Investment Adviser Sentenced In Manhattan Federal Court For Insider Trading Scheme Involving Pharmaceutical Industry Stocks

   Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that DAVID HOBSON, a former investment adviser, was sentenced to six months in prison for engaging in a scheme to commit insider trading in connection with deals involving a pharmaceutical company (the “Pharma Company”) at which Michael Maciocio, HOBSON’s friend, client and co-conspirator, worked.  HOBSON pled guilty on October 25, 2016, to one count of conspiracy to commit securities fraud and one count of securities fraud before United States District Judge Laura T. Swain, who also imposed today’s sentence. 

Acting U.S. Attorney Joon H. Kim said:  “David Hobson used his relationship with a childhood friend to obtain inside information, and then traded on that information, making hundreds of thousands of dollars in illegal profits. The securities market must be free and fair for all, and our Office’s commitment to investigating and prosecuting insider trading remains firm.”      

According to the allegations contained in the Indictment filed against HOBSON and his co-conspirator and statements made in related court filings and proceedings:

From May 2008 through April 2014, HOBSON and Maciocio participated in a scheme to commit insider trading in advance of, and in connection with, acquisitions and transactions under consideration by the Pharma Company.  HOBSON and Maciocio were childhood friends and HOBSON had served as Maciocio’s investment adviser and broker for many years.

Maciocio learned about the impending transactions through his role as a master planner in the Active Pharmaceutical Ingredient Supply Chain Group at the Pharma Company.  In that role, Maciocio was tasked with evaluating manufacturing demands and capacity within the Pharma Company and was consulted about potential acquisitions to assist in determining whether the Pharma Company would be able to manufacture any new product in-house.  Although Maciocio was not typically provided with the names of the companies targeted for acquisition, he used the inside information he received – including the Pharma Company’s code names for the acquisitions, the drug indications, the dosages, the phases of any clinical trials, and the chemical structure of the drugs – to uncover the true identities of the target companies.  At times, HOBSON assisted Maciocio in determining the identities of these target companies based on the inside information Maciocio had obtained as part of his job.  

Having learned about these impending transactions, Maciocio, in breach of fiduciary duties and other duties of trust and confidence owed to the Pharma Company, traded on his own behalf and tipped HOBSON, so that HOBSON could use the information to trade for both himself and for Maciocio.  HOBSON also used the inside information to trade on behalf of some of his other investment advisory clients. 

HOBSON used the inside information that he received from Maciocio to make profitable trades in, among other securities:  Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc.  As a result of the scheme, HOBSON reaped approximately $165,000 in ill-gotten gains for himself, $40,000 for Maciocio, and nearly $150,000 for certain of HOBSON’s other clients.  

In addition to the term of imprisonment, HOBSON, 48, of Providence, Rhode Island, was sentenced to two years of supervised release and was ordered to forfeit $385,664.39.

Maciocio, 47, pled guilty to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of securities fraud on May 20, 2016.  His sentencing has not yet been scheduled. 

Mr. Kim praised the work of the Federal Bureau of Investigation, and thanked the U.S. Securities and Exchange Commission.

New York A.G. Schneiderman Leads Coalition Of States Opposing Pres. Trump’s Vehicle Emission Standards Roll Back

New York Will File Motion To Intervene In Lawsuit In Support Of Vehicle Emission Standards 

AGs: Reconsidering Standards Represents A Wrong Turn In Nation’s Efforts To Fight Air Pollution And Protect Public Health – And We Will Oppose It

New York Attorney General Eric T. Schneiderman led a coalition of states in expressing opposition to President Trump’s action that directs federal agencies to reconsider vehicle emission standards.

The coalition, which includes the attorneys general of New York, Maine, Maryland, Massachusetts, Oregon, Rhode Island, Vermont, and Washington D.C. and Washington State, as well as the Commonwealth of Pennsylvania’s Department of Environmental Protection, issued the following joint statement today:

 “President Trump’s action represents a dramatic wrong turn in our nation’s efforts to fight air pollution from passenger cars and trucks, and protect the health of our children, seniors, and all communities.

Weakening these commonsense standards would undermine successful efforts to combat the pollution emitted by vehicles - emissions that cause widespread, substantial harm to public health and are one of the largest sources of climate change pollution. An extensive technical study by the Environmental Protection Agency already found that the standards are fully and economically achievable by the auto industry. Relaxing them would increase the air pollution that is responsible for premature death, asthma, and more – particularly in our most vulnerable communities.  

We will vigorously oppose attempts by the Trump Administration to weaken our vehicle emission policies and put our public health at risk, and we won’t hesitate to stand up for the right of our states to adopt stricter pollution standards that provide critical protections to the health of our residents and our environmental resources.” 

New York Attorney General Schneiderman also announced that he will file a motion to intervene in support of the current vehicle emission standards in the U.S. Court of Appeals for the D.C. Circuit, where the Alliance of Automobile Manufacturers filed suit against the standards on Monday. Yesterday, California also moved to intervene in the case.

Because motor vehicles emit a variety of air pollutants harmful to human health and the environment and are a significant source of air pollution, Section 202 of the Clean Air Act requires EPA to establish national emission standards for new motor vehicles. Section 209 of the Act authorizes the State of California to adopt emission standards that are generally more stringent than the federal standards, and Section 177 of the Act authorizes other states to adopt those same standards for new motor vehicles sold within their states.

In 2012, EPA adopted emission standards limiting greenhouse gas emissions from new passenger cars and light-duty trucks for model years 2017-25 and beyond. California has adopted parallel vehicle emission standards limiting greenhouse gas emissions for those same model years, which New York and several other states have adopted as state law. The combined emission standards, together with harmonized emission standards for other pollutants that are on the books, are expected to result in substantial reductions in greenhouse gas emissions, dependency on foreign oil, and consumer fuel costs:

• Over the lifetimes of the vehicles sold during the 2017-2025 model years, the standards are expected to cut greenhouse gas emissions by two billion metric tons—the equivalent of the annual emissions of 422 million cars currently on the road—and save approximately four billion barrels of oil.

• Combined with the first phase of vehicle emission standards for greenhouse gases for model years 2012-16, the standards for the 2017-25 model year vehicles are projected to save families more than $1.7 trillion in fuel costs and reduce the country’s dependence on oil by more than 2 million barrels per day in 2025.

In January 2017, EPA determined, in its “midterm evaluation,” that the current federal standards applicable to cars and light duty trucks for model years 2022-25 are readily achievable by the auto industry. After an extensive technical review, based in significant part on information from industry, advocates, and other interested parties, EPA found that “automakers are well positioned to meet the standards at lower costs than previous estimated.” The agency concluded that, while the record supported making the standards even more stringent, it decided “to retain the current standards to provide regulatory certainty for the auto industry.” California is in the process of completing a midterm review for its parallel standards after participating in the federal process and conducting its own analysis of the feasibility of the standards.

The states issuing the joint statement have a longstanding history of working with California to adopt and enforce vehicle emission standards to combat air pollution. For example, several of the states successfully defended the first vehicle emission standards California issued to limit greenhouse gases from new motor vehicles in 2005. Subsequently, they joined California in successfully defending—in the D.C. Circuit Court of Appeals—EPA’s 2009 decision to grant California a waiver to adopt its greenhouse gas emission regulations. Several of the states also brought the landmark Massachusetts v. EPA case in which the Supreme Court held that EPA has the authority under the Clean Air Act to regulate greenhouse gas emissions from vehicles that endanger public health and welfare, and which subsequently enabled EPA’s determination that greenhouse gas emissions pose such a threat.       

A.G. Schneiderman Announces Take Down Of Massive Organized Theft Ring: “Operation Sticky Fingers”

Joint AG-NYSP Investigation Charges 12-Person Ring With Stealing Over $12 Million In High-End Electronics & Ink Cartridges From Staples, Office Depot, Best Buy In 28 States – And Reselling Merchandise On Amazon And eBay Marketplace

Operation Sticky Fingers Is One Of The Largest-Ever Busts Of A Retail Theft Ring; Crime Ring Members Face Up To 25 Years In Prison If Convicted

   Attorney General Eric T. Schneiderman today announced the indictment of 12 alleged members of a massive criminal theft and fencing ring that infiltrated New York and 27 other states across the country – marking one of the largest-ever busts of a retail theft ring. A 41-count indictment, unsealed in New York Supreme Court today, charged the 12 alleged co-conspirators with enterprise corruption, money laundering, criminal possession of stolen property and conspiracy. If convicted, each of the defendants face between 8 to 25 years behind bars.

During “Operation Sticky Fingers,” a ten-month investigation conducted by the Attorney General’s Organized Crime Task Force with support from the New York State Police, law enforcement seized more than 5,300 stolen electronics and ink cartridges from the enterprise’s alleged kingpin, Richard Rimbaugh; the enterprise’s alleged theft crew manager, George Athanasatos; and from various alleged members of the theft crews. In addition, investigators seized more than $7.7 million dollars from the defendants’ homes, financial institutions, and Amazon and PayPal merchant accounts.

Through electronic and physical surveillance, as well as analysis of financial records in conjunction with other investigative tools, the Attorney General’s investigation alleges that Rimbaugh has been directing theft crews and reselling stolen merchandise for over 20 years. The crews are charged with stealing millions of dollars in merchandise – including electronic goods and printer cartridges – from Staples, Office Depot, BestBuy, and other retailers across 28 states. Since 2012 alone, the ring has sold more than $12 million of stolen goods via Amazon and eBay internet marketplace. 

“As we allege, this brazen ring of criminals methodically stole millions from stores across 28 states – resulting in one of the largest-ever busts of a retail theft ring,” said Attorney General Schneiderman. “Retail theft is becoming increasingly organized, with crime rings preying on businesses and creating a vicious cycle that ultimately harms consumers, when the costs are passed on in the form of higher prices. But these thieves are now on notice: we won’t hesitate to pursue retail theft and prosecute these cases to the fullest extent of the law.”

State Police Superintendent George P. Beach II said, "Through this collaborative investigation, we have uncovered a highly organized, national theft operation that was responsible for stealing millions of dollars in merchandise, victimizing both retailers and the public. I want to commend the outstanding work of the State Police Special Investigation Unit and the Attorney General's Office for the hard work that led to the arrests in this case."

As alleged, Rimbaugh, known to members of the enterprise as the “General”, instructed several theft crews to steal specific printer ink cartridges, computer software, and other consumer retail electronics based on his ability to resell those stolen goods on Amazon and eBay.  Rimbaugh dictated the price that the theft crews would receive for the stolen merchandise, typically paying between 30-50% of the retail value. Rimbaugh then allegedly resold the stolen merchandise on the internet through his illegitimate business, American Media Soft, which he operated out of his Manhattan apartment. At this location, Rimbaugh received, sorted, catalogued, and shipped the stolen merchandise for resale. Rimbaugh also routinely met with theft crew members to pay them for the stolen merchandise; over the 20 years of the ring’s operation, he is accused of reinvesting approximately half of the proceeds into the criminal enterprise in the form of cash payments to the theft crews to pay for the merchandise they stole.

As further alleged, the investigation revealed that George Athanasatos, referred to by members of the enterprise as “Field Marshall,” reported directly to Rimbaugh and was the manager of three of the four theft crews that delivered stolen merchandise to Rimbaugh.  Athanasatos allegedly managed the day-to-day operations of these three theft crews and received a percentage of the total amount of money that Rimbaugh would pay the crew for their stolen merchandise. Rimbaugh and Athanasatos dispatched the three theft crews on missions to various regions across the country and remotely managed their progress during each undertaking, which took place on a weekly basis.

In addition to advising the shoplifters, Athanasatos allegedly provided the groups with coded maps detailing target retail locations, such as Staples, Office Depot, and BestBuy.  He is also accused of providing members of the theft crews with “booster” gear, such as custom-made vests known as “bazookas.” When worn underneath regular clothing, “bazookas” can conceal large amounts of merchandise while inside of the stores. When departing the stores, the crews allegedly used “kryptonite” devices to deactivate security alarms at store exits, as well as short-wave radios, which made it easier for the crews to eavesdrop on store security in order to warn one another about the presence of security or law enforcement.  Multiple anti-security devices, such as “kryptonite”, Alpha Keys, and Spider Wraps, were seized from Athanasatos’ residence during the execution of a search warrant.

Rimbaugh and Athanasatos’s alleged theft crews each consisted of two or three members, who each had specified roles: “Captain,” “Lieutenant,” or “Sergeant.”  The “Captain” served as the crew leader and was responsible for managing and directing the “Lieutenant” and the “Sergeant” while on a mission.  The crews systematically traveled across the country, at the direction of Rimbaugh and Athanasatos, who issued credit cards to the crews to cover expenses such as flights, car rentals, and hotels.

Prosecutors allege that the crews often executed a series of retail thefts on a daily basis and then shipped the stolen merchandise to Rimbaugh at his New York City apartment, where he prepared the merchandise for sale on Amazon and eBay. In fact, when the Attorney General’s office was executing its search warrant on Rimbaugh’s home, five packages of stolen merchandise arrived.

During the course of the investigation, OCTF investigators tracked the movements of the theft crews, monitored their shipments of stolen goods to Rimbaugh, and obtained numerous surveillance videos of the theft crews while stealing merchandise from retail stores across the country.

The indictment, unsealed before New York Supreme Court Justice Maxwell Wiley, charged the following individuals with enterprise corruption and other crimes in relation to their involvement in the organized retail theft and fencing enterprise. Each defendant, if convicted, faces between 8 and 25 years in prison.

Richard Rimbaugh, a/k/a “The General,” 64, Fence of the Enterprise, New York, NY

George Athanasatos, a/k/a “The Field Marshall,” 62, Manager, Brooklyn, NY                              

George Rapatsouleas, a/k/a “Skipper,” a/k/a “Nipplehead,” 31, Captain, Brooklyn, NY

Krissylee Harris, a/k/a “Princess,” 35, Lieutenant, Brooklyn, NY                                       

Nusret Srdanovic, a/k/a “Monte,” 23, Sergeant, Brooklyn, NY

Roger Ringhiser, a/k/a “Captain Rog”, 53, Captain, Long Beach, NY

Frank Albergo, 59, Lieutenant, Oviedo, FL

Kevin Cerrato, 22, Sergeant, Elmont, NY

Gregory Anastasiou, a/k/a “Captain Frank”, 38, Captain, East Stroudsburg, PA

Joseph Pooler, a/k/a “Baby Arm Johnson”, 41, Sergeant, Stroudsburg, PA

Robert Scarano, a/k/a “Reno”, 56, Captain, Las Vegas, NY

Giovanna Bonello, 28, Lieutenant, Staten Island, NY

Members of the criminal enterprise are set to be arraigned before New York Supreme Court Justice Maxwell Wiley beginning today.

This investigation also uncovered that Athanasatos was involved in an alleged welfare fraud conspiracy with Anna Candanedo, in which Athanasatos filed false documentation with the Nassau County Department of Social Services in order to facilitate Candanedo’s illicit receipt of housing benefits.  Athanasatos and Candanedo were named on a separate indictment in Nassau County for charges including forgery, possession of a forged instrument, offering a false instrument for filling, falsifying business records, larceny, welfare fraud, and conspiracy to commit those crimes. If convicted, each of the defendants faces up to 21 years behind bars. The indictment, unsealed before Nassau County Supreme Court Justice David Sullivan, charged the following individuals with the aforesaid crimes, in relation to their involvement in the welfare fraud conspiracy. The defendants are set to be arraigned before Nassau County Supreme Court Justice David Sullivan beginning today.

Anna Candanedo, 32, Elmont, NY

George Athanasatos, 62, Brooklyn, NY                              

The charges against the defendants are accusations and the defendants are presumed innocent until and unless proven guilty in a court of law.

Ridgewood Savings Bank and the Bronx Chamber of Commerce invite you to attend a Free Small Business Financial Workshop

Bronx H.I.R.E. Certification Event re-scheduled for March 23rd

STATEMENT FROM MAYOR DE BLASIO ON THE PASSAGE OF THE NYS ASSEMBLY’S ONE-HOUSE BUDGET

   "Speaker Heastie and the Assembly Democratic Conference have passed a one-house budget proposal that uplifts our fellow New Yorkers, protects the interests of New York City, and recognizes the fact that New York State succeeds when New York City succeeds and vice versa. We applaud several actions taken by the Assembly in critical areas like education, housing and homelessness. Increasing school aid and putting us back on a path to meet the Campaign for Fiscal Equity, extending mayoral control for seven years, including $500 million for critical repairs at NYCHA, keeping 25,000 seniors in their homes through enactment of our proposed mansion tax, and offering creative solutions to address homelessness with the Home Stability Support proposal are just a few examples of how the one-house budget helps New York City.  I look forward to continuing discussions with our state partners as the budget process progresses to ensure these and other City priorities are included in the enacted State budget."

EDITOR'S NOTE:

I can see now that this one house budget proposal supported by Mayor Bill de Blasio is doomed to fail. No not just because the mayor supports it while it has many very good items there are also bad ones. 

Does the mayor even know what the settlement of the CFE Lawsuit was, and just how much money not only New York City but other inner city school districts in the state were to receive as per the settlement?

The mayor has said it will take 'EIGHTEEN MILLION DOLLARS' to bring NYCHA houses up to par, but he applauds receiving only $500 Million Dollars in possible state aid which is sure to be cut by the State Senate and/or Governor.

The same goes for the Mansion Tax, and creative ways to address the HOMELESS PROBLEM in NYC. I can hear a message from a state senator upstate saying 'Why doesn't the mayor put the homeless in Gracie Mansion then'.

The best laugh of all has to be the assembly proposal to extend Mayoral Control of the public schools for seven years, when last year the state assembly proposed a three year extension and approved a one year extension of Mayoral Control. The best case scenario is for the State Senate and Governor to let Mayoral Control sunset, and come up with a real system of accountability for parents and taxpayers.

MAYOR’S OFFICE OF CRIMINAL JUSTICE, ANNOUNCE SUCCESSFUL ROLLOUT OF “JUSTICE-INVOLVED SUPPORTIVE HOUSING” PROGRAM STABILIZING INDIVIDUALS WHO FREQUENTLY CYCLE THROUGH JAIL AND SHELTER

Supportive housing projected to save $1.5 million per year in reducing jail, shelter and hospital use

Permanent supportive housing funded by asset forfeiture investment from Manhattan District Attorney Cyrus Vance Jr.’s Office

  The Mayor’s Office of Criminal Justice and the Department of Health and Mental Hygiene today announced that 97 individuals in New York City who most frequently cycled through jail on low-level charges, stayed in City shelters, and struggled with behavioral health needs have been connected to permanent supportive housing through a program called “Justice-Involved Supportive Housing.” This approach has been shown to reduce returns to jail by 38 percent and to save $16,000 per individual in annual jail, shelter, and emergency room costs.  

“Housing is one of the few proven tools we have to prevent returns to jail for those who struggle with behavioral health issues and chronic homelessness,” said Elizabeth Glazer, director of the Mayor’s Office of Criminal Justice. “For the population with serious mental health needs who have been shuttling between jail, hospitals and shelter for years, permanent housing paired with targeted services has been shown to stop the churn. This saves money, reserves jail for people who pose a public safety risk, and helps people who have been struggling to build productive, stable and healthy lives.”

“Stable, permanent housing is one of the keys to living a healthy life,” said Health Commissioner Dr. Mary T. Bassett. “Justice-Involved Supportive Housing’s great innovation is to use data already available to City government to pre-qualify people for supportive housing. This rapid placement process, paired with intense support services, has proven people with long histories of cycling through jail and shelter can succeed in permanent housing.”

In New York City, a relatively small number of people consume a disproportionate share of shelter, jail and emergency room resources. Justice-Involved Supportive Housing aims to stabilize this small population, who: 

·         Tend to face low-level charges: 90 percent of jail admissions for this population are on misdemeanor charges;

·         Cycle through jail repeatedly for short periods of time: The 97 people placed in supportive housing to date entered the City’s custody an average of 11 times each, and spent an average of 370 days in jail over a period of four years;

·         Have significant behavioral health needs: The 97 individuals placed to date have a high incidence of serious mental illness and 97 percent report extensive substance use;

·         Struggle with homelessness: The 97 people placed in supportive housing to date averaged 240 days in shelter over the last four years; and

·         Tend to be older than the average jail population: The 97 people who have been placed to date average 47-years-old. 

Permanent supportive housing for individuals who have a history of cycling through the criminal justice system is an evidence-driven model that has been shown to lead to:

·         Fewer returns to jail, with a 40 percent reduction in days spent in jail and a 38 percent reduction in jail admissions over two years;

·         Less shelter use, with a 90 percent reduction in both shelter admissions and days in shelter over two years; and

·         Improved health outcomes, with a 55 percent reduction in days in a psychiatric hospital over two years.

While housed, program participants receive continuous support from a case manager who is able to recommend and connect tenants to crisis interventions, financial management resources, public benefits, substance use counseling and treatment, medication management, and a range of other services for daily living skills. Supportive housing providers include the Fortune Society, CAMBA, and Urban Pathways.

Manhattan District Attorney Cyrus R. Vance, Jr., said: “Far too often we see the same individuals cycling through the revolving door of our courthouses, shelters, and hospitals. Investing in a safe space for this population to live and receive treatment makes us all safer. My Office is proud to be a member of the Task Force on Behavioral Health and the Criminal Justice System, and to have provided the $9 million in funding for supportive housing citywide from my Office’s Criminal Justice Investment Initiative.”

In order to ensure that available apartments in scattered sites across the City are effectively matched to the individuals with greatest need, the Mayor’s Office of Criminal Justice used an intensive and innovative data-match process to identify 400 individuals who have had at least five admissions to City jails and five admissions to City shelters within any four-year period, and who are likely living with behavioral health issues. Eighty percent of the beds funded under this program have already been filled, and the City is actively working to connect other eligible individuals to permanent homes.  

Justice-Involved Supportive Housing is a top priority of the Mayor’s Task Force on Behavioral Health and the Criminal Justice System, a $130 million commitment to reducing the number of people with behavioral health needs cycling through the criminal justice system. Despite dramatic declines in both crime and the use of jail in New York City over the last twenty years, the percentage of the jail population with behavioral health needs stayed largely constant, comprising a larger and larger proportion of the overall jail population. Since the Task Force was launched, the jail population with behavioral health needs has fallen 5% after increasing for 20 years.

Bronx Borough President Ruben Diaz Jr. - Public Hearings: Gifted & Talented Task Force