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Wednesday, March 13, 2024
NYS Office of the Comptroller DiNapoli: Former West Carthage Housing Authority Executive Director and Mother Arrested
Online Cryptocurrency Exchanger Pleads Guilty to Operating Unlicensed Money Transmitting Business
Defendant Agrees to Forfeit $1.3 Million in Cash, Crypto and Precious Metals
Earlier today, in federal court in Central Islip, David Scotese pleaded guilty to operating an unlicensed money transmitting business. As part of his plea agreement, Scotese agreed to forfeit cryptocurrency, cash, and precious metals worth in excess of $1.3 million at current valuation. The proceeding was held before United States
Breon Peace, United States Attorney for the Eastern District of New York, Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), Erin Keegan, Acting Special Agent-in-Charge, Homeland Security Investigations, New York (HSI New York), Edward A. Caban, Commissioner, New York City Police Department (NYPD), and Daniel B. Brubaker, Inspector-in-Charge, United States Postal Inspection Service (USPIS), announced the guilty plea.
“With his guilty plea today, Scotese is taking responsibility for operating a money exchanging and transmitting business in defiance of the critical legal requirements that are intended to secure our financial system from corruption by drug traffickers and other criminals,” stated United States Attorney Peace. “This prosecution should serve as a warning to other ask-no-questions, black-market money transmitting businesses that FinCEN registration and regulatory compliance are not mere technicalities, but a necessary part of our collective efforts against crime, and that we will prosecute unlicensed money transmitters who flout these rules.”
“While operating an unlicensed money transmitting business, Scotese moved money for his clients with no questions asked. Without ‘knowing the customer,’ crypto was bought and sold through his exchange with no regard of whether or not the initial funds were legitimate. This business practice can set a dangerous precedent, and with today’s guilty plea, Scotese will soon learn the consequences of his actions,” stated IRS-CI Special Agent-in-Charge Fattorusso.
“David Scotese defied vital financial regulations in posing as a legitimate cryptocurrency dealer despite having received no such accreditation. Such legal requirements were established to not only ensure fairness, but also oversight in what is undoubtedly a new and emerging market,” said HSI New York Acting Special Agent in Charge Erin Keegan. “I thank HSI New York’s El Dorado Task Force Darkweb and Cryptocurrency investigators, HSI San Diego, and HSI Riverside, in addition to our remarkable law enforcement partners, for ensuring the public remains protected from those attempting to skirt the rules at their expense.”
“Today’s admission of guilt makes abundantly clear that individuals who facilitate the illegal transfer of money will be held accountable; the security of our banking system depends on it,” stated NYPD Commissioner Caban. “The NYPD will continue to work hand in hand with all of our law enforcement partners to identify and stop these criminals. Our message is clear: Using new technology to put profits over compliance is not a path to riches; it is a path to federal prosecution.”
“At the core of our mission as Postal Inspectors is our duty to ensure a secure mail system for the American public. Scotese allegedly used the U.S. Mail to violate federal banking regulations by running an illegal cash for crypto scheme. His plea today should serve as a clear example to anyone who will attempt to evade the law and use the mail to commit a crime. Postal Inspectors and our law enforcement partners will see to it that you are prosecuted to the fullest extent of the law,” said Daniel B. Brubaker, Postal Inspector in Charge of the New York Division.
As alleged in public filings and statements made in court, since at least 2016, Scotese worked and advertised himself online as a cryptocurrency exchanger and transmitter but never registered with the Department of the Treasury, Financial Crimes Enforcement Network (FinCEN) or obtained a state license, as required by law in order to ensure effective financial reporting and anti-money laundering compliance. At the time of his arrest in California, Scotese had over $130,000 in cash in his home and vehicle, as well as hundreds of thousands of dollars in coins and precious metals obtained through the operation of his unlicensed money transmitting business. Scotese has agreed to forfeit these assets in addition to hundreds of thousands of dollars of various cryptocurrency assets.
The investigation was conducted in coordination with HSI San Diego’s Costa Pacifico Money Laundering Task Force and HSI Riverside’s Inland Commercial Enforcement and Financial Interdiction Team.
Speaker Adams Outlines Vision to “Move Forward Together” with Focus on Ensuring City Remains Home to Working- and Middle-Class Families and City Government is Strengthened to Meet Needs of All New Yorkers
Council Speaker unveils agenda to increase affordable housing, and improve health, safety, and social services
New York City Council Speaker Adrienne E. Adams delivered her State of the City address today at the Howard Gilman Opera House at the Brooklyn Academy of Music in Brooklyn. She outlined the need and her vision to ensure New York City remains affordable for working- and middle-class families, and city government is strengthened to deliver services that meet the needs of all New Yorkers. She unveiled proposals to increase housing production, expand homeownership, and deepen affordable housing to levels that match the affordability needs of New Yorkers.
To support families being able to remain in the City, Speaker Adams called for the City to fix issues with the administration of 3-K and invest in the early childhood education system. She also advanced a proposal to strengthen city government by providing career advancement and job opportunities for New Yorkers. The proposal, in partnership with the city’s largest municipal union, would help establish a clear pathway for working New Yorkers in CUNY programs to fill some of the more than 16,000 vacant positions across city government, helping them to advance their careers. It would also provide seasonal job opportunities with city agencies for underemployed New Yorkers to gain experience that boosts their employment prospects, like programs at the Parks and Sanitation departments during the pandemic.
The full text of the speech can be accessed here.
An accompanying report on the Speaker’s proposals can be found here.
Speaker Adams announced several new proposals, including those to increase and preserve affordable housing, expand access to post-partum and doula care, improve government effectiveness in delivery of essential services, and strengthen infrastructure.
Housing
Housing is one of the most basic elements to the foundation of healthy and safe neighborhoods, and it remains one of the greatest challenges that the City must confront. New York City is in a housing crisis, with too few homes for New Yorkers and a lack of affordable housing and homeownership opportunities. The rising rates of evictions and homelessness are the devastating consequences. The City must produce significantly more housing, ensure affordability levels meet the needs of New Yorkers, protect tenants in private and public housing, and increase homeownership opportunities.
The Speaker outlined the following housing related priorities and proposals:
- Re-envision the Aqueduct Racetrack in Speaker Adams’ district and an adjoining city-owned lot to be repurposed for housing, homeownership, and community amenities. The Aqueduct Racetrack in Queens is temporarily being used by the New York Racing Authority (NYRA) in place of Nassau County’s Belmont Park, which is currently being renovated. Once completed in an estimated three-to-four years, horseracing will return to Belmont as the only facility to be used as part of a longer-term plan to consolidate downstate New York horseracing. This plan presents a generational opportunity to redevelop the nearly 200-acre site of the Aqueduct Racetrack.
- Explore opportunities to leverage libraries and other city-owned land for potential housing development. Speaker Adams will prioritize support for this effort by engaging with the city’s three library systems, planners, and offering support for the City to gauge potential housing development opportunities on existing library branches that can also facilitate required upgrades. Additional city-owned property should also be considered for opportunities to produce housing.
- Revise Mandatory Inclusionary Housing (MIH) to permit a deep affordability option that requires an average of 40% area median income (AMI) as one of the required options in tandem with the ZHO citywide text amendment. By establishing a new required MIH option for deeper affordability, affordable housing units produced will better meet the needs of low-income New Yorkers.
- The deepest option of affordability currently permitted to be required in MIH (Option 1) no longer serves those in greatest need, because the incomes targeted at 60% AMI have significantly inflated over time. They have gone from $40,080 for a one-person household to $61,860 for a five-person household in 2017, to $59,340 for a one-person household to $91,500 for a 5-person household in 2023. The enactment of an affordable housing tax credit program by the state is necessary to support this goal, just as it is important to support development within the current MIH guidelines.
- A proposal to recalibrate and lower AMI levels financed by the City to reflect inflation of AMI, so affordable housing meets the need for deeper affordability.
- Explore Voucher Incentive in ZHO: The Council will explore a zoning tool to incentivize the use of vouchers as part of the ZHO text amendment. Such a zoning mechanism could dedicate a proportion of additional allowable units to be set aside for voucher-holders, helping to reach New Yorkers with deeper affordability needs.
- Propose policy changes to double the City’s production of affordable homeownership opportunities, so that 5 percent of affordable housing units financed annually by the City are dedicated to creating affordable homeownership opportunities for families earning less than $130,000 per year.
- Combat deed theft by advancing legislation requiring speculators to disclose fair market rate of property and the City to create a program that assists people with protecting their assets and managing an inherited property. The Council will host estate planning days in collaboration with NYC law schools and homeownership support organizations, where older adults from at risk neighborhoods can have their will drafted for free to protect against deed theft.
Health, Mental Health & Safety
The physical and mental health of New Yorkers is core to the vitality of our communities. Health disparities were brought to light and exacerbated by the pandemic, as inequities in access to care left the well-being of certain communities more threatened than others. Our government is responsible for eliminating disparities in health outcomes, and the Council is committed to ensuring access to quality healthcare for all New Yorkers.
The Speaker outlined the following health related priorities and proposals:
- Legislation to support peer-to-peer mental health programs for students, including requiring the City to develop and offer peer-to-peer mental health training, a “How to Start a Wellness Group” toolkit with an accompanying informational campaign, and a pilot program for CUNY Social Work students to support wellness groups in schools where students have established them.
- Call for the Adams Administration to punctually deliver the required report for the doula program established by local law when it is due in June and use its recommendations to improve the permanent program, so that vital services continue without any delay.
- Proposals to address post-partum mental health, including legislation to establish pilot program for post-partum support groups and require informational campaigns on resources for those experiencing pregnancy loss; budget proposals to increase funding for nurse family partnership and provide funding to establish maternal-health focused psychologists in H&H hospitals.
- Oversight hearing to receive an update on the provision of sexual education in schools and whether recommendations from 2018 Sexual Health Education Taskforce have been implemented, and legislation to require education and outreach campaign coordinated with young people focused on their reproductive health and bodily autonomy.
- Oversight hearing and potential legislation on nutrition education to ensure it is not solely focused on physical appearance, and rather is culturally inclusive to prioritize the development of healthy relationships to food.
- Urging the City and State to expand mental health courts and their related programs, Forensic Assertive Community Treatment (FACT) teams and therapeutic hospital beds to confront the mental health crisis. FACT teams are evidence-based solutions that provide coordinated behavioral health and social services for individuals who are justice-involved, have serious mental illness, and have not been successfully engaged by the traditional mental health treatment and rehabilitation system. They provide holistic, wraparound services in close coordination with criminal justice agencies to help clients avoid further justice involvement. Mental health issues are becoming intertwined with public safety, because of the lack of health interventions that address underlying issues of mental health. Too often, individuals with mental health challenges can have high rates of recidivism because they are not being diverted from the justice system into effective treatment. Without adequate access to care, individuals with mental illness are unlikely to break free of the hospitalization-discharge-arrest-incarceration cycle
- Call for the City and State to provide investments to sustain and potentially expand trauma recovery centers (TRCs). The Council provided initial funding to establish the first TRCs in New York State within the Bronx and Brooklyn. The unaddressed trauma that victims, their families and communities are left with can lead to chronic emotional distress and perpetuate cycles of violence. Speaker Adams and the Council have prioritized addressing these disparities by expanding support for underserved victims of violence, whose trauma is often overlooked – gun violence victims in communities of color are often disregarded as victims and blamed for their victimization.
- Continue to pursue solutions that combat the safety risks of lithium-ion batteries to keep New Yorkers safe.
- Engage New Yorkers across the City as part of the work of the Council’s first-ever Task Force to Combat Hate, developing policies and initiatives to bring people together in fighting hate and make communities safer.
Government Effectiveness
City government has a responsibility to facilitate greater opportunities for New Yorkers, while protecting the essential services relied upon by communities and effectively confronting the array of challenges often faced in the nation’s largest city. Yet, there have been significant issues with the ability to successfully achieve these core responsibilities. The job recovery has been uneven and primarily in low-wage jobs, the ability to deliver essential city services has been weakened by continued bureaucratic inefficiencies and job vacancies across city agencies. The City has struggled to respond to many of its most recent, vexing challenges. The City must get back to basics and focus on strengthening government to support an improved ability to address these issues. Creating the future that New Yorkers deserve will require smart, bold solutions and the necessary investments to ensure New Yorkers’ success.
The Speaker outlined the following priorities and proposals regarding government effectiveness:
- Initiate a career and jobs program in partnership with DC37 with two tracks that provides opportunities and strengthens city government. The first provides support for working New Yorkers in Council-supported programs, like CUNY Reconnect, to be prioritized for career advancement to fill city agency vacancies. It would include civil service exam prep, waived exam fees, and other support. The second is to help underemployed communities and populations enter the workforce initially through seasonal agency positions to build work experience for advancement. This would be aimed at young people, underemployed New Yorkers, and eligible asylum seekers.
- Launch agency report cards to evaluate performance of service delivery by city agencies and make recommendations to resolve underperformance.
- Launch the New Arrivals Strategy Team, led by experienced former government leaders to convene sectors and stakeholders to advance solutions that help migrants access short and long-term stability. The New Arrivals Strategy Team will develop a comprehensive roadmap of best practices. Crafted for our city, this roadmap will be an in-depth model that outlines specific best practices and approaches for new arrivals, rooted in the experiences of both grassroots organizations providing direct services and migrants themselves.
- Collaborate with Columbia University, community-based organizations, and elected officials on the Communities Speak survey to survey New Yorkers, gaining deeper insight into the challenges New Yorkers are facing across several key issues, including newly developed modules on hunger, asylum seekers, and education.
Transportation & Infrastructure
- Continued support for expanding Fair Fares eligibility to 200% of federal poverty level, following expansion to 120% in current budget.
- Legislation to require DOT to maintain a capital tracker of its Street Plan projects with monthly updates to connect the plan to tangible projects and their status.
- Legislation to establish safe “Higher Ground” spaces, like cooling centers, above the flood plain during severe storms to host New Yorkers endangered by flooding, because they live in basement apartments or other vulnerable areas.
- Prioritize administration to invest in flood protection and resiliency infrastructure upgrades in impacted communities, as part of the Zoning for Housing Opportunity text amendment.
The speech was simultaneously broadcast in Spanish, Mandarin, Bangla, and American Sign Language (ASL). The video of the speech can be found on the Council website via this link.
Photos from the speech will be posted on the New York City Council’s Flickr page.
“We’re proud to unveil our proposal for a groundbreaking jobs program in collaboration with Speaker Adams to offer two vital pathways to employment,” said Henry Garrido, Executive Director of District Council 37. “By providing a seamless transition from education to civil service careers and opening doors for underemployed communities, this program holds promise to be an engine of economic opportunity and upward mobility for New Yorkers of all backgrounds. Through investing in the success of working families, we can strengthen City services and build a more vibrant New York that thrives on the collective strength and potential of its people.”
“New York City’s ongoing affordability crisis has resulted in record low housing vacancy rates and record high rates of New Yorkers being rent-burdened, even forcing longtime residents to leave our city. We need more deeply affordable housing and we need more affordable homeownership opportunities. The Speaker’s proposals demonstrate strong leadership to help meet the moment on the housing crisis,” said Rachel Fee, Executive Director of the New York Housing Conference. “Today’s announcement and Speaker Adams’ vision for New York City is just another example of her continuous advocacy for affordable housing. We look forward to working alongside the Speaker and the Mayor to advance the Fair Housing Framework, secure more capital funding for affordable housing initiatives, and realize the Mayor’s $4 billion housing commitment.”
“The City must invest in long term services to empower our new neighbors as they make their lives here,” said Lisa Rivera, President and CEO of the New York Legal Assistance Group (NYLAG). “NYLAG has a long history of providing innovative, responsive immigration legal services, and with our voices at the table, I’m confident that the Council’s New Arrivals Strategy Team will forge a plan to provide these newest New Yorkers with the comprehensive support they deserve.”
“The Legal Aid Society joins the Speaker in calling on the Administration to reduce barriers to New Yorkers being able to access social services. These barriers have produced chronic delays in processing applications and recertifications for SNAP and Cash Assistance benefits and have caused thousands of New Yorkers to go without food and be able to pay their rent. The Administration must ensure that eligible New Yorkers can confidently access the benefits that they are legally entitled to. In particular, The Legal Aid Society supports the Speaker’s call to improve access to CityFHEPS benefits. New Yorkers should be able to easily apply for, secure and use this essential rental subsidy.”
“The City’s Fair Fares program has great potential to be a truly transformative program, connecting more low-income, working New Yorkers to our mass transit system which is the city’s economic engine. But the program’s artificially low eligibility threshold is preventing the program from reaching New Yorkers who are struggling to afford the bus and subway fare,” said David R. Jones, President and CEO of the Community Service Society of New York. “Today, only 33 percent of eligible city residents are enrolled in Fair Fares. In fact, a New Yorker who works full-time at the minimum wage ($16 per hour) makes too much to qualify for the program. That should be unacceptable. As the city continues its post-pandemic economic recovery, we should take all necessary steps to make our city more affordable, livable and economically viable, especially for the people who make this city run. Expanding eligibility for the Fair Fares program to 200 percent of poverty is a reasonable investment of taxpayer dollars to spread the economic benefit of the program to more New Yorkers.”
“I support and encourage increased funding for Nurse Family Partnership. Nurses begin visiting their clients as early in pregnancy as possible, helping birthing folks make informed choices for themselves and their baby. This is critical in creating trusting resource-based relationships to ensure healthier birth outcomes in our most marginalized communities,” said Professor Desi K. Robinson, Doula and Media Analyst. “Additionally, as we recognize more and more the immeasurable benefits of doulas, it’s imperative that we increase Medicaid and insurance reimbursement rates for their work. This will lead to greater participation from doulas, helping to expand the availability of services for birthing people. Investing in doula care now could help states save on health care costs in the long run while continue to improve birth outcomes.”
PUBLIC ADVOCATE'S RESPONSE TO SPEAKER ADAMS' STATE OF THE CITY ADDRESS
"In addition, as the Speaker noted, any policy is only as effective as its execution and implementation. I am glad to see the Speaker strengthening the Council’s oversight role, in addition to existing accountability tools. The state of our city depends on having a government that is fully staffed, fully functional, and fully committed to helping New Yorkers in need through essential services.”
Attorney General’s Office of Special Investigation Opens Investigation into Civilian Death in Queens
The New York Attorney General’s Office of Special Investigation (OSI) has opened an investigation into the death of Djamshed Nematov, who died on March 8, 2024 following an encounter with the New York City Police Department (NYPD) in Queens.
At approximately 6:50 p.m. on March 8, the NYPD received a 911 call reporting a man stabbing his wife in a second-floor apartment in Queens. When NYPD officers arrived, they found Mr. Nematov in the hallway holding a knife. Mr. Nematov allegedly advanced toward the officers with the knife raised. One officer deployed his taser and two other officers fired their service weapons. Mr. Nematov was transported to a local hospital, where he was pronounced dead. Officers recovered two knives at the scene.
Pursuant to New York State Executive Law Section 70-b, OSI assesses every incident reported to it where a police officer or a peace officer, including a corrections officer, may have caused the death of a person by an act or omission. Under the law, the officer may be on-duty or off-duty, and the decedent may be armed or unarmed. Also, the decedent may or may not be in custody or incarcerated. If OSI’s assessment indicates an officer may have caused the death, OSI proceeds to conduct a full investigation of the incident.
Governor Hochul Announces U.S Small Business Administration to Offer Federal Assistance to Long Island Residents and Businesses Impacted by Early January Severe Weather
U.S. Small Business Administration to Provide Low-Interest Loans to Eligible Residents and Businesses in Suffolk and Nassau Counties Affected by Heavy Rain and High Winds from January 9-10, 2024
In-Person Disaster Loan Outreach Centers to Open on March 15
Loan Applications Available Online
Governor Kathy Hochul today announced the U.S. Small Business Administration will offer federal assistance to New Yorkers on Long Island who were impacted by severe storms containing heavy rain and high winds from January 9-10, 2024. Residents and businesses in Suffolk and Nassau counties are now eligible to apply for low-interest loans to aid in their recovery from the devastating rain event.
“New Yorkers and their businesses should not have to carry the burden of storm recovery alone, and these loans will go a long way in helping those impacted build back better and stronger,” Governor Hochul said. “Long Islanders impacted by January’s winds should be sure to apply and take advantage of the additional financial support. Thank you to the SBA for ensuring New Yorkers have the resources to recover from severe weather events.”
Between January 9-10, 2024 a statewide multi-hazard weather event crossed much of NY State, resulting in significant damage to businesses and homes. The event dropped up to 3.5 inches of rainfall on Long Island and coincided with high tide causing severe flooding. On January 8, Governor Hochul announced she activated the State Emergency Operations Center in Albany to monitor the storm and coordinate State response activities. During the storm, both Suffolk and Nassau counties issued States of Emergency for their respective locations due to severe weather conditions and impacts. Following the event, personnel from the New York State Division of Homeland Security and Emergency Services (DHSES), the Small Business Administration and Suffolk County conducted a thorough assessment of damages.
The U.S. Small Business Administration provides low-interest disaster loans to help businesses and homeowners recover from declared disasters. Applicants, including businesses, homeowners, renters, and private, nonprofit organizations, must be in a declared disaster area and meet other eligibility criteria depending on the type of loan.
Disaster Loan Types
The following disaster loans are available:
- Business Physical Disaster Loans – Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery, and equipment. Businesses of any size are eligible. Private, non-profit organizations such as charities, churches, private universities, etc., are also eligible.
- Economic Injury Disaster Loans (EIDL) – Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster.
- Home Disaster Loans – Loans to homeowners or renters to repair or replace disaster-damaged real estate and personal property, including automobiles.
Disaster Loan Outreach Centers
The SBA is establishing Disaster Loan Outreach Centers to help New Yorkers apply in-person for assistance. Both centers will open on Friday, March 15 at 11:00 a.m. See below for both centers’ hours of operations after March 15.
Babylon Town Hall, 200 Sunrise Hwy, Lindenhurst, NY 11757
- Opens Friday, March 15 at 11:00 a.m.
- Hours of Operation (after Mar. 15):
- Monday-Friday: 8:30 a.m. – 4:30 p.m.
- Closed Saturday and Sunday.
Mastic Recreation Center, 15 Herkimer Street, Mastic, NY 11950
- Opens Friday, March 15 at 11:00 a.m.
- Hours of Operation (after Mar. 15):
- Monday-Friday: 9:00 a.m. – 6:00 p.m.
- Saturday: 10:00 a.m. – 2:00 p.m.
- Closed Sunday.
Both centers are scheduled to close on Friday, March 29, 2024 at 4:00 p.m.
Applications for disaster loans may be submitted online using the MySBA Loan Portal at lending.sba.gov. Applicants may also call SBA's Customer Service Center at 1-800-659-2955 or email disastercustomerservice@sba.gov.
Individuals who are deaf, hard of hearing, or have a speech disability, can dial 7-1-1 to access telecommunications relay services.
Completed applications should be mailed to U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155
The filing deadline to return applications for physical property damage is May 10, 2024. The deadline to return economic injury applications is December 11, 2024.
Bronx Man Sentenced To 15 Years In Prison For Distributing Fentanyl In Exchange For Sex With A Minor And Causing The Death Of A 19-Year-Old Victim
Damian Williams, the United States Attorney for the Southern District of New York, announced that VIRGIL WARDLOW was sentenced today to 15 years in prison for paying for commercial sex with a minor using fentanyl-laced pills that caused the death of a 19-year-old victim. WARDLOW previously pled guilty to one count of distribution of narcotics before by U.S. District Judge Mary Kay Vyskocil, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “The consequences of the defendant’s conduct are heart-wrenching: The defendant paid for sex with a 16-year-old victim using fentanyl-laced pills, which the victim’s 19-year-old friend then ingested, poisoning her and causing her death. Today’s sentence sends a powerful message to those who traffic deadly drugs to vulnerable victims and demonstrates that this Office will seek justice for families facing the horrific tragedy of losing a loved one to fentanyl poisoning and for victims of child sexual exploitation.”
According to court filings and statements made in court proceedings:
WARDLOW engaged in a pattern of paying for commercial sex with black market pills that contained fentanyl. On or about March 25, 2023, at a hotel room in the Bronx, New York, WARDLOW provided two of those pills to a 16-year-old female (“Victim-1”) in exchange for sex with Victim-1. After WARDLOW had sex with Victim-1 and WARDLOW left the hotel room, Victim-1 and her 19-year-old female friend (“Victim-2”) ingested the pills provided by WARDLOW. Thereafter, Victim-1 became ill, and Victim-2 became unconscious and died of a drug poisoning.
Between at least on or about February 8, 2023, and on or about April 24, 2023, WARDLOW exchanged several messages with other individuals in which WARDLOW offered to provide pills in exchange for sex or money. WARDLOW sent these messages using an anonymized cellphone number that masked his identity from his intended victims.
In addition to the prison term, WARDLOW, 31, of the Bronx, New York, was sentenced to three years of supervised release and ordered to pay restitution in the amount of $17,000 in connection with the funeral expenses of Victim-2.
Mr. Williams praised the outstanding investigative work of the New York State Police, the New York City Police Department, and Special Agents from the U.S. Attorney’s Office for the Southern District of New York.
Justice Department Sues Six Health Plans and Their Alliance for Concealing Overpayments for Military Managed Care Program
The United States filed a complaint alleging that six health plans participating in the Uniformed Services Family Health Plan (USFHP) program, as well as their trade group, the US Family Health Plan Alliance, violated the False Claims Act by knowingly retaining erroneously inflated payments for healthcare services the health plans contracted to provide to retired military members and their families. The United States has also reached a settlement with Department of Defense (DOD) contractor Kennell & Associates Inc., a consulting firm, related to the conduct.
The USFHP program is one of the healthcare options available to military personnel, retirees and their families. Six health plans are eligible to participate in this program, each of which is a defendant in the government’s complaint: Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, Pacific Medical Center and St. Vincent’s Catholic Medical Centers of New York.
Through the USFHP program, the DOD pays the plans capitated rates to provide healthcare services to their enrollees. According to the complaint, in June 2012, the plans learned of calculation errors that had inflated the rates they had been paid in prior years. Nevertheless, the plans took steps to conceal the existence of the overpayments from the government and continued to submit invoices at the inflated payment rates. The complaint alleges that during discussions about rates for the subsequent year, some of the plans even asked the government to continue paying them at the prior, inflated rates even though, by that time, those plans knew the rates were inflated by the errors.
“Contractors have an obligation to return overpayments, and we will hold accountable contractors that knowingly and improperly retain such funds,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We are committed to ensuring that taxpayer funds for healthcare services to military members and their families are actually used for that purpose, not to enrich those charged with administering the program.”
“Protecting the integrity of the healthcare system for our military members and their families, is a top priority of the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense Office of Inspector General,” said Acting Special Agent in Charge Brian J. Solecki of the DCIS Northeast Field Office. “The DOD expects companies to adhere to contract requirements and DCIS will continue to work with our law enforcement partners and the Justice Department to hold DOD contractors who engage in fraudulent activity at the expense of the U.S. military accountable for their actions.”
The United States filed its complaint in a lawsuit originally brought under the qui tam or whistleblower provisions of the False Claims Act by Jane Rollinson and Daniel Gregorie in the District of Maine. From 2007 to 2015, Rollinson worked at Martin’s Point Health Care, including as its Interim Chief Financial Officer. Gregorie was a consultant to the CEO and Board of Martin’s Point Health Care and later served on its Board of Trustees. The False Claims Act permits a private party to file an action on behalf of the United States and receive a portion of any recovery. The United States has the ability to intervene in such lawsuits, as it has in this case. The qui tam case is captioned United States ex rel. Rollinson v. Martin’s Point Health Care Inc., No. 2:16-cv-00447-NT.
The United States entered into a settlement agreement with Kennell and Associates Inc., a research and consulting firm located in Falls Church, Virginia, that provides actuarial consulting services to the Defense Health Agency (DHA) in connection with the USFHP program. The settlement resolves allegations that Kennell & Associates failed to notify DHA about errors in executing the rate-setting methodology that caused the USFHP rates to be overstated and their impact on DHA’s payments made to the plans. Under the terms of the settlement agreement, Kennell & Associates has agreed to pay the United States $779,951, plus interest, as well as contingent payments based on its annual contract revenue and cash reserves through the year 2025. The settlement amount is based on Kennell and Associates’ ability to pay.
The Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Maine investigated the case, with assistance from DHA.
The United States’ intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The claims in the complaint and settlement agreement are allegations only. There has been no determination of liability.