NEW YORK – Attorney General Eric T. Schneiderman today announced the fifth settlement since last year in an unprecedented enforcement effort of mental health parity laws. The settlement, reached with Rochester-based Excellus Health Plan, requires the health insurer to cover residential treatment for behavioral health conditions and reform its procedures for evaluating behavioral health treatment claims. The settlement also requires Excellus to provide notice of a new appeal right to 3,300 members whose requests for inpatient substance use disorder rehabilitation and eating disorder residential treatment Excellus denied from 2011 through 2014. The estimated value of Excellus’s denial of these individuals’ requests is up to $9 million.

Excellus, which is part of the Blue Cross Blue Shield Association, has 1.5 million members and is upstate New York’s largest health plan. An investigation by Attorney General Schneiderman’s Health Care Bureau found that Excellus denied inpatient substance use disorder rehabilitation recovery services seven times as often as inpatient medical services.

“My office has taken an aggressive approach to enforcing mental health parity laws that I hope can serve as a national model,” said Attorney General Scheiderman.“Mental health and addiction recovery treatments must be regarded the same as other health insurance claims under the law. We will continue to take on those who ignore the law and reinforce the false and painful stigma often associated with these ailments.”

Today’s settlement with Excellus is the Attorney General’s fifth enforcing the mental health parity laws since last year. Insurers Cigna, MVP Health Care, and EmblemHealth have already entered into settlements, and last week, the Attorney General entered into a settlement with ValueOptions, the behavioral health vendor for MVP and Emblem.
New York’s mental health parity law, known as Timothy’s Law, was enacted in New York in 2006, and requires that insurers provide mental health coverage at least equal to coverage provided for other health conditions. The federal Mental Health Parity and Addiction Equity Act, enacted in 2008, prohibits health plans from imposing greater financial requirements or treatment limitations on mental health or substance use disorder benefits than on medical or surgical benefits.

Excellus, based in Rochester, is part of a community that, like many parts of New York State, is experiencing an opioid overdose epidemic with deadly consequences. Heroin overdoses in Monroe County have doubled in recent years, and have increased fivefold since 2011. In 2013 alone, there were 65 heroin-related deaths in Monroe County. Access to substance use disorder treatment – in particular inpatient rehabilitation treatment – is vital to addressing this scourge.

The Attorney General’s investigation revealed that many of Excellus’s inpatient substance use disorder rehabilitation denials were the result of its requirement that members fail outpatient treatment multiple times before accessing such care, which conflicts with New York State guidelines and is not applied by Excellus to medical care. The investigation also showed that some of these denials appear arbitrary and wrongly decided, and that Excellus did not cover residential treatment for behavioral health conditions in its standard contract. In one case, Excellus denied residential treatment coverage, due to lack of a benefit, for a 16-year old girl suffering from the eating disorder anorexia nervosa, even though she was at 83% of ideal body weight, had amenorrhea (the absence of menstruation), malnutrition, unstable vital signs, and bradycardia (a dangerously slow heart rate). The girl later attempted suicide and had to be hospitalized in a medical unit.

Under today’s agreement, Excellus will provide notice of a new appeal right to 3,300 members whose requests for inpatient substance use disorder rehabilitation and residential treatment it denied from 2011 through 2014. These members will get an opportunity to file an independent appeal, if they paid out of pocket for the treatment that Excellus denied, and did not previously file an external appeal. The estimated value of Excellus’s denial of these individuals’ requests is up to $9 million.

Excellus has agreed to cover residential treatment and will make available lists of facilities at which individuals may receive such care, subject to a determination of medical necessity and applicable in-network requirements. Excellus has also agreed to reform its claims process for behavioral health coverage, in particular for substance use disorders, by:

• Not imposing any preauthorization or concurrent review requirements for routine outpatient behavioral health services (i.e., psychotherapy and medication management);
• Covering partial hospitalization and intensive outpatient (“IOP”) treatment for behavioral health conditions;
• Not requiring that members demonstrate a substantial impairment in their ability to function in a major life activity in order to receive coverage for behavioral health care;
• Removing the requirement that members “fail” outpatient substance use disorder treatment before qualifying for inpatient rehabilitation treatment;
• Conducting full and fair reviews for services that require preauthorization, such as inpatient substance use disorder rehabilitation;
• Posting its behavioral health medical necessity criteria on a website, to improve the transparency of the review process;
• Applying the primary care co-payment amount to all routine outpatient behavioral services for all standard individual and small group products offered on the New York Health Benefit Exchange, the New York State of Health (the “Exchange”);
• Providing detailed, accurate oral and written explanations for denied claims, so that members can exercise their appeal rights;
• Employing in-house Behavioral Health Advocates, who can supply members and providers with assistance and information regarding claims denials, appeals, and in-network treatment facilities and providers in the member’s service area;
• Excellus will also post parity disclosures on its website, provide additional training to its staff, file regular compliance reports with the Attorney General, and pay $500,000 in fees and costs.

State Senator Phil Boyle, Chairman of the Senate Committee on Alcoholism and Drug Abuse,said, “One of the most pressing issues which surfaced during last year’s State Senate Heroin Task Force forums was the lack of adequate insurance coverage for addiction treatment. I applaud Attorney General Schneiderman for his continuing leadership through these settlements, ensuring that New Yorkers who suffer from addiction can obtain they treatment the need without having to spend their life savings to pay for it.”

State Senator Robert Ortt, Chair of the Senate Committee on Mental Health and Developmental Disabilities,said, “This settlement is another important step to ensure that individuals suffering from mental illness receive equitable and sufficient coverage. It will help those who were denied equal treatment. Perhaps just as significantly, this can help serve as a guide to better care moving forward. This is especially critical as the state expands and consolidates insurance while transitioning to managed care.”

“One of the biggest barriers to treatment of mental health and substance abuse disorders is stigma,” said Assemblywoman Aileen Gunther, Chair of the Assembly Mental Health Committee.“Insurance companies perpetuate stigma and delay treatment by improperly denying claims and putting up roadblocks. We would be horrified if somebody with heart disease were told they needed to ‘fail first’ before they got the care they needed. I applaud Attorney General Schneiderman for his dogged enforcement of Timothy’s Law and for being a champion to people whose lives are changed by substance abuse and mental illness.”

“I applaud Attorney General Schneiderman’s work to guarantee that New Yorkers in need of treatment for mental health or substance abuse issues can receive timely and effective care and treatment, as is the case for any other medical condition,” said Assemblymember Linda B. Rosenthal, Chair of the New York State Assembly Alcoholism & Substance Abuse Committee. “While I am disappointed that nearly 10 years after its passage, insurers in New York State are still not complying with the requirements of Timothy’s Law and are instead continuing to vilify and single out certain consumers for substandard treatment, I know that the Attorney General will continue to be the watchdog for the people of New York State.”

“We commend Attorney General Schneiderman and his staff for fighting to ensure mental health parity,” said Glenn Liebman, CEO of the Mental Health Association of New York State.“The tenets of mental health parity are to ensure access to services, expand networks of care, eliminate barriers that don’t currently exist for physical health benefits and create a strong right to appeal. These settlement agreements address many of these concerns. These agreements also send a strong message to the community that people are entitled to quality behavioral health care”

“LICADD is hopeful with these changes in healthcare policies more New Yorkers will have greater access to concrete treatment services for substance use disorders," said Steve Chassman, LCSW, CASAC, Executive Director of the Long Island Council on Alcoholism and Drug Dependence, Inc."The full recognition of substance use disorders by insurance companies as a progressive, and potentially fatal, disease is long overdue. As with most diseases, assessment, diagnosis and treatment planning should be conducted by qualified healthcare professionals where the primary focus is with recovery and wellness. As this national substance use crisis continues to rage, causing devastation and loss to entirely too many New York families, LICADD commends Attorney General Eric Schneiderman and our Long Island elected officials for leading the efforts to preserve families, save lives and provide individuals with greater opportunity to engage the miracle of recovery.”

“The Legal Action Center applauds Attorney General Schneiderman for standing up for New Yorkers in need of substance use and mental health treatment," said Paul N. Samuels, Director and President of the Legal Action Center."For too long, individuals with these disorders have faced barriers to treatment due to discriminatory practices by many health insurers. AG Schneiderman continues to lead the country in enforcing the groundbreaking federal parity law that prohibits such discrimination and helps people access health care. As New York and the country face a growing opioid addiction epidemic, and access to treatment is often a matter of life or death, enforcement of the parity law could not come at a more critical moment.”

“NAMI-NYS wholeheartedly supports the Attorney General’s active enforcement of Timothy’s Law,” said Wendy Burch, Executive Director of the National Alliance of Mental Illness New York State.“By not treating mental health claims in the same manner as other physical illnesses, insurance companies are guilty of blatant discrimination and place those suffering at increased risk while hampering their chance at recovery.”

Consumers with questions or concerns about this settlement or other health care matters may call the Attorney General’s Health Care Bureau Helpline at 1-800-428-9071.

The agreement with Excellus stems from a broader and ongoing investigation into health insurance companies’ compliance with mental health parity laws.

The investigation of this matter was conducted by Assistant Attorney General Michael D. Reisman, of the Attorney General’s Health Care Bureau, which is led by Bureau Chief Lisa Landau. The Health Care Bureau is a part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

A copy of the settlement can be read here.

NEW YORK – Attorney General Eric T. Schneiderman today announced the arrest and indictment of the top four executives of the charity Narco Freedom Inc., including its present and former chief executive officers, its controller, and a son of the former chief executive for allegedly participating in a criminal enterprise. Narco Freedom, a Bronx-based nonprofit that provides substance abuse treatment and other services to thousands of New York City residents at ten locations, was also indicted.

“Criminal enterprises that use nonprofits to steals millions in public funds poison New York’s charitable sector, which is one of the greatest in the nation,” said Attorney General Schneiderman.“We entrust the leaders of nonprofits to perform their duties with their organization’s mission at heart. My office will not stop in our efforts to prosecute those who abuse that trust and rip off taxpayers.”

Today’s indictment supersedes and expands upon an indictment secured by the Attorney General’s Office last October charging former chief executive Alan Brand and his son Jason Brand with looting the charity. Today, Alan and Jason Brand were indicted for making Narco Freedom a vehicle to defraud Medicaid and syphon off Narco Freedom’s revenue for the enrichment of their criminal organization. Also indicted for participating in this crime ring were Narco Freedom’s current chief executive Gerald Bethea and its controller Richard Gross. In a separate indictment, Jonathan Brand, another son of Alan Brand, and John Cornachio, the brother of a business partner of Alan Brand, were also charged.

Narco Freedom is registered as a tax-exempt, not-for-profit corporation with its headquarters in the Bronx. Narco Freedom’s present Board of Directors includes clinicians within the field, members of the community, a member of the Nassau County Board of Elections, and at least one member of the faculty at Columbia University. Narco Freedom is also an enrolled Medicaid provider that receives nearly $40 million annually in taxpayer-funded Medicaid reimbursement. In addition to substance abuse treatment facilities, the organization provides medical, mental health and other support programs to thousands of people across New York City, including housing. State law requires that substance abuse treatment programs, such as Narco Freedom, provide its patients with individualized treatment plans, tailored to the clinical needs of each patient and to offer the least restrictive treatment plan possible, and that the patients be free of coercion.

The indictments unsealed today allege that, by submitting claims for excessive services, operating an unregulated residential treatment program and violating patients’ right, Narc0 Freedom stole at least $27 million from the Medicaid program:

• Providing Excessive Services:Narco Freedom provides outpatient substance abuse treatment programs as well as opioid treatment programs (OTP). Patients within these programs under state law are entitled to clinically appropriate treatment in the least restrictive environment possible. Instead, during their respective periods as chief executive, Alan Brand and Gerald Bethea allegedly controlled and managed those programs to maximize Narco Freedom’s Medicaid reimbursement, without regard to the clinical needs of its patients. For instance, medical rules and regulations permit OTP patients to attend treatment and pick up their medication at regular intervals and to obtain take home medication, assisting them to lead productive lives. Narco Freedom, however, has required that its patients attend treatment five days a week to pick up their medication, billing Medicaid for each of these visits. Treatment decisions were predicated on the amount of reimbursement from Medicaid and the amount of services that could be billed.
• Operating An Unregulated Residential Treatment Program:Narco Freedom also provides transitional housing, called Freedom Houses, to over 1,500 indigent –and often homeless – New Yorkers. In a practice started by Alan Brand and continued by Gerald Bethea, Narco Freedom has linked eligibility to reside in its Freedom Houses to participation in its treatment programs, as a coercive inducement for needy New Yorkers to attend its program. In effect, Narco Freedom has allegedly been operating unregulated residential treatment programs, in violation of various Medicaid rules.
• Violating Patient Rights:Narco Freedom has allegedly violated patient rights by employing exploitative and coercive practices in order to ensure that patients residing in Freedom Houses – who might otherwise be homeless— remain in treatment. For example, if a patient fails to attend treatment as dictated, they are removed – essentially evicted – from their home, without legal process. While court cases have cited Narco Freedom for this practice, it has nevertheless continued. In addition, the Freedom Houses are poorly maintained, making for difficult living conditions. Bed bug infestations are common as are drug dealing and violence.

Having illegally obtained criminal proceeds from Medicaid, members of the Brand Criminal Enterprise then allegedly enriched themselves by syphoning monies from the charity they were duty bound to serve. In fact, prosecutors estimate that the Brand Criminal Enterprise annually syphoned 10 percent of Narco Freedom’s annual Medicaid billings for themselves through a number of scams. These included:

• Shell Companies:Jason Brand allegedly owned and operated a management company, B&C Management, which billed Narco Freedom hundreds of thousands of dollars for services it never provided. B&C Management, prosecutors allege, was a shell company. Alan Brand and Jason Brand additionally owned a number of vendors who exclusively provided services to Narco Freedom. The existence of these related entities was not disclosed, as required, to a number of State agencies, including the Attorney General’s Charities Bureau, which regulates charities in New York State.
• No-Show Jobs:Jonathan Brand and John Cornachio were allegedly paid hundreds of thousands of dollars for not showing up to work. In addition to their no-show jobs, they drove luxury vehicles, such as a Porsche 911 Carrera and a Range Rover, paid for and maintained by Narco Freedom, although they did no work for the charity.
• Kickbacks:Alan Brand allegedly demanded and received $13,000 monthly in personal kickbacks for his own use for basing some Narco Freedom’s facilities in buildings of a particular real estate developer. This money, which was provided as a discount on Narco Freedom’s rent payments, rightfully belonged to the charity – not Alan Brand – to be used to fund its programs and advance its mission.
• Insurance Fraud:Alan Brand and Jason Brand allegedly defrauded Arch Insurance Company (Arch) by filing a false insurance claim in connection with the restoration of 217 Court Street in Brooklyn, New York, the location of a former Narco Freedom treatment facility. According to prosecutors, that location suffered substantial damage following a storm in 2009. During settlement negotiations with Arch, Jason Brand allegedly falsely represented to Arch that restoration work would be completed by union employees. In fact, day laborers mostly completed the work. In addition, Narco Freedom and Jason Brand failed to disclose that the company it hired to complete the restoration, DASO Development Corp, was wholly owned by Jason Brand. These intentional misrepresentations and material omissions resulted in a significant loss to Arch, which would have proceeded differently and settled Narco Freedom’s insurance claim for substantially less money.

Under State law, corporate members, board members, and directors of nonprofits owe their organizations the fiduciary duties of loyalty, care and obedience, which mandate that they place their organization’s interests above their own, abide by all rules and regulations applicable to that organization, and operate the organization in furtherance of its core mission. Prosecutors allege that all of the defendants arrested today, but particularly Alan Brand and Gerald Bethea, violated all three of these duties by belonging to and participating in the operation of this criminal enterprise.

Today’s indictments charge the defendants with a host of crimes.

Alan Brand, 65, of Melville, N.Y.– Enterprise Corruption; Grand Larceny in the First Degree (3 counts); Grand Larceny in the Second Degree (5 counts); Insurance Fraud in the First Degree, Conspiracy in the Fourth Degree, Commercial Bribe Receiving in the First Degree, Money Laundering in the Second Degree, Offering False Instrument for Filing in the First Degree (5 counts); Social Services Law §366-f (Kickbacks); and Election Law §14-120(1)(Campaign Contribution To Be Under True Name Of Contributor) (6 counts);

Gerald Bethea, 56, of Inwood, N.Y.– Enterprise Corruption; Grand Larceny in the First Degree (3 counts); and Social Services Law §366-f (Kickbacks);

Richard Gross, 61, of Yonkers, N.Y.– Enterprise Corruption; Grand Larceny in the Second Degree (3 counts); and Offering False Instrument for Filing in the First Degree (10 counts);

Jason Brand, 36, of Melville, N.Y.– Enterprise Corruption; Grand Larceny in the Second Degree (2 counts); Insurance Fraud in the First Degree; and Conspiracy in the Fourth Degree;

Narco Freedom – Enterprise Corruption; Grand Larceny in the First Degree (3 counts); Insurance Fraud in the First Degree; Grand Larceny in the Second Degree; Conspiracy in the Fourth Degree; Offering False Instrument for Filing in the First Degree (10 counts); and Social Services Law §366-d (Kickbacks);

Daso Development— Enterprise Corruption; Insurance Fraud in the First Degree, Grand Larceny in the Second Degree; and Conspiracy in the Fourth Degree;

Jonathon Brand, 33, of Huntington, N.Y.– Grand Larceny in the Second Degree; and

John Cornachio, 60, of Huntington, N.Y.– Grand Larceny in the Second Degree.

Enterprise Corruption, Grand Larceny in the First Degree and Insurance Fraud in the First Degree are each class B felonies and carry a maximum term of incarceration of 25 years. Grand Larceny in the Second Degree and Money Laundering in the Second Degree are class C felonies and carry a maximum term of incarceration of 15 years in state prison. The remaining crimes in the indictments are E felonies or misdemeanors and carry lesser terms of incarceration.

In addition to the today’s indictments, the Attorney General amended its earlier forfeiture action, seeking to increase the amount of assets subject to a freezing order and to add defendants and claims. The Attorney General’s prior request to freeze of up to $4 million in assets was granted. Yesterday, the Attorney General was granted court permission to freeze an additional $29 million in assets. The Attorney General further expanded its previously obtained temporary restraining order to preclude all of the defendants indicted today from transferring assets.

Throughout this investigation, the Attorney General’s office has worked closely with those state agencies that regulate Narco Freedom’s substance abuse treatment programs. The goal of this coordinated effort has been to ensure the continuity of care for all patients that use Narco Freedom’s services. In particular, the Attorney General would like to thank the Office of Alcoholism and Substance Abuse Services, the Office of the Medicaid Inspector General, the New York State Department of Health, and the New York City Human Resources Administration.

The criminal case is being prosecuted by Assistant Attorneys General Kristen Conklin, Megan Friedland, and Jihee Suh. The civil case, including this week’s amended forfeiture action, is being handled by Assistant Attorneys General Carolyn T. Ellis, Alee N. Scott and David Abrams. The investigation was led by Supervising Investigator Michael Casado, Senior Investigator Albert Maiorano and Investigators Dominic DiGennaro, Steven Broomer, Dave Ryan, Julie Clancy, Valerie Patrick, Sixto Santiago and Angel LaPorte. Forensic analysis was provided by Principal Auditor Investigator Manny Archer, and by Special Audit Investigators Patricia Iemma, Giovanni Liotine and Nick Thottam. Christopher M. Shaw is MFCU New York City Regional Director, Thomas O’Hanlon is MFCU Chief of Criminal Investigations – Downstate, Kenneth Morgan is MFCU Deputy Chief Investigator, and Thomasina Smith is MFCU Chief Auditor. MFCU is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

The charges filed in this case are accusations. The defendants are presumed innocent until proven guilty in a court of law.

NEW YORK—Attorney General Eric T. Schneiderman announced today that his office will be introducing an application-programming interface (API) that will allow application developers to access and use data from its NYOpenGovernment.com database. NYOpenGovernment.com is an effort by the Attorney General’s office to promote the public’s right to know and monitor governmental decision-making; it is the only statewide resource that aggregates a range of sources for state government information – including data on campaign finance, lobbying, charities, state contracts, member items, corporate registrations, elected officials, and legislation – which is otherwise scattered or difficult to retrieve. The NY Open Government API will allow developers easier access to this data, which they can use in the creation of applications. Currently, the database is used by good government groups, reporters, and law enforcement agencies for analysis, general information, and even investigations.

“Giving the public direct access to this data will help shine a much-needed light on our state government,” Attorney General Schneiderman said. “In an effort to make government more transparent and responsive, we are providing the public access to these tools. It’s long past time we brought transparency into the 21st century, and I look forward to seeing what analysis and applications are developed from the data."

Today’s announcement was made during Sunshine Week, a national initiative to promote a dialogue about the importance of open government and freedom of information. The introduction of an API for NY’s Open Government website will begin with testing by students at NYU’s Center for Urban Science and Progress (CUSP) program. Eventually, the API will be open to the public and all interested developers.

An API is a set of programming instructions and standards for accessing a web-based software application or tool. API’s allow app developers to query databases and build applications that rely on that data.

Currently, the NY Open Government databases can only be accessed through a simple search tool bar. The API will allow developers to build new graphical interfaces, devise algorithms for mining the data in innovative ways, create applications that join the Open Government information with other publicly available data, and a host of other potentially useful approaches. Other government agencies have begun to see the benefit of APIs, including the New York State Senate, New York State’s Open NY, and NYC OpenData. The Metropolitan Transit Authority’s API currently powers numerous apps that make navigating public transportation easier than ever before. Many popular media sites also offer APIs, including Facebook, Twitter, and Amazon. 

This initiative is being led for the Attorney General's Office by Special Counsel Simon Brandler, Research Director Lacey Keller, Confidential Assistant Liam Arbetman, Information Technology Specialist Namita Mishra and Information Technology Specialist Kevin Ryan.

CORTLAND – Attorney General Eric T. Schneiderman today announced the conviction of Joseph Fezza, the owner of a car dealership in Cortlandville, on five felony charges stemming from his collection and retention of sales taxes on vehicles he sold over a period of more than five years, and his failure to file sales tax and personal income tax returns.

“With Tax Day around the corner, today’s conviction shows that my office has no tolerance for business owners who cheat on their taxes,” Attorney General Schneiderman said. “When an unscrupulous few fail to pay their taxes, other hardworking New Yorkers have to shoulder the burden. If you rip off honest taxpayers, you will face time in prison.”

Fezza, 47, of Cortland, pleaded guilty to the five-count indictment lodged against him in Cortland County Court before the Honorable Julie A. Campbell, including one count of Grand Larceny in the Second Degree (a Class C felony), two counts of Criminal Tax Fraud in the Third Degree (a class D felony), and two counts of Repeated Failure to File Personal Income Tax Returns (a class E felony).

In exchange for his plea, Justice Campbell promised Fezza a sentence of up to one year in jail. Fezza is required to pay $50,000 in restitution on or before the date of his sentence. The balance of the restitution will either be agreed upon by the parties by June 15, 2015 or the Court will hold a restitution hearing on the matter.

Fezza’s sentencing is scheduled before Justice Campbell on October 1, 2015.

According to the indictment and statements made by prosecutors, Fezza, in his position as the owner and sole proprietor of JF Auto World, also known as Auto World, located at 991 Tompkins Street, Town of Cortlandville, New York, collected more than $175,000 in sales taxes from consumers between March 1, 2004 through September 20, 2009, but failed to remit those taxes to New York State. Fezza also failed to file quarterly sales tax returns, as well as several years' worth of personal income tax returns during this period.

The case stems from an investigation initiated in 2011 by the New York State Department of Taxation and Finance and the Attorney General’s Criminal Enforcement and Financial Crimes Bureau.

The Attorney General thanks the New York State Department of Taxation and Finance for their valuable assistance in the case.

The New York State Department of Taxation and Finance’s case is supervised by Director of Investigations Michael Szrama. 

The investigation was conducted by Investigator Mitch Paurowski and Deputy Chief Investigator Tony Karam. The Investigations Division is led by Chief Investigator Dominick Zarrella.

The case is being handled by Assistant Attorney General Joshua Vinciguerra 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 Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced the unsealing of three indictments charging 22 individuals with 159 criminal counts for their alleged roles in two loosely-related narcotics rings that distributed cocaine and heroin throughout the Capital Region. The indictments were unsealed in Albany County Court before the Honorable Peter Lynch. State and local law enforcement agents, led by the New York State Attorney General’s Organized Crime Task Force (OCTF), the Albany Police Department, and the New York State Police have been investigating the drug rings for ten months. The case was code-named “Operation June Bug” after Gerard “June” Carter, an alleged central figure in the heroin distribution network.

One ring, led by Carter, allegedly trafficked heroin purchased in New Jersey to Albany, Rensselaer, Saratoga, Schenectady, and Washington Counties in the Capital Region. Carter had at least five re-sellers who are alleged to have been dealing the heroin in these counties. The second ring, led by Latasha “Tasha” Gause, and loosely affiliated with the ring led by Carter, allegedly trafficked cocaine obtained from suppliers in Brooklyn, Queens and Connecticut. Gause had at least nine re-sellers who are alleged to have been dealing cocaine in the Capital District.

"A heroin epidemic is devastating families in every community across our state, from New York City to the smallest towns and villages,” said Attorney General Schneiderman.“Today’s indictments strikes a blow against those who are fueling this cycle of addiction and inflicting harm on far too many New Yorkers. My office and our law enforcement partners will not rest until we see an end to this scourge of illegal drugs".

During the arrests of the defendants this morning, investigators seized two ounces of crack cocaine, three guns and 100 bundles heroin.

According to the indictments unsealed today, Carter, of Albany, allegedly purchased heroin from a supplier in New Jersey for $30 per bundle (a term that refers to a package of 10 individually-packaged hits of heroin). Carter and his associates allegedly met their heroin supplier, Quaddir Moss, at the Woodbury Commons Premium Outlet Mall in Orange County. Carter and the supplier allegedly used the many parking lots surrounding the outlet mall for their meetings, at which thousands of dollars were allegedly exchanged for heroin.

According to the court papers, Carter had dealers operating in several counties and selling the heroin bundles for $150, a 500 percent profit. One of Carter’s main re-sellers in the Hudson Falls area was defendant Eric Ladd, who allegedly re-sold heroin to addicts throughout Washington County. In an apparent attempt to minimize the effectiveness of law enforcement wiretapping, Carter and his associates spoke in a complex coded language associated with the Nation of Gods and Earth—a splinter organization from the Nation of Islam, with which Carter is believed to be affiliated.

Gause, the alleged central figure in the cocaine distribution ring, allegedly involved her family in drug trafficking activities. Gause’s son, Javar Malloy, 20, is charged as part of this conspiracy and with distributing cocaine in the Capital District. Her live-in boyfriend, Bu’Quan Galloway, is charged with distributing cocaine and heroin. Wiretap evidence showed that Gause, who also faces child endangerment charges because she allegedly brought her younger kids with her on drug deals, allegedly sold cocaine to other members her family on a regular basis as well.

Gause allegedly got the cocaine she trafficked from two relatives, Marklen Hay and Gary Chambers, who delivered drugs to her from the New York City area. According to the court papers, wiretap evidence showed that Chambers purchasing hundreds of grams of cocaine from a defendant listed in the indictment as John Doe near the historic Belmont horse racing track on Long Island.

The indictments, which were unsealed today, charge each of the 22 defendants with a top charge of Conspiracy In The Second Degree, which carries a maximum penalty of 25 years in prison. Other top felony charges include Criminal Sale of a Controlled Substance in the First Degree, which carries a maximum penalty of 20 years incarceration. If convicted of all the offenses charged, defendants Gerard Carter, Gary Chambers, Bu’Quan Galloway, Latasha Gause, Dontray Lunday, Quaddir Moss, and James Patterson each face more than 75 years behind bars.

Since 2011, the Attorney General’s Organized Crime Task Force has taken down 23 large drug and gun trafficking rings New York State. And, in the course of over 550 felony narcotics arrests, OCTF has seized over $1.5 million and 80 guns and more than 2,000 pounds of illegal drugs off our streets.

“This case is in direct response to street level gun violence that occurred in 2014,” said Albany Police Deputy Chief Brendan Cox. “Working with our law enforcement partners and the members of our community, the Albany Police Department continues to prevent violence from occurring on our streets. I thank the New York State Attorney General’s Office, the New York State Police and the United States Marshals Service for their unwavering commitment to working together and keeping the residents of Albany safe.”

The following 22 people are charged in the indictments handed up today:

• Shaquel Brown, 22, Albany, NY
• Keith Campbell, 44, Westbrook, CT
• Gerard Carter, 26, Albany, NY
• Tariq Clark, 36, Troy, NY
• Gary Chambers, 41, Rensselaer, NY
• Marcina Dean, 43, Albany, NY
• Miriam Edmunds, 26, Albany, NY
• Bu’Quan Galloway, 26, Albany, NY
• Latasha Gause, 37, Albany, NY
• Marklen Hay, 45, Queens, NY
• Eric Ladd, 36, Hudson Falls, NY
• Dontray Lunday, 34, Schenectady, NY
• Javar Malloy, 21, Albany, NY
• Ramar Milner, 30, Albany, NY
• Quaddir Moss, 35, Troy, NY
• Ernest Muller, 22, Albany, NY
• James Patterson, 43, Albany, NY
• Obar Robinson, 21, Albany, NY
• Naseir Simmons, 16, Albany, NY
• Elijah Thorpe, 35, Belleville, NJ
• Robert Tufano, 27, North Greenbush, NY
• John Doe, Queens, NY

The charges contained in the indictment are the result of an ten-month joint investigation by the OCTF and the City of Albany Police Department, with the assistance of the New York State Police, the NY National Guard Counterdrug Task Force, the New Jersey Attorney General’s Office and the United States Marshalls Service.

The investigation was directed by OCTF Special Investigator John Monte, with assistance from Special Investigator William Charles, and Deputy Chief Investigator Gene Black, with assistance from Chief of Investigations Dominick Zarrella. The Albany Police Department’s involvement was directed by Sergeant Brian Quinn, Sergeant Richard Gorleski and Detective James Wood, under the supervision of Lt. Ed O'Leary, Commander Bob Sears, and Chief of Police Steven Krokoff. The New York State Police Community Narcotics Enforcement Team (CNET) and was directed by CNET Lt. Carla DiRienzo and Senior Investigator Dan Kiley.

The case is being prosecuted by OCTF Assistant Deputy Attorney General Andrew McElwee. Peri Alyse Kadanoff is the OCTF Deputy Attorney General, and Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice.

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

GREENWICH– Attorney General Eric T. Schneiderman today announced the arrest and arraignment of Suzanne Shumway, former Executive Director of Battenkill Community Services, Inc. (BCS), a not-for-profit agency servicing developmentally disabled individuals, for allegedly defrauding Medicaid for services rendered to BCS consumers and theft of funds of a developmentally disabled person under her care. If convicted, she could face 1 1/3 to 4 years in prison.

“Stealing from a developmentally disabled person who relies on a caregiver to act in his or her best interests is the ultimate breach of trust,” Attorney General Schneiderman said. “My office will continue to vigorously pursue the unscrupulous individuals who line their pockets at the expense of those who depend on them.”

Suzanne Shumway was the Executive Director of BCS and was responsible for coordinating and providing care to developmentally disabled individuals, referred to as BCS consumers. In addition to her role as Executive Director, from March 2010 through April 2012, Shumway was also employed by Community, Work & Independence, Inc. (CWI) as a personal assistant through the Consumer Directed Personal Assistance Program (CDPAP). The felony complaint alleges that Shumway submitted false timesheets to CWI claiming that she provided care to two BCS consumers for dates and times that Shumway authorized Medicaid billings for simultaneous care through BCS. Specifically, the investigation revealed that Shumway falsely claimed to CWI that she provided one-on-one care to consumers. However, Shumway personally provided group services to the same consumers through BCS on overlapping dates and times. As a result, Medicaid paid CWI a total of $2,207.79 for services claimed by Shumway. 

Further, the felony complaint alleges that from on or about January 2009 through April 2012, Shumway maintained joint accounts with several BCS consumers and was responsible for the management of monthly funds of supplemental security income. Shumway sought permission from family members of consumers to manage their funds. During this time, Shumway used funds from the bank account of a consumer identified as “A.R.” for payment of personal expenses, including satisfaction of her school taxes and pet and farm supplies, totaling over one thousand dollars.

Shumway, 49, of Greenwich, was charged with two counts of Grand Larceny in the Fourth Degree, E Felony, and 10 counts of Offering a False Instrument for Filing in the First Degree, E Felony, before Honorable William Blake, Greenwich Town Justice. Shumway was released on her own recognizance.

Attorney General Schneiderman thanks New York State Police Investigator Joseph Bearor and the Office for People with Developmental Disabilities (OPWDD) for their assistance with the investigation.

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

The investigation was led by Senior Investigator Julie Clancy with the assistance of Supervising Investigator Dianne Tuffey, Deputy Chief Investigator Upstate William Falk, and Associate Special Auditor/Investigators Megan Mastrianni and Sarah Finning.

Special Assistant Attorney General Erin Lynch of the Medicaid Fraud Control Unit’s Albany Regional Office is prosecuting the case with MFCU Albany Office Regional Director Kathleen Boland. Catherine Wagner is MFCU's Upstate Chief of Criminal Investigations. The Medicaid Fraud Control Unit 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 and United States Attorney for the Southern District of New York Preet Bharara today announced a settlement with the Bank of New York Mellon (“BNYM”) that resolves cases brought by the New York State Office of the Attorney General and the U.S. Attorney’s Office regarding BNYM’s fraudulent foreign exchange (“FX”) practices.  BNYM has agreed to pay $714 million to resolve the federal and state governments’ cases, certain private cases that arose as a result of the same fraud, and investigations by the Securities and Exchange Commission and the U.S. Department of Labor.  In addition to the significant monetary recovery, Attorney General Schneiderman and U.S. Attorney Bharara obtained additional key settlement terms:  namely, BNYM has admitted the factual details of its fraud, will end the employment of certain executives involved in the fraud, will reform its practices to improve and increase the information it provides to its customers, and will waive the deductibility of New York State and local taxes with respect to the New York State portion of the settlement.

“Investors count on financial institutions to tell them the truth about how their investments are being managed. But Bank of New York Mellon misled customers and traded at their expense,” said Attorney General Schneiderman.  “Today’s settlement shows that institutions and individuals responsible for defrauding investors will be held accountable and face serious consequences for their wrongdoing. The outcome also shows what can be achieved when law enforcement agencies collaborate on an important matter such as this one.”

Manhattan U.S. Attorney Preet Bharara said: “The Bank of New York Mellon’s custody clients, many of whom are public pension funds and non-profit organizations, trusted the Bank to be honest about the financial services it was providing and to deal with them fairly.  BNYM and its executives, motivated by outsized profits and bonuses, breached this trust and repeatedly misled clients to believe that the pricing they were getting on foreign exchange was far better than it actually was.  The Bank, after three years of litigation, has finally admitted what was always clear from the evidence – contrary to its various representations, including a claim of ‘best rates,’ the bank in fact gave clients prices at or near the worst interbank rates reported during the trading day.  The bank repeatedly deceived its customers and is paying a heavy penalty for it.  We will not hesitate to pursue and punish financial institutions and their executives who exploit their customer base to improve their bottom lines.”

Of the $714 million in settlement funds announced today, New York State and the Department of Justice will each be allocated $167.5 million, and Attorney General Schneiderman will direct nearly the entire New York State amount to compensate BNYM’s customers who were victims of BNYM’s fraud.  Two New York State agencies – the New York State Deferred Compensation Plan and SUNY – were among the customers BNYM defrauded and will be fully compensated for their losses.  

As alleged in this case, BNYM systematically misrepresented how it handled its customers’ FX transactions.  BNYM told customers that its Standing Instruction FX program was an automated service that allowed a client to rely upon BNYM to obtain an FX rate and execute FX trades on the customer’s behalf without any supervision or direct involvement by the customer, and that BNYM would obtain the “best rates” available for its customers.  Senior BNYM executives knew that BNYM’s representations about FX pricing were false.  In fact, BNYM obtained the best FX rates for itself, gave its customers the worst or close to the worst rates, and kept the difference for itself.  

BNYM is a custody and trust bank that provides a variety of custodial services to large investors, including public pension funds, states, colleges, charities, and foundations.  BNYM’s customers use its FX services when purchasing or selling foreign securities or converting income from foreign investments to U.S. dollars.  

As outlined in the state and federal complaints, BNYM widely disseminated numerous misrepresentations about its Standing Instruction FX service, including that BNYM would conduct Standing Instruction transactions pursuant to “best execution” standards, in a manner designed to “maximize the proceeds of each trade,” that it would obtain the “best rates” available or rates pursuant to “the prevailing global interbank market,” and that the Standing Instruction FX service was “free of charge.”  In truth, BNYM never offered clients “best execution” or the “best rates,” the service was far from free, and certain senior BNYM FX executives knew that BNYM’s representations about the pricing of the Standing Instruction FX service were false.  Instead of the service they promised, BNYM monitored FX rate fluctuations throughout the trading day or session and at the end of each trading day or session, assigned customers the worst or close to the worst rates from that day or session.  At the same time, BNYM was obtaining more favorable rates for itself, and profiting on the difference or “spread” between the two rates.

The New York case began when a whistleblower filed a complaint with the Attorney General’s office in 2009 under the New York False Claims Act.  The New York False Claims Act provides incentives for whistleblowers to report matters where governmental entities, such as pension funds, have been defrauded.  As a state senator, Attorney General Schneiderman authored amendments to strengthen the New York False Claims Act.  Those enhancements, known as the Fraud Enforcement and Recovery Act, expanded the state’s ability to collect damages and penalties from corporations or people who defraud the government, or violate their obligations to pay government entities.  The New York False Claims Act also allows a whistleblower to receive a percentage of any recovery made on behalf of the State of New York.  The Attorney General expresses his thanks to the whistleblower in this case for helping to bring BNYM’s conduct to light.

The settlement announced today is the product of a joint effort by the New York Attorney General’s office and the United States Attorney’s office.  After each office separately investigated BNYM’s fraudulent practices and each filed lawsuits against BNYM in 2011, the two offices worked together on discovery and on negotiating this significant settlement.  Attorney General Schneiderman appreciates the successful collaboration with the U.S. Attorney’s Office on this matter, which has produced an outstanding result for the public.

The state’s case was handled by Karla G. Sanchez, Executive Deputy Attorney General for the Division of Economic Justice, Roger Waldman, Senior Enforcement Counsel, Katherine Milgram, Deputy Chief of the Investor Protection Bureau, Assistant Attorneys General David Castleman, Brian Whitehurst, and Melissa Gable, and Chad Johnson, Chief of the Investor Protection Bureau.

The False Claims Act aspects of the case were handled by Assistant Attorneys General Bryan Kessler and Gregory Krakower and Deputy Bureau Chief Scott Spiegelman, of the Taxpayer Protection Bureau in the Criminal Justice Division.  Kelly Donovan is Executive Deputy Attorney General for Criminal Justice, and Thomas Teige Carroll is Chief of the Taxpayer Protection Bureau. Attorney General Schneiderman created the Taxpayer Protection Bureau in January 2011 specifically to handle cases where the government itself has been defrauded. 

NEW YORK – Attorney General Eric T. Schneiderman sent a letter on March 13th to Senate Majority Leader Mitch McConnell and Senate Minority Leader Harry Reid urging the Senate to confirm Loretta Lynch as U.S. Attorney General. The following are excerpts from the letter:

ON HER POTENTIAL CONFIRMATION: As the Attorney General for the State of New York, I am confident that Ms. Lynch will provide the strong leadership necessary to fully enforce the law and defend the rights of Americans living in my state and across the nation.

ON HER PREVIOUS RECORD: During her tenure as the United States Attorney for the Eastern District of New York, Ms. Lynch has developed a long record of achievements, and she enjoys a reputation for fairly and even-handedly enforcing the law. She demonstrates extraordinary character, sound judgment and clear commitment to the principle of equal justice under the law.

ON HER QUALIFICATIONS: Moreover, the breadth and range of her experience handling some of our nation’s most challenging federal law enforcement matters, her commitment to public service and strong management skills, make her well-suited to serve in this position.

The full letter can be read here. 

NEW YORK – Attorney General Eric T. Schneiderman today announced the appointment of Assistant Attorney General Roberto Lebron as Assistant Attorney General In Charge of the Harlem Regional Office. In his new role, AAGIC Lebron will oversee an office that serves a large constituency in Upper Manhattan and the Bronx, covering issues from consumer frauds to public advocacy litigation.

“For the past 14 years, Roberto Lebron has served New Yorkers in Upper Manhattan and the Bronx with dedication, successfully defending the public interest in cases ranging from fraud against new immigrants to actions against tax scammers.” said Attorney General Schneiderman.“His strong commitment to legal excellence and equal justice for all will be an even greater asset to the people of our state in his new leadership role.”

“My years as Assistant Attorney General have been rewarded by many accomplishments in legal battles to defend hardworking New Yorkers from bad actors. I thank Attorney General Schneiderman for giving me the opportunity to continue to serve the constituency of the Harlem Regional office and bringing justice to a community with pressing needs of legal services." 

Roberto Lebron’s appointment follows the departure of former Assistant Attorney General Guy Mitchell, who was recently appointed as Criminal Court Judge in New York City. Lebron was appointed Acting Assistant Attorney General in Charge of the Harlem Regional Office on February 13, 2015. He also served as Public Integrity Officer.

As Assistant Attorney General, Roberto Lebron investigated and prosecuted affirmative cases. Previously, Lebron worked as an enforcement litigation attorney with the New York City Department of Housing, Preservation and Development. A former president of the Puerto Rican Bar Association, Lebron is a graduate of St. John's University School of Law.

The Harlem Regional office is located at 163 West 125th Street. The Regional Affairs Division is led by Executive Attorney General for Regional Offices Martin J. Mack. 

NEW YORK – Attorney General Eric T. Schneiderman and Comptroller Thomas P. DiNapoli today announced the guilty plea of Roger Burlew, former Highway Superintendent for the Town of Erin, in a public corruption case involving the theft of more than $65,000 in goods and services from the town. Burlew today entered a guilty plea before The Honorable James Hayden in Chemung County Court to the charge of Grand Larceny in the Second Degree, a Class C Felony. As part of a plea agreement, Burlew will be sentenced to six months of incarceration and a period of five years of probation. Burlew will also pay $65,000 in restitution to cover the cost of what was stolen.

“Today’s guilty plea is the latest in my office’s joint partnership with Comptroller DiNapoli to root out public corruption whenever and wherever we find it in the Empire State,” said Attorney General Schneiderman. “Corruption undermines the public’s faith in government and that is why we have taken on more than sixty public corruption cases against state and local officials and their cronies, including securing the conviction of a sitting State Senator and indictments against members of the State Assembly and the New York City Council.”

“Mr. Burlew plundered the public’s town garage for more than $60,000 in equipment for his private mechanic’s business,” said State Comptroller Thomas P. DiNapoli.“This prosecution is a warning to those who blur the line between public and private property. I thank Attorney General Schneiderman and his staff for their diligent work on this case. Together, our Operation Integrity partnership has led to more than 60 arrests and more than $7 million in restitution. We will continue to expose public corruption, prosecute those responsible and seek restitution for New York taxpayers.”

Today’s guilty plea follows charges brought against Burlew, who was appointed Highway Superintendent in 1998, detailing a systematic course of conduct wherein he stole property valued at over $65,000 from the Town of Erin. The thefts of products and equipment were for Burlew’s personal use or the use of a third person. According to his signed plea agreement, Burlew admitted making personal purchases and then fraudulently filling out and submitting Town vouchers for the Town Board’s approval and payment. In the vouchers, he falsely indicated that the purchases were for legitimate Town Highway Department purposes, when they were actually for personal use.

The Joint Task Force on Public Integrity is a cooperative effort between Attorney General Schneiderman's and Comptroller DiNapoli's offices to root out public corruption and maximize the resources of each office. Attorney General Schneiderman thanks the staff at Comptroller DiNapoli’s Office for their invaluable cooperation and assistance in this investigation.

Assistant Attorney General Mary Gorman of the Public Integrity Bureau is prosecuting the case, with support from Deputy Bureau Chief Stacy Aronowitz, Bureau Chief Daniel Cort, and Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The prosecutors were assisted by Investigations Bureau Investigator Joel Cordone and Investigator David Buske, with support from Supervising Investigator Richard Doyle, Deputy Bureau Chief Antoine Karam, and Bureau Chief Dominick Zarrella.

The joint investigation was conducted with the Comptroller’s Division of Investigations and the Division of Local Government and School Accountability.

NEW YORK – Attorney General Eric T. Schneiderman, Mayor Bill de Blasio, and Dominican elected officials and community leaders, today announced new leadership for the Dominican Day Parade following the agreement his office obtained from the Parade’s long-time organizer, Nelson Peña.  For years, the organizations Peña purported to run had no functioning boards of directors, failed to maintain proper books and records, and failed to file the annual reports nonprofits are required to file under State law.  Under the terms of this agreement, Mr. Peña has relinquished all of his positions with the Dominican Day Parade, which is traditionally held in Manhattan on the second Sunday in August.  In addition, he has agreed to a minimum three-year ban against assuming any official or leadership role – as a director, officer, employee, agent or otherwise – in the Parade or in any other New York City parade that celebrates the culture and heritage of the Dominican community.  He has further agreed to the dissolution of the various not-for-profit entities that he used over the years to operate and raise monies for the Parade, and has withdrawn the application he filed for a City permit to run the Parade in 2015.

Following Peña’s agreement to resign,  a new not-for-profit organization, Dominican Day Parade, Inc., with a new board of distinguished individuals drawn from diverse sectors of the Dominican-American community, has applied for the City’s permit for the Dominican Day Parade. Under the leadership of the new organization, the Parade this year is scheduled to be held on Manhattan’s Avenue of the Americas on August 9, 2015.
 
“The Dominican Day Parade is a key institution for the celebration of Dominican culture and heritage in New York and throughout the nation,” said Attorney General Schneiderman. “Whatever nonprofit organization is responsible for its operation must be properly constituted, comply with New York law, and be accountable and transparent.  For years, Nelson Peña has run the Parade without regard to these requirements.  The Dominican community deserves better, and with the steps announced today, it will receive what it deserves – strong, accountable leadership for the Dominican Day Parade.”
 
“The Dominican Parade is an important cultural institution in the city, and we are pleased to have worked with the community on a resolution to ensure it continues to be a source of pride, and fulfills its mission of celebrating the contributions of Dominicans to New York City,” said Mayor de Blasio. “The new board will ensure that the desfile will be as strong and vibrant as it should be, and I look forward to joining this year’s festivities.”
 
“On behalf of the Board, we are absolutely committed to give our beloved Dominican community a Parade of which we can all be proud,” said Angela Fernández, Chair of Dominican Day Parade, Inc.“Our culture and heritage are an integral part of the American story, and deserve to be recognized and celebrated appropriately. We look forward to a great Parade this August and in many years to come.”
 
New York State Senator Adriano Espaillat said, "Entering its 34th year, the Dominican Day Parade is a mainstay of the Dominican-American community,  attracting hundreds of thousands of spectators who line up to enjoy the annual celebration of Dominican pride and culture every year. I am confident that the newly formed Dominican Day Parade, Inc., and its impressive board of directors which includes business, cultural, and community leaders, can carry on the tradition of creating a great celebration that shares Dominican culture with attendees from across the city and around the country."

“The Dominican Day Parade is part of our culture, of our city. We must make sure all Dominicans and New Yorkers keep enjoying this traditional celebration for the years to come. We cannot afford to lose such a wonderful event in our city as hundreds of thousands of parade-goers celebrate Dominican heritage," New York State Senator Jose Peralta said. I welcome the new leadership and I would like to thank Attorney General Eric Schneiderman for his work and efforts to make the Dominican Day Parade a better institution.”     

New York State Assemblymember Guillermo Linares said, "What is most important is that the parade highlights Dominican-American linguistic traditions, cultural values, and reaffirms the contributions of both the diaspora in the United States and the Dominican Republic. Congratulations to the new board and I look forward to a great Dominican parade in August."

"This is a new day for the Dominican Day parade," said New York State Assemblymember Victor Pichardo. "On behalf of the Dominican community that I represent in the Bronx, I look forward to working with the new board to make sure our heritage and culture is well represented throughout New York State and around the world."
 
New York City Councilmember Julissa Ferreras said, “Like all Dominicanos, I am proud of my heritage and the lives we have built for ourselves in New York City. Our community deserves a celebration that reflects our honest, hardworking, family-oriented and festive spirit.  I am convinced that under this new leadership, the Dominican Day Parade will thrive once again as a symbol of how far our community has come.”

New York City Councilmember Ydanis Rodríguez said, “Today marks a new chapter for the Dominican Day Parade. Under the leadership of Angela Fernandez, I am sure that we will see a parade that not only effusively celebrates our heritage and culture but abides by the rules and regulations that protect our communities. With increased accountability we can ensure that the Dominican Day Parade is the best it can be in 2015. Congratulations to Angela, the new Dominican Day Parade board and the entire community on today’s announcement!”

"As a son of Dominican Immigrants and one of the youngest Dominicans elected into office, I have dreamt of marching in the Dominican Parade, but under the previous leadership, I was not allowed to walk because I was branded by Mr. Nelson Peña as not being 'Dominican' enough," said New York City Councilmember Rafael Espinal. "I am proud to be part of a coalition that was able to build a team that would make the parade stronger and more inclusive than it has ever been. I look forward to finally being able to proudly march and celebrate my heritage with thousands of my Dominican brothers and sisters."

New York City Councilmember Antonio Reynoso said, "I am happy to know the Dominican Day Parade will continue to exist under the leadership of the new board. This board is a true reflection of our heritage and talent, they will make our communities proud. We will continue to celebrate the contributions of the Dominican people to the City of New York and this great country. My colleagues in office and I thank the A.G.’s office for its vigilance and assistance in maintaining the staple that is the Parade to Dominicans in New York."

Julissa Reynoso, Former US Ambassador and Attorney said, "As a New Yorker and Dominican-American, I celebrate this important day for all New Yorkers. The Dominican Day Parade belongs to all of us, and should represent the best of us. I am deeply grateful to Mayor de Blasio, Attorney General Schneiderman and our elected leaders for helping to assemble such a high-quality and inclusive board to carry out this wonderful event."

Junot Díaz, Dominican-American writer, MIT Professor and Pulitzer Prize Winner said, “I am elated to see the DDP in such extraordinarily capable hands; the Dominican community deserves institutions dedicated to the principles of integrity, transparency, accountability and civic-mindedness and this is precisely what this new board will provide us—with a community organization worth celebrating."

Under the Attorney General’s agreement with Mr. Peña, the organizations to be dissolved are Desfile y Festival Nacional Dominicano, Inc., Comite del Desfile y Festival Dominicano, Inc., Desfile Nacional Dominicano USA, Inc. and Festival Popular Domincano, Inc. Mr Peña has resigned his positions with all of these groups, and has relinquished all control over any of their intellectual property and ownership rights. The organizations are not believed to have any financial assets.
 
Concurrent with the Attorney General’s agreement with Mr. Peña, the City of New York, working with the elected leaders of the Dominican community throughout the City and the Attorney General’s Office, identified a diverse group of community, business, labor and academic volunteers to form a nonprofit organization capable of leading the Parade consistent with the legitimate expectations of the community.  The directors of Dominican Day Parade, Inc., the newly-created nonprofit corporation established for this purpose, include:
 
Leonardo Ivan Domínguez
Musician, Dancer and Agricultural Scientist
 
Dr. Bienvenido Fajardo
Physician, affiliated with New York Presbyterian Hospital/Columbia University Medical Center and NYU Langone Medical Center
 
Angela Fernández
Executive Director, Northern Manhattan Coalition for Immigrant Rights
 
Rudy Fuertes
CEO, Fine Fare Supermarkets and President, National Supermarkets Association
 
Henry Garrido
Executive Director, District Council 37
 
Prof. Ramona Hernández, Ph.D.
Director, CUNY Dominican Studies Institute, Professor of Sociology, City College of New York
 
Maria Khury
President, Khury Tours, Travel & Insurance Inc.
 
Maria Lizardo
Executive Director, Northern Manhattan Improvement Corp.
 
Benny Lorenzo
General Partner, B.L. Capital Partners, L.P.
 
Dr. Silvio Torres Saillant
Professor of English, College of Arts and Sciences at Syracuse University
 
Luis Tejada
Executive Director, Mirabal Sisters Cultural and Community Center
 
Estela Vazquez
Executive Vice President, SEIU 1199
 
The officers of the corporation are Angela Fernandez (Chair); Luis Tejada (1st Vice Chair); Maria Lizardo (2nd Vice Chair); Rudy Fuertes (Treasurer); and Benny Lorenzo (Secretary). Together, the 12 directors of the new nonprofit organization will bring a much broader range of competencies and perspectives to the leadership of the Dominican Day Parade than it has ever enjoyed before.
 
This matter was handled by Executive Division Senior Enforcement Counsel David Nachman, Assistant Attorney General Jennifer Michael of the Charities Bureau and Charities Bureau Enforcement Section Chief Sean Courtney.  The Charities Bureau is led by James Sheehan and the Division of Social Justice by Alvin Bragg.

NEW YORK – Attorney General Eric T. Schneiderman and State Comptroller Thomas P. DiNapoli today announced the guilty plea of Thomas Capuano, the former Commissioner of the Department of Public Works of the City of Renssealer Department of Public Works, for teaming with two DPW employees to divert $46,000 from the city by pocketing the cash from scrap metals acquired as part of their jobs with the city.

Capuano pleaded guilty today in Rensselaer County Court to Grand Larceny in the Fourth Degree (a Class E felony), which carries a potential prison sentence of one and a third to four years. Capuano sold the scrap metal for his personal benefit between 2009 and 2013.

“Those who serve the public must be held to high ethical standards, and that is why my office has partnered with Comptroller DiNapoli on Operation Integrity to root out corruption and misuse of taxpayer dollars across our state,” said Attorney General Schneiderman. “Today’s guilty plea ensures accountability for the theft of $46,000 and is the latest in over 60 public corruption cases against we have brought against state and local officials and their cronies since 2011.”

"Scrap metal can be a valuable commodity and the public rightly should have expected these employees weren’t pocketing the cash from it for themselves. Using public office for personal gain is a violation of the public trust and will not be tolerated," said State Comptroller DiNapoli. "My office will continue to partner with Attorney General Schneiderman to root out public corruption and hold those who abuse their position accountable." 

According to documents filed in court, Thomas Capuano was the Commissioner of the Rensselaer Department of Public Works, and the supervisor of his two co-defendants, Ronald Foust and Jeffrey Clark. Surveillance videos from a local scrap yard showed Foust and Clark cashing in items discarded by city residents. Foust and Clark later implicated Capuano, their supervisor, in the scheme. Both Foust and Clark have pleaded guilty for their roles in the scheme and are awaiting sentencing.

The Sanitation Division within the City’s Department of Public Works collects the city’s metals, including refrigerators, stoves, and copper coil that city residents leave on their curbs for home pick-up. The Sanitation Division then takes collected items to Rensselaer Iron, a scrap yard in Rensselaer County where the city has an account. In exchange, Rensselaer Iron writes a check to the city for the value of the metal turned in.

Court documents indicate that Foust, who was the Foreman of the sanitation crew, told investigators that at some point prior to 2010, he had the idea that rather than take both the bulk metal and scrap metal to Rensselaer Iron, he could separate the scrap metal from the bulk metal, and take the scrap metal to another scrap yard in Albany, Capitol Scrap, that paid out in cash. In doing so, he could pocket some extra money without the bulk metal even appearing to have been stripped of its parts. Foust took this idea to his supervisor, Mr. Capuano, who approved of the idea and allowed him to use a city truck to make the trips during business hours. According to the felony complaint filed in court, Foust and Clark shared part of the proceeds with Mr. Capuano.  This scheme involved at least $46,000 in theft from the city during the four year period.

The Joint Task Force on Public Integrity is a cooperative effort between Attorney General Schneiderman's and Comptroller DiNapoli's offices to root out public corruption and maximize the resources of each office. Attorney General Schneiderman thanks the staff at Comptroller DiNapoli’s Office for their invaluable cooperation and assistance in this investigation.

Prosecuting the case is Assistant Attorney General Christopher Baynes of the Attorney General’s Public Integrity Bureau, assisted by Assistant Attorney General Rachel Doft and former Assistant Attorney General Colleen Glavin. The Public Integrity Bureau is led by Bureau Chief Daniel Cort and Deputy Bureau Chief Stacy Aronowitz. The Public Integrity Bureau is part of the Division of Criminal Justice led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The investigation was handled by Investigator Dennis Tomasone, with support from Deputy Chief Investigator Antoine Karam and Chief Investigator Dominick Zarrella of the Attorney General's Investigations Bureau.

The joint investigation was conducted with the Comptroller’s Division of Investigations.

NEW YORK – Attorney General Eric T. Schneiderman today released the following statement in response to reports that Radio Shack may sell private customer data as part of its bankruptcy sale. The company’s privacy policy says that the company will not sell or rent personal information.

“When a company collects private customer data on the condition that it will not be resold, it is the company’s responsibility to uphold their end of the bargain,” said Attorney General Schneiderman. “My office will continue to monitor Radio Shack’s bankruptcy sale and whether it includes auctioning off private customer data. We are committed to taking appropriate action to protect New York consumers.”

As Radio Shack faces a bankruptcy sale, reports suggest the company may attempt to sell customer data. The company’s privacy policy currently states that:

• “We will not sell or rent your personally identifiable information to anyone at any time.
• We will not use any personal information beyond what is necessary to assist us in delivering to you the services you have requested.
• We may send personally identifiable information about you to other organizations when: We have your consent to share the information (you will be provided the opportunity to opt-out if you desire).”  - RadioShack Privacy Policy, 3/25/2015

PEARL RIVER – Attorney General Eric T. Schneiderman today announced the arrest of Terri Stephens-Traverse for allegedly stealing several pills containing oxycodone from an Orange County nursing facility’s emergency pain medication supply. Stephens-Traverse was formerly employed at Campbell Hall Rehabilitation Center located in Campbell Hall, a hamlet in the Town of Hamptonburgh in Orange County.

“Resident safety is jeopardized when those responsible for their care are under the influence of dangerous narcotics,” Attorney General Schneiderman said. “Opioid medications are highly addictive, and they must be closely monitored. My office will continue to prosecute unscrupulous medical professionals who steal patient medication and compromise the care they receive.”

On six separate occasions between January 23, 2013 and February 2, 2013, Stephens-Traverse, while working as a supervising nurse, allegedly stole powerful pain medication containing the narcotic oxycodone from an emergency supply kept on hand by the Center to fill new pain medication prescriptions for its residents. To conceal her theft, Stephens-Traverse allegedly falsified Center records and forged the signatures of assigned medication nurses, to indicate that the medications were administered to residents in her care when, in fact, she kept the pills for personal use.

Stephens-Traverse, 46, was charged in Hamptonburgh Town Justice Court with Falsifying Business Records in the First Degree (a class E felony), Forgery in the Third Degree (a class A misdemeanor), Criminal Possession of a Controlled Substance in the Seventh Degree (a class A misdemeanor) and Petit Larceny (a class A misdemeanor). Class E felonies carry a maximum penalty of four years in prison, while class A misdemeanors carry a maximum penalty of one year in jail.

Stephens-Traverse, of Inverness, Florida, was arraigned before Judge Edward Souto and released on her own recognizance. She is due back in court on May 27, 2015.

The charges brought today are accusations, and the defendant is presumed innocent until and unless proven guilty.

The case was investigated by Medicaid Fraud Control Unit (MFCU) Senior Investigator Frank Bluszcz with the assistance of Supervising Investigator Peter Markiewicz.

The case is being prosecuted by Special Assistant Attorney General Susan Bloom of the MFCU Pearl River Regional Office with the assistance of Regional Director Anne Jardine. Thomas O’Hanlon is the Chief of Criminal Investigations-Downstate. The MFCU is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman today announced the indictment of 13 individuals charged with conspiring to distribute heroin from New York City across state and county lines into Orange, Sullivan, and Nassau Counties, as well as Pittsburgh, Pennsylvania. Starting in June 2014, law enforcement agents from the New York Attorney General’s Organized Crime Task Force (OCTF) and the New York State Police’s Community Narcotics Enforcement Team (CNET) conducted a joint investigation, code-named “Operation Iron Horse,” that included covert physical surveillance and hundreds of hours of wiretaps that identified this alleged multicounty and multistate heroin distribution network. The indictment charges 13 people with a combined 179 counts related to the trafficking and possession of heroin. One defendant – who called himself “The Prime Minister” – is charged with Operating as a Major Trafficker, the only felony narcotics charge in the state that carries as possible life sentence.

“For the third time in as many weeks, we have dismantled a large heroin ring that allegedly crossed county and state lines, stretching from Pittsburgh to Long Island,” said Attorney General Schneiderman. “The tragic reality is that we are in the midst of a heroin epidemic in New York State – and the conventional wisdom that these drugs are confined to inner cities is clearly wrong. Using every tool and resources at my office’s disposal, we will continue our efforts to root out drug abuse in every New York community suffering from the blight of illegal narcotics.”

“With today's arrests, law enforcement is once again sending a strong message that this type of crime will not be tolerated in New York State,” said New York State Police Superintendent Joseph A. D'Amico. “These individuals are accused of carrying heroin on public transportation and putting innocent lives at risk. I commend the members of the New York State Police Community Narcotics Enforcement team and our law enforcement partners for the inter-agency cooperation and coordination it takes to get drugs off our streets.”

As outlined in the indictment unsealed today by the Orange County Court, evidence gathered by state investigators showed that Brian Bacon – a.k.a. “The Prime Minister” – was the alleged kingpin behind a major heroin distribution network based in New York State. This network allegedly stretched from Harlem and the Bronx, where Bacon lives and works, to Nassau, Orange, and Sullivan Counties in New York and Allegheny County in Pennsylvania.

As alleged, Bacon sold up to a kilogram of heroin per month with assistance from his son, Tamar Dillard, and his girlfriend, Donna Marie Haggans, who were integral to the packaging and delivery of the heroin to customers and resellers, as well as the handling of money. Bacon was also allegedly assisted by Wallace Walker – the self-styled “quality control officer” – who distributed heroin to third parties, who would test and then rate the quality, thereby permitting Bacon to gauge how much he could “cut” the heroin and the price he should charge.

As detailed in the indictment, Bacon had two suppliers: an as-yet unidentified male and Raymos Bertrand. The main resellers allegedly supplied by Bacon were: Jerome Turnbough, from Newburgh; Roderick Copeland, from upper Manhattan; Jamaul Aziz, who currently resides in Sullivan County, New York; and Kenneth Parris, from Uniondale.

As alleged, Bacon regularly sent his son, Dillard, to take the Metro-North train from the 125th Street station in Harlem to deliver drugs to Turnbough in Newburgh. Turnbough also allegedly traveled by train to New York City, where he would buy heroin to take back up to Newburgh.

Another one of the main resellers, Roderick Copeland, allegedly acquired heroin from Bacon every two weeks and gave it to a co-conspirator, William Thomas, who regularly traveled by bus between the Port Authority Bus Terminal in Manhattan and Pittsburgh, where the heroin was then distributed.

Those charged in the indictment are:

• BRIAN BACON, a.k.a. Prime Minister, 52, Bronx, NY
• JEROME TURNBOUGH, 55, Newburgh, NY
• DEVONNA BARRERAS, a.k.a. Creechbarreras, 22, Newburgh, NY
• TAMAR DILLARD, a.k.a. Young Buck, 37, Bronx, NY
• KENNETH PARRIS, 42, Uniondale, NY
• JAMAUL AZIZ, 34, Monticello, NY
• RODERICK COPELAND, 51, Manhattan, NY
• DONNA MARIE HAGGANS, 49, Bronx, NY
• WALLACE WALKER, Bronx, NY
• WILLIAM THOMAS, JR., 50, Pittsburgh, PA
• EDDIE L. CULLINS, 44, Newburgh, NY
• GILBERT MAXI, 22, Monticello, NY
• RAYMOS BERTRAND, 43, Bronx, NY

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

This is the third major take down of a narcotics distribution network by the New York Attorney General’s office in the last three weeks, totaling more than sixty arrests. Including this case, OCTF has busted 24 large drug trafficking gangs, made more than 560 felony narcotics arrests, and seized more than $1.5 million, 80 guns, and more than 2,000 pounds of illegal drugs in the last four years.

The New York Attorney General’s office has undertaken a comprehensive approach toward reducing opioid drug abuse in New York State. In October 2014, Attorney General Schneiderman initiated the Northeast and Mid-Atlantic Heroin Task Force (NEMA-HTF), which brings together state attorneys general from New York, Pennsylvania, New Jersey, Massachusetts, Maine, and Maryland to collaborate, coordinate, and share information to combat large-scale distribution operations spanning multiple states. I-STOP, the nation’s first real-time prescription tracking system for the most addictive prescription drugs, reduced doctor shopping in New York by 75 percent in just the first 8 months of the program. The Community Overdose Prevention (COP) program has supplied law enforcement departments across the state with naloxone, which has been used to save more than 100 lives from opioid overdoses in less than a year.

The investigation that led to today’s indictment was conducted by NYSP-CNET Investigators Christopher Fox, Gary Mazzacano, Senior Investigators Charles Kelly and Robert D’Angelo, Lieutenant Francis Kealty, and Captain William McEvoy. The commanding officer of NYSP-CNET is Major David Krause. They were joined by NYAG-OCTF Investigators Brad Farrell and Edwin Margenat, Supervising Investigator Kevin McCann, and Deputy Chief Christopher Vasta.

The case is being prosecuted by Assistant Deputy Attorney General Jonathan Sennett and Assistant Deputy Attorney General Cristina A. Villani. The Organized Crime Task Force is led by Deputy Attorney General Peri Alyse Kadanoff. The Executive Deputy Attorney General for Criminal Prosecutions is Kelly Donovan.

NEW YORK – Attorney General Eric T. Schneiderman and New York City Police Department (NYPD) Commissioner William J. Bratton today announced three guilty pleas in a worldwide khat trafficking ring that flooded New York City, as well as other parts of New York, Massachusetts, and Ohio, with several tons of khat, a plant containing controlled substances similar to amphetamines. Today’s guilty pleas by the drug ring’s three leaders mark the first time in New York that khat dealers will serve time in New York state prison.

Last summer, Attorney General Schneiderman and Commissioner Bratton announced the indictment of 17 members of a khat trafficking ring. The 215-count Brooklyn indictment charged that the defendants operated as Major Traffickers who worked together to obtain khat from Yemen, Kenya and Ethiopia; ship it to the United States through countries including the United Kingdom, China, The Netherlands, and Belgium; and trafficked it in the New York, Syracuse, Rochester and Buffalo metropolitan areas, as well as communities in Massachusetts and Ohio. The ring then laundered the illicit proceeds through operatives in Minnesota and wired the money to various locations abroad, including Dubai and England.

“Khat is a dangerous and illegal drug with worldwide reach. As a result of this international takedown, a sophisticated operation accused of bringing drugs into the United States and sending the illicit profits overseas, has been shut down and the ringleaders are headed to prison,” said Attorney General Schneiderman. “Today’s guilty pleas demonstrate that those who flood our national and state borders with drugs will be brought to justice.”

"I want to thank all of the agencies involved in this complex investigation for their unwavering commitment in targeting criminal networks like these, and in doing so, stopping the flow of illegal drugs from hitting our streets and compromising the safety and well-being of our communities," said Police Commissioner William J. Bratton.

As part of the plea agreements, Yadeta Berki (a.k.a. “Murad”), 24, of the United Kingdom, will be sentenced to three years in state prison and will forfeit $150,000; Bayan Yusuf, 32, of Rochester, will be sentenced to two years in state prison; and Ahmed Adem, 32, of Rochester, will be sentenced to two years in state prison. All three defendants pleaded guilty to Attempted Operating as a Major Trafficker.

Khat is a plant cultivated largely in Kenya and Ethiopia. Among its active ingredients are cathinone, a stimulant classified as a Schedule I controlled substance under the New York State Public Health Law, and cathine, which is classified as a Schedule IV controlled substance. Users of khat chew the leaves and stems of the plant and swallow the juice to create a high.

As part of the investigation, state and local law enforcement agents led by the New York State Attorney General's Organized Crime Task Force (OCTF) and the NYPD’s Intelligence Division conducted a nearly year-long investigation. The indictment alleges that England-based defendant Yadeta Bekri, known to his co-conspirators as “Murad,” systematically shipped large quantities of khat to his U.S.-based partners, Bayan Yusuf and Ahmed Adem, through multiple U.P.S. stores located in Manhattan. Yusuf and Adem, both of Rochester, NY, would then allegedly deliver the khat to their distributors and direct customers based in Brooklyn, Rochester, Syracuse, and Buffalo, as well as Everett, Massachusetts.

Surveillance conducted as part of the investigation revealed that the defendants used public storage facilities in Rochester, Queens and Brooklyn to store large quantities of khat until they were able to distribute the drugs.

At Bekri’s direction, Yusuf and Adem allegedly transported the proceeds of these illegal sales by car to Bekri’s fiancée and co-conspirator Ibsitu Hashi in Minnesota who, in turn, sent the money back to Bekri via Dubai and other countries.

In addition to the Attorney General’s Office and the New York City Police Department, the New York State Police, ICE Homeland Security Investigations, and United States Customs and Border Protection all assisted in the investigation.

The indictment charged 17 co-conspirators with crimes including Operating as a Major Trafficker and various counts of Criminal Sale and Criminal Possession of a Controlled Substance, Money Laundering and Conspiracy to commit those crimes. The indictment represents the first time that the controlled substances found in khat have been the subject of the Operating as a Major Trafficker statute (§220.77(1) of the Penal Law of the State of New York), authored by Attorney General Schneiderman as part of changes to the Rockefeller-era drug laws.

The defendants charged last year included:

• Yadeta Bekri (a.k.a. “Murad”), 24, of the United Kingdom
• Bayan Yusuf, 32, of Rochester
• Ahmed Adem, 32, of Rochester
• Mustafa Sadeq Ali, 22, of Brooklyn
• Sadeq Hassan Ali, 46, of Brooklyn
• Noman Saleh Almoflehi, 22, of Brooklyn
• Ahmed Khader Sulaiman, 25, of Brooklyn
• Al Khader Sulaiman, 29, of Brooklyn
• Wail Seidi, 22, of Queens
• Nabil Seidi, 36, of Queens
• Mohamed Seidi, 26, of Queens
• Abubaker Seidi, 39, of Queens
• Ali Saleh, 40, of Rochester
• Mohamed Mohamed, 43, of Rochester
• Rumiya Osman, 31, of Rochester
• Malyun Ibrahim, 46, of Everett, Massachusetts
• Ibsitu Hashi, 35, of Blaine, Minnesota

The investigation was directed by OCTF Investigator Brian Fleming and Supervising Investigator Arthur Schwartz, OCTF Deputy Chief Christopher Vasta and Investigations Bureau Chief Dominick Zarrella in the Attorney General’s office, and by NYPD Detective Milton Lopez, Sergeant Scott Mackay and Lieutenant Joseph Sullivan of the Intelligence Division and Deputy Inspector Paul Mauro. The case is being prosecuted by OCTF Deputy Bureau Chief Tarek Rahman, with the assistance of OCTF Analyst Nicole Accurso, under the supervision of OCTF Deputy Attorney General Peri Alyse Kadanoff. The Executive Deputy Attorney General for Criminal Justice is Kelly Donovan.

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

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with the National Junior College Athletic Association (“NJCAA”), to eliminate an eligibility rule that limited the participation of students who attended fewer than three years of high school in the United States in their member colleges’ athletic programs. As part of the settlement, the NJCAA has agreed to eliminate the rule nationally, engage in outreach to junior colleges and students about the change, and submit any future eligibility rules concerning students’ national origin to the Attorney General for review.

“My office is committed to ensuring equal educational access to all students in New York State, regardless of national origin,” Attorney General Schneiderman said. “Our state remains one of the most thriving in the nation because of the millions of immigrants that, for centuries, have come here seeking opportunity through their own hard work. New York is committed to the principle that such opportunity is best realized through an educational system open to all students, regardless of where they were born or attended high school. Our agreement with the NJCAA will help ensure that the valuable, character-building athletic programs they organize for junior colleges in New York and across the country are open to all students.”

CUNY Vice Chancellor for Student Affairs Frank Sanchez said, "These rule changes will provide undocumented students access to the full array of CUNY programs and activities that make up our distinctive collegiate experience, including intercollegiate athletics." 

The NJCAA is the second-largest national intercollegiate sports association, after the NCAA, with a membership of 525 public and private junior and two-year colleges across the country, including 41 member colleges in New York State. Its stated mission is to “foster a national program of athletic participation in an environment that supports equitable opportunities consistent with the educational objectives of member colleges.”

In 2012, the NJCAA adopted a national eligibility rule that had the effect of limiting participation in the athletic programs of its member colleges to students who had attended at least three years of high school in the U.S. In the fall of 2014, several public junior colleges in New York State brought the rule to the Attorney General’s attention, citing the importance of athletic programs to the academic and general success of their students. The rule had a particularly negative impact upon urban junior college systems that serve a large number of immigrant students. For example, in fall 2013, 39% of students enrolled at junior colleges within the City University of New York system were born outside the mainland United States. And among CUNY’s first-time junior college freshmen, 7.2% attended high school for some period outside the United States.

In response to these concerns, and the possibility that the NJCAA’s eligibility rule violated state and local non-discrimination laws concerning national origin, the Attorney General’s Civil Rights Bureau opened an inquiry into the NJCAA eligibility rules in February 2015. As a result of the Attorney General’s inquiry, the Association immediately suspended the eligibility rule and ultimately agreed to eliminate it on a permanent basis.

Under the terms of the agreement, the NJCAA will:

• Permanently eliminate the eligibility rule for member colleges nationwide;
• Develop an outreach campaign to member colleges and their students concerning elimination of the rule and the opportunities available for all student-athletes. The campaign will include notices on the NJCAA website; fact sheets for distribution by athletic directors at member colleges; and quarterly posts to the Association’s various social media accounts, through January 2016;
• Submit for the Attorney General’s review any proposed eligibility rule concerning a student’s citizenship status, national origin, or residency in the U.S., through 2017; and
• Report to the Attorney General complaints made by any member college, student, or prospective student in New York State, alleging discrimination on the basis of citizenship status or national origin.

This matter is being handled by Assistant Attorneys General Anjana Samant and Justin Deabler, and Civil Rights Bureau Chief Kristen Clarke. The Bureau is part of the Division of Social Justice, which is led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

NEW YORK – Attorney General Eric T. Schneiderman today announced a landmark agreement with Pennsylvania-based retail giant GNC to implement new standards in authenticating herbal supplements, ensuring their purity, and educating consumers about their chemical content. Under today’s agreement, GNC will perform DNA barcoding on the “active” plant ingredients used in its products; implement testing for contamination with allergens, both before and after production; and post prominent signage advising consumers of the processed, chemical nature of extracts. GNC will be required to implement these new procedures in all of its more than 6,000 stores nationwide, making this agreement the first in the nation to require testing standards for herbal supplements that exceed current FDA requirements.

“When consumers take an herbal supplement, they should be able to do so with full knowledge of what is in that product and confidence that every precaution was taken to ensure its authenticity and purity,” said Attorney General Schneiderman. “When it comes to consumer health, we expect companies to reach a high safety bar. Without tests and safeguards, including those that rule out dangerous allergens, these supplements pose unacceptable risks to New York families. I urge all herbal supplements manufacturers and retailers to join GNC in working with my office to increase transparency and put the safety of their customers first.”

Last month, Attorney General Schneiderman sent cease-and-desist letters to GNC, Target, Walgreens and Walmart, after a study commissioned by his office failed to detect identifiable genetic material for the plants depicted on the labels in most of the four retailers’ herbal supplement products. The study further detected DNA associated with plants not listed on the labels, as well as the presence of potential allergens. In launching his investigation, the Attorney General raised concerns about the measures put in place by manufacturers and retailers to ensure the authenticity and purity of herbal supplements – which are taken by more than half of all American adults – and the sufficiency of federal standards regulating this $60 billion worldwide industry. Earlier this month, joined by the Connecticut and Indiana state attorneys general and the Puerto Rico Secretary of Consumer Affairs, Attorney General Schneiderman formed a coalition to further investigate the business practices of the herbal supplement industry.

“This agreement provides stronger consumer protections for these GNC supplements and highlights the relative weak federal standards," said Indiana Attorney General Greg Zoeller, whose office is not party to today's agreement but is part of the multistate coalition. "Hopefully this will lead others in the supplement industry to follow suit and encourage the FDA to review the existing national standards that are currently in place that has resulted in attorneys general making efforts to ensure better consumer protections for dietary and herbal supplements."

"Consumers should be able to expect that the product they are purchasing actually contains the ingredients that are listed on the label," said Connecticut Attorney General George Jepsen. "GNC has taken a laudable step toward ensuring the highest level of transparency in the products it offers to consumers. The testing and disclosures included in this agreement are truly landmark and will provide important information about these products to consumers in New York, Connecticut and across the country so that they can make educated decisions when choosing to use a supplement. I commend Attorney General Schneiderman for his continued leadership on this issue."

"GNC and the NY Attorney General’s office are to be congratulated for so promptly reaching agreement on the means of providing monitoring of herbal supplements so as to more effectively ensure safety of consumers who purchase these products," said Arthur P. Grollman, M.D., Professor of Pharmacological Sciences at Stony Brook University. "This agreement should serve as a model for other companies and, hopefully, for the federal government to enact similar regulations. Adoption of DNA barcoding to confirm the authenticity of all plants prior to processing is a major step forward in the regulation of herbs."

New York State Assembly Assistant Speaker Felix W. Ortiz said, "The health & safety of New Yorkers is always important. This agreement insures that consumers know what they are buying and that the product quality is guaranteed. I applaud the Attorney General for his initiative."

David Schardt, Senior Nutritionist, Center for Science in the Public Interest said, "The agreement GNC reached with New York State represents important progress in ensuring that supplements contain what they claim to. But Congress should pass reform that would allow the FDA to police this marketplace and remove products that are dishonestly marketed or potentially dangerous.

Jane L. Delgado, President and CEO of the National Alliance for Hispanic Health said, "All consumers deserve to know that what is on the label is actually in the supplements they are using. It is time for all manufacturers to adopt higher standards of DNA technologies to ensure authenticity of components and strict testing for contaminants."

David S. Seres, M.D., Director of Medical Nutrition at Columbia University Medical Center said, “When federal law prohibits the kind of regulation that we demand on all other products used for health benefits, the Attorney General’s actions represent an important step in reining in the supplement industry and assuring that the consumer can trust what is in the bottle.”

Tod Cooperman, M.D., President of ConsumerLab.com said, “FDA’s rules focus on making sure a supplement is produced the same way each time, but not necessarily with high-quality, authentic ingredients. Companies are allowed to choose their own tests and set their own standards. The additional tests outlined by this agreement are a positive step toward making sure that herbal supplements are actually made from the plants on their labels.”

Josh Bloom, Director of Chemical and Pharmaceutical Science, American Council on Science and Health said, “Although this agreement is certainly an improvement from the standards that have been in place, and Attorney General Schneiderman should be applauded for his work in this area, this is only the first step. Congress has stripped the FDA of the ability to approve or reject these products, which are essentially unregulated drugs."

While the Attorney General’s Office found that GNC’s herbal supplements were produced in compliance with FDA regulations requiring the use of current good manufacturing practices, the investigation raised questions regarding the sufficiency of those requirements in relation to state consumer protection laws.

For instance, the FDA does not mandate the use of DNA-based technologies, like barcoding, to authenticate herbal supplements. Instead, the FDA allows companies to support their claims through other methodologies. Given the existence of chemically-similar natural or synthetic substitutes, the Attorney General’s Office remains concerned that these alternate methodologies do not provide adequate assurances of the authenticity of herbal supplements. Current FDA regulations allow for low levels of inadvertent contamination, including from allergens, and there is no federal testing required to confirm that contamination falls below relevant safety thresholds.

Contamination in herbal supplements could pose a significant danger to those who have food allergies or take medication – and there have been a number of examples of supplements endangering consumer safety. A 2013 outbreak of hepatitis that struck at least 72 people in 16 states was traced to a tainted supplement. Last October, an infant at a Connecticut hospital died when doctors gave the child a popular probiotic supplement that was later found to be contaminated with yeast.

DNA barcoding is a technique used to authenticate organic materials using unique reference sequences of DNA, which holds great promise as a scientific technique for the verification of plant species. GNC will commit to implementing this procedure during herbal supplement production, enhancing other aspects of its operations, and leading the industry to adopt the same standards, as follows:

Authentication: Within 18 months, GNC will begin utilizing DNA barcoding to confirm the authenticity of all plants used as sources for its herbal supplements products prior to processing. This will ensure the presence of a biological connection between the source plant and the extract that is eventually included in GNC’s supplements. In cases where no DNA barcode is yet available for the relevant species, GNC has committed to perform its own sample collection – DNA isolation and sequencing – to create a DNA barcode for that plant ingredient. GNC will contribute any new barcodes, and the scientific methods used to identify them, to a publicly accessible database within 24 months. 
GNC will also require that all herbal ingredients used in its products are manufactured in facilities that are certified as good manufacturing compliant by a third-party accreditation body, such as ISO, USP, or NSF.

Broad Testing For Contaminants: GNC will implement a sweeping, randomized testing protocol for the eight most common allergens – defined by the FDA as milk, eggs, peanuts, tree nuts, fish, shellfish, soy and wheat. This will include testing certain raw ingredients for contamination and, after production, ensuring that those allergens are not present in its products. In order to do this, GNC will not only require its suppliers to implement this testing protocol, but will also perform testing themselves on finished products, using a scientifically-validated technique. In addition, GNC will also conduct testing to confirm any affirmative representations on its labels that particular ingredients are absent from certain products (e.g. “No sugar.”)

Consumer Transparency: GNC will prominently display signs in stores across the country and include language on its website indicating whether a supplement product is derived from whole herbs or extracts and explaining the difference between those two processes. In particular, these signs will highlight that extracts are chemicals derived from plants after applying solvents, like liquid carbon dioxide. GNC will list all ingredients used in its products on its labels, per existing FDA rules.

Reporting: GNC will provide semiannual reports to the Attorney General’s Office, detailing all plant species sourced after authentication using DNA barcoding; the name and address of all facilities in which DNA barcode authentication was performed; a list of materials rejected as a consequence of the results of the barcoding and the results of the randomized testing for common allergens. GNC will provide additional documentation and information necessary for the Attorney General’s Office to verify compliance with this agreement without the necessity for a subpoena. 

In response to the Attorney General’s cease-and-desist letter, GNC removed from its shelves all products that the office’s testing found to contain contaminants not identified on their labels. As described in the agreement, those products remain off of store shelves.

The case is being handled by Executive Deputy Attorney General Marty Mack, Senior Adviser and Special Counsel Simon Brandler and Assistant Attorney General Deanna Nelson, Assistant Attorney General Alicia Lendon, Assistant Attorney General Richard Yorke and Environmental Scientist John Davis.

The broader investigation into the herbal supplements industry is being handled by Assistant Attorney General Dorothea Caldwell-Brown, Research Analyst John Ferrara, Research Director Lacey Keller, Chief of the Environmental Protection Bureau Lemuel Srolovic and Executive Deputy Attorney General for Economic Justice Karla Sanchez.

To see the copy of the agreement, click here.

NEW YORK — As part of a coordinated law enforcement action, Attorney General Eric T. Schneiderman today announced that his office and the Attorneys General of Oregon, Minnesota, Missouri and Texas filed lawsuits against Orbital Publishing Group, Inc. and a ring of interrelated New York and Oregon companies for mailing millions of unauthorized and allegedly misleading magazine and newspaper subscription notices to consumers nationwide. The solicitations were sent without the permission of the publishers and stated that consumers were receiving “one of the lowest available rates,” when, in fact, they were being charged, in some cases, more than double the publication price. The companies then pocketed the difference.

“It is illegal under New York law to trade on the name of reputable publications and use deceptive advertising to trick consumers into overpaying for goods and services,” said Attorney General Schneiderman. “New York is home to the largest media market in the country and serves as headquarters to many of our nation’s most important newspapers and magazines. My office will work hard to protect New Yorkers from swindlers and to protect the business of reputable companies who play by the rules.”

“This sophisticated mail scam ripped off thousands of Oregonians and others across the country,” said Oregon Attorney General Ellen Rosenblum. “Consumers thought they were dealing with legitimate companies, and that they were paying the lowest available price. Instead, they sent payments to a dishonest third-party, who pocketed the money. As Attorney General, I will not tolerate dishonest or fraudulent business practices in Oregon.”

“They used deceptive ‘renewal’ notices to get people to unwittingly pay significantly more for their newspaper or magazine subscriptions,” said Minnesota Attorney General Lori Swanson.

Attorney General Schneiderman’s lawsuit, which charges violations of New York State law, alleges that, from at least 2010 to the present, the interrelated companies sent consumers unlawful solicitation notices designed to look like they came directly from at least 44 publications. The victimized publications include some of the nation’s leading periodicals, including Consumer Reports, National Geographic, the New York Times, the Wall Street Journal and the Washington Post.

The New York suit, filed today in Manhattan Supreme Court, seeks to stop the alleged illegal business practices, return money to consumers, disgorge any profits related to these alleged illegal activities, and penalties.

Attorney General Schneiderman’s lawsuit charges the companies violated Sections 349 and 350 of New York’s General Business Law, which prohibits deceptive business practices and false advertising, and Section 335-a of the General Business Law, which requires magazine renewal solicitations to disclose the month and year that the consumer’s subscription expires. The companies’ solicitations failed to provide this information. As a result, some consumers sent money to the companies to renew their subscriptions, not realizing that their current subscription had not yet expired. Other consumers complain that they sent payments to the companies but never received their subscriptions. Many of the consumers affected by the scam appear to be elderly.

The New York Attorney General’s office has received dozens of complaints from consumers across New York, including on Long Island, in New York City, the Hudson Valley, the Capital Region and Erie, Niagara and St. Lawrence counties, about misleading subscription solicitations from the companies named in the lawsuit. Thousands of complaints have been received by the Federal Trade Commission and the Better Business Bureau and the offices of the Attorneys General in the four other states filing suit today.

In an effort to stop the alleged abuse, many of the publishers – who complained to law enforcement and filed lawsuits in an effort to stop the alleged abuse – have issued cease and desist letters to the solicitation companies demanding that they stop sending unauthorized solicitations. Some of these publishers ran alerts on their websites and full page advertisements in their publications in an effort to warn their readers about scam solicitations. Dow Jones, in an affidavit filed as part of New York lawsuit, stated that it has spent $3.5 million in responding to the unauthorized notices, including by offering free subscriptions. American City Business Journals estimates that its subscribers, who were charged double the publication’s real subscription price, have lost as much as $120,000 as a result of the companies’ allegedly deceptive practices.

According to the New York lawsuit, the solicitation scams were operated by a labyrinth of corporate entities, which were allegedly created to disguise the scheme. The solicitation companies have used dozens of different names to solicit consumers, including Magazine Payment Services, Associated Publishers Network, Publishers Periodical Service, United Publishers Service, Publishers Billing Exchange, Publishers Billing Association, Publishers Billing Center, Magazine Billing Network, Publishers Distribution Services, Magazine Distribution Service and Subscription Billing Service. The solicitations generally contained a return address in White City, Oregon, Henderson, Nevada, or Reno, Nevada.

According to the court papers, once the companies received orders from consumers, typically at exorbitant prices, the companies sent a check to the publishers for the actual subscription price, so that the consumer’s subscriptions were started or renewed, and then pocketed the difference. For example, the companies charged consumers as much as $59.95 for annual subscriptions to Consumer Reports that cost $29.95. They charged Wall Street Journal consumers $599.95 for a one-year subscription that cost $413 at retail. The New York Times estimated that the companies charged consumers a price that is 30 to 40 percent higher than the actual subscription cost of The Times. Many publishers are no longer accepting orders from the companies.

In addition to Orbital, the Attorney General sued the following entities and individuals: Liberty Publishers Service, Inc., Express Publishers Service, Inc., Associated Publishers Network, Inc., Publishers Payment Processing, Inc., Adept Management, Inc., Customer Access Services, Inc., Consolidated Publishers Exchange, Inc., Magazine Clearing Exchange, Inc., Henry Cricket Group, LLC, Laura Lovrien, and Lydia Pugsley. Laura Lovrien is the alleged Chief Operating Officer of Orbital and president and secretary of Liberty Publisher. Lydia Pugsley is the alleged owner of Adept Management, Inc. Both Lovrien and Pugsley are alleged to have participated in the operations of the companies, including sending solicitations, receiving consumers’ payment and handling consumer complaints. Orbital Publishing Group, Inc., Liberty Publishers Service, Inc., Publishers Payment Processing, Inc. and Henry Cricket Group, LLC are incorporated in New York, but appear to be operating out of Oregon.

If you believe you were a victim of a magazine or newspaper subscription scam, please file a complaint with the Attorney General’s Office. Complaint forms are available here. You may also call the Attorney General’s Consumer Hotline at 1-800-771-7755.

This case is being handled by Special Counsel Mary Alestra, Volunteer Assistant Attorney General Daniel Park, Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Attorney General’s Bureau of Consumer Frauds and Protection, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

PEARL RIVER – Attorney General Eric T. Schneiderman today announced an agreement with Keli House Community Services, Inc., a Fishkill-based nonprofit serving New Yorkers with disabilities and their families, that used unqualified individuals to provide services to Medicaid recipients who participated in the Home and Community Based Services Program offered by the New York State Office of Persons with Developmental Disabilities (OPWDD). The settlement calls for Keli House to reimburse Medicaid $363,643.

“People suffering from disabilities deserve the best assistance available when exploring the option to stay in their homes,” said Attorney General Schneiderman. “Service providers that employ inexperienced staff deprive New Yorkers of the expertise needed to navigate and maximize all opportunities. We will crack down on anyone who shortchanges not only the most vulnerable members of our community but also our Medicaid program.”

Keli House Community Services provides a variety of services intended to decrease the risk of institutionalization for Medicaid recipients with developmental disabilities. These services include service coordination, which assesses the needs of the individual and connects them to programs designed to prevent their institutionalization.

OPWDD rules require individuals providing service coordination for organizations to meet certain minimum educational and experience requirements to ensure the quality of services provided to persons with special needs. Each coordinator must have at least an associate’s degree in a health or human services field and, either one year experience working with people with developmental disabilities or one year of service coordination experience. They must also complete a training program approved by OPWDD. During a three and a half year period ending in November 2009, Keli House employed ten persons to provide service coordination in the program, but only one was fully qualified to provide this service. Some of the coordinators had no experience while others held degrees in unrelated fields.

Keli House will reimburse the Medicaid program $363,643, which was the amount paid to the nonprofit for services provided by unqualified employees.

The Attorney General would like to thank the former Commission on Quality of Care and Advocacy for Persons with Disabilities, now part of the Justice Center for the Protection of Persons with Special Needs, for its assistance in conducting the investigation.

The case was investigated by Special Assistant Attorney General William McClarnon of the Medicaid Fraud Control Unit, Principal Special Auditor Investigator Jean Moss, Associate Auditor Investigator Sandra Alvarez, Investigator Timothy Connolly, with the assistance of Regional Director Anne Jardine, Supervising Investigator Peter Markiewicz and Assistant Chief Auditor Investigator John Regan. The Medicaid Fraud Control Unit is led by Acting Director Amy Held and is within the Division of Criminal Justice, which is led by Deputy Attorney General Kelly Donovan.

A copy of the settlement is available here.