Attorney General James Recovers $4 Million from Drizly for Former Delivery Workers

 

Drizly Led Customers to Believe Tips Would Go Directly to Delivery Workers Who Earned Them, But Did Not Ensure Store Owners Properly Distributed Tips

More Than 8,300 Delivery Workers Across New York State Will Be Eligible to Receive Recovered Funds

New York Attorney General Letitia James today announced that she has recovered $4 million in withheld tips from Drizly, a now-defunct alcohol delivery platform owned by Uber, for failing to ensure delivery workers received their rightfully earned tips. An investigation by the Office of the Attorney General (OAG) found that Drizly actively encouraged customers to leave tips for delivery workers, even including an automatic 10 percent tip at checkout. However, Drizly led customers to believe that the entirety of those tips would go directly to the delivery workers who earned them, when in fact all tips instead went to store owners for distribution. Liquor stores using Drizly had the option to either outsource deliveries or to employ their own delivery workers. For delivery workers employed by the stores, including more than 8,300 workers at 2,453 stores throughout New York state, Drizly sent all of the tips to the store owners, who then decided how tips would be distributed. As a result of OAG’s action, Drizly will pay $4 million in restitution to impacted delivery workers.

“Drizly misled its customers by encouraging them to tip and then failing to make sure those tips went to the delivery workers who earned them,” said Attorney General James. “So many delivery workers work paycheck to paycheck and denying them their hard-earned tips could mean the difference between making ends meet and not being able to put food on the table. Now, we are finally returning this money to those who actually deserve it and who customers intended it would go to. My office will always take on companies that mislead their customers and workers and undermine the laws meant to protect them.”

Drizly was an online alcohol delivery platform that began operations in New York in 2013. Uber acquired Drizly in 2021 and shut it down in March 2024, after Uber decided to consolidate its food and alcohol delivery services into one platform, Uber Eats. Through Drizly, customers were able to purchase alcohol from local stores for delivery to their homes. In New York, 2,453 stores used the Drizly platform, including:

• New York City - 1,375
• Long Island - 508
• Hudson Valley - 194
• Western New York - 176
• Finger Lakes - 71
• Capital Region - 55
• Central New York - 31
• Southern Tier - 27
• North Country - 9
• Mohawk Valley - 7

Within New York City, stores in every borough used the Drizly platform: 

• Manhattan - 409
• Brooklyn - 367
• Queens - 351
• Bronx - 109
• Staten Island - 39

As of August 2023, over 80 percent of Drizly orders were being delivered by store employees. These store employees did not automatically receive their earned tips through the Drizly app. Instead, Drizly sent all of the tips to the store owners, who then decided how tips would be distributed. Drizly failed to ensure that those tips were paid to the delivery workers who earned them, even though Drizly was heavily involved in stores’ delivery processes. Drizly also encouraged liquor stores to engage in “tip pooling,” or splitting tips among all employees rather than giving them directly to the workers who earned them, a practice that is unlawful for liquor store employees in New York. Despite this, Drizly continued to encourage tip pooling and did not implement any mechanism to ensure the delivery workers received the money intended for them. As a result, many delivery workers did not receive all of the tips they earned.

In addition to enabling and encouraging unfair tipping practices, Drizly deceived customers about how tips were used and distributed. When individuals placed orders through Drizly’s platform, Drizly encouraged them to tip their delivery workers on its checkout screen, writing, “we provide you with the opportunity to tip your driver from our apps or website. The default tip is 10 percent of your order total, but you may adjust the amount according to your preference. We humbly ask that you tip drivers, as they are critical in making every Drizly delivery a reality.” Drizly failed to adequately notify customers that the tips would not go directly to delivery workers or clarify that stores were responsible for tipping their employees. Instead, many customers were led to believe that the full amount of the tip they paid was going to the delivery worker who delivered their order.

As part of the settlement, Drizly must pay $4 million in restitution to delivery workers employed by stores that used the Drizly platform. Drizly must also pay an additional $200,000 for a settlement administrator, who will track and disburse the restitution funds to these delivery workers. At least 8,385 delivery workers stand to receive settlement funds from this settlement. In New York City, surveys found that an overwhelming majority of delivery workers are non-white, over 80 percent work full-time as delivery workers, and nearly half are supporting a child or family member on this salary.

Bronx Borough President Vanessa L. Gibson - Community Resources & Updates

Dear Neighbor,

Yesterday, there was a heavy street leak that affected Webster Ave and Mosholu Parkway North. The north side of the sidewalk has been cleared and is now open to pedestrian traffic. The Department of Environmental Protection (DEP)`s Emergency Contractor and DSNY are still working to remove roadway debris on Webster Ave, between Mosholu Parkway N. and E. Mosholu Parkway S. Additionally, DEP is on-site distributing Comptroller claim forms to all impacted properties. If you have any questions or concerns, please do not hesitate to contact 3-1-1 or our office at 718-590-3500 or email us at webmail@bronxbp.nyc.gov.

Lastly, we want to extend our warmest wishes to you and your loved ones for a joyful, safe, and healthy holiday season. May this special time bring you peace, happiness, and cherished moments with those who matter most.

In partnership,

Bronx Borough President Vanessa L. Gibson

IN THE COMMUNITY

In partnership with the Bronx Zoo and Roadway Moving, we hosted a heartwarming Veterans Toy Drive! Thank you to all our incredible partners for making this event a success! Your generosity and holiday spirit brought joy to many veterans and their families across the Bronx this Christmas season! Spotlight on the Bronx Educational Opportunity Center (EOC)! The Bronx EOC is a cornerstone of our borough’s commitment to education and workforce development. Through job fairs, job readiness initiatives, vocational programming, and more, they’ve been a vital partner in equipping Bronx residents with the tools they need to succeed. We’re proud to support their mission and collaborate on efforts that empower our community! We just celebrated the reopening of the newly renovated Melrose Library! Specific renovations at the Melrose branch include: Creation of a fully accessible entrance and other accessibility updates Installation of a new elevator Creation of new designated areas for teens, children, and adults Creation of new community spaces for programming & more! This is a major game-changer for the South Bronx! This newly renovated facility is not just a library; it’s a hub for creativity, learning, and opportunity. We must continue to invest in libraries like Melrose across our borough—these community centers offer more than books; they provide the foundation for a brighter, more equitable future. Thank you to the NYPL, my colleagues in government, and everyone else who played a vital role in making this possible! UPCOMING EVENTS COMMUNITY EVENTS GENERAL INFORMATION

 

Bronx Tax Preparer Pleads Guilty To Filing Tens Of Thousands Of False Tax Returns Causing $145 Million In Fraudulent Tax Loss

 

Rafael Alvarez Perpetrated and Oversaw One of the Largest Ever Tax Frauds by a Return Preparer

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced today the guilty plea of RAFAEL ALVAREZ, a/k/a “the Magician,” to a two-count Superseding Information charging ALVAREZ with one count of conspiracy to defraud the U.S. and steal government funds and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return.  The charges arise from ALVAREZ’s orchestration of a decade-long, $145 million tax fraud scheme to file tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden.  As part of today’s guilty plea, Alvarez agreed to pay the Internal Revenue Service (“IRS”) $145 million in restitution and forfeit over $11.84 million in fraudulent proceeds he received from his criminal conduct.  ALVAREZ pled guilty today before U.S. District Judge J. Paul Oetken.

Acting U.S. Attorney Edward Y. Kim said: “Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear.  But, as today’s guilty plea shows, there was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue.  Today’s guilty plea, in one of the largest ever tax frauds by a return preparer, should serve as an important reminder to tax professionals that this Office will vigorously investigate and prosecute tax offenses.” 

As alleged in the Indictment and Superseding Information and statements made in public filings and court proceedings: 

From at least in or about 2010, up to and including in or about 2020, ALVAREZ was the CEO, owner, and manager of ATAX New York, LLC, also doing business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation (together, “ATAX”).  ATAX was a high-volume tax preparation company located in the Bronx, New York, which prepared approximately 90,000 federal income tax returns for its customers during this period.  ALVAREZ both prepared tax returns for ATAX customers and recruited, supervised, and directed other ATAX personnel who in turn prepared tax returns for customers.  During this period, ALVAREZ oversaw a sweeping fraudulent scheme, whereby he and his employees submitted false information to the IRS in ATAX customers’ tax returns. This false information, which included, among other things, bogus itemized tax deductions, made-up capital losses, phony business expenses, and fraudulent tax credits, served to fraudulently reduce the customers’ tax liability and increase the customers’ tax refunds from the IRS. 

In total, ALVAREZ oversaw ATAX’s fraudulent submission of tax returns on behalf of customers that deprived the IRS of $145 million in tax revenue.  ALVAREZ was so consistent at falsifying ATAX customer tax returns that he became known to ATAX’s customers as “the Magician.”  Additionally, ALVAREZ agreed as part of his plea agreement that he was a leader of the scheme and attempted to obstruct or impede the administration of justice with respect to the investigation of the tax fraud scheme when he and an ATAX employee made false statements to an IRS Revenue Agent.  ALVAREZ’s operation of ATAX helped the company generate approximately $12 million in fraudulent proceeds over the duration of the fraud. 

ALVAREZ, 61, of Cortland Manor, New York, pled guilty to one count of conspiracy to defraud the U.S. and steal government funds, which carries a maximum sentence of five years in prison, and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return, which carries a maximum sentence of three years in prison.  ALVAREZ is scheduled to be sentenced by Judge Oetken on April 11, 2025.    

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

Mr. Kim praised the outstanding investigative work of the IRS, Criminal Investigation, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration in this case. 

This case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorney David R. Felton is in charge of the prosecution. 

Virginia Man Convicted for Crypto Financing Scheme to ISIS

 

A jury convicted Mohammed Azharuddin Chhipa, 35, of Springfield, Virginia, on Dec. 13 for charges relating to his efforts to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a foreign terrorist organization.

According to court records and evidence presented at trial, from at least October 2019 through October 2022, Chhipa collected and sent money to female ISIS members in Syria to benefit ISIS in various ways, including by financing the escape of female ISIS members from prison camps and supporting ISIS fighters. Chhipa would raise funds online on various social media accounts. He would receive electronic transfers of funds and travel hundreds of miles to collect funds by hand. He would then convert the money to cryptocurrency and send it to Turkey, where it was smuggled to ISIS members in Syria.

His primary co-conspirator was a British-born ISIS member residing in Syria who was involved in raising funds for prison escapes, terrorist attacks, and ISIS fighters. Over the course of the conspiracy, the defendant sent out over $185,000 in of cryptocurrency.

The jury found Chhipa guilty of one count of conspiracy to provide material support or resources to a designated foreign terrorist organization and four counts of providing and attempting to provide material support or resources to a designated foreign terrorist organization. Chhipa faces a maximum penalty of 20 years in prison per count. A sentencing hearing has been scheduled for May 5, 2025. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, Executive Assistant Director Robert Wells of the FBI’s National Security Branch, and U.S. Attorney Jessica D. Aber for the Eastern District of Virginia made the announcement.

The FBI is investigating the case.

Assemblymember John Zaccaro - UPDATE on Webter Avenue Water Main Break

Friends, 

Last night a water main broke on Webster Ave causing massive flooding, and the loss of water and utilities to many of the surrounding businesses and homes. 

This morning my team participated in an intergovernmental agency briefing outside the site of last night's water main break. Clean-up and repair is underway and we continue to be briefed by city agencies on their progress. As of this afternoon, water and power have been restored to most of the residents and businesses in the area. ConEd has informed us that they are anticipating gas to be completely restored by this evening. However, some buildings may continue to be impacted. Until the street is fully cleared of debris and deemed traffic ready, Webster Avenue and some of the surrounding streets will remain closed.

Our team continues to be briefed on the situation and we remain in constant contact with our agency partners to bring you the most up to date information. 

As always, we will continue to update our community in real time. If you have any questions or concerns, please call our office at 718-409-0109. If you reside in the affected area and need to report an issue with your utilities, please call 311 to report the problem.

Thank you to the numerous agencies who have worked around the clock to restore, water, power, and gas to the area, as well as clean up the debris to reopen our streets. 

With Gratitude, 

John Zaccaro, Jr. 

NYC Comptroller Lander’s Annual Report Finds Continued Use of Budget Gimmicks by City Hall

 

Adams Administration continues to under-budget $3 billion annually on expenditures they know will be larger, but simultaneously claim that spending on asylum seekers will be far larger than reality. Lander renews call for more honest budgeting

In his office’s Annual State of the City’s Economy and Finances, New York City Comptroller Brad Lander laid out the city’s economic and fiscal outlook, reflecting stronger economic growth than projected last year as well as looming economic and budget risks because of the incoming Trump Administration.

The Comptroller’s analysis projects that the Mayor’s Office of Management and Budget (OMB) has underbudgeted likely expenses including uniformed overtime, special education Carter Cases, and rental subsidies by an average of $3 billion each fiscal year. At the same time, the report projects that the Adams Administration inflated projected costs for spending on asylum seekers by nearly $6 billion in total over the same period.

“Enough with the budget gimmicks,” said Comptroller Brad Lander. “For the past two years, the Adams Administration has consistently cried wolf that the City would go broke because of asylum seeker costs, when in reality, they inflated projections for asylum seeker services by billions of dollars, as part of a narrative that has scapegoated migrants and distracted New Yorkers with unnecessary fights about cuts to libraries and parks. Meanwhile, they continue to underbudget $3 billion every year in areas they know we will spend more on, like uniformed overtime and rental subsidies. And they have failed to contribute to the Rainy Day Fund, despite increased tax revenues which we have long called to be designated to strengthen our reserves. New Yorkers deserve more honest and fiscally responsible budgeting.”

The Comptroller’s Office projects that total spending on asylum seekers will be lower than OMB assumed by $1.35 billion in FY 2025, $2.30 billion in FY 2026, and $1.90 billion in FY 2027. Furthermore, the ongoing reconciliation of FY 2023 spending in asylum seeker services budget codes may result in up to $462 million in accrual adjustments. Under the accrual method of budgeting, when the City readjusts and lowers prior-year expenses, the difference is recognized as savings in the current year.

Overall, the Comptroller’s Office estimates that OMB underbudgeted expenditures by $2.63 billion in FY 2025 and by $3.08 billion on average in each fiscal year, from FY 2026 through FY 2028. The Comptroller’s Office also projects lower spending on asylum seekers and higher tax revenues to offset underbudgeting and other risks in FY 2025 but not in FY 2026, when the budget gap is estimated to be $2.95 billion after prepayments.

This report also indicates that New York City has climbed out from the economic downturn and disruption of the pandemic, but faces new economic and budget challenges from an incoming Trump administration. Cuts to Federal aid, tariff, and immigration policies threaten to reverse recent growth and imperil the very fabric of New York City.

“Four years later, the City has finally recovered from and surpassed the economic downturn of the pandemic. Despite the rosy economic indicators, New Yorkers are still facing the high cost of rent and daily living, and we now face an incoming Federal administration bent on inflationary tariffs and reducing aid to municipalities. By spotting the risks on our horizon, the City can better plan and use its resources to build, create, and manage a more livable and better run city.”

Four years after the pandemic, the city’s employment is now above its pre-pandemic level, the commercial real estate sector shows signs of recovery and tourism has returned. However, the city’s population has declined over the past three years and the housing market remains exceedingly tight, with housing affordability a top issue for New Yorkers.

Based on the current strength of the national and local economies, the Comptroller’s Office forecasts that New York City tax revenues will grow this fiscal year by a strong 6.1 percent, followed by more moderate growth, averaging 2.9 percent per year through FY 2028. The Mayor’s Office of Management and Budget (OMB) presented less tax growth in its November Financial Plan. This updated tax forecast is also significantly higher than the one the Comptroller’s Office published last summer, primarily due to continued growth in business income tax collections and an improved outlook for the U.S. economy, local industries, financial markets, and financial sector profits. The Comptroller’s Office projects surplus resources of $1.39 billion in FY 2025 compared to the Mayor’s November Financial Plan.

Unlike recent plans, the City’s November budget update did not include a Program to Eliminate the Gap (PEG). Some savings were recognized over the financial plan period—including reduced costs for pensions, largely due to higher than anticipated returns on the City’s pension investments, lower debt service costs, and savings on asylum seeker services in FY 2025.

As this Office highlighted in its recent spotlight, NYC’s Federal Funding: Outlook Under Trump, the Federal government provides over $100 billion collectively to New York City government, related entities, directly to New Yorkers, and other organizations each year. This includes $9.55 billion in Federal categorical aid currently included in the City’s operating budget (about 8.3 percent of the city’s current $115.03 billion budget). These funds support affordable housing programs, public education, healthcare, infrastructure, and touch the lives of every New Yorker. While not all Federal funds are at risk, any reduction in this aid would put pressure on the City’s finances.

The City also did not include deposits into its Rainy Day fund (the Revenue Stabilization Fund or RSF) in its budget for FY 2025. The City currently holds $1.96 billion in the RSF. The Comptroller continues to believe strongly that the City should establish a transparent policy of regular efficiency and long-term savings planning as part of the annual budget process, regardless of whether there is fiscal tightening projected on the horizon, as well as continues to urge the adoption of rules to determine the fund’s target size, deposits, and withdrawals. This is particularly true when facing the tax revenue risks and potential loss of Federal aid presented by the incoming Trump Administration.

The City’s Adopted Capital Commitment Plan for FY 2025 through FY 2028, released in September, totals $86.67 billion in all-funds authorized commitments. The largest increases over the four-year period are for education/CUNY projects ($3.10 billion) and housing and economic development projects ($3.10 billion). While the size of the City’s capital program increased overall, it still requires the further funding for other City projects, including the construction of the city’s borough-based jails. Since releasing the Adopted Capital Commitment Plan, as part of the recent agreement reached between the City Council and the Adams administration on the City of Yes housing plan, new capital commitments include $4 billion, including $1 billion from the State ($2 billion for housing programs and $2 billion for infrastructure projects).

To read the full Annual Report on the State of the City’s Economy and Finances, click here.

2006 MURDER SUSPECT ARRAIGNED ON INDICTMENT

 

Defendant Fled to Kosovo After He Allegedly Ran Over Bystander After Bronx Bar Fight; Extradited to Face Charges

Bronx District Attorney Darcel D. Clark today announced that a Bronx man has been brought to justice for the 2006 killing of an innocent bystander when he drove his S.U.V. at a crowd on Belmont Avenue after a bar fight. 

District Attorney Clark said, “After 18-years of eluding authorities, the defendant is facing justice for allegedly mowing a victim down on the sidewalk with his vehicle. I thank the U.S. Department of State, the U.S. Department of Justice’s Office of International Affairs, the U.S. Marshals Service, and the Kosovan authorities for their assistance in returning the defendant so that we may bring closure to this case of senseless murder.” 

District Attorney Clark said Ahmet Gashi, aka Ahmet Arifi, 42, was indicted on two counts of second-degree Murder, first-degree Manslaughter, and first-degree Reckless Endangerment. He was arraigned before Bronx Supreme Court Justice Brenda Rivera on December 16, 2024. He was remanded. He is due back in court on January 16, 2025. 

According to the investigation, on December 31, 2006, at approximately 4:35 a.m., Gashi got into an argument and physical altercation at the Moonlight Restaurant and Bar at 2370 Belmont Avenue. After being ejected, Gashi continued arguing with people outside the bar and was told to leave. Gashi allegedly got into his black S.U.V, sped on the sidewalk, dispersed a crowd of people, and struck Kemal Kolenovic, 28. Kolenovic, an innocent bystander, was thrown down the block from the initial impact and died from his injuries. The defendant fled to Kosovo and was extradited to the U.S. on December 13, 2024.

District Attorney Clark thanked NYPD Detective Carlos Vasquez from the NYPD Cold Case Squad for his work on the investigation.

An indictment is an accusatory instrument and not proof of a defendant’s guilt. 

Money in Your Pocket: Governor Hochul Reminds New Yorkers of Minimum Wage Increase on January 1

New York’s Minimum Wage Set to Increase to $16.50-Per-Hour in New York City, Westchester, and Long Island, and $15.50-Per-Hour for the Rest of the State

Part of Historic Agreement to Increase New York’s Minimum Wage Through 2026 and Index to Inflation Beginning in 2027

Governor Kathy Hochul today announced that New Yorkers earning minimum wage will earn an additional $0.50 per hour starting on January 1, 2025. New York’s minimum wage will increase to $16.50-per-hour in New York City, Westchester, and Long Island, and $15.50-per-hour for the rest of the state. This adjustment is part of New York’s historic multiyear agreement between Governor Kathy Hochul and the New York State Legislature to index the minimum wage to inflation. Today's announcement is part of NYSDOL’s ongoing effort to educate employees and employers alike, ensuring awareness of the change, and to proactively reduce potential wage theft.

“Putting money back in your pockets has been the focus of my first three Budgets, and that includes increasing minimum wage for the lowest earners across the state,” Governor Hochul said. “With rising costs of living, this increase will help to lighten the burdens of inflation for New Yorkers while providing businesses with the time needed to adjust.”

New York State Department of Labor Commissioner Roberta Reardon said, “In this current era of inflation and rising costs, every cent counts for all New Yorkers, especially workers who earn minimum wage. By gradually increasing wages for the lowest earners, we are ensuring businesses can adjust to the change while also helping more families make ends meet. I want to thank Governor Hochul and the Legislature for working together to strengthen the paychecks of New Yorkers statewide.”

Employers can find additional information, including an interactive Minimum Wage Lookup Tool, by visiting the Minimum Wage website.

Minimum wage earners who do not see the increase reflected in their paychecks can file a wage complaint on the New York State Department of Labor’s website or by calling 833-910-4378. For more information about NYSDOL’s efforts to combat wage theft, visit the Department’s landing page.