NEW YORK – Attorney General Eric T. Schneiderman today announced that two defendants, charged in connection with the three-county takedown, “Operation Angry Birds,” have been sentenced to nine months incarceration. Manuel and Moises Cruz both received sentences of nine months jail, a $1,500 dollar fine and were required to sign an Animal Non Possess Order which indicates that they may not possess any animals nor work, live, or stay in any place where a live animal is kept. “Operation Angry Birds” resulted in the dismantling of the largest known cockfighting ring in New York history, reaching from Ulster County to Brooklyn and Queens, and one of the biggest in the country. Moises Cruz, 71, and farm manager Manuel Cruz, 60, pleaded guilty to the top count felony of violating New York Agriculture and Markets Law, Prohibition of Animal Fighting. The men are among ten defendants who have pleaded guilty in the case. They were sentenced by Ulster County Court Judge Donald A. Williams.

“Cockfighting is a cruel, abusive and barbaric practice. It tortures animals, endangers the health and safety of our communities and is known to facilitate other crimes,” Attorney General Schneiderman said. “We are holding accountable those who raised animals for illegal sport, operated illegal gambling venues and trafficked fighting animals to New York City. My office, along with our partners in law enforcement and animal welfare, are committed to ending this vicious blood sport in New York.”

The two men were arrested in February when Attorney General investigators, officers from the Ulster County Sheriff’s Office, the State Police and other local law enforcement, raided a 90-acre farm at 230 Plattekill Ardonia Road, in Plattekill, operated by the men. Manuel Cruz and his nephew, Jesus Cruz Mendez, 37, were two of approximately 70 arrests made in the three counties in two days. Moises Cruz was later apprehended in Florida.

Hours before the Upstate arrests, dozens of people were initially detained after a raid at a Queens cockfighting event. Seven of them were charged with felony Prohibition of Animal Fighting. They pleaded guilty in April.

They are:

• Elisandy Gonzalez, 45, of Brooklyn
• Orlando Bautista, 52, of Queens 
• Noel Castillo, 67, of Brooklyn 
• Edward Medina, 42, of the Bronx 
• Francisco Suriel, 45, of Brooklyn 
• Jeremias Nieves, 75, of Brooklyn
• Samuel Rodriguez, 46, of Bay Shore, New York

The American Society for the Prevention of Cruelty to Animals® recovered almost 4,000 birds at the farm, which was previously registered as a commercial farm under the name CMC Plattikil, Inc., but had then been unregistered since 2010. The farm had operated under the guise of a live poultry farm and its owners hid thousands of makeshift cages within the center of the property to avoid detection by neighbors and law enforcement. Significantly, well over half of all the chickens seized were roosters, a statistic which is completely inconsistent with the operation of a legal poultry farm. Roosters and chickens were found to be boarded in deplorable conditions. The owner charged rent to board, feed, and care for roosters that were bred and trained for fighting, with blood sport enthusiasts and rooster owners from NYC, Long Island, New Jersey, Pennsylvania, Connecticut, and Massachusetts boarding, training and sometimes fighting their roosters there. For years, roosters bred and trained at this farm were transported to cockfighting events throughout the region and specifically to the event raided on February 8 in Queens County. The investigation revealed that roosters were also transported to the Brooklyn pet shop that was raided as well.

The Attorney General’s OCTF unit was assisted with the investigation by the ASPCA®, which offered its expertise in evidence collection as well as removal and sheltering of the seized animals, the Ulster County Sheriff’s office, which provided physical surveillance, and the Department of Homeland Security (HSI), which provided local aerial surveillance. The New York State Police also assisted with the raids.

Arrests in the case came as investigators raided the cockfighting event at 74-26 Jamaica Avenue in Queens on February 8. While the 70-person event, including bettors and spectators, was busted up, six individuals who had brought and fought birds were charged. The others were released. The ASPCA took control of 65 fighting birds. The ring had been operating bimonthly events there since at least May 2013, when OCTF first began monitoring cockfighting at this location. At the same time, OCTF investigators executed a search warrant upon Pet NV, a pet shop owned by Jeremias Nieves, located at 71 Central Avenue in Brooklyn. Dozens of fighting birds were removed from a basement beneath the pet shop. The roosters, found in poor condition, had been kept inside individual metal cages and exhibited all the physical hallmarks of having been bred, trained, and altered for fighting.

Cockfighting contraband and implements were found within the basement, including artificial spurs, candle wax, medical adhesive tape, syringes used to inject performance-enhancing drugs to strengthen the roosters’ fighting ability and other cockfighting implements and paraphernalia. The farm was raided the following morning. The two Cruzes were arrested and the roosters were seized. These roosters were bred, trained, plied with performance-enhancing drugs, had razor-sharp gaffs attached in place of their natural spurs and were locked in a small pen to be wagered upon. The ASPCA®'s Field Investigations and Response team was on hand to remove the animals, and identify and document forensic evidence.

Cockfighting is a crime in all 50 states. In New York, cockfighting and possession of a fighting bird at a cockfighting location are felonies. In May 2013, the Attorney General announced his Animal Protection Initiative, which included the goal of shutting down underground animal fighting rings across the state. New Yorkers seeking to give anonymous tips about potential animal fighting rings or report animal abuse should call 1-866-697-3444 and alert their local authorities. For more information on Attorney General Schneiderman’s Animal Protection Initiative, visit www.ag.ny.gov/animals.

The Attorney General thanks the ASPCA®, the Ulster County Sheriff’s Office, the New York State Police and HSI.

This case was investigated by OCTF Senior Investigator Jose Rojas, with Deputy Chief Christopher Vasta and Chief Dominick Zarrella. The case was prosecuted by OCTF Assistant Deputy Attorney General Diego Hernandez and OCTF Deputy Attorney General Peri Alyse Kadanoff. The Executive Deputy Attorney General for Criminal Justice is Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced that Mental Health Association of Rockland County, Inc. agreed to pay $304,000 to resolve claims that its managers and employees altered records in advance of a Medicaid audit. In a settlement agreement, MHA Rockland admitted that handwritten changes to records were made prior to the audit so that the records would appear to support claims that were submitted by MHA Rockland to New York State's Medicaid program.

“Audits are an important tool in protecting Medicaid funds that should be used to provide health care to millions of New Yorkers,” Attorney General Schneiderman said. “Any attempt to undermine those audits and our Medicaid program will be investigated aggressively by my office.”

MHA Rockland provides a variety of outpatient mental health services to children and adults in Rockland County. In October 2009, the Office of the Medicaid Inspector General (OMIG) began an audit of MHA Rockland's Continuing Day Treatment program for adults. Prior to the audit, OMIG asked MHA Rockland to collect certain records relating to the program, such as progress notes that purported to document the number of hours patients spent in the program each day. Instead of simply collecting the documents, MHA Rockland managers and employees compared the progress notes to claims MHA Rockland submitted to the Medicaid program and then altered the progress notes so that they would appear to support the claims.

In the days preceding the October 2009 OMIG audit, MHA Rockland managers and employees made over 40 handwritten changes to the progress notes. In some instances, hours were added for days for which there previously had been no entry and, in other instances, handwritten entries of "2" hours were changed to "5" hours. After making the changes, MHA Rockland provided the altered progress notes to OMIG auditors. The unaltered progress notes were originally completed between 2003 and 2008.

Under the New York State False Claims Act, the State can recover penalties relating to the creation or use of false records in connection Medicaid claims. The New York State False Claims Act provides for penalties of between $6,000 and $12,000 for each false record. About $250,000 of the $304,000 settlement announced today is to resolve claims for penalties under the New York State and federal False Claims Acts. The remainder of the settlement resolves claims relating to MHA Rockland's failure to have progress notes or treatment plans for certain Continuing Day Treatment program participants in violation of Medicaid program regulations.

The Attorney General would like to thank the Office of the Medicaid Inspector General for its assistance in this case. OMIG is an independent entity created within the New York State Department of Health, which administers New York's Medicaid program. The United States Attorney's Office for the Southern District of New York also assisted with the investigation.

The Attorney General's investigation was prompted by the filing of a whistleblower lawsuit by two former MHA Rockland employees, who will receive a portion of the settlement. The lawsuit is captioned, U.S., State of New York, ex. rel. Dale v. Mental Health Association of Rockland County, Inc., No. 12 Civ. 0468 (KMK).

The case was investigated by Special Assistant Attorneys General Christopher Y. Miller and Susan Bloom of the Medicaid Fraud Control Unit, Special Investigators Kenneth Deis and Lisa McDonald, Senior Special Investigator Frank DiChiaro, Associate Special Auditor Investigator Melissa Stoebling, Auditor Investigator Nevena Ilcheva, and Principal Special Auditor Investigator Jean Moss. The matter was assisted by Supervising Investigator Peter Markiewicz, Chief of Downstate Investigations Kenneth Morgan, and Assistant Chief Auditor Investigator John Regan. The Attorney General’s Medicaid Fraud Control Unit is led by Acting Director Amy Held and is within the Division of Criminal Justice, which is led by Executive Deputy Attorney General Kelly Donovan.

A copy of the settlement can be read here.

NEW YORK –Attorney General Eric T. Schneiderman and State Comptroller Thomas P. DiNapoli today announced that Joseph Ross, the former insurance broker for the Metropolitan Council on Jewish Poverty (“Met Council”), has been sentenced to 18 months in jail. Ross also paid $534,000 in restitution to Met Council and agreed to a judgment against him in the amount of $956,000 in favor of Met Council. The joint investigation revealed that Ross, together with former Met Council CEO William Rapfogel and other co-conspirators, stole approximately $9 million from the taxpayer-funded nonprofit organization as part of a 20-year grand larceny and kickback scheme. Ross personally stole $1.5 million from Met Council.

“If you rip off the neediest New Yorkers by stealing from the charities that provide them with vital services, you will face jail time. That applies to all New Yorkers, including the rich or powerful,” said Attorney General Schneiderman. “We have brought charges against more than 60 public officials and their cronies for abusing state funds, and with through my partnership Comptroller DiNapoli, we will continue to pursue anyone who violates the public’s trust.”

"This callous and heartless scheme enriched the defendants at the expense of New Yorkers in need,” said Comptroller DiNapoli. “Mr. Ross’ sentence serves as a warning to other potential scammers that we will investigate and prosecute public corruption. I thank Attorney General Schneiderman and his staff for partnering with us to recover millions of dollars in funds stolen from vulnerable New Yorkers.

Ross previously pled guilty to Grand Larceny in the Third Degree (a class D felony), Money Laundering in the Third Degree (a class D felony) and Criminal Tax Fraud in the Third Degree (a class D felony). As part of his guilty plea, Ross admitted that from 1992 to 2013, he conspired with co-defendants William Rapfogel, David Cohen and others to steal from Met Council through an elaborate kickback scheme.

Ross was the principal of the now defunct Century Coverage Corporation, an insurance company that serviced Met Council from 1992 to 2013. Met Council is a New York State not-for-profit organization that provides the poor and elderly in the New York City area with social, economic, housing, food and emergency financial assistance. Met Council receives funding through New York State and New York City grants, legislative member items and contracts.

The conspiracy began in 1992, when Ross devised a scheme with David Cohen, the executive director of Met Council, in which Century Coverage Corporation would submit inflated invoices for insurance coverage to the nonprofit. Met Council knowingly paid the inflated premiums, and then Ross gave cash kickbacks to Cohen and Herb Friedman, Met Council's former chief financial officer.

In 1993, William Rapfogel took over as the head of Met Council, and Cohen served as a consultant to the nonprofit. About six months after Rapfogel took over as Met Council executive director, he joined the conspiracy and began receiving kickbacks, either in envelopes of cash or through payments of personal expenses. Initially, Ross paid both Rapfogel and Cohen $20,000 to $30,000 annually, but the inflated amount on the insurance policies increased over time and so did the kickbacks, with Rapfogel ultimately receiving approximately $30,000 per month.

In July 2014, William Rapfogel was convicted and sentenced to 3 1/3 to 10 years in prison, and ordered to pay $3 million in restitution to Met Council. Herb Friedman was convicted and sentenced to four months in jail, and ordered to pay $775,000 in restitution to Met Council. In February 2015, Solomon Ross and William Lieber, former insurance brokers for Met Council, were each sentenced to five years of probation and $1.5 million in restitution.

This conviction and sentence are the results of an ongoing investigation by the Attorney General’s Office in conjunction with New York State Comptroller DiNapoli, as part of the Joint Task Force on Public Integrity. Attorney General Schneiderman and Comptroller DiNapoli would like to thank the New York City Department of Investigation, the New York State Department of Financial Services and the New York State Department of Taxation and Finance for their assistance with the investigation.

Supervising Investigator Gerard Matheson from the Attorney General’s office is the lead investigator assigned to this case. The Investigations Bureau is led by Chief Investigator Dominick Zarella. Also assisting in the investigation are Supervising Auditor Edward J. Keegan, Associate Auditor Matthew Croghan, Supervising Analyst Paul Strocko of the Criminal Enforcement and Financial Crimes Bureau, and Legal Support Analyst KerryAnn Rodriguez of the Public Integrity Bureau. The joint investigation was conducted with the Comptroller’s Division of Investigations. This case is being prosecuted by Gary T. Fishman, Chief of the Criminal Enforcement and Financial Crimes Bureau, with Assistant Attorney General Jihee Suh of the Public Integrity Bureau. The Attorney General's Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

Anyone with additional information on this or any other public corruption matter is encouraged to contact the Attorney General’s Office at 1-800-996-4630 or the Comptroller’s Office at 1-888-672-4555; file a complaint online at investigations@osc.state.ny.us; or mail a complaint to: Office of the State Comptroller of Investigations Unit, 110 State Street, 14th floor, Albany, NY 12236.

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with the nation’s three leading national credit reporting agencies, Experian Information Solutions, Inc., (“Experian”), Equifax Information Services, LLC (“Equifax”), and TransUnion LLC (“TransUnion”). The agreement means the companies will improve credit report accuracy; increase the fairness and efficacy of the procedures for resolving consumer disputes of credit report errors; and protect consumers from unfair harm to their credit histories due to medical debt. All three credit reporting agencies worked cooperatively with the office to develop these critical reforms.

“Credit reports touch every part of our lives. They affect whether we can obtain a credit card, take out a college loan, rent an apartment, or buy a car – and sometimes even whether we can get jobs,” Attorney General Schneiderman said. “The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country. I thank the three agencies for working with us to help consumers.”

"Debt collection is consistently one of our top complaints, with collection of debts not owed being the number one reason New Yorkers contact us," said NYC Department of Consumer Affairs Commissioner Julie Menin."Mistakes like these, illegal payday loans and other information like medical debt end up on credit reports where they can misrepresent a consumer's creditworthiness. The agreement by Attorney General Schneiderman with the three credit reporting companies is no small feat and I applaud him for ambitiously requiring these institutional agencies to make it easier to obtain and repair one's report."

“Today marks a major victory for New York consumers; it has been widely reported over the last few years that there are gross inaccuracies that can be found on the average consumer’s credit report,” said Assemblyman Jeffrey Dinowitz.“Our system puts great faith in the credit reporting agencies to serve as the de facto watch dogs of the credit market in this country and in New York State. To put it simply, the current system was failing. As Chairman of the Assembly Standing Committee on Consumer Affairs and Protection I held a hearing on the inaccuracy of credit reports in 2013 and what we found was a system that ignored errors and made it practically impossible for a consumer to repair their credit without undue hardships. This settlement should help to restore consumers’ faith in the credit reporting system and will hopefully make repairing erroneous marks on their report that much simpler. I applaud Attorney General Schneiderman for his action on this issue.”

“Problems with credit reports routinely block people’s access to housing and jobs, particularly low income people and people of color," said Susan Shin, Senior Staff Attorney at New Economy Project."The practices of the big three credit reporting agencies have an outsized impact on the lives of hundreds of millions of people. We applaud Attorney General Schneiderman for his leadership in challenging fundamental inequities in the credit reporting system."

"This agreement addresses some of the most egregious problems in credit reporting that consumer advocates have complained about for many years," said Chi Chi Wu, National Consumer Law Center staff attorney. "We commend Attorney General Schneiderman and his staff for getting these changes, which should benefit consumers enormously."

Experian, Equifax, and TransUnion are credit reporting agencies (“CRAs”) that maintain consumer credit information on approximately 200 million consumers. The credit information is compiled by the CRAs via voluntary submissions from “data furnishers” such as banks and collection agencies. The CRAs provide credit reports to companies who then use the reports to assess consumers’ credit-worthiness. Creditors use credit reports to assign numerical ratings, called “credit scores” that are used in determining whether to grant credit and in determining the cost of credit.

Credit report errors may arise as a result of identity theft or fraud, or through the CRAs’ process of matching information provided by furnishers to individual consumer’s credit files. For example, when consumers have similar names and share other identifying information, some or all of the credit information of one consumer can become “mixed” into the file of another consumer.

A 2012 study by the Federal Trade Commission found that 26% of study participants identified at least one potentially material error in their credit reports, and that 13% of study participants experienced a change for the better in their credit score as a result of modification to their credit report after a dispute to a credit reporting agency. These findings suggest that millions of consumers have material errors on their credit reports.

The Attorney General’s settlement requires the CRAs to institute a number of reforms to increase protections for consumers, over a three year period. Many of those reforms will be instituted nationwide:

1. Improving the Dispute Resolution Process

Consumers have the right to challenge inaccurate information in their credit report by initiating a “dispute” with a CRA. Attorney General Schneiderman’s investigation of the CRAs revealed that in some cases, the CRAs use a fully-automated process in which they reduce consumers’ disputes to a three-digit code and submit the code and any documentation to the creditor. If the creditor verifies the challenged information, the CRA rejects the consumer’s dispute without conducting any further investigation.

The agreement requires that the CRAs employ specially trained employees to review all supporting documentation submitted by consumers for all disputes involving mixed files, fraud or identity theft. The agreement also requires that, for all categories of disputes, when a creditor verifies a disputed credit item through the automated dispute resolution system, the CRA will not automatically reject the consumer’s dispute, but rather, a CRA employee with discretion to resolve the dispute must review the supporting documentation.

2. Medical Debt

Over half of all collection items on credit reports are medical debts. Medical debts often
result from insurance-coverage delays or disputes. As a result, medical debt may not accurately reflect consumers’ creditworthiness.

Pursuant to the Attorney General’s agreement, the CRAs will institute a 180-day waiting period before medical debt will be reported on a consumer’s credit report. This waiting period will provide extra time to permit resolution of delinquencies that result from insurance delays or disputes. In addition, while delinquencies ordinarily remain on credit reports even after a debt has been paid, the CRAs will remove all medical debts from a consumer’s credit report after the debt is paid by insurance.

3. Increasing the Visibility of AnnualCreditReport.com

Many consumers are not aware that they are legally entitled to one free annual credit report from each CRA via AnnualCreditReport.com. Consumers searching for a credit report online frequently find a CRA’s website, and many consumers subscribe to a CRA credit monitoring service to obtain a credit report or purchase a credit report from the CRA without understanding that they can obtain a free credit report. The agreement requires the CRAs to include a prominently-labeled hyperlink to the AnnualCreditReport.com website on the CRAs’ homepages. The hyperlink must appear directly on the CRAs’ homepages or via a drop-down menu visible on the homepages.

4. Additional Free Annual Credit Report

Consumers have a statutory right to obtain one free credit report per year from each CRA. The Attorney General’s agreement requires the CRAs to provide a second free credit report to consumers who experience a change in their credit report as a result of initiating a dispute. This requirement will permit consumers to verify that the CRA made the correction to their credit report without have to pay for a second credit report.

5. Payday Loan Debt

Predatory high-interest loans made in violation of New York lending laws are often referred to as “payday loans.” New Yorkers who take these loans often have trouble paying them back, damaging their credit, and making it more difficult to obtain a credit card, get a job, or even rent an apartment. The Attorney General’s agreement prohibits the CRAs from including debts from lenders who have been identified by the Attorney General as operating in violation of New York lending laws on New York consumers’ credit reports.

6. Furnisher Monitoring

Companies that provide consumer data to the CRAs (“furnishers”) must investigate consumers’ disputes and report their findings to the CRAs. The Attorney General’s agreement requires the three CRAs to create a National Credit Reporting Working Group (“Working Group”) that will develop a set of best practices and policies to enhance the CRAs’ furnisher monitoring and data accuracy. The Working Group will develop metrics for analyzing furnisher data, including: the number of disputes related to particular furnishers or categories of furnishers; furnishers’ rate of response to disputes; and dispute outcomes. Each CRA will implement policies to monitor furnishers’ performance and take corrective action against furnishers that fail to comply with their obligations.

7. Media Campaign About Consumers’ Rights

To ensure that consumers understand their rights, the Attorney General’s agreement requires the CRAs to carry out an extensive consumer education campaign in New York via public service announcements and paid placements on television, radio, print media, and online. The campaign will be carried out over three years and will focus on consumers’ rights to: (a) obtain a free annual credit report; (b) dispute errors in their credit reports; and (c) submit documents in support of disputes. The agreement also requires the CRAs to expand the consumer education materials available on AnnualCreditReport.com, the website that consumers can use to obtain their free annual credit report.

All three credit reporting agencies cooperated in the Attorney General’s investigation and demonstrated a strong commitment to reforming practices to increase protections for consumers.

Tips for Consumers:

• You can get a free credit report from each of the CRAs once each year.
• To get your free report, visit www.AnnualCreditReport.com or call (877)-322-8228.
• You can request all three credit reports at the same time, or you can request the reports separately. Spreading out the reports permits you to monitor your credit over the course of the year.
• It is important to review your credit report regularly in order to check for errors.
• If you find an error, you have the right to dispute the error with the CRA and with the company that provided the information.
• You have the right to submit copies of documents that support your dispute. You may submit such documents to the CRAs online via the CRAs’ websites.
• Watch out for websites that claim to offer “free” credit reports, but require you to subscribe to their fee-based services in order to obtain the credit report.

New York City residents who need help understanding their credit report or improving their credit score, should call 311 to find their nearest Financial Empowerment Center for free financial counseling.

This case was handled by Special Counsel Carolyn Fast, Assistant Attorney General Melissa O’Neill and Bureau Chief Jane M. Azia, all of the Consumer Frauds Bureau, and Executive Deputy Attorney General Karla G. Sanchez.

NEW YORK -- Attorney General Eric T. Schneiderman today announced the formation of a coalition of state attorneys general from Connecticut, Indiana and Puerto Rico to further investigate the business practices of the herbal supplement industry. This multistate partnership brings together top law enforcement officers representing nearly 30 million Americans as they seek to ensure that herbal supplement manufacturers and retailers comply with the law. The initiative seeks to enhance transparency and ensure that the herbal supplements industry is taking the steps necessary to validate their marketing claims, including as to authenticity and purity.

The coalition’s formation follows a recent analysis commissioned by the New York State Attorney General’s Office that found contaminants, unlabeled plant species, and other substances in certain store brand herbal supplements. Many of the supplements, moreover, had either been so thoroughly processed that the genetic material of the original plant source was undetectable or not present at all. The office has sought documentation from the retailers as well as from several major manufacturers of supplements, as part of an ongoing investigation.

“I am pleased to announce this historic partnership to protect the millions of people who buy herbal supplements from potentially false and misleading business practices,” said Attorney General Schneiderman. “New Yorkers and consumers nationwide deserve confidence that when an herbal supplement is represented as authentic, pure, and natural, it really is. Clearly, the questions we raised about the herbal supplements sold in New York resonate outside of our borders. By joining together, and building on the long track record of state attorneys general upholding the rights of consumers, we can go further in investigating this industry and, as needed, in achieving reform. I look forward to collaborating with these partners on this vital work.”

"Consumers are entitled to expect that the product they are purchasing actually contains the ingredients as listed on the label,” said Connecticut Attorney General George Jepsen. “The findings uncovered by Attorney General Schneiderman raise serious public health and consumer protection concerns potentially impacting consumers in Connecticut and across the country. As attorneys general have shown time and time again in recent years, we have a strong and unique ability to work together on behalf of our respective constituencies on issues of national concern. I thank Attorney General Schneiderman for his leadership, and look forward to partnering with him and my fellow attorneys general on this coalition."

“The significant issues recently raised about herbal supplements are a concern that must be taken seriously so as not to further jeopardize the health and safety of people ingesting these products,” Indiana Attorney General Greg Zoeller said. “As state consumer protection advocates, my fellow attorneys general and I are focused on efforts to eliminate misleading and deceptive labeling for the benefit of consumers.”

"The accuracy in the information that a label offers to consumers is sacred,” said Nery Adames Soto, the secretary of the Department of Consumers Affairs in Puerto Rico.“When is not up to par with standards, it induces the consumer to error and violates the trust between the commerce and the client. At DACO we will be rigorous demanding that the labeling reciprocates the product contents. We are grateful to the New York State Attorney General’s Office for this coordinated effort and look forward to work together in this front."

A 2013 study from the Canadian Institutes of Health Research estimated there are about 65,000 dietary supplements on the market consumed by more than 150 million Americans. Medicinal herbs comprise the most rapidly growing sector of the North American alternative medicine market. The Natural Products Foundation estimates that the dietary supplement industry contributes $61 billion dollars to the national economy.

The U.S. Food and Drug Administration requires companies to verify that their products are safe and properly labeled for their contents, but unlike drugs, supplements do not undergo the agency's rigorous evaluation process, which scrutinizes everything about the drug—from the design of clinical trials to the severity of side effects to the conditions under which the drug is manufactured.

More than half of FDA Class I drug recalls between 2004 and 2012 were for “dietary supplements.” Class I recalls are reserved only for products whose use poses a high risk of “serious adverse health consequences or death.” One of the most dramatic examples of harm caused by use of supplements involved ephedra-containing herbal weight loss products, which caused hundreds of deaths before ephedra was banned from the market in 2004.

Mislabeled supplements ingested by the public may pose a significant danger to those who have food allergies or take medication. If the producers of herbal supplements fail to identify all the ingredients on a product’s label, a consumer with food allergies, or who is taking medication for an unrelated illness, is taking a potentially serious health risk every time a contaminated herbal supplement is ingested.

UTICA – Attorney General Eric T. Schneiderman and Inspector General Catherine Leahy Scott today announced the guilty plea of Jonathan Bronson, 39, of Westernville, NY, for having engaged in a lengthy scheme to defraud numerous medical care providers from August 1, 2010, through February 11, 2015. Mr. Bronson pleaded guilty to one count of Scheme to Defraud in the First Degree, a Class E felony, for which he has been promised a sentence of six months of incarceration and five years of probation.

Mr. Bronson pleaded guilty after an investigation revealed an ongoing scheme in which Mr. Bronson was treated by physicians at emergency rooms, sometimes several times per week. According to documents filed in court, while being treated, Mr. Bronson complained of pain and demanded that Dilaudid be provided to him intravenously, engaged in drug-seeking behavior according to emergency room physicians and staff, and would leave the respective hospitals when defendant learned that he would not receive Dilaudid.

“My office is committed to ensuring that there is one set of rules for everyone,” Attorney General Schneiderman said. “Mr. Bronson’s conviction sends the message that those who flagrantly abuse the insurance system and take advantage of health care providers will be prosecuted to the fullest extent.”

Mr. Bronson was insured by United Healthcare Insurance Company of New York (United) in connection with the New York State Health Insurance Program. As a result of Mr. Bronson’s frequent hospital visits, United issued checks to Mr. Bronson’s wife totaling approximately $201,335, which were then deposited into various bank accounts controlled by Mr. Bronson. The checks from United were for the portions of the various medical bills that United agreed to pay relating to Mr. Bronson’s frequent hospital visits. It was the responsibility of Mr. Bronson to remit the total payment to the health care provider. However, Mr. Bronson admitted that he kept the funds provided by United and failed to pay any of the bills relating to his hospital treatment.

“Over an extended period of time, my investigation found this individual collected hundreds of thousands of dollars from the state health insurance plan for emergency room care, and rather than pay the health providers as he was required to do, he kept the money for himself,” said Inspector General Scott.“I am pleased that our investigation has resulted in meaningful accountability for his misdeeds.”

The investigation was handled by Investigator Dennis Tomasone. The Attorney General’s Investigations Bureau is led by Deputy Bureau Chief Antoine Karam and Bureau Chief Dominick Zarrella.

The case is being handled by Assistant Attorney General Andrew L. Weinstein, of the Public Integrity Bureau, with the assistance of Legal Support Analyst Morgan McCollum. The Public Integrity Bureau is led by Deputy Bureau Chief Stacy Aronowitz and Bureau Chief Daniel Cort. Attorney General’s Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

The joint investigation was conducted with the New York State Inspector General’s Office and the New York State Department of Taxation and Finance.

NEW YORK – Attorney General Eric T. Schneiderman today announced an agreement with EmblemHealth, Inc., requiring Emblem to cover anesthesiology services provided in connection with an in-network preventive colonoscopy, without any cost-sharing by the member. Emblem has also issued refunds to hundreds of Emblem members who paid a copayment, coinsurance, or deductible for such anesthesiology services.

An important provision of the Patient Protection and Affordable Care Act (“Affordable Care Act”) is the requirement that health plans cover recommended preventive services without member cost-sharing. Preventive services can improve health and save money by identifying health issues before they become complex and costly to manage. In order to encourage more individuals to seek these services, the Affordable Care Act requires free access to certain preventive services, without any cost-sharing requirements such as copayments, coinsurance and deductibles. One of these preventive services is in-network preventive colonoscopies.

“Preventative screening procedures are critical to improving the health of New Yorkers, and today’s agreement will help ensure that more people are getting important life-saving care,” said Attorney General Schneiderman. “My office will continue to verify that health insurance companies are following the law so that we can avoid the needless patient suffering and high-cost care involved with advanced illnesses.”

Because colonoscopies necessitate the administration of anesthesia, anesthesia services provided in connection with preventive colonoscopies should likewise be covered without member cost-sharing. In the past, only certain Emblem plans were structured to adhere to this principle, but even those plans failed to remove cost-sharing obligations for such anesthesia services. Now, Emblem has agreed to cover in full – without copayment, coinsurance, or deductible – all claims for anesthesiology services provided in connection with an Affordable Care Act-mandated in-network preventive colonoscopy.

As part of the agreement, Emblem has also sent reimbursement checks to members of certain Emblem plans whose claims for anesthesia performed in connection with an in-network preventive colonoscopy were processed subject to member cost-sharing. Reimbursements total close to $400,000. In addition, the agreement provides that Emblem will train its employees, and pay a penalty.

This settlement is the most recent of the Bureau’s efforts to ensure that health plans and providers are complying with the Affordable Care Act, and to educate consumers regarding the wide range of protections afforded them by the law. As a result of the Bureau’s past work, a health plan reinstated coverage for young adults who were not notified of their rights under the ACA, consumers received relief after their enrollment in an exchange plan was delayed, and refunds were provided to consumers who were wrongly charged co-payments for preventive services.

Consumers who believe they may have been treated unfairly by a health care provider, health plan, or health-related business should call the Attorney General’s Health Care Helpline at 800-428-9071.

The case was handled by Assistant Attorney General Carol Hunt of the Health Care Bureau. The Health Care Bureau is led by Bureau Chief Lisa Landau. The Health Care Bureau is a part of the Social Justice Division, which is led by Executive Deputy Attorney General Alvin Bragg.

A copy of the agreement can be read here.

NEW YORK - Attorney General Eric T. Schneiderman today announced the sentencing of Ock Chul Ha, President of the Korean Social Service Center, a not-for-profit organization, who operated a pervasive scam on primarily elderly Korean-Americans for more than three years. Ha, 58, of Fort Lee, NJ, was sentenced to 1-3 years state prison and was banned from performing social service work and is required to pay restitution to the victims, who cooperated with this investigation. The order also includes the closure of the Korean Social Service Center.

Ha falsely promised clients – who came to him for advice regarding Medicare or Social Security – placement in low-income housing in the city’s coveted 421(a) program.

Last November, Ha pleaded guilty to one count of Grand Larceny in the Second Degree (a Class "C" felony), one count of Scheme to Defraud in the First Degree (a Class "E" felony), and Criminal Tax Fraud in the Third Degree (a Class "D" felony).

“We have absolutely zero tolerance for this kind of behavior. At a time when more New Yorkers than ever are struggling with the cost of housing, Mr. Ha dangled the promise of an affordable home to steal hundreds of thousands of dollars, ruining lives in the process,” said Attorney General Schneiderman. “Exploiting insecurity and vulnerability – especially in one’s own community – is despicable, and we are putting this defendant in jail and out of business.”

According to Ha’s fully allocated plea, Ha was the President of Korean Social Services, a Manhattan not-for-profit located at 16 West 32nd Street, Suite 301. Based on our investigation, Ha preyed on vulnerable people, who he believed would be least likely to notify law enforcement of his scam. He generally conned elderly Korean-American immigrants, widows and those on disability who spoke limited English. He admitted to scamming an electrician, who lost his entire life savings to Ha and an artist who borrowed money from relatives. He would gain their trust by relying on his position as a social worker, and then offer them an opportunity to obtain a precious commodity in New York: affordable housing.

The investigation found that after Ha propositioned his victims, he would call them repeatedly, warning them that they would lose their chance at a 421(a) apartment if they did not act quickly. Often he would demand $28,500 from his victims. Most of his victims drained their bank accounts, borrowed from friends or pooled money from relatives to pay Ha. Ha would then demand more money from his victims, often citing the need for security deposits equaling six months of rent. He would provide his victims with a receipt from the Korean Social Service Center that reflected the total amount provided by his victim (often in the tens of thousands of dollars), the victim’s name, and a note indicating that these monies were for a deposit on a “N.Y.C H.D.” apartment. Ha admitted to stealing approximately $207,000 from such victims.

The investigation further revealed that after a March 18, 2014, search warrant was executed at Ha’s office, he began calling his victims and urging them not to cooperate with law enforcement. Ha dangled the prospect of reimbursement as a reward for their refusal to cooperate. Despite such empty promises, several brave men and women cooperated with law enforcement to bring Ha to justice.

This investigation, initiated by the Attorney General’s Charities Bureau, was a joint collaboration between the Attorney General’s Office and the New York State Department of Tax and Finance. The Attorney General thanks the New York City Department of Investigation for its cooperation on this case.

The investigation was initiated by Assistant Attorney General Michael Torrisi of the Charities Bureau and handled by Investigator Edward Ortiz and Chief Dominick Zarrella of the Attorney General’s Investigations Bureau, and Michael Yun formerly of the NYS Department of Tax and Finance. This case was prosecuted by Special Counsel John R. Spagna, Chief Auditor of the Forensic Audit Section, Edward J. Keegan, Senior Analyst Jacqui Brown, and Associate Forensic Auditor Matthew Crogan, in the Attorney General’s Criminal Division, which is led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced an agreement with KPH Healthcare Services, Inc., a company based in New York State that operates the Kinney Drugs chain of pharmacies, requiring KPH Healthcare Services to ensure that customers who are deaf or hard of hearing are able to access their services and communicate effectively with pharmacists. Under the agreement, a model for pharmacies across the state, each Kinney Drugs store will install an assistive listening system and implement new policies concerning communication with customers and their family members or companions who are deaf or hard of hearing.  

“Full access to healthcare should be available to every New Yorker, regardless of whether or not they have a disability,” said Attorney General Schneiderman. “My office is committed to ensuring that pharmacies and other healthcare facilities meet patients’ communications needs, as required by state and federal law.Effective communication between customers and pharmacy staff is critical to patients understanding the effects of medications and potential drug interactions.”

KPH Healthcare Services operates 101 Kinney Drugs pharmacies, 77 of which are located in 19 counties across upstate New York, including Cayuga, Clinton, Cortland, Essex, Franklin, Herkimer, Jefferson, Lewis, Madison, Montgomery, Oneida, Onondaga, Oswego, Otsego, St. Lawrence, Seneca, Tompkins, Warren, and Wayne counties. Hearing loss is one of the most common conditions affecting elderly individuals, who also make more frequent use of pharmacies, and upstate New York is home to a substantial population of seniors. According to U.S. Census estimates, more than 700,000 New Yorkers are either deaf or have serious difficulty hearing.  

In cooperation with the Attorney General’s Office, KPH Healthcare Services agreed to improve its policies to ensure that pharmacists and other staff communicate effectively with individuals who are deaf or hard of hearing. In addition to expanding access to communication aids and services, including assistive listening systems and qualified sign-language interpreters, as required by law, KPH Healthcare Services also agreed to new protocols for evaluating and meeting the needs of individuals who are deaf or hard of hearing, and improved procedures for training, recordkeeping and investigation of complaints. KPH Healthcare Services will also pay $30,000 to Onondaga County to support programs that benefit individuals who are deaf or hard of hearing and other individuals with disabilities.

This agreement is part of the Attorney General’s initiative to ensure equal access for individuals with disabilities at places of public accommodation in New York State. Previous agreements ensuring communications accessibility for deaf and hard-of-hearing New Yorkers include agreements with hospitals and other healthcare facilities and theatres. As part of this initiative, the Civil Rights Bureau is also assessing communications accessibility at other pharmacy chains in New York.

Janice S. Lintz, hearing  accessibility advocate, said, “This is a game changer. When communication barriers in healthcare settings are removed, customers who are deaf and hard of hearing can decide on healthcare treatment options in a more equitable and timely manner. This agreement helps to ensure that persons who are deaf and hard of hearing are able to engage in meaningful counseling and consultation with pharmacists about medications and other important health issues. No one should have to ask permission to receive important and critical healthcare information.”

“Too often, the barriers faced by people with hearing loss are ignored, chiefly because hearing loss is an unseen disability,” said Jerry Bergman, president of the Hearing Loss of America’s New York State Association."We thank the New York State Attorney General for his unwavering commitment to eliminating those barriers and fighting for our right to enjoy equal access to public accommodations.”

Michael Schwartz, associate professor at the Syracuse University College of Law and director of the Disability Rights Clinic, said, “Deaf and hard-of-hearing people are entitled to effective communication under state and federal laws, and all places of public accommodation, including pharmacies and other healthcare facilities, must provide sign-language interpreters if needed to ensure effective communication. Attorney General Eric Schneiderman is to be applauded for securing an agreement that promotes equal access for pharmacy customers and their companions.”

This matter is being handled by Assistant Attorney General Mayur Saxena of the Attorney General’s Civil Rights Bureau, which is led by Bureau Chief Kristen Clarke. The Civil Rights Bureau is part of the Attorney General’s Social Justice Division. The Executive Deputy Attorney General for Social Justice is Alvin Bragg.

The Civil Rights Bureau of the Attorney General’s Office is committed to protecting the rights of individuals with disabilities throughout New York State. To file a civil rights complaint, contact the Attorney General’s Office at (212) 416-8250, civil.rights@ag.ny.gov or visit www.ag.ny.gov.

WATERTOWN –Attorney General Eric T. Schneiderman today announced the indictment of 33 individuals charged with conspiring in four loosely-related drug distribution networks that funneled heroin and cocaine across state and county lines into St. Lawrence County. As part of a multi-agency investigation, code-named “Operation 315,” state and local law enforcement agents, led by the New York State Attorney General’s Organized Crime Task Force (OCTF), St. Lawrence County Sheriff’s Office, the New York State Police and St. Lawrence County Drug Task Force, conducted a 12-month probe that included covert physical surveillance and hundreds of hours of wiretaps in a coordinated effort to identify and shut down heroin pipelines which are flooding the largely rural St. Lawrence County and surrounding areas with deadly drugs. Today’s indictments included charges of illegal weapons possession by the alleged drug dealers, including for a Bushmaster, AR15 assault rifle.

“It is well known that heroin is as deadly as it is addictive. It’s less well known that, over the past decade, it’s use has spread from our inner cities to even our most rural New York counties and communities,” Attorney General Schneiderman said. “Make no mistake about it, we are fighting a war on heroin – and those who profit from it—across our state and with all the tools that are available to us. Besides arresting those who deal drugs, my office has equipped law enforcement officers across New York with a life-saving heroin overdose antidote and is cracking down on prescription drug abuse, which fuels opioid addiction.”

The indictments unsealed in St. Lawrence County Court, in Canton, N.Y., are the result of a year-long investigation in which law enforcement officials seized approximately two kilos of heroin, which has an estimated street value of $500,000, and more than five kilos of cocaine, with a street value estimated at $600,000, as well as over $100,000 in cash, seven hand guns, three assault rifles, two shotguns and a rifle.

The four indictments, which include a total of 111-criminal counts, charge each of the defendants with crimes that carry significant state prison time. The counts range from top felony charges of Conspiracy In The Second Degree, which carries a maximum of 25 years behind bars and Criminal Sale Of A Controlled Substance In The First Degree, which carries a maximum of 20 years in prison, to misdemeanor Criminal Sale of A Controlled Substance.

The first indictment charges 11 defendants with distribution of heroin and cocaine. Evidence developed during the investigation and outlined in court papers, shows that Nicholas Adams, of Potsdam, N.Y., purchased heroin in Leominster, Massachusetts, and brought it to St. Lawrence County for distribution, where it was allegedly sold on the streets in the Potsdam area. One of his co-defendants, Laronda Ashlaw, who resided with Adams, allegedly brought heroin from Massachusetts with her toddler in a vehicle. A loaded assault weapon and hypodermic needles were seized from a closet in the child’s room. Stolen goods, including jewelry, from two burglaries were also found in the home, court papers allege.

A second indictment charges 20 individuals, including three who are also named in the first indictment. This indictment charges three alleged drug suppliers, one from Yonkers, one from the Bronx, and a third of Syracuse, with cocaine and heroin distribution for allegedly supplying drugs to Colin Campbell, Joshua Jones, Caleb Serrano and Jordan Willette, all of St. Lawrence County.

One of the out-of county suppliers allegedly concealed the heroin he delivered from New York City by stowing it in the lining of the trunk of a 2008 Cadillac CTS. Defendants Caleb and Omar Serrano, who are brothers, concealed the cocaine that they trafficked inside of a lint brush in the car they drove, and another defendant, who is handicapped, concealed the heroin that he was transporting within the seat of his wheelchair that was stowed in his car. Drugs in this second alleged conspiracy came from New York City and Syracuse and were allegedly sold in the Edwards, Pierrepont and Stockholm areas of St. Lawrence County.

The third and fourth indictments charge nine people, four of whom are also named in the first two indictments, as members of the conspiracy to distribute heroin. Those charged in the third indictment include the handicapped defendant, who is charged with redistributing heroin for resale in the county via this third allege network. The fourth indictment includes charges against a fourth out-of-county supplier with distributing cocaine to Jason Burnette, among other counts.

New York State Police Superintendent Joseph A. D’Amico said, “Today’s arrests and announcement speak to the inter-agency coordination and cooperation dedicated to getting drugs off New York streets. Thanks to a strong partnership, a major drug operation has been shut down and drugs, weapons, and money have been seized. These arrests should send a clear message to anyone dealing these dangerous and deadly drugs- you will be found, you will be arrested and you are going to jail.”

St. Lawrence County Sheriff Kevin M. Wells said, “The mission of this investigation was to arrest and remove heroin dealers that prey on our communities and to disrupt the flow of illegal drugs to our county -- we have accomplished that. On behalf of our task force partners and the people of St. Lawrence County, I want to thank the Attorney General and his staff along with all of the involved law enforcement professionals that have worked this case and that will continue to move it forward.”

Twenty six of the defendants have been arrested. Seven are being sought. Those arrested are:

NICHOLAS P. ADAMS, 22, Potsdam, NY
LARONDA L. ASHLAW, 29, Potsdam, NY
ELIZABETH A. BRIGGS, 23, Canton, NY
JASON C. BRUNET, 28, Edwards, NY
DARIAN J. CAMERON, 18, Winthrop, NY
COLIN A. CAMPBELL, 25, Winthrop, NY
ZACHARY W. COLE, 20, Gouvernour, NY
RYAN L. DONALDSON, 26, Potsdam, NY
ERIC M. DRAYSE, 34, Adirondacks Region
RYAN M. FINLEY, 27, Odgensburg, NY
KYLE D. HAWLEY, 25, Potsdam, NY
JOSHUA J. JONES, 24, Edwards, NY
KYLE E. KAIN, 21, Potsdam, NY
MATTHEW A. KLEMKO, 27, Colton, NY
GREGORY S. LANPHEAR, 24, Edwards, NY
JUSTIN M. LASHOMB, 31, Hogansburg, NY
ZACHARY M. LATIMER, 23, Canton, NY
NATHAN D. LIGHTFOOT, 26, Massena, NY
MICHAEL T. MATZELL, 28, Potsdam, NY
CALEB J. SERRANO, 22, Edwards, NY
OMAR L. SERRANO, 24, Edwards, NY
MATTHEW P. VANHYNING, 26, Canton, NY
REYNOLD R. VOISINE, 37, Canton, NY
PAULA M. WELSH, 28, Massena, NY
JUSTIN H. WHITMARSH, 24, Edwards, NY
JORDAN C. WILLETTE, 25, Pierrepont, NY

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

Law enforcement agencies that participated in the investigation include the Canton Police Department, the Potsdam Police Department, Massena Police Department, the Gouverneur Police Department, the Ogdensburg City Police Department, the St. Lawrence County District Attorney’s Office, the Syracuse Police and Onondaga County Sheriff's Office, the Drug Enforcement Administration, the Franklin County Drug Task Force, the New York State Department of Corrections and Community Supervision, U.S. Homeland Security Investigations, the U.S. Border Patrol and the Border Enforcement Security Task Force, and the Coast Guard Investigative Service.

The investigation was conducted by St. Lawrence County Detective Arthur Shattuck and OCTF Special Investigator Christopher Reidy, with Supervising Investigator Thomas M. Wolf, Deputy Chief Eugene Black, and Chief Dominick Zarella.

The case is being prosecuted by OCTF Assistant Deputy Attorney General and Senior Investigative Counsel James J. Mindell and Assistant Deputy Attorney General Irene S. Bardot. OCTF is led by Deputy Attorney General Peri Alyse Kadanoff. Executive Deputy Attorney General for Criminal Prosecutions is Kelly Donovan.

MASTIC - Attorney General Eric T. Schneiderman today announced the conviction of Sajjad Rashid, 43, of Rocky Point, the owner and manager of a Suffolk County convenience store who orchestrated a multi-year larceny scheme to illegally trade cash for almost $1 million in Supplemental Nutritional Assistance Program (SNAP, formerly known as the Food Stamp Program) benefits. From 2012 to 2014, a ring of corrupt store owners and clerks at Mastic Supermarket Corp., located at 1088 Mastic Road, Mastic, NY, rang up hundreds of thousands of dollars in phony food stamp transactions at taxpayer expense. The Corporation, Mastic Supermarket, was also convicted today.

“Mr. Rashid’s scheme not only ripped off taxpayers, but also the many New Yorkers in need who depend on food stamp benefits, specifically those harmed by Hurrican Sandy,” Attorney General Schneiderman said. “As seen by today’s sentence, we have no tolerance for this type of fraud: If you steal from a government benefits program, we will seek prison time.”

Rashid, who was the scheme’s ringleader, pleaded guilty to the four-count indictment lodged against him in Suffolk County Supreme Court before the Honorable John B. Collins, including one count of Grand Larceny in the Second Degree (a Class C felony), one count Misuse of Food Stamps (a Class C felony), and two counts of Falsifying Business Records in the First Degree (a Class E felony. In exchange for his plea, Justice Collins promised Rashid a sentence of between 1 ½ to 4 ½ and 2 1/2 to 7 ½ years in state prison.

Rashid’s sentencing is scheduled before Judge Collins on May 19, 2015.

The Corporation, Mastic Supermarket, pleaded guilty to one count of Grand Larceny in the Second Degree (a Class C felony). In exchange for this plea, Justice Collins will order the Corporation to pay restitution in the amount of $974,619. The Corporation will be dissolved.

Last month, Haricharan Malhotra, a clerk at Mastic Supermarket, was sentenced to 1 1/3 to 4 years in prison for his role in this scheme.

According to the indictment and statements made by prosecutors, Rashid, used his position as the co-owner and manager of Mastic Supermarket Corp., operating with the business name “Shop With Us Quality Foods”, to fraudulently exchange food stamps for cash. The evidence revealed that on hundreds of occasions, dozens of SNAP recipients presented their SNAP benefit cards to Rashid at the register at Mastic Supermarket. Instead of ringing up eligible food purchases, Rashid rang up phantom purchases and then split up cash in the amount of the phantom purchase between the store and the recipients. The government then reimbursed Mastic Supermarket for these phantom purchases made using SNAP benefits cards.

These illegal exchanges sharply increased in the wake of Hurricane Sandy, when the government program allocated an additional 50% in benefits to all SNAP recipients in affected areas, without regard to need. After the storm, numerous SNAP Recipients in Suffolk County received this Sandy benefit and then illegally exchanged their benefits for cash at Mastic Supermarket. The investigation determined that nearly $1 million was fraudulently stolen from the government program as a result of this scheme.

The case stems from an investigation initiated by the United States Department of Agriculture and the Attorney General’s Criminal Enforcement and Financial Crimes Bureau in 2013. A civil lawsuit, filed by the Attorney General’s Office against Rashid and other individuals and corporate defendants, is still pending. The Attorney General’s lawsuit seeks $973,000 in restitution.

The Attorney General thanks: the United States Department of Agriculture, Office of Inspector General, Northeast Region; United States Department of Agriculture, Food and Nutrition Service; the Suffolk County District Attorney's Office; the Suffolk County Department of Social Services; the Suffolk County Police Department; the Nassau County Police Department; and the New York State Department of Financial Services for their assistance in the case.

The case is being handled by Assistant Attorneys General Tyler Reynolds and Rhonda Greenstein of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Meryl Lutsky and Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The investigation was conducted by Legal Support Analyst Theo Davidson, Investigator Ryan Fannon, Supervising Investigator John Sullivan and Deputy Chief Investigator John McManus. The Investigations Division is led by Chief Investigator Dominick Zarrella.

If see or know of waste, fraud or abuse in a social services program in New York State, please contact the Office of the Attorney General's helpline at (800) 771-7755.

BUFFALO – Attorney General Eric T. Schneiderman today announced that his office has filed two lawsuits and has reached one settlement against contractors accused of price gouging during last November’s massive snowstorm in Greater Buffalo. The contractors are accused of inflating the price for goods and services during the snow storm. In some areas, the storm resulted in up to 7 feet of snow and the declaration of a state of emergency. Under New York State’s price gouging law (General Business Law 396-r), merchants are prohibited from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during an “abnormal disruption of the market,” including severe weather events.

“The people of Western New York pull together during tough times, and that spirit was on full display when the vast majority of neighbors were helping neighbors during the Buffalo snowstorm last November,” said Attorney General Schneiderman. “Unfortunately, there are people who attempted to exploit this emergency to take advantage of those in need, and today we are taking the first step towards holding people accountable.”

The Attorney General’s Office first issued a warning to contractors against price gouging when a state of emergency was declared following the November storm and encouraged consumers to file complaints about suspected cases of price gouging. The action taken today stems from approximately a dozen complaints received against the three contractors.

The lawsuits and settlement announced today by Attorney General Scheiderman’s Office include the following:

Collingwood Construction

The Attorney General’s Office received complaints against this company for charging $2,000 or more for the company to remove snow from consumers’ roofs in the Town of Cheektowaga and the Lexington Green neighborhood in the Town of West Seneca. The Attorney General’s investigation confirmed that consumers were allegedly charged $2,000 or more to have snow removed from their roofs, and, in several other cases, consumers were allegedly charged between $1,400 - $1,900. The Attorney General's lawsuit alleges that, in most cases, the company failed to remove all snow from roofs, as it only agreed to remove 4 feet of snow from the gutter upward, leaving a significant amount of snow left on the roofs. The investigation further revealed that some of the jobs appeared to take less than an hour for the crew to complete. The average going rate for roof snow removal was in the $500-$600 range and the Attorney General’s office believes that the rates charged during the storm were unconscionably excessive and constitute price-gouging under New York law. 

In addition to the alleged snow removal issues, the Lexington Green neighborhood was devastated by flooding back in January of 2014. As a result of the flooding, approximately 70 homes were damaged. Neighbors are still working to recover all they lost, and as the warmer weather approaches, the potential for additional flooding is a very real concern. In an effort to prevent future flooding, the Army Corp of Engineers and town officials are teaming up for a study of the ice jam flooding problem.

Action: A lawsuit has been filed against Collingwood Construction seeking restitution for consumers, a civil penalty of $25,000, and an injunction against Collingwood Construction prohibiting it from offering any consumer services at an unconscionably high price.

Buffalo and Orchard Park Topsoil

The Attorney General’s Office and the company reached a settlement after the office received several complaints against this company for charging up to $650 to remove snow from consumers’ driveways during the November 2014 storm. The Attorney General’s investigation revealed $650 was at least double what other contractors were charging for the same service. The company agreed to pay restitution to each consumer in the amount it paid in excess of $300, and a fine in the amount of $150 per occurrence.

Action: The Attorney General’s Office reached a settlement with Buffalo and Orchard Park Topsoil. The company agreed to pay restitution to each consumer in the amount it paid in excess of $300, and a fine in the amount of $150 per occurrence.

Charles Cooper

The Attorney General’s Office filed suit against Charles Cooper, an individual from Lodi, NY (Central NY) who holds himself out as the owner of C & C Construction. The Attorney General’s Office received a complaint against Cooper for charging a homeowner in the Town of Alden $2,000 to remove snow from his roof. Cooper had initially demanded that the consumer pay $4,000, which the consumer refused. The suit alleges that Charles Cooper charged the homeowner an unconscionable price for snow removal services and engaged in price-gouging under New York Law.  The suit seeks restitution for the consumer, fines, a penalty in the amount of $25,000, and in injunction prohibiting Cooper from engaging in future price-gouging activity

Action: The Attorney General’s Office has filed a lawsuit against Charles Cooper seeking restitution for consumers, a civil penalty of $25,000, and an injunction against Cooper prohibiting him from offering any consumer services at an unconscionably high price.

The claims made in the lawsuits are allegations until proven in court.

ALBANY - Attorney General Eric T. Schneiderman and New York State Comptroller Thomas P. DiNapoli today announced the conviction and sentence of Graycelia Cizik, 64, a resident of Polk County, Florida. Cizik pleaded guilty on January 21, 2015 to a one-count Indictment charging her with the crime of Grand Larceny in the Second Degree, a class C felony. Today, she was sentenced to 2 to 6 years in state prison by Supreme Court Judge Roger D. McDonough in Albany County Court. Cizik also agreed to a judgment in favor of the New York State and Local Employees Retirement System in the amount of $121,772.72.

Under the plea agreement, Cizik admitted to stealing $121,772.72 in pension benefits issued by the Office of the New York State Comptroller, on behalf of the New York State and Local Employees Retirement System, to her deceased uncle, David Wynn. Wynn was a New York State pensioner who retired from the Port Authority of New York & New Jersey and died in 1988.

“We will aggressively pursue stiff penalties for those who rip off our retirement system and steal from retirees across our state who count on that money,” said Attorney General Schneiderman. “We will protect taxpayer dollars and prosecute those who misuse public funds.”

“Ms. Cizik scammed the New York State Retirement System and is now on her way to state prison for several years," Comptroller Thomas P. DiNapoli said. "We will continue to safeguard the state pension system and work with Attorney General Eric Schneiderman to punish those who defraud the pension fund.”

A joint investigation by the New York State Attorney General’s Office and the Office of the New York State Comptroller revealed that Cizik witnessed a cremation authorization form for Wynn when he died, but failed to notify the Retirement System of Wynn’s death. Instead, Cizik submitted false information to Wynn’s bank indicating that he was still alive, and utilized a power of attorney to access his account and withdraw pension benefits paid on his behalf during a twelve year period between June 30, 1997 and October 30, 2009.

The case is the latest joint investigation under the Operation Integrity partnership between the Attorney General and Comptroller, which has resulted in dozens of convictions and more than $6 million in restitution. Cizik was arrested in August 2014 by agents of the Polk County Sheriff’s Office in Florida, and extradited to Albany County to face the Indictment.

Attorney General Schneiderman and Comptroller DiNapoli thank the Polk County Sheriff’s Office in Florida for their assistance.

The Attorney General’s investigation was conducted by Investigator Dennis Churns and Deputy Chief Investigator Antoine J. Karam. The Investigations Division is led by Chief Investigator Dominick Zarrella.

The case was prosecuted by Assistant Attorney General Benjamin Clark of the Criminal Enforcement and Financial Crimes Bureau. The bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General T. Eric Schneiderman today announced that he has joined a coalition of states in filing an amicus brief in a federal Court of Appeals, asking that the court allow President Obama’s recent executive actions on immigration policy to take effect immediately, despite an injunction imposed by a federal district court judge in Texas.

“President’s Obama executive actions would give millions of undocumented immigrants the opportunity to come out of the shadows and stop living in fear,” Attorney General Schneiderman said. “By giving work authorization to people who are already living here, we can increase the states’ tax revenue and reduce demand for social services. And states benefit immeasurably when thousands of their citizens and legal residents are given relief from the threat of seeing a parent deported.”

It is estimated that the President’s executive actions will impact an estimated five million individuals. One executive action would expand the population eligible for the Deferred Action for Childhood Arrivals (DACA) program, which gives beneficiaries the right to work, to include all young people who came to this country before turning 16 years old and have been present since January 1, 2010. Another executive action would create a new Deferred Action for Parental Accountability program, which would make eligible for deferred action and work authorization individuals who are parents of U.S. citizens and lawful permanent residents, who have been in the country since January 1, 2010, and who pass background checks.

The brief was filed in Texas v. United States, a legal challenge by Texas and other states to the President’s authority to take executive action on immigration. The Washington State Attorney’s General Office authored the brief, which was joined by the attorneys general of California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, New Mexico, New York, Oregon, Rhode Island, and Vermont.

For more information on the president’s executive action, including guidelines, forms and timelines, please click here.

NEW YORK - Attorney General Eric T. Schneiderman and New York City Department of Investigation (DOI) Commissioner Mark G. Peters today announced the sentencing of Chan Jamoona and Veda Jamoona convicted of conspiring to steal more than $50,000 from a lunch program for senior citizens run by the nonprofit United Hindu Cultural Council of USA North America Inc. (UHCC)  by falsifying documents related to the lunch program with another defendant, the caterer for the lunch program who admitted to giving kickbacks to the Jamoonas.  Chan Jamoona was sentenced by the Honorable John B. Latella in New York State Supreme Court for Queens County to five years probation and a $45,000 fine; Veda Jamoona was sentenced to three years probation and a $5,000 fine.

The defendants were convicted on November 21, 2014 after a jury trial for crimes related to their scheme to steal money from the New York City Department for the Aging (“DFTA”) by submitting false monthly Contract and Service Invoice Reports to DFTA containing inflated numbers of seniors receiving lunches at the United Hindu Cultural Council (“UHCC”) senior center and inflated costs of the lunches provided by Sonny’s Roti Shop (hereinafter referred to as the “Roti Shop”).  Defendant Chan Jamoona was convicted of eleven Class E felony counts, including Conspiracy in the Fourth Degree, Grand Larceny in the Fourth Degree, seven counts of Falsifying Business Records in the First Degree, and two counts of Offering a False Instrument for Filing in the First Degree.  Defendant Veda Jamoona was convicted of a Class E felony count, Conspiracy in the Fourth Degree.  Prior to the trial, on June 20, 2013, the Roti Shop owner, Steven Rajkumar, pleaded guilty to Falsifying Business Records in the First Degree and was sentenced to a conditional discharge and restitution of $25,000.

“These defendants stole from the senior center lunch program, putting personal greed ahead of the basic needs of New York seniors,” Attorney General Schneiderman said. “When it comes to services vital for our seniors, we cannot accept fraud as a cost of doing business. My office will prosecute fraud in critical New York programs to the fullest extent of the law.”

DOI Commissioner Peters said,“UHCC executives deliberately and cynically stole funds that should have been used to provide food and services for elderly clients. Not-for-profit organizations that take advantage of our seniors ‎have no business receiving public funds."

The indictment charged the two former UHCC executive directors—Chan Jamoona, 68, of Queens and her daughter, Veda Jamoona, 30, of Manhattan and Queens—of perpetrating a long-running scheme in which the senior center operator inflated bills submitted to New York City’s Department for the Aging (DFTA). To carry out the scheme, the indictment alleges that the defendants directed UHCC workers to falsify invoices from the senior center’s caterer, Sonny's Roti Shop in Queens, and provide fake signatures on sign-in sheets.  The indictment also alleged that the owner of Sonny's Roti Shop, Steven Rajkumar, 57, of Queens, then kicked a portion of the inflated payments back to Chan Jamoona.  

The case was prosecuted by Assistant Attorney General Jihee G. Suh and Senior Counsel Wanda Perez Maldonado. The Public Integrity Deputy Bureau Chief is Stacy Aronowitz. The Chief is Daniel Cort.  Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice. The joint investigation between the Attorney General's Office and DOI began after referrals from DFTA and the New York State Office for the Aging.

Attorney General Schneiderman and DOI Commissioner Peters thanked DFTA and the New York State Office for the Aging for their assistance provided during the investigation. They also recognize the diligent work of OAG staff, including Legal Support Analysts Casey Lasda, Morgan McCollum, and Kerry Ann Rodriguez, and, from the Investigations Bureau, Investigators Sixto Santiago, Gerard Matheson, Sal Ventola, Anna Ospanova, and Elsa Rojas, Supervising Investigator Michael Ward, Deputy Chief John McManus and Chief Dominick Zarrella; and DOI staff, including  Chief Forensic Auditor Ivette Morales and Special Investigator Nicole Clyne. 

Anyone with additional information on this matter or any other public corruption is encouraged to contact the Attorney General’s Office at 1-800-996-4630.

HAUPPAUGE – Attorney General Eric T. Schneiderman announced today that two individuals responsible for illegally reselling or “flipping” puppies through their Suffolk County-based nonprofit, Precious Pups Rescue, Inc., have been permanently barred from engaging in any for-profit or not-for-profit activity relating to animals in any way. The respondents, who sold sick dogs to unsuspecting consumers, are also ordered to pay more than $24,000 in restitution and penalties for their deceptive business practices.

“Pets are companions and important members of many New York families. Consumers deserve to know that their puppies were healthy and raised in a safe place,” said Attorney General Schneiderman. “Through our Animal Protection Initiative, my office is committed to ensuring the humane treatment of dogs and cats by all sellers. We will take aggressive action against anyone who endangers innocent animals and, in turn, the New York consumers to whom those pets are sold.”

LauraZambito, 43, of Lake Ronkonkoma, N.Y., and Rose Torrillo-Hooghkirk, 61, of Calverton, N.Y., obtained, or “pulled” puppies from both in-state and out-of-state shelters, sold them to consumers, and pocketed the so-called “adoption fees” or “donations” of $200 to $600 per dog. Zambito and Torrillo-Hooghkirk, who were not licensed pet dealers, initially kept the puppies in Torrillo-Hooghkirk’s home, and then expanded their Precious Pups operation to a commercial storefront located at 4466 Middle Country Road in Calverton.

Zambito and Torrillo-Hooghkirk sold consumers dogs that they claimed were healthy, vaccinated, spayed or neutered, and evaluated by a veterinarian, when in fact, they were not. In fact, the dogs had visible signs of illness, such as coughing, scratching, matting and sores. Afterwards, consumers learned that their dogs suffered from a variety of illnesses, including distemper, heartworm, pneumonia, sarcoptic mange (scabies), and tick infestation. Some of these illnesses not only caused other dogs in consumers’ households to become sick, but have caused the consumers themselves to become ill, requiring medical treatment. In addition, many of these pets required prolonged veterinary care, causing consumers to incur thousands of dollars in veterinary bills.  Several dogs died, and some suffered such severe medical or aggression issues that they had to be euthanized. 

In the past year, the Attorney General’s Office has received approximately fifty complaints from consumers about Precious Pups’ business practices. 

As a result of a court order, Zambito and Torrillo-Hooghkirk are permanently barred from selling, rescuing or fostering animals or becoming pet dealers in New York State. In addition, they are prohibited from soliciting, receiving or holding any funds for any charitable organization, or act in a managerial capacity of any charitable organization for a period of ten years, and must dissolve Precious Pups Rescue, Inc. Furthermore, Zambito and Torrillo-Hooghkirk are ordered to pay $14,090 in restitution and a $10,000 penalty. Zambito was also required to sign a $20,000 confession of judgment, which can be docketed in the event that she is found to be in violation of the consent order.

Pursuant to the court order, consumers who purchased sick dogs from Precious Pups Rescue, Inc. and would like to be considered to receive restitution have 30 days to file a complaint with the Office of the Attorney General, Suffolk Regional Office, 300 Motor Parkway, Suite 230, Hauppauge, New York 11788.

In May 2013, Attorney General Schneiderman was the first state attorney general to launch an Animal Protection Initiative, which is committed to ensuring the humane treatment of dogs and cats by requiring pet dealers to guarantee the good health of any such animal sold by a pet dealer to a consumer. Consumers who suspect animal cruelty can file a complaint or give an anonymous tip to the Attorney General’s Helpline at 1-866-697-3444.

This case was handled by Rachael C. Anello, Assistant Attorney General, Suffolk Regional Office, with the assistance of Lori L. Pack, Assistant Attorney General, Suffolk Regional Office, and Debra K. Siegler, Paralegal, under the supervision of Kimberly A. Kinirons, Assistant Attorney General-In-Charge, Suffolk Regional Office, and Marty Mack, Executive Deputy Attorney General for Regional Affairs.  This case was investigated by Paul Matthews, Attorney General Senior Law Department Investigator and Andre Job, Law Department Investigator.

A copy of the consent order and judgment can be read here.

NEW YORK – Attorney General Eric T. Schneiderman today announced that New York, along with 49 other states and the District of Columbia have reached a settlement with Daiichi Sankyo, Inc. (Daiichi), a global pharmaceutical company with US headquarters in New Jersey. The settlement resolves allegations that Daiichi violated the False Claims Act by using lavish meals and speaker programs to improperly induce physicians to prescribe the drugs Azor, Benicar, Tribenzor and Welchol. Under the agreement, Daiichi agrees to pay the United States and the state Medicaid programs 39 million dollars, 10 million dollars to the state Medicaid Programs and 19 million to other Federal programs. Under this agreement, the New York State Medicaid program will receive $2,339,671.

“This settlement sends the message loud and clear: My office will hold accountable companies that attempt to improperly influence physicians for the benefit of their bottom line,” Attorney General Schneiderman said. “A physician’s decision concerning what drugs to prescribe should be based on what is best for the patient, not what perks they may get from a drug company.”

The settlement resolves allegations that Daiichi caused the submission of false claims for reimbursement by the Medicaid program (and other federal programs) for Azor, Benicar, Tribenzor and Welchol. The claims were false because they resulted from kickbacks that Daiichi provided to prescribing physicians. Specifically, the agreement alleges that the kickbacks took the form of honoraria payments, meals and other remuneration to physicians who participated or supposedly participated in physician opinion & discussion programs from January 1, 2005 through March 31, 2011 and other speaker programs from January 1, 2004 through February 4, 2011.

It is contended that the programs were in fact kickbacks because the physicians were paid by Daiichi even if the physician spoke only to members of his or her own staff in their office; physician participants took turns accepting “speaker” honoraria for duplicative discussions; the audience included the honoraria physician’s spouse; the speaker was paid even if the event was cancelled beforehand; and/or the dinners were lavish and even exceeded Daiichi’s own internal cost limitations of $140 per person.

The Federal Anti-Kickback Statute was enacted so that physicians’ medical judgment was not influenced by improper payment or gifts. The statute prohibits anyone from offering, paying, soliciting or receiving such remuneration to induce referrals of services covered by federal health care programs including Medicaid.

The New York State Medicaid Fraud Control Unit led a national team from California, Massachusetts and Maryland working with the Department of Justice and the United States Attorney’s Office for the District of Massachusetts in investigating this matter. The US Attorney’s office for the District of Massachusetts announced the federal settlement in January.

The settlement stems from a complaint filed by whistleblower, Kathy Fragoules, a former Daiichi sales representative, under the Federal and New York State False Claims Act, which authorize private individuals to sue on behalf of the State of New York and the Federal Government. The Attorney General would like to thank Ms. Fragoules for her efforts in bringing this matter to light.

The national team was led by Jay Speers, Counsel to the Medicaid Fraud Control Unit (MFCU), also part of the national team from New York were Senior Auditor/Investigator Matthew Tandle and Supervising Auditor/Investigator Michael Beers. The MFCU is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman tonight offered a sharp critique of Albany's long history of ethical lapses and past claims of reform, and made comprehensive proposals to fundamentally change New York State government by striking at the root causes of corruption.  

During remarks delivered at a forum hosted by the nonpartisan good government group Citizens Union, the Attorney General outlined what he believes is required to help “cure the disease” of public corruption, including a total ban on outside employment income for legislators, an end to per diems, rules reform to empower individual legislators, and a constitutional amendment to extend legislators’ terms from two to four years. The Attorney General also proposed a comprehensive overhaul of New York’s campaign finance system.  

The Attorney General’s proposed legislative changes go further than any package previously proposed by a statewide elected official or legislative leader.

“We have more vigorous cops on the beat, defending the public trust, than ever before – but prosecutors can only respond to the symptoms of a system that is very, very ill,” said Attorney General Schneiderman. “To cure the disease, we must break a pattern in which scandal is followed by outrage, which is followed by reforms that largely tinker at the margins, and a press conference declaring that the problem has been solved, which is ultimately followed by another scandal. It looks to the people of New York like one charade after another.”

Attorney General Schneidermancontinued, “The people of this great State demand comprehensive, fundamental reforms. They deserve nothing less.”

Attorney General Schneiderman praised Governor Andrew M. Cuomo for pushing ethics reform as part of the State budget process, but called for more dramatic changes, even if doing so delayed enactment of the budget.
 
“The Governor has proposed to enact some reforms through this year’s State budget,” said Attorney General Schneiderman.“We should support his leadership in using this perfectly constitutional mechanism.  In fact, I would urge the Governor to hold out for even bolder reforms, including the proposals I have outlined.  In doing so, he would have the support of both the Constitution and the people of the State of New York.  A late budget would be a small price to pay.”

“Citizens Union applauds Attorney General Schneiderman for his aggressive and full-throated proposals to end the corrosive culture of corruption in Albany that has put too many elected officials behind bars and taints the many good lawmakers who serve well the public interest,” said Dick Dadey, executive director of Citizens Union, which hosted tonight’s public forum on ethics. “Our ethics laws need to be further strengthened to reduce conflicts and bolster enforcement.  Our campaign finance laws need to be reformed to reduce the influence of money on our political system. And legislators’ compensation needs to be overhauled so we can attract the best to Albany.  Attorney General Schneiderman’s bold proposals adds his strong voice to a crescendoing effort to not only change our state’s laws, but to change how the people’s business is done in our state capitol.”

"The Attorney General has proposed a comprehensive set of reforms which, if adopted, would go far to reduce conflicts of interest and transform the ethical climate in Albany,” said Richard Briffault, a Columbia Law professor and panelist at tonight’s public forum.

"New Yorkers can no longer afford a state government that is being bought by billionaires and their campaign cash,” said Karen Scharff, executive director of Citizen Action of New York.“We applaud Attorney General Schneiderman's far-reaching proposals for campaign finance reforms, including public matching funds, that are what's needed to finally reduce pay to play politics and corruption in Albany. AG Schneiderman is providing the kind of statewide leadership New York State needs."

“Attorney General Schneiderman is right – for years in Albany there has been too much patting ourselves on the back for passing piecemeal reforms, while the problem of corruption only grows worse,” said Lawrence Norden,deputy director of the Brennan Center's Democracy Program. “The nexus of big money, lack of enforcement, and some unscrupulous elected officials has entrenched a political system constantly beset by scandal. The only answer is comprehensive campaign finance reform, starting with a statewide public financing system to elevate the voices of average voters, who are too often forgotten amidst the search for big money. If coupled with other changes to address the conflicts of interest that pervade Albany and corrupt public policy, a cleaner, more representative New York State government is attainable.”

"The scandals of the last few years have shown that incremental steps are not enough," said Daniel R. Alonso, a former federal prosecutor who recently served as Manhattan Chief Assistant District Attorney."Attorney General Schneiderman's comprehensive set of reforms wisely focuses on preventing corruption before it happens, and puts New York State front and center in the fight against corruption in our midst."

Former United States Attorney for the Southern District of New York Benito Romano said, “Attorney General Schneiderman understands that New Yorkers not only need stronger enforcement  tools for fighting corruption, but also systemic reforms that make public service more transparent and ethical, allowing  honest, hard-working public servants to thrive.  I applaud his boldness and initiative here.”

In 2011, Attorney General Schneiderman and  State Comptroller Tom DiNapoli formed “Operation Integrity,” a first-of-its-kind joint task force using the State Comptroller’s power to refer cases involving the abuse of public funds to the Attorney General’s office to investigate and prosecute public corruption. This effort has led to more than sixty cases against state and local officials and their cronies, including the conviction of a sitting State Senator and indictments against members of the State Assembly and the New York City Council. But despite the efforts of the Attorney General’s Public Integrity Bureau and those of U.S. Attorneys across the State, the cycle of corruption persists, in part due to the negligible impact of marginal reforms previously enacted in the wake of public corruption scandals.

In order to end the ‘rinse-and-repeat’ cycle of scandal followed by public outrage, Attorney General Schneiderman proposed a sweeping package of reforms that would bring a meaningful transformation of the culture of Albany.  The Attorney General’s plan includes:

·         Ban Outside Employment Income For Lawmakers: Banning outside employment income for legislators – rather than simply introducing stricter disclosure requirements – would rescind a clear invitation for corruption. “In the 21st Century, it is impossible to avoid conflicts—or the appearance of conflicts—if legislators have outside employment,” said Attorney General Schneiderman.

·         Increase Salary For Legislators: In order to attract the best and brightest talent into public service, Attorney General Schneiderman proposed a significant salary increase for legislators. The Attorney General proposes a salary for State Legislators that is between what members of the New York City Council and members of Congress are paid, along with automatic cost of living increases going forward. 

·         End Per Diem Payments: Attorney General Schneiderman proposed ending per diem payments – which provide a daily allowance for legislators while in the Capitol – and replacing them with reimbursements for the actual costs of travel, with a cap on reimbursements.

·         Empower Individual Legislators:Attorney General Schneiderman also proposed reforms to the way the State Senate and Assembly operate that would empower rank-and-file lawmakers, as a means of attracting more talented people to legislative service.  He proposed making standing committees a more meaningful part of an open legislative process, and more equitable funding for legislative staff and offices.

·         A Four-Year Term For The Legislature: Calling it a “a game changer,” Attorney General Schneiderman proposed a constitutional amendment to change the length of legislators’ terms to four years, in order to end the two-year cycle of non-stop re-election fundraising and campaigning.

·         Amend The Penal Law To Prohibit Undisclosed Self-Dealing By Public Officials:  To address the Supreme Court’s decision in Skilling, which severely hampered the federal government’s ability to prosecute cases involving deprivation of “honest services” by public officials, New York State should enact a felony-level crime of “Undisclosed Self-Dealing” to target public officials who further their own financial self-interest while purporting to be acting on behalf of their constituents or government employer.

·         Provide The Attorney General’s Office With Concurrent Jurisdiction Over Public Corruption Crimes:  Through a “standing” order from the Governor, under Executive Law §63, the Attorney General should be empowered to investigate and prosecute public corruption crimes.

To address what he called “the stranglehold that political contributions have on our government,” the Attorney General’s plan also includes fundamental changes to New York State’s campaign finance system:

·         Public Matching Funds: A voluntary public matching funds and disclosure system should be enacted for state elections, modeled on the system that has been successfully implemented in New York City.

·         Dramatically Reduced Contribution Limits:  Campaign contribution limits should be dramatically reduced, including and especially for statewide officeholders, who are currently subject to the highest limits in the nation (excluding states without contribution limits).

·         Close The LLC Loophole: The loophole that allows limited liability corporations to funnel virtually limitless amounts of cash to campaigns must be closed.

·         Eliminate “Housekeeping Committees”: Housekeeping committees now operate as barely regulated slush funds for political parties and legislative campaign committees and must be eliminated.

·         Limit “Pay-To-Play” Contributions: Pay-to-play contributions must be limited in State campaigns as they are now in New York City elections.  Entities that do business with the State, their executives, and those who are paid to lobby state officials should be limited to making extremely modest campaign contributions.

·         Strengthen Enforcement Of Election Laws:  New York State should increase funding and support for the Enforcement Counsel at the Board of Elections, including increasing the number of auditors and investigators. 

To read the Attorney General’s full address, click here.

NEW YORK –Attorney General Eric T. Schneiderman and the U.S. Department of Justice today announced that they have reached a settlement with Coach USA Inc., CitySights LLC, and their joint venture, Twin America, LLC, to remedy the loss in competition in the New York City hop-on, hop-off bus tour market that occurred when the defendants combined to form an illegal monopoly. The settlement requires the defendants to relinquish approximately fifty bus stops across Manhattan controlled by City Sights, including highly coveted locations in Times Square and near the Empire State Building. They are also required to disgorge $7.5 million in profits obtained by operating their joint venture in violation of the antitrust laws between 2009 and 2015.

Attorney General Schneiderman and the Justice Department’s Antitrust Division filed a lawsuit in the U.S. District Court for the Southern District of New York in 2012 alleging that the March 2009 formation of Twin America violated the antitrust laws and resulted in higher prices for hop-on, hop-off bus tours in New York City. Today’s settlement, if approved by a court, resolves the claims alleged in the complaint filed in this case.

“By eliminating the competition between them, the largest operators of New York City’s iconic double-decker tour buses were able to raise prices and deprive city visitors of the benefits of a free and fair market,” said Attorney General Schneiderman. “This settlement allows competition to thrive once again, and ensures that these companies did not profit from operating an unlawful and anticompetitive joint venture. I thank the Justice Department’s Antitrust Division for partnering with my office to achieve this resolution for consumers in New York.”

“The formation of Twin America gave Coach and City Sights an unlawful monopoly over the New York City hop-on, hop-off bus tour market and allowed them to immediately increase prices to consumers,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “As a result of the joint efforts of the Antitrust Division and the New York Attorney General, Coach and City Sights will forfeit key bus stop authorizations throughout Manhattan to restore competition and surrender illegal profits they obtained from violating the antitrust laws.”

As alleged in the complaint, prior to the formation of Twin America, Coach, the long-standing market leader through its “Gray Line New York” brand, and City Sights, a firm that launched the “CitySights NY” brand in 2005, accounted for approximately 99 percent of the hop-on, hop-off bus tour market in New York City. Between 2005 and early 2009, the two companies engaged in vigorous head-to-head competition on price and product offerings that directly benefited consumers.

That competition ended in 2009 when Coach and City Sights joined to form a new entity, called “Twin America.” The formation of this joint venture provided Twin America with control over substantially all of the competitively-meaningful bus stops throughout Manhattan, and enabled them to increase hop-on, hop-off bus tour prices by approximately 10 percent. According to the complaint, Coach and its corporate parent, Stagecoach Group plc, had long assumed that combining with Coach’s only meaningful competitor would allow the merged firm to raise prices and communicated this assumption to City Sights during joint venture negotiations. In early 2009, over a period of approximately two months, Coach and City Sights did just that, implementing the joint venture and raising prices. The joint venture continues to operate both the Gray Line New York and City Sights NY brands today.

For more than three years following Twin America’s formation, there was no new entry or expansion in the market, and Twin America sustained the early 2009 price increases. Since 2012, although several firms have entered the market, they have been unable to obtain bus stop authorizations from the New York City Department of Transportation (“NYC DOT”) at, or sufficiently close to, top attractions and neighborhoods to meaningfully compete with Twin America. Bus stop authorizations are required for hop-on, hop-off operators legally to load and unload passengers. Both Coach and City Sights hold large portfolios of bus stop authorizations covering virtually all of Manhattan’s key attractions that the firms received from NYC DOT years ago, and before many locations were at capacity. The formation of Twin America gave them a dominant share of the competitively-meaningful bus stop authorizations in Manhattan.

The settlement with New York and the Department of Justice requires Twin America to divest all of City Sights’ Manhattan bus stop authorizations (roughly half of those held by Twin America) by relinquishing them to NYC DOT, the agency in charge of managing bus stop authorizations in New York City. The relinquished stops include highly-coveted locations such as the areas surrounding Times Square, the Empire State Building, and Battery Park, where rival firms have been chronically unable to obtain competitive bus stop authorizations. By increasing the NYC DOT’s inventory of bus stops and freeing up capacity at approximately 50 locations throughout Manhattan, the settlement will significantly ease the most intractable barrier to rivals being able to compete meaningfully with Twin America. The defendants will continue to compete in the market and hold Gray Line New York’s bus stop authorizations for its own hop-on, hop-off service.

The settlement also requires the defendants to disgorge $7.5 million in profits they obtained from the operation of their illegal joint venture, and as a result of their several year effort to forestall antitrust enforcement. This amount is in addition to $19 million that the defendants had already agreed to pay to a class of consumers to settle related private litigation brought after the filing of the government complaint. The New York Attorney General and the United States determined that the defendants earned profits in excess of $19 million from their unlawful monopoly and that disgorgement was particularly appropriate on the facts of this case – a consummated merger involving an anticompetitive price increase and deliberate attempts to evade antitrust enforcement. The payment of $7.5 million in disgorgement will deprive the defendants of ill-gotten profits they retained even after the class settlement, and deter future antitrust law violations.

Defendants took steps that led to the delay of this action and prolonged their unlawful monopoly position. Shortly after learning about the joint venture in the summer of 2009, the New York Attorney General’s office issued subpoenas to investigate the transaction. After receiving the subpoenas, the defendants delayed New York’s antitrust investigation by belatedly filing the Twin America transaction with the federal Surface Transportation Board (STB) and asserting, among other things, that as a result of certain minimal interstate operations held by the joint venture, the STB had exclusive jurisdiction to review the transaction. STB approval of the transaction would have precluded antitrust review.

During several years of litigation before the STB, New York submitted filings strongly objecting to the transaction on the basis that it was anticompetitive and that the STB process was being used by the defendants to interfere with antitrust enforcement. The STB ultimately agreed with New York’s position, rejecting the joint venture in early 2011 as not in the “public interest,” and expressing concern that the STB’s “processes may have been manipulated to avoid” antitrust review. The STB affirmed its ruling in early 2012, directing that Coach and City Sights either dissolve the joint venture or terminate the minimal interstate operations that provided the purported basis for exclusive STB jurisdiction. Later that year, the defendants chose to terminate the venture’s interstate operations. The New York State Attorney General and the Department of Justice filed their joint lawsuit challenging the transaction in December 2012.

The settlement also requires the defendants to establish antitrust training programs and that defendants will provide the government with advance notice of any future acquisition in the New York City hop-on hop-off bus tour market that is not otherwise reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act).

The New York Attorney General’s office conducted the investigation and litigation of this matter in close coordination with the Antitrust Division of the U.S. Department of Justice, and views the matter as an exemplary case of successful federal and state cooperation.

For the New York Attorney General’s office, the investigation and litigation of this matter were handled by Assistant Attorneys General James Yoon, Matthew Siegel, Jeremy Kasha, and Bureau Chief Eric J. Stock, all of the Antitrust Bureau, as well as Chief Economist Guy Ben-Ishai, Research Director Sumanta Ray, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

• Stipulation of Settlement
• Proposed Final Judgment

In 1882, 23-year-old Theodore Roosevelt arrived in Albany as a new Assemblyman, representing Manhattan, ethical but determined to get things done. In his first session, he sponsored legislation he thought was critical. It also happened to be important to the powerful Manhattan Elevated Railroad and its executive, Jay Gould.

The bill, to expand railway terminal facilities, faced inexplicable delays, held up by corrupt legislators, who withheld their support until copious campaign contributions began to flow to them and their party organizations. Roosevelt was sidelined, and in the end, the bill was slipped into the pile of legislation passed during the middle of the night in the last hours of the legislative session.

The system worked for everyone involved -- except for the public it was meant to serve, and the public interest in good government.

Today it may seem that we are living in a golden age of graft, and that corruption in Albany is worse than ever. That is not true. It feels that way because we have more vigorous prosecutors on the job than ever before, uncovering acts of corruption that benefit the few at the expense of the rest of us.

But we must ensure that the recent wave of public scandals leads to dramatic, uncompromising reform that finally allows the people's voice to be heard over the powerful whispers of special interests.

Allowing legislators to earn outside income invites corruption. Past tweaks to disclosure requirements have failed to stop corruption and more tweaks now will fail, too. We must ban outside income altogether. And we should replace the existing "per diem" system with actual reimbursement for actual expenses.

This must go hand-in-hand with a substantial salary increase for legislators, so that we may attract more of the brightest to the legislature.

In the same vein, if we move power from legislative leaders to individual legislators, more good people will want to run for the legislature. A decade ago, the Brennan Center for Justice found that New York's legislature was the most dysfunctional in the nation, in large part as a result of rules that provided for an almost dictatorial leadership structure. It's past time to loosen that grip.

New York State is also overdue for an overhaul of our campaign finance system: we need a statewide public matching funds system like the one that has worked well in New York City. And there are four rules changes that must be part of any package: dramatically reducing campaign contribution limits; closing the loophole that allows virtually unlimited contributions to flow through limited liability corporations; ending the lightly regulated party slush funds known as "housekeeping committees"; and tightening restrictions on campaign contributions made by entities and individuals with business before the state.

Finally, I propose a constitutional amendment that would be a game-changer: each legislative term should be four years, instead of two. Legislators should spend more time on governing and less on politicking.

Gov. Andrew M. Cuomo has proposed some reforms through the budget process. We should support his leadership in using this constitutional mechanism. In fact, I would urge the governor to hold out for bolder reforms, including the proposals mentioned earlier. In doing so, he would have the support of both the Constitution and the people of New York. A late budget would be a small price to pay, in the long term, if it delivers transformational change.

We must seize this moment, and think, speak and act more boldly. We must, right now, demand a state government that truly serves the public interest.