SBA Exhausts Funds for New Disaster Loans

 

Disaster Survivors in Need of Loans Should Continue to Apply While SBA Awaits Additional Funding

The SBA announced that it has exhausted funds for its disaster loan program after warnings that funding would soon run out following increased demand from Hurricane Helene. Until Congress appropriates additional funds, the SBA is pausing new loan offers for its direct, low-interest, long-term loans to disaster survivors. However, SBA is encouraging individuals and small businesses to continue to apply for loans given assurances from congressional leaders that additional funding will be provided upon Congress’s return in November.

The SBA’s loan application portal remains open, SBA’s disaster centers and in-person staff remain deployed across the country, and the agency will continue to accept new applications and ready borrowers to get their disaster loan offers as soon as possible once Congress appropriates funds. Disaster survivors in need of an SBA loan for personal belongings, residential property damage, and business damage and disruption should not wait to apply. Disaster survivors should start the application process immediately, regardless of SBA funding availability, so that our disaster teams can take them through the application process and position eligible applicants to receive offers and funds.

“We know that swift financial relief can help communities recover quickly to stabilize local economies,” said Administrator Isabel Casillas Guzman. “While we await Congress to provide much-needed funding, we strongly encourage eligible businesses and households to apply for SBA disaster loans. SBA will continue to support homeowners, renters, businesses and nonprofits in processing their applications to ensure they receive assistance quickly once funds are replenished.”

The SBA will continue loan processing operations including supporting current borrowers and new applicants.

• The SBA will accept and process new applications from all 173 disaster declarations that it is supporting and queue eligible applicants. Applications in this queue can receive loan offers after additional funding from Congress becomes available and will be processed in the order in which they were received. The SBA will issue declines for new applicants who do not meet eligibility or underwriting criteria for a loan and provide information on additional resources for support.

• SBA will also continue to support existing borrowers and applicants who have already received offers. So far, the SBA has seen around 37,000 applications for relief submitted from those impacted by Hurricane Helene alone. The SBA has already made over 700 Helene loan offers totaling about $48 million. For Hurricane Milton, SBA has already received over 12,000 applications. Importantly, despite this funding lapse, borrowers who already have a loan offer will continue to receive disbursements, and borrowers who already have existing loans may continue with servicing actions and loan modifications.

• The SBA may continue to make a small number of new loan offers during this time, as funds may be made available through loan cancellations and similar actions.

Following federally declared disasters, the SBA steps in immediately to provide financial relief to business owners, nonprofits, homeowners, and renters with long-term, low-interest loans. Studies have shown that the SBA’s loan program is a crucial resource for small businesses and households recovering from disaster – whether it’s used for debris removal, replacing a damaged car, or covering loss of revenue due to business disruption. SBA loans allow borrowers to avoid predatory bridge loans or using a credit card with high interest rates.

Provided Congress makes funds available, SBA can make disaster loans up to $500,000 to homeowners to repair or replace disaster-damaged or destroyed real estate. Homeowners and renters may be eligible for up to $100,000 to repair or replace disaster-damaged or destroyed personal property. Businesses may be eligible for loans up to $2 million for both physical damage and economic injury from business disruption.

Interest rates are as low as 4% for businesses, 3.25% for nonprofit organizations, and 2.813% for homeowners and renters, without credit elsewhere, and terms are up to 30 years. Interest does not begin to accrue until 12 months from the date of the first disaster loan disbursement, and monthly payments begin 12 months from the date of the initial disbursement. Loan amounts and terms are set by the SBA and are based on each applicant’s financial condition.

Applicants may apply online and receive additional disaster assistance information at sba.gov/disaster. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance. For people who are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. Individual survivors are also encouraged to visit disasterassistance.gov for resources including assistance from FEMA.

MAYOR ADAMS KICKS OFF PUBLIC REVIEW ON ATLANTIC AVENUE MIXED-USE PLAN TO CREATE APPROXIMATELY 4,600 NEW HOMES, 2,800 PERMANENT JOBS

 

Building on Extensive Public Engagement, Plan Would Deliver Community Investments, Infrastructure Updates, and Open Space 

Along with “City of Yes for Housing Opportunity” Proposal, Atlantic Avenue Plan Advances Administration’s Moonshot Goal of Building 500,000 New Homes by 2032 

New York City Mayor Eric Adams and New York City Department of City Planning (DCP) Director and City Planning Commission (CPC) Chair Dan Garodnick today announced the start of the public review process for the Atlantic Avenue Mixed-Use Plan, a community-led proposal for new housing, jobs, and infrastructure investments in Central Brooklyn. The plan would create approximately 4,600 new homes — including 1,440 permanently income-restricted, affordable homes — and 2,800 permanent new jobs to a roughly 21-block stretch of Atlantic Avenue, including neighboring blocks in Crown Heights and Bedford-Stuyvesant, where restrictive zoning regulations have prevented residential development and job growth. Delivering on a key community priority, the plan would also install traffic safety projects — including planters, bike corrals, and daylighting — at intersections along Atlantic Avenue to improve pedestrian visibility, safety, and accessibility. Today’s announcement comes as the Adams administration aims to address the housing crisis with the passage of its “City of Yes for Housing Opportunity” proposal and advance several neighborhood zoning plans to produce a moonshot goal of 500,000 new homes by 2032.

“The Atlantic Avenue Mixed-Use Plan is a bold, visionary reimaging of what our neighborhoods can — and should — look like,” said Mayor Adams. “Safer streets, more affordable housing, community spaces for our older adults and young people, jobs for communities in need — this proposal is the result of multiple agencies, City Hall, and everyday New Yorkers coming together to transform and build the neighborhoods of tomorrow, today. As it goes through the public review process, I encourage all New Yorkers to make their voices heard, listen to the facts, and embrace the endless possibilities within this proposal. The future is in their hands and all it requires them to say is ‘yes’ to opportunity.”

“After years of calls from the community to fix outdated zoning along Atlantic Avenue, our administration is taking real action to rejuvenate the corridor and transform the area into a place where hardworking New Yorkers can live, work, and play,” said First Deputy Mayor Maria Torres-Springer. “We are thrilled to be kicking off the official public review process for the Atlantic Avenue Mixed-Use Plan that will deliver approximately 4,600 new homes and 2,800 jobs alongside critical investments that will allow Central Brooklyn to flourish. I want to thank our team at DCP for leading this effort, as well as Councilmembers Hudson and Ossé for their steadfast partnership.”

“We are prioritizing the whole community on and around Atlantic Avenue with this proposal — transforming an area previously defined by vacant lots and self-storage facilities into a livable, walkable neighborhood. Our administration is delivering on safer streets, wider sidewalks, and infrastructure at and below our roadways to accommodate more and bigger storms — and we’re partnering with the private sector to deliver even more public space,” said Deputy Mayor for Operations Meera Joshi. “This is the kind of thoughtful planning that leads to better connected, more vibrant communities, and I look forward to robust public feedback.”

“For far too long, this stretch of Atlantic Avenue has been stymied by outdated zoning that has limited opportunities for new homes and jobs. It’s past time for a change, and this plan delivers on a community-driven roadmap for the homes, jobs, safe streets, and investments that Central Brooklyn needs,” said Dan Garodnick, Director of the Department of City Planning. “Building on extensive public engagement, this transformational plan would benefit Brooklynites for years to come, and we hope they will continue to make their voices heard as public review gets underway.”  

“The Atlantic Avenue Mixed-Use Plan is a community-driven vision informed by extensive engagement and resident input,” said New York City Executive Director for Housing Leila Bozorg. “It is a model for how we should plan for the future of our neighborhoods: building more housing with permanent affordability, improved safety, quality jobs, better public spaces, and investments in infrastructure — all for current and future residents. We’re excited to kick off public review, and I thank Councilmembers Hudson and Ossé, and the many community members and agency staff who have brought the plan to this important milestone.”

“New Yorkers don’t need to be reminded that climate change is bringing more intense storms to the city and we are prioritizing investments to better manage all the rain, reduce flooding, and keep residents safe,” said New York City Department of Environmental Protection Commissioner and Chief Climate Officer Rohit T. Aggarwala. “Upgraded sewers, curbside rain gardens, and playgrounds that absorb stormwater are all improving drainage along the Atlantic Avenue corridor, and we will continue to look for ways to improve the quality of life for both residents and businesses.”

“We are proud to deliver safer streets and transportation options as part of the Atlantic Avenue Mixed-Use Plan,” said New York City Department of Transportation Commissioner Ydanis Rodriguez. “This plan will create desperately needed new, affordable housing and generate thousands of jobs in Crown Heights and Bedford-Stuyvesant. We welcome Brooklynites to come out and have their voices heard. And, we look forward to working alongside our sister agencies and New Yorkers on reimagining streets, in the short-, medium-, and long-term, so that they enrich, protect, and uplift the standard of living for all New Yorkers.”

“The Atlantic Avenue Mixed-Use Plan rezoning has been a long time in the making,” said New York City Councilmember Crystal Hudson. “For more than a decade, the community surrounding Atlantic Avenue has called for a new vision for this dangerous corridor that delivers more deeply affordable housing, increased investments in the area’s local economy, safer streets, and greater consideration of local infrastructure needs. The scope of this project was exhaustive, ultimately delivering a framework that brings us closer toward pursuing comprehensive planning across Council District 35. Community stakeholders shared local priorities and dozens of community-informed recommendations to ensure this vital section of Brooklyn can support its small businesses, visitors, and, most importantly, protect and uplift its longtime residents. As the process moves forward, I will continue to fight for a final plan that realizes these priorities and delivers a more just, equitable, and vibrant Atlantic Avenue.”

“There is no doubt that our city and my district specifically face a dire housing shortage that is causing prices to skyrocket and driving everyday New Yorkers to financial crisis,” said New York City Councilmember Chi Ossé. “I strongly support efforts to ease the housing shortage and proud to work hand-in-hand with my community to make sure we get this right”

A New Vision for Atlantic Avenue

The Atlantic Avenue Mixed-Use Plan focuses on a section of Atlantic Avenue and neighboring streets between Vanderbilt Avenue and Nostrand Avenue. Since the 1960s, this area of Atlantic Avenue has been zoned for one-to-two industrial buildings and storage, despite its proximity to a major commercial area and transit hub. The Atlantic Avenue-Mixed Use Plan offers a transformational opportunity to create urgently-needed housing, including income-restricted affordable housing, as well as space for 2,800 permanent new jobs in the commercial and industrial sectors.

Along Atlantic Avenue, the plan calls for high-density housing — with permanently income-restricted and rent-stabilized affordable units through Mandatory Inclusionary Housing — and a mix of commercial uses to create active ground floors. Through this change, the area will transform from a corridor of vacant lots, self-storage facilities, and auto-shops to a mix of residential, commercial, and manufacturing, providing much-needed homes and jobs for New Yorkers. On neighboring avenues and streets, the plan would encourage moderately-sized mixed-use buildings with income-restricted affordable housing and job-generating uses.

Map of the impacted areas within the Atlantic Avenue Mixed-Use Plan.

 

Building More Affordable Housing

The plan will create nearly 4,600 new homes, including approximately 1,055 permanently affordable homes through the Mandatory Inclusionary Housing program, and an additional 380 units of permanent affordable housing on city-owned or controlled sites found throughout the neighborhood. Utilizing HPD programs, the Adams administration has committed to building over 380 income-restricted affordable homes at several sites in Crown Heights and Prospect Heights, such as 542 Dean Street, 516 Bergen Street, and 1134-1142 Pacific Street. These affordable units will include set-asides for older New Yorkers and the formerly homeless. The administration will continue to explore opportunities for additional affordable developments during the public review process.

To preserve existing affordability, the Atlantic Avenue Mixed-Use Plan will provide a nearly $3 million investment from HPD’s Partners in Preservation program to community-based organizations focused on anti-harassment and anti-displacement programming for area tenants.

Crown Heights and Bedford Stuyvesant are also priority areas for the city’s new $10 million Homeowner Help Desk, a one-stop shop to provide low-income homeowners with housing and legal counseling that will launch later this fall.

Creating Safer Streets and Investing in Public Spaces

The Adams administration is committing to several street safety projects to create a better, safer experience for pedestrians and bicyclists along Atlantic Avenue, as well as nearby transit corridors. This work will include painted “neckdowns,” which are raised curb extensions that narrow the travel lane at intersections or midblock locations, to expand curbside protections; daylighting to improve visibility at intersections; planters; and bike corrals along medians throughout the neighborhood; as well as a new bike lane on Bedford Avenue. To better serve pedestrians, new developments in the plan’s geography would be required to set their buildings further away from the street to create up to a 20-foot-wide sidewalk — an increase from the 8-to-15-foot-wide sidewalks that exist today.

Rendering of Atlantic Avenue’s improved, and safer streets.

The Atlantic Avenue Mixed-Use Plan provides $24.2 million in improvements to St. Andrew’s Playground, including adding a new, synthetic turf multi-use field with a running track, upgraded basketball and handball courts, renovated playground spaces, a remodeled public restroom, new seating, shade trees, plantings, and other green infrastructure. The administration will also improve Lowry Triangle, near Atlantic Avenue and Washington Avenue, to help community members better enjoy and use the space. The plan would also create a zoning incentive for additional publicly accessible open space. The project will complete the design phase in 2025 and anticipate construction to start in 2026.

Other infrastructure enhancements in the wider neighborhood include storm water and sewer upgrades, along Atlantic Avenue and Dean Street, as well as subsurface stormwater detention systems and 140 rain gardens throughout the community. These investments will bolster sewer capacity and help the neighborhood better handle storm and flooding events.

Engaging with the Community

The Atlantic Avenue Mixed-Use Plan is the result of extensive of community-based planning, building on engagement work started by local leaders and Brooklyn Community Board 8 in 2013. Since the official Atlantic Avenue Mixed-Use Plan study kicked off in early 2023 with facilitator WXY Studio, DCP has closely collaborated with the Offices of New York City Councilmembers Crystal Hudson and Chi Ossé, the New York City Council Land Use Division, and agency partners to craft the plan. Today’s certification begins the roughly seven-month Uniform Land Use Review Procedure, which includes recommendations from Community Boards 3 and 8 and Borough President Reynoso, which will be followed by hearings and binding votes at the CPC and then a City Council vote.

The Adams Administration’s Record on Housing

The Adams administration is also in the midst of public review for City of Yes for Housing Opportunity, the most pro-housing zoning proposal in New York City’s history. In addition to the City of Yes and the Atlantic Avenue Plan, DCP is advancing several robust neighborhood plans that, if adopted, would deliver more than 50,000 units over the next 15 years in Midtown South in Manhattan and in Long Island City and Jamaica in Queens. Earlier this year, the City Council approved the Bronx-Metro North Station Area Plan, which will create approximately 7,000 homes and 10,000 permanent jobs in the East Bronx.

Since the start of his administration, Mayor Adams has made record investments towards creating and preserving affordable housing. This past July, Mayor Adams announced back-to-back record breaking years in both creating and connecting New Yorkers to affordable housing. In June, the Adams administration delivered an on-time, balanced, and fiscally-responsible $112.4 billion Fiscal Year (FY) 2025 Adopted Budget that invests $2 billion in capital funds across FY25 and FY26 to HPD and the New York City Housing Authority’s capital budgets. In total, the Adams administration has committed a record $26 billion in housing capital in the current 10-year plan as the city faces a generational housing crisis. And this past spring, thanks to Mayor Adams’ vision and leadership, the city celebrated the largest 100 percent affordable housing project in 40 years with the Willets Point transformation.  

Further, the Adams administration is using every tool available to address the city’s housing crisis. This summer, Mayor Adams announced multiple new tools, including a $4 million state grant, to help New York City homeowners create accessory dwelling units on their properties that will not only help them to afford to remain in the communities they call home, but also to build generational wealth for their families.  

Earlier this year, Mayor Adams and members of his administration successfully advocated for new tools in the 2024 New York state budget that will spur the creation of urgently needed housing. These tools include a new tax incentive for multifamily rental construction, a tax incentive program to encourage office conversions to create more affordable units, lifting the arbitrary “floor-to-area ratio” cap that held back affordable housing production in certain high-demand areas of the city, and the ability to create a pilot program to legalize and make safe basement apartments.   

Additionally, under Mayor Adams’ leadership, the city is fulfilling its 2024 State of the City commitment to build more affordable housing across the city, including by being ahead of schedule on advancing two dozen affordable housing projects on city-owned land this year through the “24 in ‘24” initiative, reopening the Section 8 Housing Choice Voucher program waitlist after being closed to general applications for nearly 15 years, and creating the Tenant Protection Cabinet to coordinate across agencies to better serve tenants. The city has also taken several steps to cut red tape and speed up the delivery of much-needed housing, including through the “Green Fast Track for Housing,” a streamlined environmental review process for qualifying small- and medium-sized housing projects; the “Office Conversion Accelerator,” an interagency effort to guide buildings that wish to convert through city bureaucracy; and other initiatives of the Building and Land Use Approval Streamlining Taskforce.  

Justice Department Secures $8M from Fairway Independent Mortgage Corporation to Address Redlining in Black Communities in Birmingham, Alabama

 

Combating Redlining Initiative Surpasses $150M in Relief for Redlined Communities at its Third Anniversary

The Justice Department and Consumer Financial Protection Bureau (CFPB) announced today that Fairway Independent Mortgage Corporation (Fairway) has agreed to pay $8 million and a $1.9 million civil money penalty to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black neighborhoods in and around Birmingham, Alabama.

Redlining is an illegal practice by which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of residents in those communities.

With this settlement, the Justice Department’s Combating Redlining Initiative surpassed $150 million in relief for communities of color nationwide that have experienced lending discrimination. This settlement marks the Justice Department’s 15th redlining settlement in three years. Under the Combating Redlining Initiative, the Department has secured a historic amount of relief that is expected to generate over $1 billion in investment in communities of color in places such as Houston; Memphis; Los Angeles; Philadelphia; and Birmingham.

“This settlement, and the over $150 million in relief the Justice Department has secured for communities across the country through our Combating Redlining Initiative, will help to ensure that future generations of Americans inherit a legacy of home ownership that they too often have been denied,” said Attorney General Merrick B. Garland. “This case is a reminder that redlining is not a relic of the past, and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises and to secure relief for the communities harmed by it.”

The Justice Department and CFPB allege that Fairway illegally redlined Black neighborhoods in Birmingham, including through its marketing and sales actions, and discouraged residents of those neighborhoods from applying for mortgage loans. The settlement announced today requires Fairway to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in Birmingham’s majority-Black neighborhoods, invest an additional $1 million in programs to support that loan subsidy fund, and pay a $1.9 million civil penalty to the CFPB’s victims relief fund.

This case is the third redlining enforcement action brought jointly by the Justice Department and the CFPB under the initiative, highlighting the strong partnership between the agencies to root out and address lending discrimination.

“Birmingham lies at the heart of our nation’s civil rights struggle but is also a community that bears the legacy of discriminatory redlining and other exclusionary policies,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement will provide Birmingham’s Black neighborhoods with the access to credit they have long been denied and increase opportunities for homeownership and generational wealth. This settlement makes clear our intent to uproot modern-day redlining in every corner of the country, including in the deep South. With more than $150 million in total relief secured in three short years, our Combating Redlining Initiative is generating real economic opportunity for communities of color while sending a strong message to mortgage lenders, no matter their business model, that discriminatory lending will not be tolerated in America.”

“The settlement reached with Fairway Mortgage is a win for communities of color here in Birmingham that have historically been denied access to vital economic resources,” said U.S. Attorney Prim Escalona for the Northern District of Alabama. “Our office is committed to ensuring that these communities have equal access to housing and credit resources.”

“The CFPB and Justice Department are holding Fairway accountable for redlining Black neighborhoods,” said CFPB Director Rohit Chopra. “Fairway’s unlawful redlining discouraged families from seeking loans for homes in Birmingham’s Black neighborhoods.”

Fairway is a non-depository mortgage company headquartered in Madison, Wisconsin. In 2022, Fairway was the nation’s fifth-largest lender by origination volume and ninth-largest by application volume. Fairway operates in the Birmingham area under the trade name MortgageBanc.

The complaint describes how Fairway redlined majority-Black neighborhoods in the Birmingham Metropolitan Statistical Area (Birmingham MSA). During the period covered by the complaint, the Birmingham MSA included six counties in north central Alabama with a combined population of about 1.1 million. While Fairway claimed to serve the entire metropolitan area, it concentrated all its retail loan offices in majority-white areas, directed less than 3% of its direct mail advertising to consumers in majority-Black areas, and for years discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions.

The Justice Department and CFPB allege that Fairway violated the Fair Housing Act, Equal Credit Opportunity Act, and Consumer Financial Protection Act. Specifically, the government alleges problematic conduct by Fairway including:

• Failing to address known signs of discrimination: Fairway’s own data showed that, since at least 2017, it was failing to serve majority-Black neighborhoods in the Birmingham area, but before October 2022, it took no meaningful actions to address redlining risk. Between 2018 and 2022, only 3.7% of Fairway’s applications were for properties in majority-Black areas, compared to 12.2% for Fairway’s peer lenders. In other words, Fairway’s peer lenders generated applications for properties in majority-Black areas at over three times the rate of Fairway. This disparity was even higher in neighborhoods with 80% or more Black residents, where Fairway made loans at less than one-eighth of the rate of its peer lenders. Despite these figures, Fairway failed to adopt any written plan for marketing or growth to address the concern.
• Redlining Black neighborhoods: From 2015 through 2022, Fairway operated three retail loan offices and three loan production desks within real estate offices in the Birmingham MSA, all of which were in majority-white areas. Fairway also relied on referrals from real estate professionals and its loan officers’ personal contacts to generate applications, and the vast majority of Fairway’s referral sources and referred consumers were located in majority-white areas. Fairway predominantly directed its marketing to majority-white areas and failed to train or incentivize its existing loan officers to better serve majority-Black areas. By taking these actions, Fairway discriminated against, and unlawfully discouraged mortgage loan applications for properties in, majority-Black neighborhoods.

The proposed consent order, which awaits approval by the Federal District Court for the Northern District of Alabama, would require Fairway to:

• Provide $7 million for a loan subsidy program: The order would require Fairway to offer home purchase, refinance, and home improvement loans on a more affordable basis than otherwise available in majority-Black neighborhoods in the Birmingham MSA. The program may provide lower interest rates, down payment assistance, closing cost assistance, or payment of initial mortgage insurance premiums.
• Invest at least $1 million in redlined neighborhoods: Fairway would be required to open or acquire a new loan production office or full-service retail office in a majority-Black neighborhood in the Birmingham MSA. The company must also spend at least $500,000 on advertising and outreach, at least $250,000 on consumer financial education, and at least $250,000 on partnerships with one or more community-based or governmental organizations to serve the affected neighborhoods.
• Pay a $1.9 million penalty: The proposed order imposes a $1.9 million civil penalty against Fairway, which would be paid into the CFPB’s Civil Penalty Fund, also referred to as the victims’ relief fund.

Information about the Justice Department’s fair lending enforcement work can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website

This Week at KRVC - Halloween Events, Breast Cancer Awareness Month and More!

 

COMING UP AT KRVC

Around the Community  October is Breast Cancer Awareness Month!  KRVC joined Senator Gustavo Rivera and St. Barnabas Hospital this past Tuesday. The mobile unit was parked for three hours offering mobile mammography services. We will continue to bring resources to our community as early detection saves lives.  KRVC bids farewell to our karaoke host, Tamara.  A huge thanks to Sarah Gold and Shira Silverman. Sarah organized a children's clothing swap at the Sunday market. Shira delivered the donated clothing to us. Bronx shelters will soon receive the donations.

New Jersey Man Pleads Guilty To Causing The Death Of A Seven-Year-Old Boy And A 48-Year-Old Woman In Hudson River Boat Capsizing

 

Damian Williams, the United States Attorney for the Southern District of New York, announced today that RICHARD CRUZ pled guilty to misconduct and neglect of a ship officer resulting in death, in connection with the deaths of a seven-year-old boy and a 48-year-old woman after the motor vessel Stimulus Money capsized in the Hudson River in July 2022.  CRUZ pled guilty before United States District Judge Katherine Polk Failla, who will sentence CRUZ on January 25, 2025, at 3:30 p.m. 

U.S. Attorney Damian Williams said: “Richard Cruz admitted today that his misconduct and negligent actions caused the tragic deaths of a young boy and a woman when Cruz’s vessel capsized in the Hudson River. This prosecution should send a message to all captains and operators of commercial vessels that there will be consequences when they fail to follow the federal regulations and safety protocols that exist to keep passengers safe.” 

According to the allegations contained in the Complaint, Information, and statements made in court:

On or about July 12, 2022, at approximately 2:40 p.m., the motor vessel Stimulus Money capsized in the Hudson River resulting in the death of two passengers — a seven-year-old boy (“Victim-1”) and a 48-year-old woman (“Victim-2”).  At the time of the capsizing, RICHARD CRUZ was the owner and captain of the vessel.  CRUZ had purchased the vessel approximately three months before the capsizing.  CRUZ conducted boat “tours” for paying customers onboard the vessel on multiple occasions in the months leading up to the capsizing, despite not having the required United States Coast Guard (“USCG”) credentials and certifications to do so.

CRUZ’s negligent actions and omissions caused the capsizing and the deaths of Victim-1 and Victim-2.  At the time of the capsizing, among other things: (i) CRUZ operated Stimulus Money with 13 people on board, exceeding the vessel’s maximum allowable capacity; (ii) CRUZ operated Stimulus Money at a high rate of speed even though an advisory had been issued to alert small watercraft of hazardous conditions, including high winds and heavy seas; (iii)  CRUZ had not obtained a required USCG certification to operate the vessel with paying customers on board; and (iv) CRUZ operated Stimulus Money without a valid USCG Certificate of Inspection, which is required for a vessel to operate with paying customers on board.

All 13 people on board Stimulus Money were thrown overboard when it capsized in the Hudson River.  Shortly after the capsizing, boats from the New York City Police Department’s (“NYPD”) Harbor Unit and the New York City Fire Department’s (“FDNY”) Dive Rescue Team, and ferries operating nearby, arrived at the scene of the capsizing to render emergency assistance.  All but two passengers were recovered conscious and in varying medical conditions. They were subsequently transferred to hospitals in Manhattan and survived the capsizing.  Approximately 25 minutes after the capsizing, members of the FDNY Dive Rescue Team recovered Victim-1 and Victim-2 from the Hudson River. They were trapped underneath the capsized vessel and found unconscious.  Emergency medical personnel subsequently pronounced Victim-1 and Victim-2 deceased.  The cause of death was drowning.

Please report any illegal passenger charters to the USCG at https://www.p3tips.com/878.

CRUZ, 32, of Elizabeth, New Jersey, pled guilty to one count of misconduct and neglect of a ship officer resulting in death, which carries a maximum sentence of 10 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 defendants will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the USCG Investigative Service and the Special Agents and NYPD Detectives assigned to the U.S. Attorney’s Office for the Southern District of New York.