitter accounts to others. O’Connor communicated with others regarding purchasing unauthorized access to a variety of Twitter accounts, including accounts associated with public figures around the world. A number of Twitter accounts targeted by O’Connor were subsequently transferred away from their rightful owners. O’Connor agreed to purchase unauthorized access to one Twitter account for $10,000.

O’Connor also accessed without authorization one of the most highly visible TikTok accounts in August 2020, which was associated with a public figure with millions of followers (Victim-1). O’Connor and his co-conspirators obtained unauthorized access to Victim-1’s account via a SIM swap after discussing a variety of celebrities to target, and O’Connor used his unauthorized access to Victim-1’s platform to post self-promotional messages, including a video in which O’Connor’s voice is recognizable. O’Connor also stated publicly, via a post to Victim-1’s TikTok account, that he would release sensitive, personal material related to Victim-1 to individuals who joined a specified Discord server.

O’Connor also targeted another public figure (Victim-2) in June 2019. O’Connor and his co-conspirators obtained unauthorized access to Victim-2’s account on Snapchat via a SIM swap. They used that access to obtain sensitive materials, to include private images, that Victim-2 had not made publicly available. O’Connor sent copies of these sensitive materials to his co-conspirators. O’Connor and his co-conspirators also reached out to Victim-2 and threatened to publicly release the stolen sensitive materials unless Victim-2 agreed to publicly post messages related to O’Connor’s online persona, among other things.

Lastly, O’Connor stalked and threatened a minor victim (Victim-3) in June and July 2020. In June 2020, O’Connor orchestrated a series of swatting attacks on Victim-3. A “swatting” attack occurs when an individual makes a false emergency call to a public authority in order to cause a law enforcement response that may put the victim or others in danger. On June 25, 2020, O’Connor called a local police department and falsely claimed that Victim-3 was making threats to shoot people. O’Connor provided an address that he believed was Victim-3’s address, which would have the result of causing a law enforcement response. That same day, O’Connor placed another call to the same police department and stated that he was planning to kill multiple people at the same address. In response to that call, the department dispatched every on-duty officer to that address in reference to an armed and dangerous individual. O’Connor sent other swatting messages that same day to a high school, a restaurant, and a sheriff’s department in the same area. In those messages, O’Connor represented himself as either Victim-3 or as a resident at the address he believed was Victim-3’s. The following month, O’Connor called multiple family members of Victim-3 and threatened to kill them.

The NDCA Case was transferred to SDNY pursuant to Federal Rule of Criminal Procedure 20 and consolidated with the SDNY Case.

SDNY Case

According to court documents, between approximately March 2019 and May 2019, O’Connor and his co-conspirators perpetrated a scheme to use subscriber identity module (SIM) swaps, a cyber intrusion technique, to conduct cyber intrusions to steal approximately $794,000 worth of cryptocurrency from a Manhattan-based cryptocurrency company (Company-1), which provided wallet infrastructure and related software to cryptocurrency exchanges around the world. 

During a SIM swap attack, cyber threat actors gain control of a victim’s mobile phone number by linking that number to a SIM card controlled by the threat actors, resulting in the victim’s calls and messages being routed to a malicious unauthorized device controlled by the threat actors. The threat actors then typically use control of the victim’s mobile phone number to obtain unauthorized access to accounts held by the victim that are registered to the mobile phone number.

As part of the scheme, O’Connor and his co-conspirators successfully perpetrated SIM swap attacks targeting at least three Company-1 executives. Following a successful SIM swap attack targeting one of the executives on or about April 30, 2019, O’Connor and his co-conspirators successfully gained unauthorized access to multiple Company-1 accounts and computer systems. On or about May 1, 2019, through their unauthorized access, O’Connor and his co-conspirators stole and fraudulently diverted cryptocurrency of various types from cryptocurrency wallets maintained by Company-1 on behalf of two of its clients. The stolen cryptocurrency was worth at least approximately $794,000 at the time of the theft. 

After stealing and fraudulently diverting the stolen cryptocurrency, O’Connor and his co-conspirators laundered it through dozens of transfers and transactions and exchanged some of it for Bitcoin using cryptocurrency exchange services. Ultimately, a portion of the stolen cryptocurrency was deposited into a cryptocurrency exchange account controlled by O’Connor.

As part of the NDCA Case, O’Connor pleaded guilty to conspiracy to commit computer intrusion and two counts of committing computer intrusions, each of which carries a maximum penalty of five years in prison; making extortive communications, which carries a maximum penalty of two years in prison; two counts of stalking, each of which carries a maximum penalty of five years in prison; and making threatening communications, which carries a maximum penalty of five years in prison. As part of the SDNY case, O’Connor pleaded guilty to conspiracy to commit computer intrusions, which carries a maximum penalty of five years in prison; conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison; and conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison. O’Connor also agreed to forfeit $794,012.64 and to make restitution to victims of his crimes. He is scheduled to be sentenced on June 23. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case. 

The U.S. Attorney’s Office for the Northern District of California and the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are handling the NDCA case. Assistant U.S. Attorney Andrew F. Dawson for the Northern District of California and CCIPS Assistant Deputy Chief Adrienne L. Rose are prosecuting the case.

The U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit is handling the SDNY case. Assistant U.S. Attorney Olga I. Zverovich for the Southern District of New York is prosecuting the case.

The Justice Department’s Office of International Affairs provided valuable assistance in securing the extradition of O’Connor. 

Comptroller: Cuts to CUNY Threaten Course Offerings and Programs

 

New York City Comptroller Brad Lander released Cuts to CUNY, an analysis of reductions to the City of New York’s contributions to the budget for City University of the New York (CUNY) ahead of the City Council hearing on Higher Education’s examination of the proposed Executive Budget. CUNY confronts repeated patterns of disinvestment and serious challenges to its finances stemming from inconsistent state and city funding, unstable tuition revenues, the expiration of federal pandemic aid, and rising costs due to inflation.

In Fiscal Year 2023, successive reductions to CUNY’s funding from the City of New York totaled $155 million, resulting in the loss of 235 faculty and staff positions. The FY 2024 Executive Budget reflects $41.3 million annually in permanent cuts for FYs 2024-2026.  Reductions in staff positions and fringe benefits account for $35 million of these cuts.

“CUNY represents both the rich diversity and possibility that is New York City,” said Comptroller Brad Lander. “This Executive Budget jeopardizes CUNY’s ability to provide the academic and support services necessary to catapult low-income New Yorkers into the middle class. CUNY remains New York City’s greatest opportunity for civic recovery and rebuilding after the pandemic, and the City must recognize the powerful value of a strong CUNY by realigning long term budget priorities.”

The CUNY system has 225,000 students spanning 25 campuses including senior colleges, community colleges and graduate schools. The overall budget for CUNY is $4.3 billion in FY 2023, which includes $3.1 billion for Senior Colleges (4-year) and $1.2 billion for Community Colleges (2-year). Although New York State provides the majority of CUNY’s budget, the City contributes over $600 million dollars, making up 14% of the overall CUNY budget with over 90% dedicated to CUNY community colleges.

In response to the latest PEG in February, a CUNY memo informed Presidents and Deans of a hiring freeze and a centrally-managed vacancy review process—which will result in fewer counselors, faculty and support staff. April Financial Plan still budgets $415 million annually in tuition and fees for FY 2024 and out and even if enrollment and tuition at Community Colleges stabilizes rather than continues to decline, CUNY will face devastating reductions in its budget– almost $141 million this year alone—and more in the outyears.

Lander continued, “Students striving to gain higher education, but who need academic supports and schedule flexibility to balance school with work or caregiving responsibilities will find classroom doors closed without professors to teach those classes. Without these classes and supports, students will drop out and in turn exacerbate CUNY’s enrollment and tuition declines and further strain the institution’s overall budget.”

CUNY educates a critical segment of the New York City and State workforce. A 2021 analysis by the Comptroller’s Office found that CUNY graduates earned $57 billion and paid an estimated $4.2 billion in State income taxes in 2019. The Mayor’s Executive Budget also jeopardize the expansion of successful programs such as CUNY Reconnect, Accelerated Study in Associate Programs (ASAP) and Accelerate, Complete, Engage (ACE), further weakening the institution’s ability to attract and uplift students.

“Comptroller Brad Lander is right to raise the alarm about the harm to CUNY wrought by the mayor’s repeated budget cuts because cutting CUNY undermines New York’s communities, workforce, and economy,” said James Davis, President of Professional Staff Congress/CUNY. “CUNY graduates strengthen the City’s workforce and contribute $4.2 billion annually to the state economy, most of it here in our city.  No university system lifts more students and families out of poverty and into the middle class than CUNY, but Mayor Adams’ cuts are undermining students’ academic and career success. We urge the mayor to heed the Comptroller’s and City Council’s concerns and restore CUNY’s funding.”

Read the full Cuts to CUNY report here.