MAYOR DE BLASIO, CITY AND STATE OFFICIALS ANNOUNCE NEW AFFORDABLE HOUSING DEVELOPMENT AND BRONX MUSIC HALL

The Bronx Commons Development will introduce 305 affordable apartments and a new 300-seat arts and cultural center and performance space.

High resolution renderings of the Bronx Commons and Bronx Music Hall development courtesy of Danois Architects, WXY Architecture + Urban Design can be found in this link.

    Mayor Bill de Blasio, the New York City Department of Housing Preservation and Development (HPD) Commissioner Vicki Been, Housing Development Corporation (HDC) President Eric Enderlin, and New York State Homes and Community Renewal (HCR) Commissioner Jamie Ruben join WHEDco, and BFC Partners to announce the start of construction on Bronx Commons – a 426,000 square foot, mixed-used development in the Melrose section of the Bronx that will include 305 affordable apartments, retail space, and the Bronx Music Hall, a new 14,000 square foot, 300-seat music venue and arts-centered community hub focused on the deeply-rooted history of cutting edge Bronx music. The affordable housing project received financing through the City’s Mix and Match program and received a special line of funding from the City’s Our Space program.

“As we build more and more needed affordable housing, there is no finer tribute to New York’s deep artistic history than including a music hall in this Bronx development. The projects will transform long-vacant City land into a vibrant cultural mecca and residential community for the borough and the City. I congratulate the Melrose community, and the future residents of this 100% affordable development,” said Mayor Bill de Blasio.

“As we create and preserve affordable housing at record pace, we aren’t just helping people, we are building better neighborhoods,” said HPD Commissioner Vicki Been.  “Bronx Commons represents exactly the kind of dynamic, mixed-use development that Mayor de Blasio envisioned in Housing New York.  The 305 affordable apartments will serve New Yorkers at a range of incomes, while also providing a cultural hub for the Melrose community with open space, quality retail, and a new music venue on land that had long been abandoned.  I want to thank our colleagues at HDC and HCR and our partners at WHEDco and BFC for the hard work and vision that went into this dynamic project.”

NYS Homes and Community Renewal Commissioner James S. Rubin said: “On behalf of Governor Cuomo and the entire HCR team, congratulations to WHEDco and the community for bringing this last piece of the Melrose Commons Urban Renewal plan to fruition. The transformation of what was a collection of vacant and blighted properties into a vibrant and growing community is a remarkable and enduring achievement. The State’s investment in Bronx Commons – including a $2 million Regional Economic Development Council Grant for the redevelopment of the theater – combined with that of our partners, is helping to complete this neighborhood and seal our shared legacy as pioneers of creative affordable housing development and preservation.”

“It’s not every day that we have the opportunity to create more than 300 units of 100% affordable housing serving New Yorkers at a wide range of incomes, let alone in such a unique development anchored by a state-of-the-art music venue and public recreation space,” said HDC President Eric Enderlin.  “This project combines the affordability, diversity, open space, and access to the arts that contributes to vibrant, dynamic neighborhoods – the goal of Mayor de Blasio’s Housing New York plan.  Thanks to our many valued partners at HPD, HCR, BFC and WHEDco, today we are able to celebrate the start of construction on the Bronx Commons and the Bronx Music Hall - a remarkable affordable housing development and cultural center that the Bronx community can be truly proud of.”

“This long-awaited project will bring new housing and new amenities, including the innovative Bronx Music Hall, to the Melrose neighborhood of The Bronx. My office has always been a strong supporter of building affordable units at all income levels, and I was proud to provide this project $300,000 in funding from my capital budget. I congratulate WHEDco on today’s groundbreaking, and for having the vision to meld our borough’s housing and cultural needs into one amazing project,” said Bronx Borough President Ruben Diaz Jr.

Bronx Commons will transform long-abandoned, city-owned land -- the final undeveloped parcel of the Melrose Commons Urban Renewal Area -- into a vibrant center for living, working, learning, shopping and entertainment, honoring the neighborhood revitalization plan created by local residents more than twenty years ago.   The development’s creative financing structure maximizes affordable housing financing and Low Income Housing Tax Credit (LIHTC) equity along with public and private grants to create unique non-residential spaces – in addition to badly-needed affordable housing – that will serve as neighborhood anchors of development and revival.

“Bronx Commons will include hundreds of affordable apartments, a landscaped public plaza, places to eat and shop, all anchored by the Bronx Music Hall – a new music venue, gallery, and arts-based community center focused on the Bronx’s heritage of cutting edge music,” said Nancy Biberman, Founder and President of WHEDco. “For more than two decades, WHEDco has designed, with deep neighborhood engagement, civic anchors that not only create stable, affordable homes for Bronx families, but that serve as hubs for small business development, early childhood education, after school programs, healthcare, nutrition, and most especially music and arts education. While working to develop the Bronx Music Hall, WHEDco launched the Bronx Music Heritage Center as a ‘lab’ in a small storefront in our Intervale Green building, where for over four years we were able to test the concept. Raising $2M in philanthropic support and hosting 400 events for nearly 14,000 attendees clearly demonstrated local appetite and enthusiasm for opportunities to hear, learn, and play music, and to dance.”

Bronx Commons will be one of the most deeply and broadly affordable new developments in the City,   including 305 apartments that span seven income bands.  The units will be affordable to homeless individuals and families exiting the shelter system, individuals and households with annual household income ranging from $22,032 for a household of three to $89,760 for a household of three.

Danois Architects is the design architect for Bronx Commons. WXY Architecture + Urban Design is the architect for the Bronx Music Hall. Local Projects, a renowned interactive-media design firm, are designing the Bronx Music Hall to serve as a top-tier music venue, performance space, and iconic cultural institution for the South Bronx.

Financing for Bronx Commons came from New York City (NYC) Housing Preservation and Development, NYC Housing Development Corporation, New York State (NYS) Housing & Community Renewal, NYS Empire State Development, the NYC Council, the Bronx Borough President, Citibank, Richman Housing Resources, and the JPMorgan Chase Foundation, with predevelopment and working capital provided by the Contact Fund, Deutsche Bank Americas Foundation, and Enterprise Community Development.

The New York City Department of Housing Preservation and Development (HPD)

The New York City Department of Housing Preservation and Development (HPD) is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and diverse, thriving neighborhoods for New Yorkers through loan and development programs for new affordable housing, preservation of the affordability of the existing housing stock, enforcement of housing quality standards, and educational programs for tenants and building owners. HPD is tasked with fulfilling Mayor de Blasio’s Housing New York: A Five-Borough Ten-Year Plan to create and preserve 200,000 affordable units for New Yorkers at the very lowest incomes to those in the middle class. For more information visitwww.nyc.gov/hpd and for regular updates on HPD news and services, connect with us via www.facebook.com/nychpd and www.twitter.com/nychousing.

About the New York City Housing Development Corporation (HDC)

HDC is the nation’s largest municipal Housing Finance Agency and is charged with helping to finance the creation or preservation of affordable housing under Mayor Bill de Blasio’s Housing New York plan. Since 2003, HDC has financed more than 120,000 housing units using over $13.7 billion in bonds, and provided in excess of $1.6 billion in subsidy from corporate reserves. HDC ranks among the nation’s top issuers of mortgage revenue bonds for affordable multi-family housing on Thomson Reuter’s annual list of multi-family bond issuers. In each of the last four consecutive years, HDC’s annual bond issuance has surpassed $1 billion. For additional information, visit: http://www.nychdc.com  

About WHEDco

The Women’s Housing and Economic Development Corp. (WHEDco) is a community development organization founded on the radically simple idea that all people deserve healthy, vibrant communities.  Working in the South Bronx, WHEDco builds award-winning, sustainable, affordable homes that serve as anchors for strong communities that residents can be proud of. WHEDco’s mission is to provide the Bronx with access to all the resources that create thriving neighborhoods – from high-quality early education and after-school programs, to healthy food, cultural programming, and economic opportunity. For more information: www.whedco.org

About the Bronx Music Hall

The Bronx Music Hall will be a state-of-the art venue where Bronx residents and visitors from around the city and the world can connect to music and dance through high-quality shows and exhibits; explore Bronx music history and understand its lasting legacy and contributions to today’s popular music; and actively participate in music and art making.  At 14,000 square feet, the Bronx Music Hall will feature flexible performance space with seating for 300 people, a permanent, interactive exhibit that connects visitors to the history and influences of Bronx music, rehearsal and classroom spaces, gallery space for temporary or traveling exhibitions, and an outdoor plaza for recreation and open-air performances.

Cutting-edge music has a deeply rooted history in the Bronx. A thriving Latin music scene gave it’s the nickname, El Condado de la Salsa (The Borough of Salsa) and everyone knows that hip hop, now a global phenomenon, was born in its streets.  The Bronx had not one, but two major centers of early R&B (doo wop) music, Morrisania and Belmont, which produced groups suchh as The Chords, the Chantels and Dion & the Belmonts; and a thriving jazz scene along Boston Road, which was home to many jazz legends (and even some future NEA Jazz Masters) including Jimmy Owens, Valerie Capers, Maxine Sullivan, Lou Donaldson, Herbie Hancock and even Thelonius Monk. The Bronx has also been the place where traditional music, as well as popular music, found a home—young Puerto Ricans have been able to return to their island percussive roots at the casitas that dot neighborhoods such as Melrose. Today the sounds of emerging communities who now make the Bronx their home fill the soundscape—the drums of the Garifuna, the plucked kora strings from the Gambia, and bachata from the Dominican Republic--creating new work, collaborating across genres and generations, and innovating music forms in one of the most diverse counties in the nation.

Engel Statement On Latest Republican Move Towards ACA Repeal

   Congressman Eliot L. Engel, a top member of the House Energy and Commerce Committee, released the following statement after voting against S. Con. Res. 3, a budget resolution that sets in motion Republicans’ repeal of the Affordable Care Act (ACA), and that passed the House of Representatives this afternoon by a vote of 227 to 198:

“I am deeply saddened by the results of today’s vote. The Affordable Care Act has shepherded momentous progress for our nation’s health care system and, especially, for the people of New York. Should this landmark legislation be repealed, more than 2.7 million New Yorkers will lose their insurance coverage – including thousands in the Bronx and Westchester. I had hoped that stakes like these might give pause to Republicans, but today’s vote suggests that they are indeed committed to taking health care away from millions of hardworking Americans.

“Despite today’s disappointing results, my Democratic colleagues and I will continue fighting. The people of New York simply cannot afford the GOP plot to repeal the ACA. I remain committed to protecting this lifesaving law and the improvements it’s brought to my constituents’ health care.”

ENGEL & CONNOLLY OFFER SANCTIONS BILL TO PUNISH ELECTION INTERFERENCE

More than 50 Cosponsors Support Measure Responding to Russia's Hacking

WASHINGTON—Representative Eliot L. Engel (NY), Ranking Member of the House Committee on Foreign Affairs, and Representative Gerald E. Connolly (VA) are leading a group of more than 50 lawmakers to offer legislation that would punish illegal foreign interference in an American election. The SECURE Our Democracy Act would sanction any foreign individual or entity found to have unlawfully meddled with a federal election, and would bar entry to the United States and freeze U.S.-based assets of anyone involved in such interference.

“Our intelligence and law enforcement communities are unanimous in their assessment that Russia worked to rig our election. This is an attack on our country, and it cannot go unanswered. If the criminals who interfered with our election get away with it, what’s to stop our enemies from doing the same thing the next time Americans cast their votes? This bill would mete out tough penalties to those who tried to undermine our democracy, and it would put any other would-be meddlers on notice: stay out of our business or face the consequences,” said Rep. Engel. “Every member of the House should cosponsor this bill. I hope in the days ahead, we build the sort of bipartisan support around this issue we're seeing in the Senate under the leadership of Senators McCain and Graham.”

“The U.S. Intelligence Community recently shared an unclassified report detailing an unprecedented, deliberate, and multi-faceted campaign by Russia to interfere in the 2016 U.S. presidential election. That should trouble every American,” said Rep. Connolly. “One of our most cherished institutions, democratic elections free of foreign interference, was attacked. Congress must come together in a bipartisan fashion to demonstrate that there is a cost to such attacks on American democratic institutions.

“I am glad to join with Ranking Member Engel to introduce legislation that would publicly identify and authorize sanctions against foreign persons and governments that unlawfully interfere in U.S. federal elections. I applaud the Obama Administration for releasing this intelligence assessment. Our bill seeks to standardize this transparency measure because exposing these tactics is the best way to nullify them.”

Among the bill's cosponsors are Ranking Members Nita Lowey (NY) of the Appropriations Committee; Adam Smith (WA) of the Armed Services Committee; Bennie Thompson (MS) of the Homeland Security Committee; Adam Schiff (CA) of the Permanent Select Intelligence Committee; John Conyers, Jr. (MI) of the Judiciary Committee; and Elijah Cummings (MD) of the Oversight and Government Reform Committee. Click here for a complete list of the bill’s original cosponsors.

The SECURE Our Democracy Act would require the Secretary of State to compile and regularly update a public list of foreign persons and entities who, at any time since January 1, 2015, unlawfully interfered in U.S. elections for federal office. Those on the list would be barred from entering the United States and have their financial assets in this country frozen. Similar sanctions have won strong bipartisan support and have been used successfully against terrorists, drug traffickers, and human rights violators. The bill would also require the Secretary to submit a report to Congress after each federal election summarizing any foreign interference in the previous cycle, offering the American people an official report.  The SECURE Our Democracy Act would cost zero taxpayer dollars.

of tSTATEMENT FROM STATE SENATOR GUSTAVO RIVERA on Governor Cuomo's 2017 Statehe State Proposals Mirroring Senate Democrats' Previous Legislative Measures and KINGSBRIDGE ARMORY

As Governor Cuomo finalized unveiling his 2017 State of the State proposals, it is important to remember that nearly every single one of these plans has already been introduced by members of the Senate Democratic Conference during previous Legislative Sessions. My colleagues and I have proudly advanced common sense legislation to improve the lives of all New Yorkers, however, most of them have been continuously blocked by Senate Republicans.  Here are just a few examples of how my Senate Democratic colleagues and I have already advanced legislation and projects which mirrors what Governor Cuomo is calling for in his State of the State presentations: * Governor Cuomo's announcement to include $108 million in the state budget to develop the Kingsbridge Armory - a project I have supported since its inception in 2012. * Senate Democrats have led the fight to make a quality higher education affordable for all New York students. Our Higher Education Ranking Member, Senator Toby Ann Stavisky, has carried a bill that would accomplish this goal by providing New York State residents with the possibility of receiving free tuition at SUNY, CUNY and Community Colleges. * The affordable childcare proposal put forth by Governor Cuomo is similar to a plan first put forward by Senator Daniel Squadron and the Democratic Policy Group. Senator Daniel Squadron's legislation establishes Childcare Advance, a deferral of state taxes to help families afford the extremely high costs of childcare. Additionally, Senator Velmanette Montgomery has legislation to help ensure more affordable childcare options are made available through state services. * Efforts to ensure hardworking New Yorkers are not taken advantage of through wage theft have been advanced by Senator Jose Peralta. An issue that has drastically affected workers in my district and that I have fought to help and protect. It is doubtful the Governor's 2017 State of the State plans will be enacted, as all of these proposals have been previously blocked by Senate Republicans. That is why it is critical that all 32 Democratic Senators in the 63-member State Senate work together to form a functional majority so we can pass these important initiatives and help struggling New Yorkers. We should not allow politics to get in the way of delivering results that will improve the lives of New Yorkers. My colleagues and I in the Senate Democratic Conference will continue to lead the fight to make New York a more affordable place to live, work and raise a family.

Three Doctors And Three Executives Charged In $33 Million Medicare And Medicaid Fraud Scheme

Doctors Worked at Eight Fraudulent Medical Clinics in Brooklyn That Paid Elderly People to Act as Patients, and Billed for Unnecessary or Non-Existent Medical Services

   Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dennis Rosen, Inspector General of the New York State Office of the Medicaid Inspector General (“OMIG”), announced the unsealing today of a superseding indictment charging physicians MUSTAK Y. VAID, PAUL J. MATHIEU, and EWALD J. ANTOINE, as well as health-care executives MARINA BURMAN, ASHER OLEG KATAEV, a/k/a “Oleg Kataev,” and ALLA TSIRLIN with operating a $33 million health care fraud scheme through the operation of eight fraudulent medical clinics in Brooklyn, as well as the operation of related suppliers of medical equipment, tests, and services. As part of the fraud scheme, the defendants’ co-conspirators paid cash kickbacks to elderly and financially disadvantaged patients (the “Paid Patients”) who were insured by Medicare and/or Medicaid, and the defendants and their co-conspirators then billed Medicare and Medicaid for unnecessary medical services, tests, and supplies related to the Paid Patients.

VAID was previously indicted and arrested on these charges in November 2016. MATHIEU, ANTOINE, BURMAN, KATAEVE, and TSIRLIN were arrested earlier today and presented and arraigned this afternoon before U.S. Magistrate Judge Kevin Nathaniel Fox. The case is assigned to U.S. District Judge Lorna G. Schofield.

U.S. Attorney Preet Bharara said: “These defendants allegedly operated fraudulent medical clinics and suppliers in a scheme that bilked Medicare and Medicaid out of more than $30 million. As alleged, three of the defendants were doctors who, in violation of their Hippocratic oath, signed medical charts for patients they never treated and prescribed unnecessary medications, procedures, and supplies. Medicare and Medicaid were established to assist the elderly and economically disadvantaged, not to serve as cash cows for allegedly corrupt professionals.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “In this case, as alleged, Medicare and Medicaid programs suffered millions of dollars in losses when a group of physicians and health-care executives created, operated, or became associated with eight fraudulent medical clinics. As charged, their litany of crimes included paying a series of kickbacks, writing scripts for unnecessary medical tests, and arranging transportation services for patients who didn’t need a ride. Today’s charges certainly won’t prove to be a cure for all ills, but they are a step in the right direction when it comes to confronting the threats faced by the health care system.”

Medicaid Inspector General Dennis Rosen said: “This joint investigation and today's arrests send an unmistakable message. Those who seek personal gain by preying upon vulnerable New Yorkers and exploiting the Medicaid program will be held fully accountable. My office will continue to work closely with our partners in the U.S. Attorney’s Office, FBI and other state and federal agencies to root out fraud, waste and abuse in the Medicaid program.”

As alleged in the Indictment unsealed today and according to statements made in Court today: [1]

Aleksandr Burman, an individual with no medical license, established eight medical clinics in Brooklyn (the “Related Clinics”), which operated between 2007 and 2013. For each clinic, Aleksandr Burman hired one of three doctors – VAID, MATHIEU, or ANTOINE – to pose as the nominal owner of the clinic, since New York State law requires that a professional services corporation providing medical care must be owned by a medical professional. In fact, however, VAID, MATHIEU, and ANTOINE were each simply hired by Aleksandr Burman to pose as the owner of one or more of the clinics, and to come to the clinic periodically, in order to sign medical charts falsely stating that the doctor had examined a number of Paid Patients. VAID posed as the owner of one such clinic, while MATHIEU posed as the owner of four others, and ANTOINE posed as the owner of the remaining three. The three doctors were also paid to provide a large number of prescriptions and referrals for medically unnecessary supplies. Such unnecessary prescriptions included referrals for more than $3.5 million worth of durable medical equipment (“DME”), consisting mostly of incontinence supplies such as adult diaper sets ordered from a DME supply company (“USD”) owned jointly by BURMAN and Aleksandr Burman of the Related Clinics.

Many of the Paid Patients who received such prescriptions and referrals did not need or receive the diapers and other supplies. Instead, BURMAN and USD arranged for the Paid Patients to exchange their diaper prescriptions for valuable merchandise, such as bed linens, tablecloths, dishes, kitchen appliances, and other housewares. BURMAN and USD nonetheless filed Medicaid claims for such DME, seeking more than $3.5 million in reimbursement. BURMAN also transported cash to the Related Clinics to be used to pay kickbacks to the Paid Patients.

VAID, MATHIEU, ANTOINE, and their co-conspirators also provided medical referrals for transportation services to hundreds of Paid Patients, even though such transportation was not medically necessary. This practice generated more than $4 million in losses to Medicaid. In addition, VAID, MATHIEU, and ANTOINE provided referrals and prescriptions for medically unnecessary diagnostic tests, including MRIs, as well as prescriptions for medications such as expensive ointment compounds. The defendants and their co-conspirators then sent such medical referrals to specific medical testing companies, which in turn provided kickbacks to Aleksandr Burman.

In 2012, KATAEV and TSIRLIN became business partners of Aleksandr Burman, and operated as the managers of two of the Related Clinics. Their activity as managers included paying cash kickbacks directly to Paid Patients, and employing MATHIEU and ANTIONE to pose as the owners of the two clinics.

In or about March 2016, Aleksandr Burman pled guilty for his role in these offenses. He is scheduled to be sentenced on February 15, 2017, before the Honorable Paul G. Gardephe.

VAID, 43, of Brownstown Township, Michigan, MATHIEU, 51, of Morristown, New Jersey, ANTOINE, 66, of Valley Stream, New York, BURMAN, 54, of Manhattan, KATAEV, 48, of Staten Island, and TSIRLIN, 46, of Brooklyn, are all charged with: (1) conspiring to commit health care fraud, mail fraud, and wire fraud, which carries a maximum sentence of 20 years in prison; (2) the substantive offenses of mail fraud and wire fraud, each of which carries a maximum sentence of 20 years in prison; (3) the substantive offense of health care fraud, which carries a maximum sentence of 10 years in prison; and (4) conspiring to make false statements relating to a federal health care program, which carries a maximum penalty of five years in prison. BURMAN, KATAEV, and TSIRLIN are also charged with conspiring to violate the Anti-Kickback Statute, which has a maximum penalty of five years in prison.

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

 

Mr. Bharara praised the investigative work of the New York FBI’s Health Care Fraud Task Force.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney David Raymond Lewis is in charge of the prosecution.

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

 

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

Bronx Tax Preparer Sentenced To More Than 7 Years In Prison For Stealing Millions Of Dollars From The U.S. Treasury Using Fraudulent Tax Returns

Flor Soto Oversaw Massive Identity Theft Ring That Filed False Tax Returns Under Names Of Identity Theft Victims, Earning Over $24 Million

   Preet Bharara, the United States Attorney for the Southern District of New York, and Kathy A. Enstrom, Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigations (“IRS-CI”), announced that FLOR SOTO, an associate of K&S Tax Solution, Inc. (“K&S”), was sentenced today to 87 months in prison by the United States District Judge Kimba M. Wood. Soto had previously pled guilty to theft of public funds in connection with her participation in a lucrative scheme to file fraudulent and false tax returns, so as to receive tax refunds in the form of checks and wire transfers. Together with others at K&S, SOTO successfully stole over $24 million in tax refunds by submitting false tax returns using stolen identities, most of which had been stolen from residents of Puerto Rico. To date, 14 employees and associates of K&S, in addition to SOTO, have been convicted in connection with this scheme.

Manhattan U.S. Attorney Preet Bharara said: “Flor Soto and her co-defendants stole an astounding $24 million in tax refunds from the U.S. Treasury, using stolen identities to file false tax returns. Thanks to the hard work of the investigators at the IRS-CI and the prosecutors in this Office, 14 defendants charged with this audacious scheme have been held to account.”

IRS-CI Acting Special Agent in Charge Kathy A. Enstrom said: “Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers as well as defrauding the government and the American taxpayers. Individuals like Flor Soto who commit identity theft and refund fraud of this magnitude will be held accountable and deserve to be punished to the fullest extent of the law.”

According to the Superseding Indictment, other documents filed in Manhattan federal court, statements made at sentencing and related court proceedings, and as established at the trial of SOTO’s co-conspirator Eliana Sarmiento, who was convicted on September 23, 2016:

Between 2008 and February 2013, SOTO and others at K&S perpetuated a large-scale fraud upon the IRS and the United States Treasury, through the filing of fraudulent and false tax returns, so as to receive tax refunds in the form of checks and wire transfers. Certain employees and associates of K&S obtained electronic filing identification numbers, or EFINs, for the purpose of filing hundreds of electronic tax returns. Those EFINs were obtained under the names and Social Security Numbers (“SSNs”) of the victims of the defendants’ identity theft scheme. SOTO and her co-conspirators used those EFINs to file tax returns bearing the names and SSNs of still more victims of identity theft. Finally, SOTO and employees of K&S used the stolen identities of children as false “dependents” on the tax returns of certain clients of K&S. SOTO acted as a recruiter of other scheme participants and a primary source of stolen identities.

In these ways, SOTO and others at K&S obtained millions of dollars from the U.S. Treasury. To date, and based on a subset of EFINs associated with SOTO and her co-conspirators at K&S, the IRS has identified $281,348,627 in attempted fraudulent returns.

In addition to the prison sentence, SOTO, 53, of Brooklyn, New York, was sentenced to three years of supervised release. Judge Wood also ordered SOTO to forfeit $24,719,724 in ill-gotten gains.

Mr. Bharara praised the IRS-CI for its work in the investigation. Mr. Bharara also expressed his appreciation to the United States Secret Service for its assistance in the investigation.

A.G. Schneiderman Investigation Results In Return Of $22.5 Million In Fees Overcharged To 47,000 Citi Customers

Resolution of Schneiderman’s Investigation Means Citi Agrees To Fully Reimburse All Overcharged Customers, With Interest, And Pay $1 Million Penalty To NY State

Schneiderman: Citi’s Cooperation With Our Investigation, Including Identifying And Repaying Overcharged Customers With Interest, Sets An Example For Financial Institutions

   Attorney General Eric T. Schneiderman today announced the resolution of a four-year investigation of Citigroup Global Markets, Inc. (CGMI), a subsidiary of Citigroup, that revealed that CGMI had overcharged over 47,000 of its customers more than $22.5 million in fees.  After the Attorney General’s Office launched its investigation, CGMI revised its policies and procedures to address the fee overcharge issues uncovered in the investigation, and as a part of the agreement announced today, CGMI admits the findings of Attorney General Schneiderman’s investigation. 

In cooperation with the Attorney General’s investigation, in October 2014 CGMI began reimbursing its customers in full with interest, for the overcharged fees.  The agreement announced today also requires CGMI to report fee overcharge issues to the New York Attorney General’s office for the next three years and to pay a penalty of $1 million to the State of New York. 

“Our investigation put $22.5 million rightfully back in the hands of customers in New York and across the country,” said Attorney General Schneiderman. “We appreciate Citi’s cooperation with our investigation and its commitment to ensuring investors are paid back what they are owed – which sets an example for other financial institutions.”

The fee overcharges at issue in the investigation arose (1) when CGMI overcharged some of its customers more than the fees they had negotiated on their managed investment accounts, and (2) when CGMI overcharged customers by failing to rebate certain customers’ accounts after periods of inactivity when fees should not have been charged but were charged.  CGMI identified these overcharges as part of an internal review conducted in cooperation with the Attorney General’s investigation.

The Attorney General’s investigation of CGMI began in 2012 after a complaint from a Westchester resident led the Attorney General’s Office to investigate fee overcharge issues at CGMI. The investigation proceeded with CGMI’s cooperation, and will result in the repayment of more than $22.5 million in principal and interest for fees CGMI overcharged to more than 47,000 of its customers. The Attorney General oversaw CGMI’s review and remediation efforts.  As part of the agreement resolving the investigation, CGMI will provide the Investor Protection Bureau of the New York Attorney General’s Office, on a quarterly basis for the next three years, a detailed written report on overcharge errors that CGMI discovers in its United States-based advisory business.

As a result of the Attorney General’s investigation, CGMI initially identified more than 31,000 customers who were charged higher advisory fees than they negotiated on so-called “TRAK” accounts.  Customers with TRAK accounts typically pay a fee for advisory services ranging from 1% to 1.5%.  However, the fees were negotiable, and many customers were able to obtain a lower fee than the standard rate.  An inquiry into that process, though, determined that many customers were unaware that they were being charged higher-than-negotiated rates.  In an October 22, 2014 interim agreement between CGMI and the Attorney General, CGMI agreed to begin reimbursing its customers for those overcharges while the Attorney General’s Office continued to investigate.  CGMI overcharged the more than 31,000 TRAK customers a total of close to $17 million in principal and interest, which CGMI has now substantially repaid to affected customers.

As a part of the October 22, 2014 interim agreement, CGMI also agreed to continue to cooperate with the Attorney General’s investigation and to conduct a wider review of other types of CGMI investment accounts to ensure that other account holders who were overcharged fees would also be paid restitution.  As part of CGMI’s wider review, CGMI discovered it also overcharged another 948 non-TRAK accounts for similar issues and repaid affected customers more than $1 million in principal and interest.

Citi’s continued cooperation and its wider review of customer accounts also identified more than 15,000 additional Citi customer accounts that were overcharged fees during frozen periods—that is, when a CGMI customer’s account was frozen during a period of inactivity.  CGMI’s review revealed that thousands of customers who were overcharged fees during frozen periods were not allocated rebates they should have received, either because they did not request a rebate or because CGMI did not have policies and procedures in place to determine when rebates were appropriate.  As a result of the Attorney General’s investigation, CGMI will repay more than 15,000 customers for the frozen account fee overcharges a total of more than $4.6 million in principal and interest.

A copy of the agreement with CGMI can be found here.

A.G. Schneiderman Announces 89-Count Indictment Charging 10 Individuals With Involvement In A Heroin Trafficking Ring Throughout New York City

  Investigation Seized Over 600 Glassines Of Controlled Substances, Including Heroin Laced With Animal Tranquilizer

Schneiderman: Dangerous Drug Trafficking Rings Like What We Have Allegedly Uncovered During Operation Times Up Threaten The Safety And Stability Of Our Communities

  Attorney General Eric T. Schneiderman and New York City Police Commissioner James P. O'Neill announced the indictment of 10 individuals for their alleged involvement in a heroin distribution ring operating in Kings County, Queens County, and surrounding areas in New York State. The network allegedly illegally trafficked heroin which was cut with ketamine – an animal tranquilizer—as well as cocaine, on a daily basis to various parts of New York City.

Over the course of the investigation, which was led by the Attorney General's Organized Crime Task Force (OCTF) and the New York City Police Department’s Brooklyn North Gang Squad, authorities seized over 600 glassines of controlled substances, including heroin and ketamine. Dubbed “Operation Times Up” after investigators seized glassines containing heroin and ketamine which were proprietarily branded with the stamp “Times Up.” These stamps, according to investigators, were Christopher Quinones’ calling card, who was the leader of the multi-county heroin trafficking ring. The branding signaled to buyers that these drugs came from him. Wiretaps caught the defendants discussing their drug transactions in a cryptic and coded manner in the hope of avoiding detection by law enforcement, referring to heroin as donuts and cocaine as cookies. 

“Dangerous drug trafficking rings like what we have allegedly uncovered during Operation Times Up threaten the safety and stability of our communities. We won’t hesitate to crackdown and prosecute drug kingpins to the fullest extent of the law when they fuel the vicious cycle of addiction across New York State,” said Attorney General Schneiderman.

“Heroin is killing Americans at an alarming rate. The ten arrests made this morning on heroin-related charges in New York City is the precision policing that saves lives,” said NYPD Commissioner James P. O’Neill.  “I want to thank the NYPD detectives and the investigators from the Attorney General’s Office for their work that led to today’s arrests.”

The 89 count indictment, unsealed today in court, charged three individuals, Raphael Rodriguez, Saul Drullard, and Melvin Nieves, with Criminal Sale of a Controlled Substance in the Second Degree, a class A-II Felony, which carries a mandatory sentencing range of three to ten years determinate in state prison.  Additionally, all defendants were charged with counts of Criminal Sale and Criminal Possession of a Controlled Substance, class B felonies, which carries a mandatory sentencing range of one to nine years determinate in state prison, and with conspiracy in the Second Degree, also a class B felony. The central target in this conspiracy, Christopher Quinones, is facing 40 separate charges for Criminal Sale and Criminal Possession of a Controlled Substance charges.

This narcotics ring included 10 people charged with Conspiracy to commit Criminal Sale of a Controlled Substance in the Second Degree: 

• Christopher Quinones, of Brooklyn, New York
• Melvin Nieves, of Staten Island, New York
• Raphael Rodriguez, of Queens, New York
• Pablo Rodriguez, of Queens, New York
• Walter Quinones, of Brooklyn, New York
• Jose Perez, of Brooklyn, New York
• Johnny Gonzalez, of Brooklyn, New York
• Victor Beltran, of Brooklyn, New York
• Saul Drullard, of Queens, New York
• Brian Estevez, of Philadelphia, Pennsylvania

The investigation was conducted by OCTF Investigator Kyle Vitale-O’Sullivan, Supervising Investigator Brad Miller, Deputy Chief Investigator Christopher Vasta, together with NYPD Detective Michael Scoloveno, Sergeant Ryan Gillis, and members of the Brooklyn North Gang Squad unit, under the supervision of Captain Craig Edelman. The Investigations Bureau is led by Chief Investigator Dominick Zarrella.

The case is being prosecuted by OCTF Assistant Deputy Attorney General Caitlin Carroll. Deputy Attorney General Peri Alyse Kadanoff runs the Attorney General's Organized Crime Task Force.

The charges against the defendants are accusations and the defendants are presumed innocent until and unless proven guilty.