NEW YORK – Attorney General Eric T. Schneiderman and Mayor Bill de Blasio today announced the formation of a new joint task force to target those who prey on immigrants, while encouraging victims of fraud to come forward without fear.

The task force, led by the Mayor’s Office of Immigrant Affairs and the NYC Department of Consumer Affairs, together with the Office of Attorney General, will dedicate enforcement resources and conduct a public awareness campaign to stop predators from taking advantage of immigrant communities in advance of the full implementation of President Obama’s executive actions on immigration.

“Together we are sending a powerful message that New York has zero tolerance for anyone who seeks to prey on immigrants and their families,” said Attorney General Schneiderman. “As the president’s executive action goes into effect, New York is taking the lead to root out fraud against those looking for a better life. Through this strategic partnership, we will hold accountable those who take advantage of vulnerable immigrants and help make the goals of the president’s action a reality for thousands of New Yorkers.”

“The president’s immigration reforms will initiate an economic, political and social transformation of our cities and our country, but unfortunately, this progress also brings new opportunities for criminals who prey on the most vulnerable among us,” said Mayor Bill de Blasio. “Our joint city-state anti-fraud task force will stop fraudsters in their tracks and provide a safe place for immigrant fraud victims to come forward. While New York is taking bold action, we are also working in collaboration with cities and states across the country to prevent fraud and protect families nationwide.”

“The president’s bold action gives thousands of New Yorkers a path toward security and stability, but that promise can be threatened by fraudsters looking to profit from immigrant vulnerability,” said Immigrant Affairs Commissioner Nisha Agarwal. “Immigrants should be careful to avoid fraud by going to high-quality trusted services, including those supported by the city. By committing the resources of our city and state agencies as part of this task force, New York is taking a leading role to ensure the new process is enacted with integrity.”

“Too many immigrant New Yorkers have been victims of predatory immigration service providers who fleece consumers of thousands of dollars while failing to provide bona fide services. These providers often leave immigrants more vulnerable than they were before,” said DCA Commissioner Julie Menin. “Mayor de Blasio has committed to protecting all of New York City’s immigrants, and DCA is proud to be partnering with the Mayor’s Office of Immigrant Affairs and New York State Attorney General Eric Schneiderman to engage in public outreach and appropriate enforcement actions to ensure that our City’s immigrants are protected.”

"For too long, scam artists have taken advantage of the vulnerability of new immigrants," said Assemblyman Francisco Moya. "This new anti-fraud task force sends a strong message that New York is prepared for the President's immigration reforms and that we will not tolerate immigration-related fraud. As a lawmaker who has spent many years advocating for anti-fraud measures that protect new immigrants from predatory employment agencies, I am intimately aware of how fraudsters seek to exploit immigrants. I commend Mayor Bill de Blasio and Attorney General Eric Schneiderman for taking this innovative and pro-active approach to combating fraud. This initiative helps demonstrate that New York is a welcome home for immigrants."

“Immigrants across New York will welcome this new Task Force as a much-needed effort to bring new energy to this issue throughout New York City and State,” said Javier H. Valdés, co-Executive Director of Make the Road New York. “As New Yorkers prepare for the administrative relief that President Obama announced last November, it’s critical that New York steps up its enforcement of unscrupulous notarios who take advantage of our communities. Make the Road New York applauds the Mayor and Attorney General for this new effort, and we are eager to work with the Task Force to ensure its success.”

“For organizations like La Fuente, the fight against fraudulent legal service providers who target immigrants aspiring to legal status has been daunting,” said Lucia Gomez, Executive Director, La Fuente. “The announcement that Mayor de Blasio and State Attorney General Schneiderman will launch a joint Anti-Immigration Fraud Task Force demonstrates a commitment to addressing head-on an issue that has plagued our immigrant communities for decades. This laudable effort will provide immigrant communities across the state a more robust effort to ensure predators are reported and dealt with by the proper authorities. With this announcement, New York has once again demonstrated its commitment to advancing immigrant rights and recognizing the value of its diverse population.”

“New York City truly stands as example of inclusion for our immigrant residents, yet too often newly arrived New Yorkers stay in the shadows despite being victims of fraud that threaten their well-being and financial stability,” said Grace Bonilla, President for The Committee for Hispanic Children and Families. “CHCF whole heartedly supports and congratulates Mayor de Blasio and Attorney General Schneiderman for addressing these injustices and providing communities that give so much to this city an avenue to come forward, stop these abuses and advocate for themselves.”

“We applaud Mayor de Blasio and Attorney General Schneiderman for their bold leadership in protecting immigrants from fraudulent actors, by the creation of this very important task force. We at Northern Manhattan Coalition for Immigrant Rights have seen the life-shattering damage that unscrupulous immigration providers have wreaked on our community members,” said Angela Fernandez, Esq., Executive Director of Northern Manhattan Coalition for Immigrant Rights. “We look forward to working closely with the task force on behalf of all immigrants throughout New York State.”

"Without any pity for those who desperately seek the safety of legal residency for themselves and their families, agents of exploitation have for too long reigned with impunity,” said Luis Garden Acosta, Founder and President of El Puente. “We welcome Mayor De Blasio's defense of our community's defenseless and join with our Attorney General and President Obama in declaring, once and for all, Basta Ya!"

The joint task force will focus on rooting out a variety of abuses targeting immigrants, but particularly the unauthorized practice of law, commonly known as “notario fraud,” or “immigrant service provider fraud.”

New York State’s Immigration Assistance Service Enforcement Act establishes protections for immigrants who use the services of individuals or businesses that falsely represent themselves as certified legal advisors for citizenship and other issues. The law, which went into effect on February 6, 2015, stiffens penalties and adds new penalties, both criminal and civil, for violations of the Act.

The president’s recent executive action will lead many immigrants to search for legal assistance to navigate the new rules, potentially creating an opportunity for service providers or scam artists to take advantage of immigrants. Unauthorized immigration consultants can create delays in the application process, cost applicants unnecessary fees and possibly even lead to removal proceedings.

The task force is committed to undertaking the following actions:

• Targeted enforcement and/or investigations against immigrant service providers who may be engaging in the unauthorized practice of law. These investigations could occur in partnership, where feasible, or independently by each agency.
• Improved information-sharing to identify illegal activity and coordinate enforcement efforts. In collaboration with community organizations, the task force will establish an information pipeline to connect on-the-ground reports of immigration fraud hotspots to city agencies and the Attorney General’s Office to stop problematic service providers or practices.
• Increased public awareness outreach to engage vulnerable communities and encourage victims to come forward. City agencies and the Attorney General’s Office will collaborate on public education campaigns to bring attention to potential abuses wherever they exist.
• Continual expansion to include other relevant governmental entities and provide a blueprint for cities and states across the country to adopt best practices. As part of Cities United for Immigration Action, New York City is working in close collaboration with partner cities to develop a national model to combat immigration services fraud.

Attorney General Schneiderman has a strong track record for combating immigration services fraud and other actions that ensure equal opportunity for immigrant communities. Recent examples of actions taken by his Civil Rights Bureau include the establishment of a $2.2 million restitution fund for victims of one of the nation’s largest immigration services schemes, action to combat fraud perpetrated by employment agencies that target vulnerable immigrant communities; and efforts to ensure equal educational opportunity for unaccompanied minors and undocumented youth regardless of immigration status. 

The de Blasio administration has a proven track record for welcoming immigrant New Yorkers. From access to federal immigration benefits, citizenship and U-visa application assistance, to the city’s response to the unaccompanied child migrant crisis and new Immigration and Customs Enforcement detainer legislation to dramatically reduce deportations, the city has led a movement that cements the notion that a city’s prosperity and strength depends upon its new American residents having ample opportunities to reach their fullest potential and contribute to the well-being of our communities. 

On April 12th, the Mayor’s Office of Immigrant Affairs will co-host an executive action legal screening for immigrant New Yorkers who might be eligible for the DACA/DAPA programs. While implementation of these programs is temporarily on hold, providing reliable information and combatting abuse is more important than ever. This legal screening event will mark an important citywide collaboration between the city’s largest legal service providers and immigration advocacy groups to create a large-scale legal clinic.

The event will be held on April 12th, from 11 a.m. to 5 p.m. at Temple Emanu-El, located at East 65th Street, Manhattan. For more information: nyc.gov/deferredaction.

To report complaints regarding immigration services, contact the Attorney General’s Immigration Services Fraud Unit Hotline at (866) 390-2992 or Civil.Rights@ag.ny.gov.

NEW YORK – Attorney General Eric T. Schneiderman of New York and Attorney General Greg Zoeller of Indiana today announced that they are leading a bipartisan group of 14 attorneys general calling on Congressional leaders to launch a comprehensive inquiry into the herbal supplements industry. The group has sent a letter asking for Congress to consider a more robust oversight role for the U.S. Food and Drug Administration with respect to herbal supplements. The letter follows New York State’s investigation that raised serious concerns about the marketing and safety of these products, which are regularly consumed by millions of Americans.

“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. “I am proud to stand with a bipartisan group of attorneys general calling for a Congressional inquiry into whether stronger FDA oversight of the herbal supplements industry is needed. My office’s investigation reaffirmed long-standing concerns about the herbal supplements industry. The millions of consumers who take herbal supplements deserve to know whether they are getting what they pay for, and that these products are properly labeled and safe.”

“My focus is on ensuring the best consumer protections for dietary and herbal supplements, and eliminating potential false or deceptive labeling that could be harmful to consumers,” said Indiana Attorney General Greg Zoeller. “My fellow attorneys general and I are urging Congress to consider stronger federal oversight of the herbal supplements industry so that members of the public have full information about a product they are ingesting.”

The multibillion dollar herbal supplement industry is built on the promise that its products will improve the health and well-being of those who use them. Yet, the New York investigation has raised serious concerns about the marketing and safety these products. Recent tests conducted by the New York Attorney General’s Office of popular herbal supplements showed that products were contaminated with allergens, off-label plant species, and other potentially dangerous substances. Some products were so thoroughly processed that the genetic material of the original natural plant source was unrecognizable. Other research has suggested that some herbal supplements have been found to contain high levels of heavy metals like lead, mercury, and arsenic. One study even found that a popular herbal supplement designed to reduce menopause symptoms may have caused severe liver damage in certain women.

The letter to Congressional leaders is co-signed by Attorneys General George Jepsen (D-CT), Karl Racine (D-DC), David M. Louie (D-HI), Lawrence Wasden (R-ID), Greg Zoeller (R-IN), Tom Miller (D-IA), Jack Conway (D-KY), Maura Healey (D-MA), Jim Hood (D-MS), Joseph Foster (D-NH), Eric Schneiderman (D-NY), Joey P. San Nicolas (D-MP), Kathleen Kane (D-PA), and Peter Kilmartin (D-RI) and urges Congressional subcommittees to act in concert with the FDA to address the following issues:

• The adequacy and effectiveness of existing quality assurance measures for verifying the source, identity, purity, potency, and quality of ingredients and fillers;
• The adequacy and effectiveness of existing regimes for verifying the identity, composition, purity, potency, and quality of the finished products sold by domestic manufacturers and retailers;
• The degree to which product labels and marketing, including the use of the terms ‘natural,’ ‘herbal,’ and ‘extract,’ mislead consumers about the contents of herbal and dietary supplements, and whether the FDA should develop standards and restrictions governing their use;
• The extent to which Congress should mandate, or direct the FDA to develop enhanced, uniform, industry-wide quality assurance and verification regimes to guarantee the source, identity, purity, and potency of materials incorporated into herbal and dietary supplements; and,
• The extent to which Congress should mandate, or direct the FDA to develop, enhanced manufacturing and supply chain management requirements for the industry to guarantee the safety and efficacy of the finished herbal and dietary supplements.

In February of 2015, New York Attorney General Eric Schneiderman asked major retailers to halt the sale of certain herbal supplements following DNA tests that failed to detect plant materials listed on the labels of the majority of products tested. Earlier this month, Attorney General Schneiderman announced the formation of a multi-state coalition as part of an expanded probe of the herbal supplement industry.

Earlier this week Attorney General Eric Schneiderman announced a historic agreement with GNC to implement landmark reforms for herbal supplements. Under the agreement, GNC, one of the nation’s largest supplement retailers, will use DNA barcoding to authenticate plants used in supplements and adopt new testing standards to prevent contamination. The move is designed to improve transparency for consumers and is a first step towards ensuring greater consumer safety.

A copy of the letter sent to Congressional leaders today can be found HERE.

WESTCHESTER -- Attorney General Eric T. Schneiderman today announced prison sentences for Tyrone “Reece” Lee, 28, and Anthony “Sug” Davis, 29, both of the Bronx, who had previously pleaded guilty to participating in a brazen identity-theft ring that targeted customers of local banks. The ring stole over $850,000 by using bank tellers to fraudulently obtain the personal information of hundreds of unsuspecting customers, and then creating fake identification cards to withdraw money from the accounts.

“Today’s prison sentences show that those who steal New Yorkers’ personal financial information will pay a steep price,” said Attorney General Schneiderman. “We will do all we can to protect innocent businesses and their customers from the growing threat of identity theft.”

Lee, who was the scheme’s ringleader, was sentenced today by the Honorable Justice Barry E. Warhit in Westchester County Criminal Court, to four and a half to nine years in state prison. Lee previously pleaded guilty before Justice Warhit to the entire 37-count indictment against him, including two counts of Grand Larceny in the Second Degree (a class C felony), 11 counts of Grand Larceny in the Third Degree (a Class D felony), 18 counts of Identity Theft in the First Degree (a Class D felony), three counts of Criminal Possession of a Forged Instrument in the Second Degree (a Class D felony), and three counts of Scheme to Defraud in the First Degree (a Class E felony).

Davis, who was the scheme’s fraudulent document maker, was sentenced by Justice Warhit to two to six years in state prison. Davis had also previously pleaded guilty before Justice Warhit to one count of Identity Theft in the First Degree (a Class D felony) and one count of Scheme to Defraud in the First Degree (a Class E felony). Davis is currently serving a 10-year sentence in federal prison on a federal identify theft case.

This identify-theft ring operated between July 2010 and June 2014. Corrupt bank tellers fraudulently accessed and stole personal information, including account numbers and Social Security numbers, from hundreds of customers at Bank of America, JP Morgan Chase, HSBC, TD Bank and Wachovia in Westchester and New York City.

Lee orchestrated the hiring of corrupt bank tellers at Westchester and New York City-area banks. He directed the bank tellers to target customers with common names and over $50,000 in their accounts. After the customer information was smuggled to him, Lee conspired with Davis to create fraudulent checks and identification documents using the stolen customer information. Lee arranged for other ring members to impersonate bank account holders to withdraw money at area banks.

Davis created an array of fake documents using the stolen personal and financial data, including forged checks and driver’s licenses that contained victims’ personal information, but displayed the photographs of other ring members. These fake documents were then used to impersonate the account holders and to withdraw money at bank branches in Westchester County, New York City and Long Island, as well as Connecticut and Massachusetts.

This prosecution was the culmination of a long-term investigation by the Attorney General’s Crime Proceeds Strike Force, including court-authorized wiretaps and search warrants. In intercepted telephone calls and text messages, co-conspirators spoke in code about customer accounts, which they referred to as “joints,” and to the “bands” of money they would steal, referring to $1000 stacks of cash. They also used code names to refer to the banks they targeted, including “touchdown” for TD Bank and “Yase” for JP Morgan Chase.

The three bank tellers who conspired with Davis and Lee in this scheme have also been convicted. Kalika Arline, Venise Cole and Nadia Figueroa have all pleaded guilty to their roles in the ring.

Among the New York bank branches whose customers were victimized by this identify theft ring are:

• Bank of America: 206 Main Street, White Plains, NY;
• JP Morgan Chase: 235 Main Street, White Plains, NY; 
• JP Morgan Chase: 410 South Broadway, Yonkers, NY; 
• JP Morgan Chase: 5 West Burnside Avenue, Bronx, NY; 
• HSBC: 1 East Fordham Road, Bronx, NY; 
• Bank of America: 50 West Fordham Road, Bronx, NY; 
• Bank of America: 479 North Broadway, Jericho, NY; and
• Wachovia (now Wells Fargo): 43 North Plank Road, Newburgh, NY

Attorney General Schneiderman thanks the New York State Department of Financial Services and the White Plains Police Department for their assistance in this matter.

The case was prosecuted by Assistant Attorneys General Tyler Reynolds and Rhonda Greenstein of the Attorney General’s Criminal Enforcement and Financial Crime Bureau. The bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Meryl Lutsky and Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The investigation was conducted by Legal Support Analyst Theo Davidson, Investigators Steve Pratt, Vincent Gisonti, Sylvia Rivera, Israel Hernandez, Ryan Fannon and Dave Negron and Larry Riccio, Senior Investigator Dennis Maddalone, Supervising Investigator John Sullivan, and Deputy Chief Investigators John McManus and Greg Stasiuk. The Investigations Division is led by Chief Investigator Dominick Zarrella.

NEW YORK – Attorney General Eric T. Schneiderman today announced the arrest of certified nurse aide Marie Jeanty on felony charges that she assaulted an 80-year-old, bedridden resident of West Lawrence Care Center, a nursing home located at 1410 Seagirt Boulevard in Far Rockaway, N.Y. If convicted on the top count, the defendant faces up to seven years in state prison.

“When New Yorkers place those who mean the most to them in a nursing home, they should have confidence that their loved ones are not in danger of severe physical abuse,” Attorney General Schneiderman said. “My office will bring criminal charges against nurses who violate the trust of the residents in their care and their family members.”

Court documents filed in the case allege that, on or about August 15, 2014, Jeanty, 59, of Far Rockaway, N.Y., instructed the resident to move so that she could change the resident’s clothing and bed linens. Jeanty then allegedly pushed and hit the resident multiple times in the arm and shoulder with a closed fist and forcibly pushed her into the side of the bed rail, causing her face to hit the bed rail. As a result, the resident suffered a black eye and significant bruising and swelling to her left arm, right temporal area, and right orbital area, which required treatment at St. John’s Episcopal Hospital. Jeanty no longer works at the facility.

A felony complaint filed in Queens County Criminal Court by the Attorney General’s Office charges Jeanty with Assault in the Second Degree, a class D violent felony offense, for intent to cause physical injury, being ten years younger than such person and assaulting a person who is 65 years or older; Endangering the Welfare of a Vulnerable Elderly Person, or an Incompetent or Physically Disabled Person in the Second Degree; Endangering the Welfare of an Incompetent or Physically Disabled Person, class E felonies; and Wilful Violation of Health Laws, a misdemeanor.

The defendant, who pleaded not guilty, was arraigned today in Queens County Criminal Court before the Honorable Judge David Hawkins and released on her own recognizance.

The case was investigated by Special Investigator Kimara Bradley of the Attorney General’s Medicaid Fraud Control Unit (MFCU) with the assistance of Supervising Special Investigator Mitchell Scher and Deputy Chief Investigator Kenneth Morgan.

The case is being prosecuted by Special Assistant Attorney General Travis Hill of the MFCU’s New York City Regional Office, with the assistance of New York City Deputy Regional Director Larissa Payne and Regional Director Christopher M. Shaw. Thomas O’Hanlon is the MFCU Chief of Criminal Prosecutions–Downstate. MFCU is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The charges in the criminal complaint are merely accusations and the defendant is presumed innocent until and unless proven guilty in a court of law.

NEW YORK – Attorney General Eric T. Schneiderman today announced that Daniel Dominguez, a volunteer emergency medical technician who stole over $300,000 from the Corona Community Volunteer Ambulance Corps (CCAC) in Queens, has been sentenced to serve four months in jail and five years probation, and to pay full restitution. In the event that Dominguez fails to pay the full restitution amount, he faces up to seven years in prison.

“Daniel Dominguez used this charity dedicated to providing medical services to New Yorkers as his own personal piggy bank,” Attorney General Schneiderman said. "This defendant is not only headed to jail, but also must repay every dollar that he stole from the nonprofit. Our message is clear: Crime doesn’t pay."

Dominguez pleaded guilty on January 14, 2015 to Grand Larceny in the Third Degree, a Class D felony. Dominguez was sentenced today before the Honorable Justice Joel Blumenfeld in Queens County Supreme Court.

According to the Attorney General's felony complaint filed in September 2013, from March 2009 to May 2011, Dominguez used his position as a board member and treasurer of CCAC to steal more than $300,000 from CCAC bank accounts. Dominguez used his access to CCAC bank accounts to transfer funds directly into his own personal accounts. He then used that money for extravagant jaunts to Walt Disney World and Niagara Falls, as well as purchases of luxury car service trips, theater tickets, rent, car payments and fancy meals.

Founded in 1960, CCAC is a non-profit volunteer ambulance organization whose EMTs and paramedics provide basic medical care to patients and transport them to hospitals. CCAC responds to 911 calls as well as community requests to transport patients to hospital and medical appointments.

The Attorney General's investigation commenced with a complaint from CCAC board members to the Attorney General's Charities Bureau about possible missing or misappropriated funds from CCAC bank accounts. An investigation conducted by attorneys and an accountant in the Charities Bureau uncovered hundreds of thousands of dollars embezzled from the not-for-profit.

Separate felony complaints filed by the Attorney General’s Office in September 2013 alleged that two other CCAC board members, Daryl Adeva and David Moretti--who served as a board member and President of CCAC--also stole thousands of dollars from CCAC between September 2008 and May 2011. Adeva and Moretti were each convicted of Attempted Grand Larceny in the Fourth Degree (a Class A Misdemeanor).

The Attorney General thanked the New York State Police and Commissioner Joseph D'Amico for their assistance in the case.

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

This case was investigated by Supervising Investigator Michael Ward, Deputy Chief of Investigations John McManus. The Investigations Division is led by Chief Investigator Dominick Zarrella.

NEW YORK – With this year’s tax deadline looming and April marking Financial Literacy Month, Attorney General Eric T. Schneiderman today offered New Yorkers tips to avoid falling victim to reported tax prep scams. The Attorney General also asked taxpayers to notify his office of any suspected fraudulent schemes designed to steal personal and financial information from consumers.

“Unfortunately, there are scammers who will shamelessly take advantage of vulnerable consumers as they try to file their taxes on time,” said Attorney General Schneiderman. “My office wants to ensure that consumers have the information they need to avoid these scams and report them to the appropriate authorities.”

Each year, the Office of the Attorney General receives complaints from consumers about various tax preparation schemes. This year, the Attorney General’s Office has received numerous complaints about scammers who are impersonating IRS officials and attempting to collect bogus tax debts. The scammers often threaten lawsuits or arrest if consumers fail to turn over money or provide sensitive personal information. Often the scammers claim consumers owe past tax debts and insist that consumers pay using a pre-paid credit card. Pre-paid credit cards are generally difficult to trace and that is why many scammers insist that would-be scam victims pay using these products.

In an effort to help New Yorkers avoid tax-themed scams, the Attorney General’s Office offers the following tips:

• The IRS and legitimate government agencies never demand payment by phone;
• If you owe money, you will receive a legitimate notice in writing that identifies the agency and the reason you owe money;
• Do not give out personal information, including your Social Security number or bank account information, to telephone callers;
• Legitimate government organizations will never threaten arrest or deportation for failure to pay a debt;
• Legitimate government agencies will never insist that consumers pay a debt only via a pre-paid credit card.

The following suggestions will help consumers file their tax returns safely and keep more of their return:

• If you use a tax-preparation service, use only established and recognizable companies;
• Check the tax preparer's qualifications and history through the Better Business Bureau (www.bbb.org);
• Ask for a written estimate of all fees; avoid those who base their fees on a percentage of your refund;
• Make sure the tax preparer is accessible, even after the April due date;
• Never sign a blank return;
• Review entire return before signing;
• Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number (PTIN);
• Consult New York's “Consumer Bill of Rights Regarding Tax Preparers.”

Consumers should also beware of refund anticipation loans (RALs) and refund anticipation checks (RACs). RALs are often marketed as "instant" or "24-hour" refunds but are actually high-cost loans that come with fees and interest that reduce the amount of any refund. New York State’s General Business Law section 372 (known as the Consumer Bill of Rights regarding Tax Preparers), requires RALs to be marketed as loans – not refunds. RACs are temporary bank accounts established on behalf of a taxpayer into which a direct-deposit refund can be received –but these also come with fees that will reduce the consumer’s refund. The tax preparer must give the consumer a written disclosure that explains:

• That consumers are not required to take out a refund anticipation loan or refund anticipation check in order to receive your tax refund;
• The amount of fees and interest consumers will have to pay for a refund anticipation loan or refund anticipation check;
• The amount consumers will receive after the fees and interest are deducted;
• The annual percentage rate of interest that consumers will be charged;
• The amount the refund will be without a refund anticipation loan.

Consumers can avoid the costs of refund anticipation loans and checks by filing their return electronically and having refunds mailed or directly deposited into their own bank accounts.

Consumers may report suspected instances of consumer fraud by calling Attorney General Schneiderman’s Office at 1-800-771-7755 or by visiting www.ag.ny.gov.

The Attorney General also reminds New Yorkers that there are Volunteer Income Tax Assistance (VITA) sites where consumers can get their tax returns prepared free of charge. For more information about how to qualify and identify VITA location sites, go to www.irs.gov.

Consumers whose income is $60,000 or less may qualify for FreeFile and can use free tax preparation and e-filing software. Information on free e-filing is available at: www.tax.ny.gov.

Some additional websites with helpful information include:

Internal Revenue Service
www.irs.gov/taxtopics/tc254.html

NYS Consumer Bill of Rights Regarding Tax Preparers
www.tax.ny.gov/pdf/memos/income/m08_7i.pdf

NYC Department of Consumer Affairs
www.nyc.gov/html/dca/html/home/home.shtml

Attorney General Schneiderman is urging New Yorkers to be vigilant consumers and to report instances of fraud to his Office. Consumers who feel they've been victims of any tax preparation scams are urged to file complaints by visiting the Office’s website or calling 1-800-771-7755. Consumers can also file an online complaint with the United States Treasury Inspector General at http://www.treasury.gov/tigta/contact_report_scam.shtml.

ROCHESTER – Attorney General Eric T. Schneiderman today announced that Assembly Majority Leader Joseph Morelle and Senator Patrick Gallivan will sponsor the Attorney General’s program bill regulating the use of payroll cards to increase protections for workers, clarify ambiguities in the law, and ensure that payroll cards offer a convenient and beneficial method for workers to access their pay. Several Rochester area labor and community organizations also announced their support for the bill, including the Rochester & Genesee Valley Area Labor Federation, the Rochester Building & Construction Trades, the Rochester Legal Aid Society, Metro Justice, the Worker Justice Center of New York, and Empire Justice. The Attorney General’s Payroll Card Act requires clear disclosure of payroll card fees, and restricts certain fees. The legislation was first proposed last year, following recommendations made in a report released by the Attorney General’s Labor Bureau.

“Workers shouldn’t have to pay to get their pay,” Attorney General Schneiderman said. “While payroll cards can be helpful for employees without bank accounts, too often workers see their hard-earned wages chipped away by fees. The Payroll Card Act will ensure that workers have free and clear access to their wages, and provide clarity to employers about how to offer payroll cards in compliance with the law.”

“As public officials we have an obligation to protect the interests of New York State’s hard working men and women and ensure that employers are doing the same,” said Assembly Majority Leader Joseph D. Morelle. “The Payroll Card Act delivers meaningful protections for workers by eliminating unreasonable fees, ensuring that they receive every dollar they have rightfully earned, and establishes clear guidelines for employers to follow when distributing payroll cards. I thank Attorney General Schneiderman for his leadership on this issue and I look forward to working with my colleagues in the legislature toward the passage of this bill.”

“We want to ensure that hard working New Yorkers have easy access to their wages and are protected from excessive fees. We also need to protect employers from overly burdensome regulations. We can achieve both by clarifying the rules regarding the use of payroll cards and the options available to workers and businesses,” said Senator Patrick Gallivan.

“I commend Attorney General Schneiderman for leading the fight to protect the hard earned wages of working New Yorkers,” said Assembly Member Harry Bronson. “As more employers continue to adopt payroll card programs, it is critical to give employees an informed choice in how they are paid, provide clear disclosure of any fees associated with payroll cards, and make it easy to avoid those fees.”

“Payroll Cards have grown increasingly common across New York State, but our laws have not kept up with this trend," said Jim Bertolone, President of the Rochester & Genesee Valley Labor Federation. "That has left low wage workers exposed to unexpected and costly fees. By updating the law, Attorney General Schneiderman's Payroll Card Act will ensure that workers have a fair chance to receive all of the wages they earn.”

Stuart Appelbaum, President of the RWDSUsaid, “For low-wage workers, unregulated payroll card fees can bring their earnings below the minimum wage. There must be clear language on fees, and workers must be provided in writing the terms and conditions of the card, including all fees that may be assessed. This bill will require that the card has access to at least one network of ATMs providing no-cost cash withdrawals, balance inquiries, and other fee-free services. We stand with Attorney General Eric Schneiderman in calling for passage of this bill that will regulate employer use of payroll cards.”

“For workers who are living paycheck to paycheck, a surprise fee taken out of their pay can leave them short on the rent at the end of the month. That’s just not fair,” said Carla Palumbo, President & CEO of the Legal Aid Society of Rochester. “The legislature should pass Attorney General Schneiderman’s Payroll Card Act, so that every worker will be clearly informed of how they can receive their wages without paying any fees.”

“Both workers and employers deserve clear guidelines for how payroll cards can be used fairly,” said Lewis Papenfuse, Executive Director of the Worker Justice Center of New York. “Attorney General Schneiderman’s Payroll Card Act will ensure that employers can enjoy greater efficiency without saddling workers with unfair fees.”

“Lower-wage workers are increasingly receiving their wages on payroll cards, and can ill afford to see their hard-earned pay drained by unfair fees and charges that benefit the big financial institutions that issue these cards. It is vital that New York implement strong protections to ensure that workers have fair and unobstructed access to their wages,” said Liz Fusco, staff attorney at New Economy Project.

“This bill would go a long way toward ensuring that workers have a choice in how to be paid, and that they won't be nickel-and-dimed out of their wages,” said Chuck Bell, programs director for Consumers Union, the public policy and advocacy division of Consumer Reports. “These reforms would help promote fair, safe, and effective methods for workers to access their pay.”

A payroll card is a prepaid debit card used by employers to pay wages to employees, typically as an alternative to direct deposit or a paper check. Each payday, a cardholder employee’s wages are deposited electronically into an account at a bank selected by the employer or by the payroll card vendor. The employee can obtain access to the funds in the account by using the payroll card. Similar to a bank-issued debit card, the payroll card can be used to withdraw funds from an ATM, make point-of-sale purchases, and electronically transfer funds, among other functions.

Use of payroll cards has increased significantly in recent years. Nationally, an estimated 5.8 million workers received their wages via payroll cards in 2013, and that number is expected to increase to 10.8 million by 2017, according to research reported in Forbes. Often cited benefits of payroll cards include cost savings for employers; payroll cards' usefulness in weather-related disasters when paper checks are hard to deliver to employees; payroll cards’ limited environmental impact, compared with paper checks, and the lower transactional cost to employees of payroll cards, when compared with check-cashing outlets. These benefits however cannot be used as an excuse to charge onerous fees or withhold basic information to participant wage earners.

The Attorney General's office began looking into payroll card programs utilized in New York State in 2013 after receiving complaints from employees and other information indicating that certain payroll card programs were potentially in violation of state labor law, or did not provide adequate disclosures regarding the terms and conditions of the card. In response to requests from the Attorney General's Office, 38 national and regional employers submitted information on their use of payroll cards. Last year, the Attorney General released a report detailing the findings of his office's review of the information provided.

The Attorney General Labor Bureau Report revealed the following:

• Cardholder employees were often given insufficient information about how to obtain their wages without incurring a fee and, where the employer provided detailed fee data, approximately 75% of cardholder employees incurred some kind of fee while attempting to access their wages.
• In some programs, fees reached as high as $20 per employee per month, on average. Workers were steered or required to be paid by payroll card: 40% of employers surveyed did not provide employees with the option of receiving their wages by a traditional paper check, and an additional 31% discouraged the selection of a paper check.
• Many programs failed to provide sufficient means for workers to withdraw wages without incurring fees. One employer’s payroll card vendor brought in almost $70,000 in fees for fewer than 5,000 cardholder employees during a one year period, of which over $60,000 were for ATM transactions alone, the majority of them to access wages or check account balances.
• More than one-third of employers used payroll card programs that included overdraft fees. One payroll card vendor received over $200,000 in overdraft fees from August 2012 to July 2013, with an average of 2,570 accounts open each month.

The report recommended a range of reforms, some of which have subsequently been adopted by a number of the surveyed employers as a result of the Attorney General’s inquiry and report. These reforms are included in the Payroll Card Act to address these problems more broadly and ensure that payroll cards can be a convenient and beneficial method of payment for workers to access their pay. Its provisions would protect the rights of workers and prevent the unfair reduction of their wages through fees, including:

• Requiring employers to allow employees to elect whether to be paid through a payroll card, direct deposit, or to receive a paper check;
• Mandating that employees receive clear and appropriate notice of payroll card program terms and conditions, including potential fees and how to avoid them; and
• Prohibiting employers from using payroll card programs that charge certain types of fees, and requiring employers to use payroll card programs with at least one network of ATMs where employees can obtain access to their wages without paying a fee.

NEW YORK – As part of an ongoing focus on widespread allegations of wage theft at public works projects in New York City, Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters today announced the arrests of five subcontractors on charges they underpaid wages and benefits to workers at three publicly-funded New York City construction projects.

The arrests stem from an investigation into underpayment and kickback schemes that allegedly took place at P.S. 7X, an elementary school in the Bronx, the New York City Department of Housing Preservation and Development’s (HPD) Sugar Hill Houses in Harlem, and the New York City Housing Authority’s (NYCHA) Pomonok Houses project in Fresh Meadows, Queens, between January 2012 and November 2014. The Manhattan case includes a top count felony of Falsifying Business Records in the First Degree against Sergio Raymundo and his New Paltz-based construction company for allegedly cheating eight workers at the Sugar Hill housing project out of approximately $800,000 in wages during a 17-month period.

“Employers who cheat workers out of the wages and benefits they deserve are breaking the law and will face the consequences, including criminal charges,” said Attorney General Schneiderman. “Like all workers across America, New York City’s construction workers do not deserve to be cheated out the wages they earned from building schools for our children and affordable housing for our families. My office will continue to take aggressive action with our law enforcement partners against employers who ignore their legal obligation to pay workers proper prevailing wages on taxpayer-funded projects.”

Today’s arrests are part of an ongoing effort to root out prevailing wage underpayment practices in New York City. In December, three other subcontractors were arrested for allegedly violating prevailing wage laws. Those arrests involved work done at P.S. 196K in Williamsburg, Brooklyn, and the NYCHA Pomonok Houses development in Fresh Meadows, Queens.

NYC Department of Investigation Commissioner Mark G. Peters said, “Prevailing wage theft steals paychecks from honest workers' pockets and compromises the integrity of construction sites on City-funded projects. I look forward to continuing to work together with the Attorney General and our partner agencies to expose and prosecute this pernicious crime.”

NYC Department of Housing Preservation and Development Commissioner Vicki Been said, “After months of hard work I am pleased to see this case moving forward, and I thank the Attorney General, the Department of Investigation, and their teams for their continued partnership on this investigation.”

Federal and state prevailing wage laws seek to ensure that government contractors pay wages and benefits that are comparable to the local norms for a given trade, typically well above the state and federal minimum wage, and hold general contractors responsible for underpayments by their subcontractors. Today’s arrests covered three separate projects spanning three New York City boroughs that were subject to prevailing wage requirements.

One of the cases, which spans three indictments filed in Bronx Supreme Court, charges three business owners and their respective companies for allegedly underpaying masonry workers on an exterior renovation project at P.S. 7X in the Bronx during different time periods between January 2012 and November 2012. The defendants are Shamas Mian, 51, and his company, United Construction Field, Inc., located in Brooklyn; Tariq Mahmood, 56, and his company, Peral General Contractor LLC, located in Fresh Meadows, Queens; and Baldev Singh, 39.

Mian is accused of underpaying workers by more than $25,000 and covering up the underpayments by allegedly submitting falsified payroll records to New York City’s School Construction Authority. He is charged with Failure to Pay Prevailing Wages and Benefits in Excess of $25,000, Offering a False Instrument for Filing in the First Degree, and Falsifying Business Records in the First Degree.

Mahmood and Singh are accused of underpaying workers by more than $100,000. They are charged with Failure to Pay Prevailing Wages and Benefits in Excess of $100,000. They each face seven years in prison if convicted.

The second case, filed in Manhattan Criminal Court, charges a subcontractor for allegedly underpaying eight carpentry workers approximately $800,000 for work done at the NYC HPD’s Sugar Hill Houses, a mixed-use, commercial and low-income residential project in Harlem, from April 2013 through August 2014. The defendants are Sergio Raymundo, 28, and his company Lalo Drywall, Inc., located in New Paltz.

Raymundo is accused of underpaying eight workers by approximately $800,000 and attempting to conceal the underpayments by signing false checks drawn on his company’s account indicating that employees on the job were paid properly under the law. According to court papers, those checks were never given to the workers.

Raymundo is charged with counts of Falsifying Business Records in the First Degree and Failure to Pay Wages. Raymundo faces four years in prison if convicted.

The third case, lodged in Queens Criminal Court, charges a subcontractor and his company with allegedly demanding kick-backs and underpaying workers for scaffolding work done at the NYCHA Pomonok Houses in Fresh Meadows between August 2014 and November 2014. The defendants are Jagdish Singh, 57, and his company, Navico B & S Construction Corp., located in Jamaica, Queens. Navico has multiple contracts with NYCHA to provide scaffolding at various construction projects across New York City.

Singh is accused of demanding $6,000 in kick-backs from two workers. The alleged kickbacks were required by Singh in exchange for the workers keeping their jobs. One employee returned $5,785 of his wages, another $1,006. A third worker was allegedly underpaid by $2,520. Singh is charged with Grand Larceny in the Fourth Degree, Offering a False Instrument for Filing in the First Degree, Falsifying Business Records in the First Degree, Kick-Back of Wages Prohibited, and Failure to Pay Wages. He faces up to four years in prison if convicted.

In addition to the criminal actions announced today, OAG and the New York City School Construction Authority (SCA) Inspector General’s Office have also pursued civil recovery of the back wages related to the December indictments. Under the civil provisions of the New York State prevailing wage law, a general contractor is financially responsible for any underpayment of wages and benefits by its subcontractors.

The general contractor on the Brooklyn exterior renovation at P.S. 196K, Pro-Metal Construction, Inc. of Brooklyn, New York, entered into an Assurance of Discontinuance with the Office of the Attorney General on December 16, 2014 guaranteeing payment to eight of the subcontractor’s workers. Pro-Metal has paid $323,000 to cover the alleged underpayment of wages and benefits for work performed by its subcontractors at the Brooklyn school. One of the laborers on the job is being paid over $70,000, while another five are being made whole with payments in excess of $35,000.

The alleged underpayments for the school projects at P.S. 7X in the Bronx and P.S. 235K in Brooklyn will be paid by general contractor Dean Builders Group, Inc. of Great Neck, New York. Dean entered a settlement agreement with the New York City School Construction Authority on January 14th, 2015 wherein it agreed to assign $201,946.00 in funds to the SCA to cover the underpayment in wages and benefits. As to benefits, Dean has paid over an additional $90,000.00 to the Mason Tenders Benefit Fund for benefits owed to the workers on the two jobs.

The Attorney General thanks the Inspectors General for the School Construction Authority, the New York City Housing Authority and Housing Preservation and Development, all of whom report to the Department of Investigation, and their staffs for their assistance on this investigation.

The SCA cases were investigated by William O’Brien and Lee Callier of the School Construction Authority, Office of the Inspector General under the supervision of First Assistant Inspector General Gerard McEnroe and Inspector General Maria Mostajo. The HPD case was investigated by Deputy Inspector General David Jordan and Assistant Inspector General Ondie Frederick under the supervision of Inspector General Jessica Heegan. The NYCHA case was investigated by Special Investigator Robert Diienno of the New York City Housing Authority, Office of the Inspector General under the supervision of Inspector General Ralph Ianuzzi. The Department Investigation’s effort to combat prevailing wage violations was overseen by Senior Associate Commissioner Michael Carroll and Associate Commissioner William Jorgenson.

Attorney General investigators working on these cases are Elsa Rojas, Sixto Santiago, Edward Ortiz, Ismael Hernandez, Brian Metz, Michael Leahy, Naomi Jimenez, Michael Yun and Senior Investigators Salvatore Ventola and Lawrence Riccio with assistance by Supervising Investigators John M. Sullivan and Michael Ward. The investigation was conducted under the supervision of Supervising Investigators Luis Carter, under the direction of Deputy Chief Investigator John McManus. The Attorney General’s Investigations Bureau is led by Chief Investigator Dominic Zarrella.

The criminal cases are being prosecuted by Assistant Attorney General Matthew Ross, Assistant Attorney General Benjamin Holt and Richard Balletta, the Attorney General Labor Bureau’s criminal section chief, with assistance from Stephanie Swenton, the Deputy Bureau Chief of the Criminal Enforcement and Financial Crimes Bureau.

The Labor Bureau Chief is Terri Gerstein. The Executive Deputy Attorney General for Social Justice is Alvin Bragg and Kelly Donovan is the Executive Deputy Attorney General For Criminal Justice.

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

NEW YORK – Attorney General Eric T. Schneiderman today announced a lawsuit against the board of directors of two Brooklyn-based nonprofits, Brooklyn Child & Family Services, Inc. and Project Teen Aid Housing Development Fund Corp., for alleged gross negligence and failed management of the organizations – and of two converted townhouses in the Bedford-Stuyvesant section of Brooklyn. The Rose F. Kennedy Family Center, located at 178 Halsey Street, and the Rosa Parks Apartments, located at 243 Hancock Street, have been owned by the jointly operated nonprofits since the 1990s. The charitable organizations were intended to provide housing and support services for pregnant women, young mothers and their children. As set forth in the lawsuit, an investigation by the Attorney General’s Charities Bureau found that several board members listed the townhouses for sale without necessary approval. Supreme Court Justice Genine D. Edwards granted the Attorney General’s Office a temporary restraining order earlier this week that freezes the organization’s assets.

“Lured by a lucrative real-estate market in Brooklyn, the board members of these two charitable organizations allegedly attempted to illegally sell two brownstones that belonged to the charities and were meant to serve as housing for single mothers – kicking out their vulnerable residents along the way,” said Attorney General Schneiderman. “There is simply no excuse for a charitable board using its organizations’ valuable assets for the personal gain of board members. We will continue to hold New York’s entire nonprofit sector to its responsibilities, especially when those obligations are to underprivileged families.”

According to a lawsuit filed in Brooklyn Supreme Court on Monday, the Attorney General’s investigation, which began in February, found that the board of directors of the two organizations ignored the long-standing charitable mission of the groups and led the organizations to financial ruin, resulting in their loss of public funding. The board members who are being sued by the Attorney General’s Office include directors and officers Thomas McKinney and Amuel Renard Hilliard; Gene Baynes, the organizations’ financial manager, whose certification as a financial planner was revoked in 2010 in California; Vivian Munsey-Thomasson, the vice-chair of both boards; and Reggie Wells, a resident of Chicago.

According to the Attorney General’s petition, in August 2013 and at the board’s direction, the organizations evicted the young women who resided at the Rose Kennedy Center and the Rosa Parks Apartments –who the nonprofits were supposed to serve. The board then allegedly attempted to profit personally by marketing the buildings for private sale: The Rose F. Kennedy Family Center was listed by Halstead for $3.6 million in December 2014, and Rosa Parks Apartments was listed by Halstead for $2.1 million in May 2014. According to the allegations, the board also enlisted Vice Chair Munsey-Thomasson’s son, who is a real estate broker, to market both properties, with the prospect of earning six percent commissions.

The complaint also details evidence of several other alleged improprieties by the organizations’ board and its officers, including:

• pilfering $80,000 from a charitable bank account directly into the personal account of financial manager Gene Baynes;
• taking out two high-fee loans totaling $600,000, secured by the Rose Kennedy Center’s property on Halsey Street, currently with an annual interest rate of 12 percent and a default rate of 24 percent;
• forging the signature of the secretary of the board to authorize the high-fee loan on Rose Kennedy Center’s property, without the board member’s permission;
• failing to pay the wages of their employees; and
• neglecting corporate filings, including tax returns.

The Asset Management Division of the New York City Department of Housing Preservation and Development noticed suspicious behavior concerning the management of the properties and notified the appropriate authorities in the Attorney General’s Charities Bureau. Upon receiving complaints from the public and from the New York City Department of Housing Preservation and Development, the Attorney General’s Charities Bureau worked with Halstead in February 2015 to remove the listings of the two properties and put a stop to the organizations’ attempt to sell the buildings.

“I am grateful that through the diligence and initiative of HPD Assistant Commissioner Allred and his team in the Office of Asset Management and Property Management, this wrongdoing was brought to light,” said HPD Commissioner Vicki Been. “Our partnership with the Attorney General’s office is a great asset in the fight to protect tenants and preserve the stock of affordable housing. I am pleased to learn that this court order was put in place to protect these buildings and look forward to seeing them return to use as much-needed affordable housing.”

The sale of the charities’ two key assets without prior approval by the Charities Bureau or a state court is illegal under state law. New York’s Not-for-Profit Corporation Law requires that such sales include advance approval by either the appropriate court or the Attorney General’s Charities Bureau. In addition, proceeds of such sales must return to the nonprofit to further its charitable purposes or to another charity with similar purposes. The Attorney General’s lawsuit alleges that the attempted sales were intended to personally benefit the board members, and not the charities.

Both the Rose Kennedy Center and the Rosa Parks Apartments buildings accumulated numerous buildings code violations and fines, notwithstanding the millions of public dollars invested in them over the course of many years.

Under the temporary restraining order secured by the Attorney General’s Office on Monday, the court directed that certain bank accounts and other assets of the organizations be frozen. In addition, the Attorney General’s lawsuit is asking the court to remove the board of directors and put a temporary receiver in place to manage the organizations. The five directors must appear in Brooklyn Supreme Court on April 22 to explain why they should not permanently be removed from their positions as officers and directors of the organizations.

The Attorney General’s investigation into Brooklyn Child & Family Services, Inc. and Project Teen Aid Housing Development is continuing.

The Attorney General thanked the New York City Department of Housing Preservation and Development, in particular, Assistant Commissioner Christopher Allred of HPD’s Division of Asset Management, for assisting in the investigation.

The Charities Bureau’s civil case is being prosecuted by Assistant Attorney General Elizabeth Fitzwater. Assistance was provided by Legal Assistants Carolyn Fleishman and Jacqueline Sanchez. The Bureau’s Enforcement Section is led by Assistant Attorney General Sean Courtney. The Charities Bureau is led by Deputy Bureau Chief Karin Kunstler Goldman and Bureau Chief James G. Sheehan. The Attorney General’s Division of Social Justice, of which the Charities Bureau is a part, is led by Executive Deputy Attorney General Alvin Bragg.

The Attorney General’s Charities Bureau regulates nonprofit organizations, and is charged with protecting them and the public from unscrupulous practices in the management of charitable assets and in the solicitation of donations. The Charities Bureau also ensures that funds and other assets of charitable organizations are properly used in accordance with their charitable purposes.

The charges in this lawsuit 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 settlements totaling $970,000 with four current Domino’s Pizza franchisees, who together own 29 stores across New York State, as well as with one former franchisee who owned 6 stores. With stores located in Cortland, Dutchess, Erie, Genesee, Monroe, Nassau, New York, Onondaga, Ontario, Orange, Rockland, Suffolk, and Westchester counties, the franchisees admitted to a number of labor violations, including minimum wage, overtime or other basic labor law protections. In light of today’s agreements – which follow similar settlements last year with the owners of 26 other Domino’s stores statewide – Attorney General Schneiderman also called on the Domino’s Pizza corporation and Chief Executive Officer Patrick Doyle to exercise increased oversight of Domino’s franchisees’ pay practices.

“In the past two years, the owners of over fifty New York Domino’s franchise locations have admitted to violations of some of the most basic labor law protections – an appalling record of ongoing disregard for workers’ rights,” Attorney General Schneiderman said. “Franchisors like Domino’s need to step up to the plate and fix this problem. Franchisors routinely visit franchise stores to monitor operations – down to the number of pepperonis on each pizza – to protect their brand, and yet they turn a blind eye to illegal working conditions. My message for Domino’s CEO Patrick Doyle is this: To protect the Domino’s brand, protect the basic rights of the people who wear the Domino’s uniform, who make and deliver your pizzas.”

Today’s agreements followed investigations by the Attorney General’s Office into the franchisees, covering the time period from 2008 through 2014. All investigated franchisees admitted to the violations of law outlined in the settlement agreements. The admitted violations varied by location and time period, and included the following:

• Some stores paid delivery workers below the tipped minimum wage applicable to delivery workers under New York law. 
• Some stores failed to pay overtime to employees who worked over 40 hours in a week, and others under-paid overtime, because they did not combine all hours worked at multiple stores owned by the same franchisee, or because they used the wrong formula to calculate overtime for tipped workers, unlawfully reducing workers’ pay.
• Delivery workers who used their own cars to make deliveries were not fully reimbursed for their job-related vehicle expenses. 
• Delivery workers who used their own bicycles to make deliveries were typically not reimbursed for any expenses related to maintaining their bicycles, nor were they provided with protective gear as required by New York City law.
• Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours. 
• Some stores also violated a state requirement that employers must pay restaurant workers for at least three hours of work when those employees report to work for a longer shift but are ultimately sent home early because of slow business or other reasons.
• Some stores took a "tip credit" without tracking tips, and assigned delivery workers to kitchen or other untipped work for more time than legally permitted. Employers may only take a “tip credit” and pay a lower minimum wage to tipped restaurant employees if those employees earn enough in tips and spend most of their time – at least 80 percent –performing tipped work.

A list of all of the Domino’s franchisees and the restaurant locations that have reached settlements with the Attorney General’s Office can be found here.

In addition to payment of $970,000 in restitution funds, the franchisees must also institute complaint procedures, provide written handbooks to employees, train supervisors on the labor law, post a statement of employees’ rights, and designate an officer to submit quarterly reports to the Attorney General's Office regarding ongoing compliance for three years.

The largest franchisee to reach an agreement today, Robert Cookston, is paying $675,000 to settle the charges against him. In 2013, his Washington Heights store was the subject of a separate investigation for retaliatory discharge, which was ultimately resolved when all 25 discharged employees were reinstated pursuant to an agreement with the Attorney General’s Office. In today’s agreement, in addition to paying restitution to these and other workers, Mr. Cookston agreed to pay for independent monitoring of all of his stores for three years.

Today’s five agreements follow settlements announced last year with six Domino’s pizza franchisees, who together owned 23 stores and agreed to pay a total of $448,000 in restitution, as well as an additional settlement last year with a franchisee, Abdil Karaborklu, who paid $40,000 to resolve a case involving his three stores. Some of the stores investigated by the Attorney General in today’s announcement and last year changed hands among franchisees during the period of the investigation.

In total, franchisees investigated by the Attorney General have admitted violations of basic labor law protections in a total of 57 distinct Domino’s store locations in New York. Collectively, the Attorney General’s agreements have required franchisees to pay nearly $1.5 million in restitution to underpaid employees in Domino’s stores.

There were approximately 130 total Domino’s franchisee store locations statewide in 2014, according to Domino’s disclosure documents. Nationally, over 90 percent of Domino’s locations are franchisee-owned.

The Attorney General continues to investigate additional Domino’s franchisees in New York.

In addition to investigations involving Domino’s restaurants, the Attorney General’s office has brought a number of additional cases in the fast food industry.

• In February, a judge awarded a judgment of over $2 million in unpaid wages and penalties to the Attorney General against New Majority Holdings, LLC, a New York City-based Papa John’s franchisee, and its owner Ronald Johnson.
• In January, the Attorney General obtained a judgment for nearly $800,000 against Emmanuel Onuaguluchi, the operator of Emstar Pizza Inc., another New York City-based Papa John’s franchisee.
• In June 2014, the Attorney General obtained $10,000 in restitution for an employee unlawfully discharged after reporting a gas leak at a McDonald’s franchise located in Lyons, in upstate New York.
• In March 2014, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of a group of seven New York City-based McDonald’s franchises.

The cases were handled by Labor Bureau Section Chief Andrew Elmore and Assistant Attorneys General Claudia Henriquez, Kevin Lynch and Haeya Yim, assisted by Assistant Attorney General Justin Deabler of the Civil Rights Bureau.  Terri Gerstein is the Labor Bureau Chief and Alvin Bragg is the Executive Deputy Attorney General for Social Justice.

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has reached a settlement with 39 Lispenard Project, LLC and its former principal Peter Moore – the architect and prolific real estate developer of properties in lower Manhattan – for failing to register numerous real estate investments known as syndications under the Martin Act. The settlement brings to a close a lengthy investigation into Moore’s unlawful public offering of real estate investments in three offerings, including the unlawful offer of condominium units involving 39 Lispenard Street, a luxury loft development in TriBeCa.

“Promoters of real estate investments need to follow the rules and if they don’t, they will be held accountable,” Attorney General Schneiderman said. “The Martin Act provides necessary protections to all investors, including homebuyers seeking to purchase a condominium unit. Thanks to our settlement, Mr. Moore will take steps to ensure this important law is upheld, or face permanent consequences.”

The Attorney General’s investigation initially uncovered that Moore solicited and offered investments known as syndications in his company, 39 Lispenard Project, LLC, to members of the public – which would ultimately lead to ownership of a condominium unit – without making necessary filings with the Attorney General’s Office. Under the Martin Act, New York’s blue sky law that regulates securities, both syndications and the offer of condominium units require the filing of prospectuses, which must be provided to investors and purchasers before they decide to invest or buy a condominium unit.

Without making any attempt to comply with the Martin Act, Moore took blatant steps to procure investors in an unregistered syndication. He went so far as to hire a prominent New York luxury real estate brokerage firm – Town Residential – to assist in the public marketing and advertising of the project. Town Residential separately agreed to pay $7,500 in investigation costs and educate its brokers on the requirements of the Martin Act.

Under the settlement obtained by Attorney General Schneiderman, Moore has agreed to a six-month bar from offering or selling securities in the State of New York, in addition to making the required syndication filings with the office. Moore also agreed to conduct his business affairs legally in the future. If Moore violates any term of the settlement agreement, he will be barred from offering or selling securities permanently. In addition, Moore will pay a fine totaling $50,000.

During the course of the initial investigation into 39 Lispenard Project, LLC, it was revealed that Moore was involved in two other unregistered syndication offerings as well. As a part of the settlement, Moore has registered all of these projects with the Real Estate Finance Bureau.

39 Lispenard Project, LLC will also pay a fine of $5,000 and file an offering plan with the Attorney General before delivering condominium unit deeds to existing investors or offering for sale any other units to the public.

A copy of the settlement agreement with Mr. Moore is available here.

A copy of the settlement agreement with 39 Lispenard Project LLC is available here.

The investigation of this matter was conducted by Assistant Attorney General Nicholas J. Minella, Deputy Bureau Chief Andrew H. Meier, and Bureau Chief Erica F. Buckley, all of the Real Estate Finance Bureau, as well as Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has obtained a settlement from debt buyer Asta Funding, Inc. (“Asta”) for bringing improper debt collection actions against hundreds of New York consumers. For years, Asta sued New York consumers and obtained uncontested default judgments against consumers who failed to respond to the lawsuits, even though the underlying claims were untimely under New York law. Under the settlement, Asta will move to vacate more than 300 improperly obtained judgments totaling more than $1.7 million. Asta will also reform its debt collection practices and pay civil penalties and costs in the amount of $100,000.

“Filing lawsuits on debts that have surpassed the statute of limitations is an abuse of the court system and hurts New Yorkers,” said Attorney General Schneiderman. “My office will continue to hold debt collectors and lenders accountable, so that New Yorkers can keep more of their hard-earned money where it belongs – in their pockets.”

Asta is a debt buyer that purchases unpaid consumer debts such as credit card debts from the original creditor or from other debt buyers at deeply discounted prices. Asta’s subsidiaries, which include Palisades Collection, LLC and Palisades Acquisition XVI, LLC, then attempt to collect on the debt.

It is unlawful for a debt collector to bring suit against a consumer when the claims are outside of the applicable statute of limitations. Under New York law, for an action to be timely filed it must be commenced not only within New York’s statute of limitations, but also within the statute of limitations of the state where the cause of action accrued, if other than New York. In debt collection actions, a cause of action accrues where the original creditor resides. For example, while New York’s statute of limitations to collect on a debt is generally six years, if the original creditor was located in Delaware, which has a three-year statute of limitations, the shorter statute of limitations would govern the action.

The Attorney General’s investigation found that despite the clear requirements of New York law, Asta brought debt collection actions that were untimely under the statutes of limitations where the causes of action accrued. Because most consumers fail to respond when they are sued by a debt collector, Asta obtained default judgments in its favor based on these time-barred claims.

In addition to seeking to vacate more than 300 improperly obtained judgments and paying $100,000 in civil penalties and costs, Asta has agreed to several important reforms of its current practices in New York. These include:

• Disclosing in written or oral communications that a debt is outside the statute of limitations and that the company will not sue to collect on the debt.
• Disclosing in written or oral communications that a debt is outside the date for reporting the debt provided for by the federal Fair Credit Reporting Act and that because of the age of the debt the company will not report the debt to any credit reporting agency.
• Alleging certain information relevant to the statute of limitations in any debt collection complaint, such as the name of the original creditor, and the date of the consumer’s last payment on the debt.

In addition to filing time-barred debt collection actions, from 2006 through 2012, contrary to New York law, Asta permitted its employees to sign affidavits outside the presence of a notary and then deliver them to an employee who would notarize the affidavits in bulk. The settlement requires Asta to ensure that affidavits are notarized in a manner consistent with the requirements of New York law, including that the affidavit or other sworn statement is signed in the presence of a licensed notary.

This settlement is a part of the Attorney General’s continuing efforts to combat unlawful and abusive debt collection activity. In May 2014 and January 2015, Attorney General Schneiderman obtained settlements from three major debt buyers, Portfolio Recovery Associates, Sherman Financial Group, and Encore Capital Group, who filed time-barred debt collection cases. Those settlements resulted in the vacature of more than 7,500 improperly obtained judgments estimated at more than $34 million. More information on those settlements is available here and here.

In addition, in September 2014, New York’s Court System adopted a comprehensive set of reforms related to consumer debt collection actions that incorporate many of the recommendations of the Attorney General’s Office. More information on those reforms is available here.

Consumers facing default judgments arising from debt collection actions brought by Asta or its subsidiaries who believe that the default judgment was improperly obtained because the claim was time-barred should contact the Attorney General’s Office within 60 days. Such judgments may be eligible for vacature pursuant to the settlement.

This case was handled by Assistant Attorney General Melissa O’Neill and Bureau Chief Jane M. Azia, both in the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General of Economic Justice Karla G. Sanchez.

NEW YORK – Attorney General Eric T. Schneiderman today released the following statement in support of all those gathering across the country to demand fairness for low-wage workers:

“Today, across the country, workers are standing up to send an important message: They deserve a raise, and they deserve to be treated fairly. In a society as wealthy as ours, there is no reason that anyone who is willing to work full time should live in poverty. And in a society as advanced as ours, it is outrageous that many employers in our state fail to pay their workers even the minimum that they are legally owed. That’s called wage theft, and my office has been – and will continue to be - very aggressive in bringing both civil and criminal cases to stop it. I am proud to stand with these workers today in New York as they fight for a raise and for fairness.”

Since 2011, Attorney General Schneiderman has successfully returned more than $20 million in restitution to more than 17,000 workers across New York, and recovered more than $2 million in restitution and penalties for the state. This year alone, the Attorney General has taken a number of actions against labor law violations:

• On Tuesday, the Attorney General secured a total of $970,000 in settlements with current and former owners of 35 Domino’s franchise locations in 13 counties statewide, from Long Island to the suburbs of Buffalo, for violating workers’ basic rights.
• On Monday, his office sent letters to 13 major retailers seeking more information on their possibly disruptive ‘on call’ scheduling practices.
• Last week, with the NYC Department of Investigation, the Attorney General announced the arrests of five contractors charged with underpaying workers on public works projects in New York City by nearly $1 million.
• In February, a judge awarded a judgment of over $2 million in unpaid wages and penalties to the Attorney General against New Majority Holdings, LLC, a New York City-based Papa John’s franchisee, and its owner Ronald Johnson.
• In January, the Attorney General obtained a judgment for nearly $800,000 against Emmanuel Onuaguluchi, the operator of Emstar Pizza Inc., another New York City-based Papa John’s franchisee.

If you are aware of a violation of workplace rights in New York State, whether as a victim or a concerned witness, please file a complaint with the Attorney General’s Labor Bureau by filling out this complaint form or by calling the Labor Bureau at 212-416-8700. 

NEW YORK– Attorney General Eric T. Schneiderman today announced a $10 million settlement of a lawsuit filed against the auditing firm Ernst & Young LLP (“Ernst & Young”) over its involvement in a financial statement fraud at the now-defunct investment bank, Lehman Brothers Holdings, Inc. That money will be distributed as restitution to investors in Lehman securities, along with some $99 million being paid by Ernst & Young to settle a private federal class action that relied in part on facts uncovered by the Attorney General’s investigation. No other law enforcement authority has brought an enforcement action in connection with the 2008 collapse of Lehman. Moreover, today’s settlement resolves the first lawsuit brought against an auditor of a public company under New York’s securities laws. The case also resulted in an important decision by the Appellate Division’s First Department, which confirmed the Attorney General’s power to obtain disgorgement of professional fees received by a firm, in this case Ernst and Young’s fees.

“The basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public. If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy, and our country,” Attorney General Schneiderman said. “Auditors will be held accountable when they violate the law, just as they are supposed to hold the companies they audit accountable.”

Under the terms of the settlement, Ernst & Young will pay $10 million—most of which will go to investors, with the remaining settlement funds to be used to reimburse New York State for investigation and litigation costs.

The Attorney General’s case, People v. Ernst & Young LLP, filed in Manhattan Supreme Court pursuant to the Martin Act and Executive Law § 63(12) in December 2010, concerned Ernst & Young’s role, as Lehman’s auditor, in an alleged fraud involving Lehman’s use of “Repo 105” transactions. Repo 105s were transactions in which Lehman transferred to various overseas counterparties investment grade securities in return for cash, with the binding understanding that Lehman would repurchase the same securities within a very short time, often just a few days. As alleged in the Attorney General’s lawsuit, Lehman, with Ernst & Young’s approval and complicity, treated the Repo 105s as sales, which enabled Lehman to temporarily remove tens of billions of dollars of securities from its balance sheet without requiring Lehman to disclose the Repo 105 transactions as financings on its financial statements. The Repo 105s served no legitimate business purpose. As alleged in the suit, Lehman used the funds derived from the transactions to pay down billions of dollars of liabilities, which had the effect of temporarily and misleadingly reducing Lehman’s leverage ratios, an important metric for analyzing Lehman’s liquidity and financial health.

As alleged by the Attorney General, Ernst & Young approved Lehman’s accounting for the Repo 105 transactions and issued unqualified opinions certifying Lehman’s financial statements, in spite of knowing that Lehman was not disclosing the existence or impact of the Repo 105s in its annual and quarterly consolidated financial statements, all of which Ernst & Young audited or reviewed. Ernst & Young also failed to object when Lehman allegedly misled analysts on its quarterly earnings calls regarding its leverage ratios, and did not inform Lehman’s Audit Committee about a highly-placed whistleblower’s concerns about Lehman’s use of Repo 105 transactions.

The lawsuit charged that Ernst & Young’s assent to Lehman’s failure to include any indication in its financial statements about the Repo 105 transactions was fraudulent and deceptive under the Martin Act and Executive Law § 63(12), as was allowing Lehman to the use the Repo 105s to manipulate its balance sheet and leverage ratios.

The case against Ernst & Young was prosecuted by Senior Trial Counsel David N. Ellenhorn, Assistant Attorneys General Armen Morian and Tanya Trakht, and Bureau Chief Chad Johnson, all of the Investor Protection Bureau, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

NEW YORK - Attorney General Eric Schneiderman sent a letter to the New York State Board of Elections (“BOE”) today, urging board members to immediately close a loophole in NYS law that allows individuals and corporate interests to contribute virtually unlimited amounts to political campaigns across the state. The letter comes just one day before the BOE is scheduled to consider the loophole at a public meeting in Albany. 

Last month, Attorney General Schneiderman called on state lawmakers to close the LLC loophole as part of a comprehensive ethics and campaign finance reform package. However, as the A.G.’s letter today explains, “with the prospects for real reform on hold indefinitely, the BOE must not squander this chance for progress.”

In his letter to the BOE, Attorney General Schneiderman also notes that the LLC loophole allows donors to conceal their identity through multiple business entities and, as a result, “defeats the transparency and accountability that are the bedrock principles of the existing campaign finance system.”

Read the full letter here.

Op-Ed Published In The New York Daily News

By Eric T. Schneiderman

On Tuesday, my office announced the latest in a string of enforcement actions against unscrupulous employers who cheat their employees out of wages, tips and overtime. Since I took office in January 2011, we’ve recovered more than $20 million for 17,000 workers.

Morally bankrupt wage practices and laws cannot hold. Enforcement actions by my office and others are having an impact, and pressure is building: Wednesday, fast-food workers across the country protested against unconscionably low minimum wages that leave even fully paid employees below the poverty line, unable to support themselves and their families.

We must use every tool at our disposal to lift the living standards of low-wage employees. Here in the Empire State — birthplace of historic labor reforms enacted by Gov. Al Smith in the aftermath of the Triangle Shirtwaist Factory fire — a 55-year-old provision of our Labor Law creates the opportunity to overcome gridlock and provide a more livable wage for our most hard-pressed workers.

While the statewide minimum wage is set by the Legislature and the governor, state law endows the state’s commissioner of labor with the authority to investigate and increase the minimum wage for any occupation if the commissioner determines that a substantial number of employees “are receiving wages insufficient to provide adequate maintenance and to protect their health.”

The law spells out in detail how the commissioner must proceed, beginning with convening a “Wage Board” to investigate and make recommendations about wage levels.

This process has been used twice in recent years, in limited ways, to raise wages for certain categories of workers. It is clearly lawful for our commissioner of labor to increase wage minimums, provided the statute’s guidelines and procedures are followed. New York courts have consistently held this process to be constitutional.

With President Obama’s proposal to increase the federal minimum wage dead on arrival, attention is turning to state and local laws. Twenty-nine states and the District of Columbia now have minimum wages that exceed federal wage law requirements; Seattle made history by enacting a plan to raise its minimum to $15.

But progress in New York has stalled: The governor’s proposal to include a modest minimum wage increase in the state budget was not enacted, and Mayor de Blasio’s laudable call for a more substantial minimum-wage hike in the city was embraced only by the state Assembly.

The state’s minimum wage remains a paltry $8.75 an hour, on track to go up to $9 at year’s end.

As a practical matter, faced with the real prospect of action by the commissioner of labor, legislators would be much more likely to pass an increase that could otherwise be held up for years. Lawmakers zealously guard their prerogatives and, as much as some might oppose a minimum-wage increase, they will not want to see the issue taken out of their hands.

Low-wage workers have power themselves to get the ball rolling. In a strikingly populist provision of the law, a petition by 50 employees in any occupation forces the commissioner of labor to conduct an investigation into the adequacy of their wages. The investigative process itself could shine a massive spotlight on the struggles of low-wage workers. And any fair examination of their conditions would almost certainly demand relief.

Just over 50 years ago, when Lyndon Johnson outlined his priorities as President, he spoke of his personal experiences with poverty and his longstanding desire to help those who suffered under its burdens. “Now I do have that chance,” he said, “and I’ll let you in on a secret: I mean to use it.”

The secret’s out: New York’s Labor Law provides the power to help low-wage workers earn enough to meet their basic needs. It may be time to use it.

Schneiderman is New York’s attorney general.

WATERTOWN—Attorney General Eric T. Schneiderman today announced that his office has issued a cease and desist letter to LeRay 300, LLC, a Virginia-based company owned by Jeffrey S. Lewis, also of Virginia. The business operates as a rental property company near Fort Drum under the name of Woodcliff Community. The letter orders Woodcliff Community to immediately cease charging service members illegal fees in violation of the Servicemember Civil Relief Act and collecting undisclosed, non-refundable "reservation deposits" in violation of New York State law, among other allegations. The rental property, located in Calcium, New York, is approximately one mile from the main gate at Fort Drum and advertises itself as the "finest neighborhood serving the Fort Drum community."

"Protecting New Yorkers from unscrupulous landlords concerned only with their bottom line, particularly when the tenants are the brave men and women of our nation's military, is a top priority for my office," said Attorney General Schneiderman. "My office will continue to stand with tenants across New York State to ensure landlords follow the law.”

The Servicemember Civil Relief Act is a vital federal law that provides rights and protections to active duty and recently separated members of the military and their families in order to ensure they are able to devote their time and energy to their military duties. Among the protections provided is the ability to terminate a residential lease without penalty prior to the end of the lease term under certain circumstances, including deployment or a permanent change of station. Attorney General Schneiderman's ongoing investigation has resulted in allegations that Woodcliff Community frequently assesses various move-out penalties when soldiers assert their right to terminate their lease early pursuant to the Servicemember Civil Relief Act.

Consumers who have unresolved complaints with LeRay 300, LLC, Woodcliff Community or any other business are urged to contact Attorney General Schneiderman's Regional Office in Watertown at 315-523-6080.

This case is being handled by Assistant Attorney General In Charge Deanna R. Nelson and Assistant Attorney General Alicia M. Lendon, both of the Watertown Regional Office. The Watertown Regional Office is part of the Division of Regional Affairs led by Executive Deputy Attorney General for Regional Affairs Martin J. Mack. 

RENSSELAER – Attorney General Eric T. Schneiderman and State Comptroller Thomas P. DiNapoli today announced the sentencing of Ronald Foust and Jeffrey Clark, former employees of the City of Rensselaer Department of Public Works, for teaming with DPW Commissioner Thomas Capuano to divert $46,000 from the city by pocketing the cash from scrap metals acquired as part of their jobs with the city.

Foust pleaded guilty to Fourth Degree Grand Larceny and was sentenced to five years of probation. Clark pleaded guilty to Attempted Fourth Degree Grand Larceny. Each must repay one-third of what was stolen. The sentencing took place in Rensselaer County Court before Judge Andrew Ceresia.

“In an effort to combat public corruption and root out the misuse of taxpayer funds, my office has partnered with Comptroller DiNapoli to form Operation Integrity,” said Attorney General Schneiderman. “These sentences echo our ongoing message that those who violate the public trust by stealing from their communities will be brought to justice.”

"Public resources do not exist for the profit of city employees," said State Comptroller Thomas P. DiNapoli. "These defendants conspired with their supervisor to steal scrap metal from the city taxpayers and line their pockets. This behavior will not be tolerated, and I will continue to partner with Attorney General Schneiderman to expose corruption and protect taxpayer resources at all levels of government ."

According to documents filed in court, surveillance videos from a local scrap yard showed Foust and Clark cashing in items discarded by city residents. Foust and Clark later implicated their supervisor Thomas Capuano, the Commissioner of the Rensselaer Department of Public Works, in the scheme.

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 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 documents 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.

Capuano is due in court for sentencing May 21.

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, Former Assistant Attorneys General Rachel Doft and Colleen Glavin also worked on the case. 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.

SYRACUSE – Attorney General Eric T. Schneiderman announced today that an expanded version of a bill he proposed last year, the Abandoned Property Neighborhood Relief Act, has been reintroduced in the New York State Legislature. The modified bill, which addresses so-called “zombie properties” – vacant and abandoned homes that are not maintained during a prolonged foreclosure proceeding – includes several new key provisions to expedite the foreclosure process for properties that are confirmed to be vacant and direct penalties for noncompliance to a fund to aid local enforcement of the law. The bill (A.6932/S.4781), reintroduced this month by Assembly Judiciary Committee Chairwoman Helene Weinstein (D-Brooklyn) and Senate Coalition Co-Leader Jeffrey D. Klein (D-Bronx/Westchester), comes amid new data showing a troubling increase in the number of zombie properties across New York State. According to data analyzed by the Office of the Attorney General (OAG), zombie property foreclosures increased by 50% from 2013 to 2014, bringing the total number of zombie properties in NYS to 16,701. As a result, almost 1 in 5 residential foreclosures is now a zombie property.

“New York will never be able to fully recover from the devastation of the financial crisis until we seriously reckon with the crisis of zombies,” said Attorney General Schneiderman. “The Abandoned Property Neighborhood Relief Act, which enjoys the support of local elected officials, law enforcement, and fair housing advocates all across New York, will equip our local communities with the resources they need to halt the spread of abandoned and vacant homes. Albany can finally alleviate the burden that these blighted properties impose on our towns and cities by passing the Abandoned Property Neighborhood Relief Act during this legislative session.”

Attorney General Schneiderman’s bill, the Abandoned Property Neighborhood Relief Act, would address the problem of zombie properties in several ways.

Since many families do not understand that they have the right to remain in their home until a judge declares the foreclosure complete, the bill would require that homeowners be provided with early notice that they are legally entitled to remain in their homes until ordered to leave by a court. The bill would also make it unlawful for a mortgagee or loan servicing agent, or a person acting on their behalf, to enter a property that is not vacant or abandoned for the purpose of intimidating, harassing or coercing a lawful occupant in order to induce them to vacate the property, thereby rendering it vacant and abandoned.

In the event that homeowners do leave their property before the foreclosure is complete, the bill would require mortgage lenders and their servicers to take responsibility for properties soon after they have been vacated – and not, as under current law, at the end of a lengthy foreclosure process. Under this provision, lenders and their servicers are required to identify, secure, and maintain vacant and abandoned properties and pay for their upkeep. The bill would also establish a periodic inspection requirement for mortgagees and loan servicing agents to determine if property subject to a delinquent mortgage is currently occupied.

To help municipalities secure zombie properties, the bill would require mortgagees or their agents to electronically register these properties with a newly-created statewide Vacant and Abandoned Property Registry to be established and maintained by the OAG. The registry would be supplemented by a toll-free hotline that community residents can use to report suspected vacant and abandoned properties to the OAG and receive information regarding the status of registered properties, including the identity of the mortgagee or agent responsible for maintaining them. Banks that fail to register an abandoned property will be subject to civil penalties.

One of the new provisions of this year’s Abandoned Property Neighborhood Relief Act would direct penalties for noncompliance into a fund for local municipalities to support code enforcement within the municipality where the violations occurred. Another new provision would create an expedited foreclosure process for properties that are confirmed to be vacant.

"The foreclosure crisis left neighborhoods scarred by vacant and abandoned properties. The introduction of the Abandoned Property Neighborhood Relief Act brings New York State a step closer to curing the blight these properties bring to neighborhoods by holding banks accountable for their upkeep,” said New York State Senator Jeff Klein, Senate Coalition Co-Chair and sponsor of S.4781. “We expect banks to maintain properties and we will keep a list of empty homes. We want to support towns and counties who have been dealing with the blight of zombie properties for too long. With the support of Attorney General Eric Schneiderman, my colleagues in the Senate and the Assembly, I hope we can pass this crucial package of legislation for New Yorkers."

"In too many neighborhoods across New York State, lenders have permitted vacant and abandoned residential properties to fall into disrepair,” said New York State Assemblywoman Helene Weinstein, Assembly Judiciary Committee Chair and sponsor of A. 6932. “These properties are a blight on neighborhoods and bring down the property values in communities. I commend Attorney General Eric Schneiderman for proposing this bill that I am proud to sponsor. I look forward to working with him to help protect our neighborhoods by identifying and ensuring maintenance of properties early on.”

“Improving the quality of life in our neighborhood starts with ensuring we have a good housing stock and this has been a top priority of my administration,” said Syracuse Mayor Stephanie A. Miner. “Vacant, blighted properties become havens for criminal activity and reduce the values of neighboring homes. In Syracuse, we have taken steps to address this issue by starting a vacant property registry and establishing one of the first land banks in New York State. Attorney General Schneiderman appreciates the importance of urban housing needs and has supported our land bank with generous funding and pushed for important legislation, like the Abandoned Property Neighborhood Relief Act, which has the potential to help address even more abandoned properties. I am pleased to join with the Attorney General in calling on the legislature to pass this important bill.”

“Foreclosed and abandoned properties have become a serious problem in our neighborhoods, affecting quality of life for residents and forcing localities to spend precious resources on maintaining them,” said New York State Senator David J. Valesky. “I commend Attorney General Schneiderman and Senator Jeff Klein for recognizing the seriousness of this issue, and working on legislation to address the problem of zombie properties. I am confident it will make a difference here in Syracuse and across the state.”

“For too long, local communities in Onondaga County and the City of Syracuse have been suffering from the growing plague of zombie properties,” said New York State Assemblyman William Magnarelli. “I applaud Attorney General Schneiderman for continuing to work with the state legislature to protect our homeowners and the communities in which they live.”

“The blight of abandoned homes attracts crime, lowers property values and hurts communities, placing an unfair economic burden on local taxpayers who are already struggling,” said New York State Assemblyman Al Stirpe. “This continues to be a problem for Central New York, which has one of the highest incidences of vacant properties in the state. Attorney General Schneiderman’s efforts will help keep more families in their homes, protect taxpayer dollars and revitalize neighborhoods throughout Central New York. I commend him for his leadership and I encourage my colleagues in the Legislature to pass this important legislation necessary to ensure the safety and stability of our communities."

“Zombie properties are a growing problem in our neighborhoods, and I commend Attorney General Schneiderman for his leadership and proactive approach in working with local governments to address this serious issue,” said Utica Mayor Robert Palmieri. “I fully support this legislation and appreciate and thank Attorney General Schneiderman for his efforts.”

“Abandoned and vacant properties attract crime and put the lives of our law enforcement officers and other first responders at risk,” said Syracuse Police Chief Frank Fowler. “This isn’t just about the tax base or property values or the aesthetic appeal of our neighborhoods; it’s about the basic safety of the people who live and work in these communities, too. The state legislature should pass the Abandoned Property Neighborhood Relief Act and give local municipalities the resources they need to keep their streets safe.”

"Land banks are designed to get vacant and abandoned properties back into productive use, but are best equipped to address tax-delinquent vacant properties,” said Katelyn Wright, Executive Director of the Greater Syracuse Land Bank. “About 2/3 of the vacant structures in Syracuse are not tax-delinquent and are more challenging to address. Complementary tools like the Abandoned Property Neighborhood Relief Act will better equip communities like ours to address the full range of vacant buildings that negatively impact our neighborhoods."

“Zombie properties are a scourge on our neighborhoods and frustrate the residents who need to live near them, non-profits and public officials alike,” said Kerry Quaglia, Executive Director of Home HeadQuarters. “One bad property can negatively affect an entire block, so someone or some entity needs to have accountability for that property – it’s just common sense.”

Attorney General Schneiderman’s Abandoned Property Neighborhood Relief Act is one component of his broad strategy to help New York homeowners and communities recover from the foreclosure crisis. He successfully fought for a strong National Mortgage Settlement that delivered more than $2 billion in relief to New York families. He dedicated $100 million from the settlement to create the Homeowner Protection Program (HOPP), a network of free legal and housing counseling services that has served more than 40,000 families statewide. 

Attorney General Schneiderman has also pursued relief for communities by directing funds from the National Mortgage Settlement to community “land banks,” which are nonprofit organizations that can acquire property that is tax delinquent, tax foreclosed, vacant, or abandoned and use it for a variety of purposes to counter neighborhood blight.

In June of 2013, Attorney General Schneiderman announced the Community Revitalization Initiative (CRI), which has provided $33 million in funding to land banks that are working at the local level across New York State to rebuild and revitalize their communities. In the first round of funding, which took place in October 2013, OAG disbursed $13 million to eight land banks. After passing legislation to increase to double the maximum allowable number of land banks, Attorney General Schneiderman disbursed an additional $20 million in a second round of funding in October 2014.

NEW YORK – Kicking off Earth Week, Attorney General Eric T. Schneiderman today showcased a variety of statewide environmental protection initiatives that his office has championed, and provided a map demonstrating the reach and impact of the Environmental Protection Bureau over the past year. 

"Having a healthy and sustainable New York is not only important for today’s residents, but also critical to ensuring the well-being and strength of our state for generations to come,” said Attorney General Schneiderman. “Just this year, my office has taken action against those who polluted our groundwater on Long Island, directed resources to improve water quality in New York City and defended the right of New Yorkers to navigate public waters in Adirondack Park. But while we have made great progress in safeguarding our environment, there is still work to be done. This Earth Week, we must continue to reaffirm our commitment to protecting and improving the natural resources in our state and on our planet.”

Recent environmental victories include: 

On Long Island

• Obtained $5.31 million from owners of industrial facilities in the New Cassel Industrial Area in North Hempstead to recover the costs of the state’s investigation of groundwater pollution emanating from the site and related natural resource damages.  Toxic industrial chemicals from the site had reached local drinking water supply wells.
• Resolved contempt of court charges against Gerald Cohen, the owner of a former aviation plant in Port Jefferson Station, related to the cleanup of petroleum and hazardous wastes dumped at the site. The settlement gives the state access to the site to perform cleanup, includes a fine and holds Cohen liable for costs. 

In New York City

• With the New York State Department of Environmental Conservation (DEC), awarded $11 million in grants from the Greenpoint Community Environmental Fund, a community grant fund created from money obtained by the state in a 2011 settlement with ExxonMobil over its Greenpoint, Brooklyn oil spill.  The environmental improvement grants will be combined with $23.8 million in matching contributions from the recipients, bringing the total investment in Greenpoint to nearly $35 million.
• Sued New York City landlord Florence Edelstein for widespread violations of state oil spill prevention laws that govern the safe handling and storage of heating oil at residential properties.  Edelstein had been found liable for 90 violations of state laws at 25 properties in the Bronx and Manhattan. 
• Joined by the DEC, reached an agreement with New York City directing $960,000 to improving water quality in the upper East River and Long Island Sound.  The City’s payment is in partial resolution of penalties assessed by the State for falling behind on scheduled upgrades to nitrogen pollution controls at its Tallman Island wastewater treatment plant in Queens. 

In the Hudson River Valley:

• With DEC, reached an agreement with Gary Prato, a Putnam County landowner, to clean up an illegal landfill that discharged pollution into the Croton Falls Reservoir – a waterbody that has historically provided drinking water to New York City. The agreement also requires Prato to pay $245,000 in penalties.
• Joined the Attorneys General of Connecticut and Vermont in challenging recently-issued rules of the Nuclear Regulatory Commission (NRC) that govern the long-term storage of highly radioactive nuclear wastes on-site at more than 100 reactors around the country – including the three Indian Point reactors in Westchester County – for 60 or more years after the reactors close.

In Central New York:

• Obtained a court order against a Cortland County property owner for allegedly causing the flooding of a cemetery leading to the desecration of grave sites, and the disinterment and reburial of several bodies. The order requires James C. Stevens, III of Cortlandville to cease diverting stormwater from his property unless he secures a DEC permit to do so. A previous suit filed by Attorney General Schneiderman alleged that Stevens was illegally diverting water from his property in violation of state environmental and public nuisance laws.
• Resolved a suit brought against Triple Cities Metal Finishing Corp. Zurenda Enterprises, and Binghamton Realty for allegedly contaminating soils and groundwater in the Hillcrest neighborhood of Fenton in Broome County with hazardous substances.  The Consent Decree requires the companies to pay the State a total of $55,000. 
• Won a case against the owners and operators of a car-crushing facility in Town of Volney in Oswego County who illegally discharged petroleum products, metals, PCBs and other chemicals into groundwater and an adjacent wetland
• Settled a civil case against Gary A. Royce, Jr. for improperly installing septic systems in a subdivision located in the Town of Granby in Oswego County, resulting in odors and raw sewage seeping to a number of yards.  The settlement requires Royce to replace, at his own expense, approximately 35 septic systems in the subdivision. 

In The North Country:

• Won a ruling upholding the public's right to travel on recreationally navigable waters in the Adirondack Park.  The courts agreed with Attorney General Schneiderman that the Adirondack waterway between Lilypad Pond and Shingle Shanty Brook was navigable-in-fact, and that attempts by local landowners to deny public travel along this state waterway are illegal and constitute a public nuisance.

In Western New York:

• Reached a court-ordered settlement requiring The Juice Factory Corp., based in Monroe County, to pay the state nearly $80,000 for repeatedly violating multiple provisions of New York’s Bottle Bill.  Investigations revealed that, for more than two years, the company collected deposits on beverage containers it sold in Monroe and Erie counties but failed to pay the unclaimed deposits to the state, as required by law. 
• Joined the DEC and Livingston County in reaching an agreement with Akzo Nobel addressing environmental impacts relating to the collapse of the company’s salt mine in The agreement requires the company to pay $20 million toward local environmental restoration projects, including drinking water supply protection, water supply infrastructure improvements, environmental monitoring, and other projects.

Statewide:

• Reintroduced legislation to ban “microbeads,” tiny plastic particles that are an emerging pollution threat in New York waters.  The Microbead-Free Waters Act will prohibit the sale in New York of personal care products that contain microbeads. The Attorney General also released a report entitled Unseen Threat: How Microbeads Harm New York Waters, Wildlife, Health And Environment that explains the scope of the environmental and public health risks posed by microbeads, and outlines solutions to address this insidious pollution.
• Sent letters to Toys R Us and other major retailers in New York State reminding them of their legal obligation to ensure the safety of children’s products. The letter focused on toys that contain toxic chemicals that present risks to human health.  The Attorney General also released a tip sheet to help consumers protect their children from toxics in children’s products.
• Released a report that, for the first time, details the increasing frequency and intensity of extreme rainfall events across New York State.  The report, Current And Future Trends In Extreme Rainfall Across New York State, highlights this disturbing weather trend in recent years in virtually every part of the state.  The report underscores the need to focus on greater resiliency planning and response measures in order to respond to climate change’s predicted impacts in New York.
• Proposed legislation that would require electric and gas utilities to ensure that the critical services they provide to New Yorkers are properly protected from the impacts of climate change. The proposal would require these utilities to assess their systems’ vulnerability to climate change, and to document for public review and comment how they intend to address these vulnerabilities.

Nationally:

• Leading a coalition of states, NY joined clean air and public health advocate groups in reaching a court-ordered settlement with the U.S. Environmental Protection Agency (EPA) that required the agency to finalize updated air pollution standards for new residential wood heaters.  Wood stoves, pellet stoves, masonry heaters, central wood boilers, forced-air furnaces, and other residential wood heaters have proliferated in many areas of New York.  The final standards, which hadn’t been revised in 25 years, were issued by EPA on February 4th of this year. 
• After a more than two-year legal effort, EPA agreed with Attorney General Schneiderman and acted on its responsibility under the Clean Air Act to regulate emissions of methane– a powerful climate change pollutant – from the oil and gas industry. The regulations, to be proposed this summer, will require the oil and gas industry to limit methane emissions fromnew and modified equipment. 
• Reached agreements with two natural gas development companies that will ensure the public disclosure of information on the financial risks that hydraulic fracturing – commonly referred to as fracking – poses to their investors.   Under the agreements, Anadarko Petroleum Corp. and EOG Resources committed to providing publicly accessible information on the financial risks associated with of regulation fracking, litigation related to fracking, and the environmental impacts of their fracking operations. 
• Led a coalition of states in backing the “Waters of the United States Proposed Rule,” a federal proposal designed to ensure that the nation’s lakes, rivers, streams, and wetlands receive proper protection under the federal Clean Water Act.  The types of waters covered by the Act has become muddled by recent U.S. Supreme Court decisions, potentially stripping large numbers of waterways of federal protection and leaving them vulnerable to pollution.
• Led a 13-member coalition in fighting back against a court challenge – brought largely by coal-producing states – to a 2010 settlement that committed EPA to adopt climate change pollution emissions standards for new and existing fossil-fuel electric generating power plants. The EPA has undertaken the rulemaking process for two rules to establish these standards for power plants, in accordance with the settlement agreement.