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ATTORNEY GENERAL CUOMO ANNOUNCES GUILTY PLEA OF HUDSON VALLEY BUILDER WHO RIPPED OFF PROSPECTIVE HOMEOWNERS

Christopher Marnell stole more than $350,000 from families, never built houses

New York State Attorney General Andrew M. Cuomo today announced the guilty plea from a Hudson Valley builder who took more than $350,000 from several area families to build houses, and then used the money for other purposes without building the homes.

Christopher Marnell, 47 of West Main Street in Stony Point, pleaded guilty in Orange County Court to four counts of Grand Larceny in the Second Degree (class C felony) and one count of Grand Larceny in the Third Degree (class D felony). Marnell must pay restitution of $351,650. He will be sentenced October 22 and could face as much as 15 years in prison.

"Families paid this individual to build homes for them, but were left with absolutely nothing in return and now the builder must pay the price," said Attorney General Cuomo.

Marnell, owner of the now defunct Marnell Homes of Lakeridge, Inc., was indicted May 5 with stealing more than $350,000 from five families that paid him to build single-family homes in Lakeridge Estates in the Town of Wawayanda. The homes were never built and Marnell used the money toward other construction projects and for personal purposes.

The case is being prosecuted by Assistant Attorney General Emmanuel Nneji of the Attorney General's Criminal Prosecutions Bureau. The case was investigated by the New York State Police and Investigator Dennis Churns of the Attorney General's Investigations Bureau.

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ATTORNEY GENERAL CUOMO SHUTS DOWN SEVEN COMPANIES FOR PROVIDING FRAUDULENT LEGAL SERVICES TO IMMIGRANT COMMUNITIES

Files Two Additional Lawsuits against Companies for Defrauding Thousands of Immigrants

Latest Stages of Cuomo's Ongoing Immigration Fraud Investigation

Yesterday, Attorney General Andrew M. Cuomo announced the latest actions in his ongoing effort to combat scams that target New York's immigrant communities. As part of his broad investigation into immigration fraud, Cuomo has shut down seven companies and sued two other organizations for providing fraudulent legal services to immigrants.

The following seven companies and their owners have been permanently barred from operating any immigration services businesses and must collectively pay $370,000 in damages to the State of New York: (1) Centro Santa Ana, Inc. and Ana Lucia Baquero, in Queens; (2) Margo's Immigration Services and Margarita Davidov a/k/a Margo Davidov, in Queens; (3) Miguel Fittipaldi, J.D., Ltd. and Miguel Fittipaldi, in Manhattan; (4) Arthur C. Hurwitz, in Manhattan; (5) Oficina Legal Para Hispanos, P.C. and Geoffrey S. Stewart, in Manhattan; (6) Asilos and Camilo Perdomo, in Queens; and (7) Mision Hispana, Inc. and Mayra Liz, in Queens.

The Attorney General began an investigation and issued subpoenas to these companies after receiving information that they were engaged in fraudulent and illegal business practices. The illegal conduct included, among other things, misrepresenting their authorization to submit documents on behalf of immigrants to the government and giving legal advice to immigrants. Further, some of these companies involved attorneys who aided others in the unauthorized practice of the law and simply lent their name to provide legitimacy to the business. Collectively, these companies abused hundreds of immigrants.

"These companies took money from immigrants by promising to provide services that they could not deliver," said Attorney General Cuomo. "The fraudulent practices of these companies caused innocent people to face problems with their immigration status, even deportation. My office will continue to go after companies and individuals that defraud and abuse New York's immigrant communities."

As a result of the settlements with the Attorney General's office, these companies are also required to notify all former and current clients in writing that they are no longer providing any immigration-related services and must submit quarterly reports to the Attorney General of any complaints from the public. Complainants may be eligible for restitution for using these fraudulent businesses.

The Attorney General's office will coordinate with several New York legal associations to help handle the companies' existing cases and to protect innocent victims.

LAWSUITS AGAINST OTHER FRAUDULENT IMMIGRATION SERVICES COMPANIES

In a separate action, Cuomo filed two lawsuits against other organizations that are providing fraudulent legal services to immigrants.

The first lawsuit is against four companies that have been illegally providing unauthorized legal services to immigrants. The lawsuits were filed today in New York State Supreme Court against: Inmigración Hoy, Inmigración Hoy News Today, Forensic Immigration Law, and Inmigración Accounting Service, which are all controlled by Edwin Rivera in the Bronx. These companies all offered legal counsel to immigrants without being licensed attorneys or having the proper accreditation. In thousands of cases across New York City and Long Island, these companies gave unlicensed legal advice and unlawfully filed immigration petitions with the United States Citizenship and Immigration Services on behalf of immigrants and their families, jeopardizing their efforts to achieve legal status. Further, the companies failed to provide consumers with written contracts in both the consumer's native language and English, as required by law.

Today the Attorney General also filed a lawsuit against Thomas N. Toscano, a lawyer in Queens who worked with non-lawyers to illegally provide legal services to immigrants. Toscano failed to supervise his non-attorney employees and allowed them to operate a law office out of their home where non-attorney employees met with clients on immigration cases. Toscano advertised as an immigration attorney but had cases handled by his non-attorney employees, who often provided legal advice. Clients never got an opportunity to discuss their cases with an actual attorney admitted to practice law, and many immigration applications were later denied by immigration authorities.

The lawsuits seek to permanently bar the companies and their owners from providing immigration-related services in the future and seek penalties for these actions.

Chung-Wha Hong, Executive Director of the New York Immigration Coalition, said, "New York is celebrated throughout the world as a place of opportunity for all, and any company that lines its pockets by defrauding immigrants has no place in our city or our state. We applaud Attorney General Cuomo for his continued work to shut down fraudulent companies and stand up for New York's immigrant communities."

Jason Abrams, Chair of the Committee on the Unauthorized Practice of Law for the American Immigration Lawyers Association in New York, said, "Immigrants and their families can be subject to irreparable harm from unscrupulous individuals and fraudulent companies. The cost of this abuse is not just measured in dollars, but in torn families, stolen opportunities, and heartache. We are proud that Attorney General Cuomo is leading the way to shut down scams that prey on immigrants and we look forward to continuing to work with him to protect these vulnerable New Yorkers."

BACKGROUND INFORMATION

The illegal actions of fraudulent immigration services organizations have disastrous consequences on immigrant communities. In addition to being forced to pay substantial fees, victims and their families are put at risk of suffering permanent damage as a result of receiving incorrect immigration-related legal advice. Individuals who followed the advice of fraudulent organizations have been subject to deportation due to inadequate or negligent legal representation.

Under state and federal law, only lawyers or accredited representatives can represent individuals before immigration authorities. Under New York State law, it is unlawful to mislead or defraud any person in immigration-related services. New York law also requires anyone providing immigration services to comply with advertising, signage, and surety requirements, and to give consumers written contracts in both the consumer's native language and English that detail their services and cancellation policy. Further, it is illegal for not-for-profit immigrant service providers to charge excessive fees for services; the services must be provided free of charge or at a very nominal rate.

Today's action is the latest stage of Attorney General Cuomo's ongoing efforts to protect immigrants and their families from being targeted by fraudulent immigration services in New York. Other actions include:

• In July 2010, the Attorney General obtained a judgment of over $6.25 million against Immigration Community Service Corporation and its owner Vincent I. Gonzalez of Manhattan for engaging in the unauthorized practice of the law and defrauding thousands of immigrants who used their services for filing immigration applications with the federal government.
• In June 2010, the Attorney General sued several organizations and their principals - Chay Pa Lou Community Center, Inc.; Delegue Tax Consultant, Inc.; Jean Michel; Rincher's Bookstore a/k/a Rincher Associates, Inc. a/k/a Rincher Associates & Bookstore a/k/a Rincher's Multi Services; Haitian American Entrepreneur's Group, LLC a/k/a Delrin Associates, LLC; Deslande Rincher a/k/a Dislande Rincher; and Sharlene M. Seixas-Rincher - for defrauding Haitian nationals of thousands of dollars by illegally providing immigration services they were not authorized to provide and by misrepresenting a new law that granted special status to certain immigrants. These organizations targeted Haitian nationals who were recently affected by the devastating January 2010 earthquake in Haiti. The cases are currently pending in the New York Supreme Court.
• In April 2010, the Attorney General shut down American Immigrants Federation for defrauding immigrants with false promises of citizenship, engaging in the unauthorized practice of law, and illegally charging exorbitant fees for services. The organization, its president Estela Figueredo, and its affiliates had to shut down all of their operations and pay $1.2 million for restitution to victims.
• In March 2010, the Attorney General obtained a $3 million court judgment against a Queens County individual, Miriam Hernandez, for defrauding immigrants by claiming that she could help them gain citizenship.
• In January 2010, the Attorney General sued and obtained a temporary restraining order against International Immigrants Foundation, International Professional Association, and their President Edward Juarez for engaging in fraud and the unauthorized practice of law. The case is currently pending in the New York State Supreme Court.
• In August 2009, the Attorney General shut down three companies - Immigration Solutions and Systems, Inc. and its owner Mary DiSerio of Manhattan; Alisandra Multiservices, Inc. and its owner Sandra A. Peguero of Brentwood, Long Island; and All Immigration Services and its owners Ruth A. Shalom and Isaac Shalom of Great Neck, Long Island - for providing unauthorized and fraudulent legal services to immigrant communities and required them to pay full restitution to all victims. The companies were required to pay more than $100,000 in penalties and were permanently prohibited from operating immigration services businesses.
• In August 2009, the Attorney General sued Professional Solutions Consultants (d/b/a Reliable Clerical Services and Reliable Immigration Services) and its owner Clover A. Perez, located in Queens, for providing unauthorized and fraudulent legal services to immigrant communities and is seeking injunctive relief, restitution, and penalties. The case is currently pending in the New York Supreme Court.

The cases are being handled by Assistant Attorneys General Sandra Abeles and Vilda Vera Mayuga and Assistant Deputy Counselor Elizabeth De León, with the assistance of Assistant Attorney General-in-Charge of the Harlem Regional Office Guy Mitchell and Investigators John McManus and Angel Laporte, under the supervision of Special Deputy Attorney General for Civil Rights Alphonso B. David and Chief Counsel for Civil Rights Spencer Freedman.

If you have been a victim of immigration assistance fraud, please contact the Attorney General's Immigration Services Fraud Unit Hotline at (866) 390-2992 or visit www.ag.ny.gov.

Attachment:

• AOD - Margarita Davidov
• AOD - Camilo Perdomo
• AOD - Arthur C. Hurwitz
• AOD - Mayra Liz and Mision Hispana, Inc.
• AOD - Miguel Fittipaldi
• AOD - Oficina Legal Para Hispanos, P.C. and Geoffrey S. Stewart.pdf

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ATTORNEY GENERAL CUOMO REACHES AGREEMENT WITH SECURITY COMPANY THAT TRICKED HOMEOWNERS INTO SIGNING CONTRACTS

Pinnacle Security Group Must Pay Restitution and Penalties and Reform Company Practices

Yesterday, Attorney General Andrew Cuomo announced a settlement with Pinnacle Security Group, LLC ("Pinnacle"), a Utah-based home security company that used deceptive door-to-door sales tactics to trick New York homeowners into signing contracts for unnecessary services. The settlement requires Pinnacle to pay restitution to New Yorkers, pay a $150,000 penalty, and reform its sales practices. Pinnacle has signed contracts with approximately 4,000 customers throughout New York since 2008.

Pinnacle's home security contracts were for a term of 39 months and included monthly service fees, installation fees, activation fees, and equipment charges. The Attorney General's investigation revealed that Pinnacle's door-to-door sales staff often targeted homeowners who had existing contracts with other security companies. In a deceptive practice known as "slamming," Pinnacle sales staff then made false representations to convince people to sign up for Pinnacle products even though the consumer had a contract with another home security company. Pinnacle misled homeowners into believing that their existing home security provider had gone out of business, had merged with Pinnacle, or was in some way already affiliated with Pinnacle.

As a result of this deception, unsuspecting homeowners signed up for a contract with Pinnacle when they were still bound by their prior home security contract. Homeowners were then stuck paying for redundant monthly services from two security companies, including upwards of $50 per month for Pinnacle. Consumers who tried to void the contract were often faced with substantial cancellation fees. For example, Pinnacle would demand full and immediate payment of the entire cost of their contract if consumers wanted to cancel early; these costs could amount to $1,900.

"Pinnacle used dirty tricks and deception to pressure New Yorkers who were simply trying to ensure the security of their homes," said Attorney General Cuomo. "This settlement holds Pinnacle accountable for their actions and makes fundamental reforms to the company to prevent such fraud from happening again."

The Attorney General's investigation revealed that Pinnacle's sales team:

• Made phony telephone calls to homeowners to tell them that their existing home security contract had been canceled;
• Misrepresented the actual terms and costs of their contracts;
• Changed the terms of contracts after consumers had signed them.

In addition, Pinnacle failed to properly train and monitor its sales force, and failed to respond promptly and adequately to consumer complaints. The Attorney General's investigation began when his office was contacted by a Pinnacle consumer.

The settlement with Pinnacle will provide full compensation to all New York consumers who signed up with the company since January 2008 and were subject to deceptive sales practices. All such consumers will have the option to cancel their contract with Pinnacle without incurring any early cancellation fees or other charges. Pinnacle must also pay $150,000 to New York State for penalties, costs, and fees. Further, the settlement requires Pinnacle to implement enhanced procedures to oversee its sales force and requires the company to provide clear disclosures to consumers about the terms of their contracts.

As a result of the settlement, Pinnacle must hire a third-party administrator to handle claims of restitution. This administrator is contacting New Yorkers who entered into a contract with Pinnacle after 2008 in order to inform them of their right to make a claim for restitution. New Yorkers who believe they may have been a victim of Pinnacle's deceptive practices can also submit a claim for restitution by calling the Attorney General's Consumer Helpline at 800-771-7755 or by visiting www.ag.ny.gov.

This matter was handled by Assistant Attorney General Matthew Eubank in the Attorney General's Brooklyn Regional Office and by Consumer Frauds Bureau Deputy Chief Jeffrey K. Powell, with the assistance of Investigator Percy Corcoran, under the supervision of Assistant Attorney General-in-Charge of the Brooklyn Regional Office Lois Booker-Williams, Special Deputy Attorney General for Consumer Frauds & Protection Joy Feigenbaum, Deputy Attorney General for Economic Justice Michael Berlin, and Executive Deputy Attorney General for Economic Justice Maria Vullo.

The settlement with Pinnacle is available at www.ag.ny.gov.

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ATTORNEY GENERAL CUOMO LAUNCHES INDUSTRY-WIDE INVESTIGATION INTO PREDATORY HEALTH CARE LENDING THAT IS PUSHING CONSUMERS NATIONWIDE INTO DEBT

Health care credit card scheme preys on seniors and vulnerable patients ~Cuomo subpoenas health care practices and credit card companies

Yesterday, Attorney General Andrew M. Cuomo announced an industry-wide investigation into predatory health care lending where consumers, especially seniors and vulnerable patients, are misled about financing, causing them to be pushed into debt.

An investigation by Attorney General Cuomo found that some health care providers pressure consumers into using GE Money's CareCredit, a health care credit card, through fast-talking sales pitches and deceit. The investigation also found that CareCredit often pays kickbacks in the form of rebates to the providers based on how much business they charge consumers on CareCredit cards.

The investigation was based in part on hundreds of consumer complaints received by the Attorney General's Office. Consumers reported that health care providers promised that the credit card had "no interest," when it often carried retroactive interest of over 25 percent if not paid in full during a promotional period. Consumers were also unknowingly charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored. Meanwhile, CareCredit pays the health care providers in-full within 48 hours of the charge.

The investigation also found that CareCredit charges the providers a fee for the right to offer the cards, and then rebates part of the fee based on the amount of money the providers generated through CareCredit sales. This kickback arrangement, plus CareCredit's payment in full to providers within two days of the charge, creates an incentive for providers to push consumers to use CareCredit rather than other methods of payment. In fact, providers pushed CareCredit over cash.

"Health care debt is the number one cause of individual bankruptcy, and this scheme is contributing to the economic burden being felt by consumers," said Attorney General Cuomo. "People are being tricked by misleading offers that have them paying for services they never received as well as interest charges they never knew about - and they are ignored and given the runaround when they try to get their money back."

Cuomo issued subpoenas to 10 providers that promote CareCredit, as well as to the companies that manage CareCredit, Chase Health Advance, Visa Health Benefits, and Citibank Health Card. The subpoenas seek marketing materials, applications, terms of credit, contracts and rebate agreements, policies and procedures, consumer complaints, and regulatory inquiries. This investigation is ongoing.

In addition, Cuomo is asking several nationwide and state-based medical associations, including the American Dental Association and the New York State Dental Association, to explain why they endorsed CareCredit and whether they received compensation for doing so. 

CareCredit is accepted by more than 125,000 health care practices nationwide. The New York State Dental Association asserts that more than 8 million dental patients and 80,000 dental practices use CareCredit nationwide. The credit card is advertised as a way to pay for services often not covered by insurance, including:

• Chiropractic procedures
• Cosmetic procedures
• Dental procedures
• Infertility treatment
• Hearing procedures
• Vision procedures
• Weight loss procedures
• Veterinary services

In recent years, Attorney General Cuomo's Office received hundreds of complaints from consumers indicating that they were lured and misled by providers into applying for, accepting, and using CareCredit. Among the complaints received by the Attorney General's Office regarding the scam: 

• A Williamsville resident went to a dental provider with a toothache and was told he needed $9,000 in work done. He told the practice's office manager that he had the ability to pay for the service in cash, but he was still persuaded to sign up for financing through CareCredit. He ended up having the work done elsewhere, but the full amount of charges was billed to his card, despite receiving no services from the practice.
• An Onondaga County woman was told by a dental practice she needed a variety of procedures, and to get them she would have to sign a CareCredit agreement. After only having one $400 procedure done, which she paid for, she received a bill for $2,600. Her attempts to get a refund were rejected by both the provider and CareCredit.
• An Oswego woman was given a $6,000 estimate for dental procedures. She was urged to sign up for CareCredit, and was told this was an interest-free, monthly payment plan. However, she was charged up-front before the procedures were done, plus interest.
• A Monroe County man signed up for CareCredit to pay for an estimated $5,600 in services from his provider, but it was not made clear he was agreeing to a credit card. He left the medical office and sought treatment elsewhere, but continued to receive bills from CareCredit, which insisted he was delinquent on payments, resulting in a negative credit report and the reduction of his other lines of credit.
• A Syracuse-area consumer was told by his chiropractor that he needed two years of treatment and he was signed up for a CareCredit card without his consent. He was charged $3,000, which CareCredit refused to rescind. When the consumer switched to a different provider because the treatments at his chiropractor worsened his condition, the practice refused to release his medical records, claiming he still owed them money. 
• A woman from Tioga County went to a provider where an application to CareCredit was "thrown in (her) face." No other financing options were offered to her, and she was charged $5,000 for a procedure that failed multiple times and for which another provider later charged only $1,200.

Chuck Bell, Programs Director for Consumers Union, nonprofit publisher of Consumer Reports, said, "Attorney General Cuomo's investigation shines a badly-needed spotlight on deceptive practices used to market health care credit cards to elderly and low-income consumers. We are concerned that some health care providers are aggressively marketing these high-interest credit cards to patients, without providing appropriate disclosures, protections, or refunds. Consumers Union strongly supports the Attorney General's investigation, and applauds his ongoing efforts to protect consumers across the nation."

Catherine Dunham, President of The Access Project, a resource center for local communities working to improve health and health care access, said, "With the cost of health care already an enormous burden on Americans, we must do everything we can to filter out abusive or deceptive practices in how providers take payment for care. Attorney General Cuomo's investigation into health care credit cards will help protect millions of patients across the country who are struggling with debt. We applaud his efforts and look forward to continuing to partner with him to protect patients."

Consumers wishing to file complaints regarding deceptive health care credit card practices are urged to contact the Attorney General's Office at HealthCreditCards@ag.ny.gov or 800-428-9071. Consumer tips and more information about the investigation, including an example of the letters sent to trade groups, can be found online at www.ag.ny.gov.

The investigation is being conducted by Assistant Attorney General Carol Hunt of the Health Care Bureau under the supervision of Executive Deputy Attorney General for Social Justice Mylan Denerstein and Special Counsel to the Attorney General Linda A. Lacewell. 

Subpoenas to Health Care Providers:

• Allcare Dental Management Inc. - Buffalo
• American Laser Centers - Farmington Hills, MI
• Aspen Dental Management, Inc. - East Syracuse
• East Syracuse Family Dental Arts - East Syracuse
• Laser Cosmetica - New York City
• Lifestyle Lift - Troy, MI
• Northern Lights Chiropractic - Watertown
• S & Y Diamond Dental P.C. - Brooklyn
• Sunshine Dental - Watertown
• Toothsavers - New York City

Letters to Groups Endorsing CareCredit:

• American College of Eye Surgeons
• Society for Excellence in Eyecare
• American Dental Association
• Academy of General Dentistry
• American Academy of Periodontology
• American Association of Oral & Maxillofacial Surgeons
• New York State Dental Association
• American Society of Plastic Surgeons
• American Society of Dermatologic Surgery
• American Animal Hospital Association
• New York State Veterinary Medical Society
• American Hearing Aid Associates
• American Society of Bariatric Physicians
• Lite and Hope

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The Council of Urban Professionals (CUP) is hosting a forum of the candidates running for Attorney General in New York. This lively discussion will inform attendees about the race, the challenges and opportunities of the office, and will provide an opportunity for the candidates to reflect their plans to support communities of color and women. 

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ATTORNEY GENERAL CUOMO SETTLES WITH BUFFALO DEBT COLLECTION COMPANY THAT HARASSED AND INTIMIDATED CONSUMERS

LHR violated state and federal debt collection laws; must reform practices, pay $125k in penalties/costs

Yesterday, Attorney General Andrew M. Cuomo announced a settlement with a Buffalo-based debt collection company that repeatedly harassed and intimidated consumers, including some who did not even owe the debt in question.

According to Cuomo's investigation, Lewis Hastie Receivables (LHR), Inc., located on Main Street in Hamburg, violated state and federal debt collection laws and, under the agreement, must immediately reform its business practices and pay $125,000 in penalties and costs. The action is the latest in Attorney General Cuomo's ongoing probe of illegal practices in the debt collection industry.

"This company's business model was to harass consumers by calling them multiple times a day, continuously calling them at work after being told not to, and repeatedly calling even after the alleged debt was disputed," said Attorney General Cuomo. "It is unacceptable for debt collection companies to use illegal tactics for their own profit and we will continue to put a stop to the practice."

According to complaints received by Attorney General Cuomo's Office:

• An LHR collector called an Oswego resident up to 16 times in one day in an attempt to collect a 10-year old debt that belonged to her husband. When she questioned the debt to LHR, the collector said, "You must not know your husband that well then." The collector illegally told her she would be arrested, have a lien put on her house, her vehicle confiscated and wages garnished.
• LHR wrongly targeted a Lackawanna man for a debt which he did not owe.
• LHR collectors called a Georgia resident 10 times per day in an attempt to collect a debt that was allegedly inflated to more than triple the original amount owed.
• LHR tried to recover a debt from a Mississippi man that was actually owed by his ex-wife. After explaining this and telling LHR to stop calling him, the collector told the man he would call every day at 8 a.m. until the bill was paid.
• LHR repeatedly called a California-based Iraq war veteran over a $2,500 cell phone contract from a company he never signed up with. Despite being provided proof that the debt was not his and that he was serving overseas at the time the company claimed he signed the contract, LHR collectors continued to call him.

The federal Fair Debt Collection Practices Act and the New York State debt collection and consumer protection laws prohibit the following conduct: posing as an attorney, threatening lawsuits or other legal action which cannot be taken, saying a consumer committed a crime or will be arrested, and talking with third parties except to get location information. The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification.

The settlement is part of an ongoing investigation by Attorney General Cuomo into unlawful debt collection practices. Since commencing the statewide initiative in May 2009, Cuomo has shut down more than a dozen debt collection and affiliated process serving companies and required others to reform their deceptive practices. His office has also garnered criminal convictions against 12 individual collectors who engaged in especially egregious and threatening actions against consumers. The investigation is ongoing and lawsuits against several other collection companies are pending.

Attorney General Cuomo urges consumers who wish to learn more to visit www.NYDebtHelp.com. The site explains consumer rights, allows victims of debt collection and debt settlement companies quick access to the Attorney General's Office to file complaints, and outlines the stages of the investigation.

The case is being handled by Assistant Attorney General Benjamin Bruce under the supervision of Assistant Attorney General-in-Charge of the Rochester Regional Office Debra Martin and Deputy Attorney General for Regional Affairs J. David Sampson.

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CUOMO ANNOUNCES ARRESTS OF ROCKLAND COUNTY MOTHER AND HOME HEALTH CARE NURSE FOR CONSPIRING TO BILL MEDICAID FOR SERVICES NEVER PROVIDED TO SICK CHILD

Investigation Used Undercover Video Surveillance as Part of AG's 'Operation Home Alone'

Yesterday, Attorney General Andrew M. Cuomo announced the arrest of a Rockland County mother and a home health care nurse who worked in tandem to defraud Medicaid of over $32,000, and then split the money.

According to the complaint, from October 2007 to May 2010, Anne Nellie Salvant, 68, of New Hempstead, and Michelle Timothee, 37, of Pomona, participated in a scheme in which Salvant, a licensed practical nurse, would submit nurses' notes and time sheets to Accucare Nursing and Homecare falsely claiming that she had cared for Timothee's disabled son. Accucare relied on these records to bill Medicaid and pay Salvant, who would then share the ill-gotten gains with Timothee. Undercover video surveillance was used in the investigation to establish that Salvant was not present at the home for the hours she billed Medicaid.

"The allegations in this case include a parent using her own child's need for medical care as a way to beat the system and steal taxpayer dollars," said Attorney General Cuomo. "My office will continue to do what is necessary, including using hidden cameras and undercover surveillance, to protect vulnerable New Yorkers as well as the taxpayer."

Salvant and Timothee are both charged with Grand Larceny in the Third Degree, a class D felony. In addition, Salvant is charged with three counts of Offering a False Instrument for Filing in the First Degree and Falsifying Business Records in the First Degree, both class E felonies. Both were released on their own recognizance pending a court date on October 13.

Attorney General Cuomo's ongoing investigation into the home health care industry, known as "Operation Home Alone," has used hidden cameras and other investigative tools to convict dozens of uncertified aides, registered nurses, managers of schools that provided false certifications, agencies that employed aides and nurses, and Medicaid recipients complicit in no-show billing schemes. In many of those cases, the aides and nurses were found to have been billing for services they did not provide.

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

Special Assistant Attorney General William McClarnon of the Medicaid Fraud Control Unit's Pearl River Regional Office is prosecuting the case. The investigation was led by Special Investigator Timothy Connolly and Associate Special Auditor/Investigator Melissa Stoebling.

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ATTORNEY GENERAL CUOMO LEADS 13-STATE COALITION TO DEFEND THE FIRST-EVER LIMITS ON GLOBAL WARMING POLLUTION FROM FACILITIES LIKE POWER PLANTS AND OIL REFINERIES

Yesterday, Attorney General Andrew M. Cuomo announced a 13-state coalition has filed a motion in Washington, D.C. Circuit Court of Appeals defending a new environmental regulation limiting greenhouse gases.

Starting in January 2011, pollution control requirements under the federal Clean Air Act will apply for the first time to new or modified facilities that emit global warming pollution. A new rule from the U.S. Environmental Protection Agency (EPA) focuses these requirements on the largest facilities, such as power plants, cement kilns, and oil refineries. These large facilities account for 70 percent of the greenhouse gases from stationary sources.

In response, interest groups representing some of these large polluters have sued the EPA to overturn the rule. The 13-state coalition has filed a motion to intervene to defend the EPA and oppose the lawsuits brought by the industry groups.

"New York is leading a coalition of states from around the country to defend common-sense regulations that will protect our country's health and well-being from global warming pollution," said Attorney General Cuomo.

The states joining New York in the motion are: California, Illinois, Iowa, Maryland, Massachusetts, Maine, New Hampshire, New Mexico, North Carolina, Oregon, Pennsylvania and Rhode Island.

Attorney General Cuomo has been a leader in the fight against global warming on a number of fronts. His office has fought to defend New York's right to reduce emissions of global warming pollution from cars, to require major energy companies to fully disclose the risks that climate change poses to their investors, and to oppose coal-fired power plants that rely on outdated pollution control technologies. Most recently, the Attorney General joined 13 other states and the City of New York to defend an industry challenge to new federal regulations that set national controls on global warming pollution from cars.

This case is being handled by Assistant Attorneys General Isaac Cheng and Morgan Costello of the Attorney General's Environmental Protection Bureau under the supervision of Affirmative Litigation Section Chief Michael Myers.

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ATTORNEY GENERAL CUOMO ANNOUNCES INTENT TO SUE MAJOR PENNSYLVANIA POWER PLANT THAT POLLUTES NEW YORK WITH ITS EMISSIONS

Homer City Plant Is One of the Largest Out-of-State Sources of Sulfur Dioxide Pollution to New York

Yesterday, Attorney General Andrew M. Cuomo announced that his office has notified a major Pennsylvania electric power plant of his intent to sue over multiple violations of the federal Clean Air Act (CAA) at the facility. The plant, Homer City Station, is one of the largest out-of-state contributors of sulfur dioxide (SO2) pollution to New York.

Attorney General Cuomo is joined by the Pennsylvania Department of Environmental Protection (PADEP) in this action. In the notice of intent to sue, Cuomo and PADEP charge that the current and former owners of Homer City Station disregarded provisions of the CAA that required state-of-the-art pollution controls be installed at the plant when it underwent several major modifications in the 1980s and 1990s that increased its pollution emissions. The lawsuit would seek to require the companies to comply fully with the CAA, including installing state-of-the-art pollution controls to address their increased emissions. The CAA requires a 60-day notice of intent to sue.

"The owners of Homer City Station have ignored their legal obligations while their power plant pollutes our skies and our lungs with over one hundred thousand tons of emissions each year," said Attorney General Cuomo. "We will hold the owners of the Homer City power plant accountable for breaking clean air laws and for endangering the health and environment of New Yorkers."

Homer City Station is a 1,884 megawatt electric power generating plant located in Homer City, Pennsylvania, roughly 50 miles east of Pittsburgh. The plant emits over 100,000 tons of SO2, nitrogen oxides (NOx), and particulate matter (PM) each year. Air emissions from the plant contribute to smog and soot pollution in New York, with the plant's annual emissions of over 100,000 tons of SO2 alone constituting one of the largest upwind sources of this kind of pollution to New York state. Pollutants contained in the plant's emissions are directly linked to increases in asthma attacks, lung diseases, and other health problems. They are also primary contributors to acid rain, which has severely damaged lakes, forests, and wildlife throughout New York's Adirondack and Catskill regions.

Cuomo and PADEP charge that, in violation of several provisions of the CAA, the owners of the Homer City plant made a number of physical or operational changes to the plant between 1982 and 1996 that resulted in increases in emissions of SO2, NOx, and/or PM that continue to this day. The CAA requires that major modifications that increase pollutant emissions be accompanied by the installation of state-of-the-art pollution controls. The owners and operator of Homer City Station are charged with consistently ignoring these and other requirements of the CAA in the course of modifying and operating the facility.

The notice of intent to sue names both the current owner of Homer City Station - a consortium of eight limited liability companies (Homer City OL1-OL8 LLC) - and its operator (EME Homer City Generation L.P.). In addition, the notice names several companies that owned the plant when, or since, it was modified and increased air pollution. These past owners include: Chestnut Ridge Energy Company; Mission Energy Westside Incorporated; Pennsylvania Electric Company; and New York State Electric & Gas Corporation.

This matter is being handled by Assistant Attorney General Susan von Reusner and Affirmative Litigation Section Chief Michael Myers of the Attorney General's Environmental Protection Bureau.

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ATTORNEY GENERAL CUOMO ANNOUNCES CONVICTION OF WNY HOSPITAL CONTRACTOR WHO BRIBED COUNTY WORKER IN MEDICAID SCAM

Hospital debt collecting company and its owner bilked Medicaid out of more than $725,000

Cuomo Medicaid Fraud Control Unit's court-ordered recoveries top $800 Million

Yesterday, Attorney General Andrew M. Cuomo announced the criminal conviction and civil settlement involving a Western New York hospital contractor who bribed a county worker as part of an extensive Medicaid scam. With this conviction, Cuomo's Medicaid Fraud Control Unit (MFCU) has now topped $800 million in court-ordered recoveries.

Deborah Kantor, 55 of Tonawanda, is the owner and operator of H.I.S. Holdings, Inc. (H.I.S.), a debt collection agency that serviced Niagara Falls Memorial Medical Center and other Western New York hospitals. Kantor and H.I.S. bribed Michael Albrecht, a Niagara County Department of Social Services employee, in exchange for Medicaid client identification numbers and his approval of Medicaid applications that had incomplete or false information.

From 2000 to 2007, Kantor and H.I.S. paid Albrecht more than $17,749 in checks and cash as part of the scheme, including $50 for each active Medicaid client identification number that he provided. By obtaining Medicaid client identification numbers and the approval of sub-standard Medicaid applications, Kantor enabled her hospital clients to unknowingly obtain reimbursement from Medicaid for claims that should not have been paid. She benefitted from the scheme by getting a percentage of the fraudulent reimbursements.

Today's court action also settles a lawsuit filed by the Attorney General's Office seeking recovery of approximately $725,000 from Kantor, which represents the amount of fraudulent Medicaid benefits the State paid as a result of the scheme.

"This Medicaid scam involved bribes, kickbacks, and the unauthorized gathering of confidential information from government computers," said Attorney General Cuomo. "My office's actions to end abuses of the Medicaid system have resulted in unprecedented court ordered recoveries topping $800 million, a vital return of taxpayer money during a time of economic uncertainty and belt-tightening across New York."

Kantor pleaded guilty today to one count of Bribery in the Third Degree and three counts of Rewarding Official Misconduct in the Second Degree. A guilty plea was also entered on behalf of her company, H.I.S., to one count of Bribery in the Second Degree. Kantor faces a maximum sentence of 7 years in prison on these charges, while H.I.S. faces a fine of up to $10,000 or twice the amount of the corporation's gain from the crime, whichever is greater.

In January, Kantor and H.I.S., along with another H.I.S. employee, Amy Gardner, 31, of Tonawanda, were found guilty, after trial by a Niagara County jury, for submitting a Medicaid application that they knew falsely reported the address of the applicant in order to get the Niagara County Department of Social Services to approve the applicant's Medicaid eligibility.

Kantor will be sentenced on all charges related to the scheme on August 12. Albrecht previously pleaded guilty to Attempted Bribe Receiving in the Third Degree, a class E felony, and will be sentenced in September.

All proceedings took place before the Honorable Sara Sheldon Sperrazza in Niagara County Court. Attorney General Cuomo thanked the administration and staff of the Niagara County Department of Social Services for their cooperation and assistance in the investigation.

Today's convictions and settlement brings the total court-ordered monetary recoveries by Attorney General Cuomo's Medicaid Fraud Control Unit since January 1, 2007 to over $800 million. Some examples of Attorney General Cuomo's Medicaid fraud cases include:

• Last week, two Brooklyn-based Medicaid providers pleaded guilty to grand larceny and were ordered to repay $44 million to taxpayers.
• New York state reached a settlement for $45 million as part of a $520 million federal and multi-state agreement with AstraZeneca concerning allegations that the company provided kickbacks to doctors and engaged in an off-label marketing campaign to promote its antipsychotic drug Seroquel.
• A $24 million settlement with three home health agencies that used aides with little or no required training.
• New York secured $66 million from Pfizer in the largest health care fraud settlement ever for kickbacks and illegal marketing campaigns.

The criminal case was prosecuted by Gary A. Baldauf, Director of Attorney General Cuomo's Medicaid Fraud Control Unit's Buffalo Regional Office. Senior Special Investigator Kathleen Donahue and Special Auditor/Investigator Mary Henry assisted in conducting the investigations. The civil case was brought by Special Assistant Attorney General Jacob M. Bergman of the Medicaid Fraud Control Unit's Civil Enforcement Division.

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City Hall and The Capitol Newspapers  present ATTORNEY GENERAL DEMOCRATIC PRIMARY DEBATE  with   Richard Brodsky, confirmed; Sean Coffey, confirmed; Eric DiNallo, confirmed; Kathleen Rice, not confirmed; Eric Schneiderman, confirmed.  Moderated by Edward-Isaac Dovere, Editor of City Hall and The Capitol  Tuesday, July 20th 8:00 AM to 9:30 AM CUNY Graduate Center Recital Hall, Ground  Floor 365 Fifth Avenue (between 34th and 35th Streets)   Breakfast will be served. Please RSVP to rsvp@manhattanmedia.com or 212.268.8600

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STATEMENT FROM ATTORNEY GENERAL ANDREW M. CUOMO

"George Steinbrenner was a giant among New Yorkers with a personality that transcended sports. Nobody in sports set the bar higher, and nobody delivered results like him.

George worked tirelessly to embed the Yankees' championship tradition into new generations of fans, and his ever-apparent love for and dedication to the team and the City made him a true American icon.

While his loss is a profound one for New York City and baseball fans everywhere, we will also remember his incredible accomplishments and contributions. My thoughts and prayers are with his family."

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Citizens Union

Invites You to
a Candidates Debate With

the Democratic Candidates for Attorney General

Candidates:
Richard Brodsky
Sean Coffey
Eric Dinallo
Kathleen Rice
Eric Schneiderman

Moderated by Dick Dadey, Exectuive Director
With Questions from a Panel of Journalists

Wednesday, July 21, 2010, 6:00-8:00 PM
Elebash Recital Hall, CUNY Graduate Center
365 Fifth Aveneu at 34th Street

Please RSVP to 212.227.0342 x47 or
events@citizensunionfoundation.org
Open to the Public

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ATTORNEY GENERAL CUOMO ANNOUNCES PRELIMINARY PENSION PADDING REPORT SHOWING THE PROBLEM IS WIDESPREAD AND IS COSTING TAXPAYERS MILLIONS

Additional 23 Letters Sent to Public Employers in Expanding Investigation

Cuomo Launches Website that Outlines Problem to New Yorkers

Yesterday, Attorney General Andrew M. Cuomo released a preliminary report in his ongoing investigation into pension padding that shows some workers across the state are significantly inflating their pensions by dramatically increasing their overtime hours in the final few years of employment. Additionally, the Attorney General's investigation is being expanded with 23 more letters sent to public employers asking for payroll information.

Cuomo also launched a Web site, www.nypensionpadding.com, that contains the preliminary report, examples of data collected, and suggested best practices to help curb overtime abuses, along with other information related to the investigation.

As part of the investigation, Attorney General Cuomo's office requested payroll data from 64 state agencies, local agencies, municipalities, and authorities that participate in the Common Retirement Fund. The preliminary report analyzed data from 50 of those 64 employers representing 3,688 retirees from 2009. The data indicates that employees are boosting their overtime to inflate their pension benefits, which are based on an employee's total income, not their base salary. Specifically, the investigation found two patterns that demonstrated increased accumulation of overtime in many workers' final years of service. The first pattern is employees who start getting overtime only when they near retirement. The second pattern is employees who greatly increase overtime only when they near retirement. The report found that 28 of the 50 employers from 13 different counties across the state showed one or both patterns, and 12 of the 28 employers showed both patterns.

"Our ongoing investigation into pension padding has so far identified problems that transcend occupation, region, or job title," said Attorney General Cuomo. "More critically, we have developed solutions and tactics that, if implemented, can reduce the abuses of the pension system. While we expand the scope of our probe, I urge all public employers to closely examine how they can improve the way they do business for the sake of the state and taxpayers."

The first pattern involves employees who start working substantial amounts of overtime only when they are near retirement. This pattern is found in 14 of the 50 public employers analyzed. Based on this pattern, some employees start to work overtime when it would likely be included in calculating their pension benefits. Here are some examples:

• A highway maintenance employee went from no overtime to working 539 hours of overtime in the final years before retirement.
• A police officer went from no overtime to working more than 800 hours of overtime in his final years before retirement.
• A Deputy Commissioner of Civil Defense/Disaster Preparedness went from no overtime to working 1,629 hours of overtime in the final years before retirement. The data shows that this employee took in more than $50,000 in overtime pay the years before his retirement and had twice as many overtime hours as his co-workers.

The second pattern involves employees who worked some amount of overtime during their career, but showed a substantial increase in the amount of annual overtime hours during the period approaching retirement. This pattern was found in 26 of the 50 public employers in the preliminary analysis. In some instances, average annual overtime hours in the period approaching retirement increased by more than 10 times the amount in earlier periods. Here are some examples:

• A 2009 retiree who was a shovel operator averaged 144 hours of overtime annually from 2002-2005. From 2007-2008 that employee averaged 820 hours of overtime annually.
• A 2009 retiree who was a journeyman operator averaged 150 hours of overtime annually from 2002-2005. From 2007-2008 that employee averaged 551 hours of overtime annually. The average annual overtime hours for other employees was around 300 hours.
• A 2009 retiree who was an operator group supervisor averaged 434 hours of overtime annually from 2002 to 2005. From 2007-2008 that employee averaged 1,191 hours of overtime annually. This employee had a $69,000 annual salary and then received $67,000 in overtime pay in the year prior to retirement.

At a minimum, this data confirms that employees are indeed inflating their pension benefits by boosting overtime as they near retirement and may be engaging in pension padding. If only 2 percent of new pension recipients followed some of the practices found in the Attorney General's investigation, taxpayers could face an additional $120 million in pension benefit payments over the next 20 years. At 5 percent, this could mean an additional $300 million over the next 20 years.

The preliminary report also identifies the following practices that may help prevent overtime abuses and pension padding:

• Institute overtime caps: Adopt overtime caps and implement a specific reporting system to monitor overtime per employee. When an employee's overtime exceeds a certain threshold of their salary, it should trigger an inquiry. This type of monitoring would allow an employer to reevaluate the work and staff needs in their department and possibly to adopt measures to reduce overtime, such as hiring new personnel, using flexible schedules, or reallocating seasonal employees.
• Move away from seniority-based assignment systems: As expected, assigning overtime based exclusively on a seniority system seems to correspond to employees working more overtime hours as they near retirement. In many cases, this type of system is granted in a Collective Bargaining Agreement. Consequently, while the agreement is in affect, the employer is legally bound to assign overtime based on seniority. However, not all employees are bound by Collective Bargaining Agreements and the agreements only apply to union members. Nonetheless, some public employers that are not bound by such an agreement are still using a seniority based system. The report shows that must be revisited.
• Centralize overtime practices: Establishing a centralized system for overtime with uniform policies and procedures should help employers effectively limit overtime excesses. If overtime is handled by a number of independent departments, districts, and sub-agencies, it can result in inconsistent overtime practices and reduction in the monitoring and prevention of overtime abuses.
• Reduce overtime generally: Management should plan for adequate staffing rather than relying on overtime to meet needs. While in some cases overtime is unavoidable, employers should regularly review overtime use and take steps to reduce overtime needs, including adopting flexible schedules and providing for more coverage over different shifts.

The pension padding investigation is ongoing and the Attorney General's Office is sending out an additional 23 letters to public employers. The new data combined with the old data will identify areas vulnerable to abuse and mechanisms to address these abuses. But the preliminary report is clear: it appears pension padding exists and is widespread across the state and ultimately legislative reform must be considered to effectively address this problem.

Carol Kellermann, President of the Citizens Budget Commission, said, "This report provides convincing evidence of increased overtime purposefully incurred to enhance already ballooning pension benefit payouts. While management reforms, such as overtime caps, are common sense ideas that should be adopted immediately, the only way to totally eliminate pension padding through excessive overtime is to exclude overtime from pension formulas entirely."

Stephen J. Acquario, Executive Director of the New York State Association of Counties, said, "Due to the severe economic recession, all levels of government are operating under strenuous financial circumstances. Governments must continue to provide important public services while striving to achieve maximum operational efficiencies. Attorney General Cuomo's investigation into pension costs has revealed important information that should help lower the cost of government operations. County leaders applaud this smart investigation and corresponding recommendations and remain committed to working with Attorney General Cuomo to implement employment based practices to reduce pension costs for New York taxpayers."

RISING PENSION COSTS AND ITS EFFECT ON PROPERTY TAXES

According to recent census data, New York State had an overall pension cost of $486 per resident in 2007, which was the highest in the nation. The New York State Common Retirement Fund (CRF), which funds the Employees' Retirement System (ERS) and the Police & Fire Retirement System (PFRS), has assets of more than $129 billion and covers more than 1 million members and retirees from more than 3,000 government employers. The CRF is primarily funded by taxpayers who pay an estimated $2.5 billion to the fund each year.

Pension payments to retirees in ERS and PFRS have increased from $3.5 billion in 1999 to more than $7.3 billion in 2009. New Yorkers end up bearing the burden caused by excesses in pensions through increases in their property taxes. New Yorkers already face some of the highest property taxes in the nation. In a ranking of the counties with the highest property taxes in the United States, Nassau County ranks fourth, Westchester County ranks fifth, Rockland County ranks seventh, and Suffolk County ranks eleventh. Although pension costs typically make up only about 2 percent of expenditures in cities, towns, counties, and villages, in certain localities pension costs represent over 7 percent of expenditures.

In light of these rising pension costs, state and local employers will be required to make significantly higher contributions to fund the state pension system starting in 2011. For public employers participating in ERS, their mandated contributions will increase from 7.4 percent of payroll to 11.9 percent of payroll; for those participating in PFRS the costs will go from 15.1 percent to 18.2 percent.

OTHER INVESTIGATIONS INTO THE NEW YORK STATE PENSION SYSTEM

Curbing all types of pension abuse and manipulation is a top priority for Attorney General Cuomo. One ongoing investigation conducted over the past three years with respect to allegations of "pay-to-play" practices at the CRF has led to a number of criminal charges to date. 15 investment firms have agreed to sign the Attorney General's Public Pension Fund Reform Code of Conduct to resolve their roles in the Attorney General's investigation. Through the investigation, a combined total of more than $130 million has been returned to the CRF and New York State.

In a separate investigation, Attorney General Cuomo uncovered abuses by independent contractors throughout the state who defrauded the pension system by holding themselves out as public employees entitled to pension benefits, resulting in the return of more than $1.9 million to taxpayers through actions involving the conduct of more than 70 attorneys and other professionals. As a permanent fix, the Attorney General spearheaded legislative reform to curb pension fraud and other pension abuses.

The Attorney General's office urges individuals with knowledge of any questionable pension padding practices to contact the Attorney General's Public Integrity Bureau at 212-416-8090 or public.integrity@ag.ny.gov.

The Attorney General's pension padding investigation is being conducted by Assistant Attorneys General Lauren Ellis, Renée Jarusinsky, and Jessica Silver, and Director of Economics Kitty Kay Chan, under the supervision of Deputy Chief of the Public Integrity Bureau Monica Stamm and Special Deputy Attorney General for Public Integrity Ellen Nachtigall Biben.

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I hope you can join me next Wednesday evening, July 7th at the penthouse home of Virginia Davies and Willard Taylor for our Progressives for Schneiderman rooftop party. With 11 days to go before our first big financial filing, it's a great way to support the campaign and help us show the strength of our movement for equal and independent justice in New York State. Even if you can't attend, your contribution today will bring us one step closer to our goal.

The party starts at 7:30, but I hope you'll consider joining me for a special reception with my key supporters at 6:30 pm. Click HERE for details.

Thank you for your support. I look forward to seeing you on Wednesday!

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ATTORNEY GENERAL CUOMO ANNOUNCES ARREST AND GUILTY PLEA OF THE FOUNDER OF A SHAM CAR DONATION CHARITY

Queens-based "Hope for the Disabled Kids, Inc." Spent Over $2 Million on Personal Expenses and Real Estate Instead of Helping Families

Latest Action in Cuomo's Industry-Wide Investigation into Car Donation Charities

Yesterday, Attorney General Andrew Cuomo today announced the arrest and guilty plea of the founder of a sham car donation charity for looting over $2 million in charitable funds. Shoba Bakhsh, of Queens-based "Hope for the Disabled Kids, Inc.," pled guilty to lying to donors and misusing funds for herself and her family. As a condition of the plea, the charity will immediately shut down. Today's action marked the latest stage of the Attorney General's ongoing, industry-wide investigation into car donation charities.

Hope for the Disabled Kids took in thousands of cars and had more than $2 million in revenue between the charity's founding in 2001 and 2009. When soliciting donors, Bakhsh promised that over 90% of donations would go to help disabled children. However, no funds were used for any legitimate charitable purposes from 2007 to 2009. No records were produced to prove that funds were used for legitimate purposes prior to 2007 because Bakhsh destroyed documents and filed false paperwork.

"This individual manipulated donors and exploited children with serious medical needs in order to enrich herself and her family," said Attorney General Cuomo. "As a result of her actions, millions of dollars that should have gone to help disabled children were instead spent on department store bills and real estate. As our investigation continues, my office encourages New Yorkers to be generous and informed donors."

On its Web site, Hope for the Disabled Kids claimed that:

• Funds will "be utilized to benefit disabled children by purchasing medical equipment;"
• Funds will "help pay for medical expenses for families who are unable to afford [them];"
• Funds will "purchase books, toys, games and food during the holidays to distribute to children in hospitals."

Instead, Bakhsh spent funds donated to Hope for the Disabled Kids on herself and her family, including:

• Close to $500,000 in connection with the purchase of real estate in Florida and payments of real estate taxes on properties owned by Bakhsh and her husband;
• Payments on two different Macy's credit card accounts;
• School tuition for Bakhsh's children;
• Additionally, Bakhsh's personal checking account received cash deposits of nearly $250,000 between 2007 and 2009. During this period, she supposedly had no employment other than her job at Hope for the Disabled Kids, which reported paying her less than $50,000 per year.

Hope for the Disabled Kids solicited the donation of vehicles through print advertising outlets and its Web site. Bakhsh and Hope for the Disabled Kids intentionally made false representations about the charity in order to trick people into donating their vehicles, including saying that more than 90% of the proceeds from the sales of donated vehicles would be spent on children in need. Bakhsh also posted forged testimonials on the charity's Web site that made it seem that it had made legitimate contributions to hospitals and health care facilities.

Bakhsh, of South Ozone Park, Queens, pled guilty in New York County Supreme Court to one count of Scheme to Defraud in the First Degree (class E felony) and two counts of Offering a False Instrument for Filing in the First Degree (class E felony). As a condition of the plea, Hope for the Disabled Kids, Inc. will immediately shut down. Bakhsh is also forbidden from serving on the board or as an officer of a not-for-profit and from being employed at any entity engaged in the car donation industry. Bakhsh is expected to be sentenced on September 23, 2010 by the Honorable Michael Obus. The Attorney General's office will be seeking penalties from Bakhsh at that time.

BACKGROUND INFORMATION

Charities involved in the car donation industry solicit contributions in the form of used vehicles, which they then sell to raise funds for humanitarian causes. Attorney General Cuomo's ongoing, industry-wide investigation into car donation charities has shown that some charities mislead donors about how much money is used for charitable purposes as well as where the money goes. In some cases, the car donation charity is a complete sham, with little or no money going to the causes the charity purports to support.

As part of the investigation, the Attorney General recently sent subpoenas to sixteen charities, fundraisers, and individuals seeking materials relating to the funds that charities and for-profit fundraisers have collected through car donation programs. Cuomo also sued to shut down a sham car donation charity, Feed the Hungry, Inc., for misusing funds meant for the homeless.

Today's action is part of Attorney General Cuomo's ongoing initiative to fight charitable fundraising scams and to safeguard donors:

• In June 2010, the Attorney General secured a permanent injunction against the United Homeless Organization that shut the group down for deceiving donors;
• In April 2010, the Attorney General sued to shut down a fake Long Island-based breast cancer charity, Coalition for Breast Cancer Cures, Inc., for misusing over $500,000;
• In January 2010, the Attorney General sued to shut down four professional fundraising companies that used fraudulent and deceptive practices;
• In November 2009, the Attorney General released his annual "Pennies for Charity" report, which shows the percentage of donations collected by charities that go to professional fundraisers as opposed to charitable purposes.

For more information on making vehicle donations, or to report an instance of charitable solicitation fraud, New Yorkers are encouraged to contact the Attorney General's office at www.ag.ny.gov or www.charitiesnys.com or by calling (212) 416-8402.

The criminal case is being prosecuted by Assistant Attorneys General Nathan Reilly and Risa Sugarman, under the supervision of Special Deputy Chief of Staff Mitra Hormozi. The investigation was handled by Investigator Gerard Matheson, with the assistance of Analyst Kayla Arslanian.

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ATTORNEY GENERAL CUOMO ANNOUNCES JUDGMENT PERMANENTLY SHUTTING DOWN UNITED HOMELESS ORGANIZATION, INC. FOR MISUSING DONATIONS

Founder and Director Also Banned from Operating Any Not-For-Profit in New York State

Yesterday, Attorney General Andrew M. Cuomo announced that his office has obtained a judgment permanently shutting down the New York City based not-for-profit group United Homeless Organization, Inc. ("UHO").

Justice Barbara R. Kapnick of New York Supreme Court granted the judgment after the defendants failed to answer the Attorney General's Complaint, which was filed in Supreme Court, New York County, in November 2009. As a result of the judgment, UHO will be dissolved. UHO's founder and president, Stephen Riley, and its director, Myra Walker, also are banned from operating not-for-profits in New York State.

The Attorney General's lawsuit alleged that Riley and Walker used the organization to dupe the public into donating cash to fund services for the homeless, when the money was instead used for personal expenses.

A hearing will be scheduled to assess the exact amount of damages and restitution that the defendants may be ordered to pay and to oversee the dissolution of UHO.

Attorney General Cuomo previously obtained a preliminary injunction, which required UHO, Riley and Walker to immediately halt all charitable solicitations from the public. That interim order also froze UHO's assets, including bank accounts and vehicles.

"The Court's judgment will permanently prevent UHO, Riley and Walker from exploiting the trust and good will of New Yorkers and visitors to New York City," said Attorney General Cuomo. "This organization's bad behavior should not undermine the public's willingness to donate to legitimate charities. This case should remind people that it is important to take the time to understand the organization to which they are contributing and what is done with the money."

According to the lawsuit, Riley and Walker had UHO workers set up tables across the city with plastic jugs to collect cash donations, telling sympathetic passersby that donated funds would be used for services for the homeless. However, Cuomo's investigation revealed that money collected went directly to Riley and Walker, was kept by the people working for UHO, or was used to continue the fraud, instead of funding charitable programs or services. The lawsuit charged Riley, Walker, and UHO with engaging in a scheme to defraud and violating New York State's not-for-profit and charitable solicitation laws.

Used donations for personal expenses

According to Cuomo's lawsuit, UHO employees (also called "table workers" or "members") paid Riley and Walker a fixed daily fee for tCUhe right to use the UHO tables, jugs, aprons, and other paraphernalia. After paying the fee, the workers would pocket any daily cash donations they received. In turn, Riley and Walker used the fees collected from workers for their own living and travel expenses, while claiming in annual reports to the Attorney General's office that they received no income from UHO. In addition, the lawsuit alleged that Riley misappropriated UHO assets, including four UHO vehicles that he transferred to his own name.

Solicited donations with false and misleading solicitations

UHO workers encouraged donations with false and misleading statements that the funds will "help the homeless," "feed the homeless," and otherwise go to "charities and different churches" or to support pantries, shelters, and detox centers. In fact, Cuomo's investigation revealed that UHO did not operate any shelters, soup kitchens, or food pantries. It did not purchase food, clothing, or other essential items for distribution to the homeless, or provide social workers or any social services to assist the homeless or fund other charities' efforts on behalf of the homeless. The Attorney General's investigation also found that Riley and Walker failed to secure a public solicitation license for UHO. Despite this, workers were given UHO's incorporation receipt to display at their tables to mislead the public into believing it was a permit.

Failed to maintain records of money collected and paid out

UHO failed to maintain any records of the hundreds of thousands of dollars of funds collected and pocketed by UHO workers at the tables. In addition, more than fifty percent of the cash withdrawn from UHO's bank account in 2007 and 2008 lacked any documentation explaining the purpose for which the funds were spent. Since UHO failed to properly book its revenues and expenses, it filed false and misleading financial reports with the Attorney General's office.

Had no governance or financial oversight

UHO was operated by Riley and Walker without any board or financial oversight, which is required of all charities by New York State law. Riley and Walker were the only directors on UHO's board, despite legal requirements that New York State not-for-profits have three directors. UHO had not held an election for directors since its incorporation in 1993.

The case is being handled by Assistant Attorney General Patricia Northrop, Chief of the Charities Bureau Jason Lilien, and Senior Trial Counsel for Social Justice Kathryn Diaz.

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  ATTORNEY GENERAL CUOMO ANNOUNCES EXPANSION OF GROUNDBREAKING INITIATIVE TO ELIMINATE SHARING OF THOUSANDS OF IMAGES OF CHILD PORNOGRAPHY ON SOCIAL NETWORKING WEB SITES

Friendster, hi5, and isoHunt join Facebook and MySpace as first to use new database to block online child porn ~Cuomo continues to urge other social networking and peer-to-peer sites to embrace hash-value technology

Yesterday, Attorney General Andrew M. Cuomo announced a significant expansion of his groundbreaking initiative to eliminate sharing of thousands of images of child pornography on social networking Web sites.

Popular social networking sites Friendster and hi5, and peer-to-peer site isoHunt, are joining Facebook and MySpace in using Attorney General Cuomo's hash value database to block attempts to share images of children being sexually abused. isoHunt, based in Canada, is the first non-U.S. based site to agree to use the hash value database.

Hash values are the equivalent of numerical fingerprints. Each image, video and file online has a unique fingerprint. Through its investigations, the Attorney General's Office has created a database of more than 8,000 hash values that are associated with images of child pornography. The database can be used to identify the corresponding child pornography images through the fingerprints and stop that picture from ending up on a site.

Friendster has over 115 million registered users worldwide, hi5 has 50 million monthly visitors, and isoHunt attracts more than 16 million unique visitors a month. The Attorney General continues to urge other social networking companies and peer-to-peer sites to use the hash value database.

"As additional social networking sites agree to use our database, the profound impact of this groundbreaking initiative will reverberate not only in New York, but across the country and around the world," said Attorney General Cuomo. "This is all about protecting kids, and the same way child pornographers use technology to distribute these disturbing images, we are using technology to shut off their digital pipeline."

The additional social networking companies that have received a letter from the Attorney General regarding his hash value database are: Black Planet; Buzznet; eSpin/eCrush; Flickr; Flixster; Fotolog; Live Journal; MyLife (formerly Reunion.com); Orkut; Stickam; and Stardoll.

The database will continue to grow as law enforcement agencies around the state contribute additional hash values. These hash values are also made available to law enforcement agencies to help in investigations and in the prosecutions of crimes against children.

The revolutionary database will be housed by the Division of Criminal Justice Services (DCJS) and maintained by the joint efforts of the Attorney General's Office and DCJS.

Ben Dunn, Spokesman for Friendster said, "Friendster is committed to ensuring the safety of its millions of users and is eager to fully deploy and take advantage of the new safeguards Attorney General Cuomo's hash value database affords. Friendster commends the Attorney General for his diligent work on Internet safety issues and thanks his office for sharing this important new safety technology."

Bill Gossman, CEO of hi5 said, "We are pleased to work with Attorney General Cuomo to provide even more safety measures for our online community. We look forward to continuing to work with the Attorney General to develop and implement new approaches to cracking down on online child pornography."

Gary Fung, Founder of isoHunt said, "Users of isoHunt have often notified us of illegal child content in the past. We are pleased to expand this effort in working with Attorney General Cuomo in a collaborative database in stopping such appalling files from being spread on BitTorrent."

Laura Ahearn, Executive Director for Parents for Megan's Law, said, "Attorney General Cuomo's innovative and commonsense approach to Internet safety has delivered real results for families in New York and across the country. His tireless efforts to crackdown on the exploitive and hideous world of child pornography are to be commended. This new database is just another example of his commitment to the safety of both our physical and online communities and I look forward to a continued partnership with his office."

Protecting children from online exploitation has been a priority for Attorney General Cuomo:

• In October 2007, Cuomo and Facebook entered into an historic settlement agreement to promote online safety for children. The agreement required Facebook to, for the first time, respond quickly and effectively to consumer reports and complaints about sexual predators, obscene content and harassment. The agreement became a paradigm for protecting children on social networking sites. Facebook, which was required to monitor its complaint handling procedures for two years, achieved a 99.9 percent compliance rate even as its active user base grew from 50 million to more than 350 million users, showing that large companies can respond efficiently and effectively to its user complaints.
• In 2008, Attorney General Cuomo introduced the Electronic Securing and Targeting of Online Predators Act (E-Stop), the nation's most comprehensive law that enhances protections from sexual predators on the Internet. Under E-Stop, many sexual predators are banned outright from using social networking sites on the Internet while on probation or parole and all convicted, New York sex offenders must register their e-mail addresses, screen names, and other Internet identifiers with the state. That information is then made available to social networking sites so they can purge potential predators from their online world. In addition to Facebook and MySpace, 30 other social networking Web sites have agreed to use E-Stop information. As of early 2010, more than 9,000 New York accounts linked to nearly 4,000 individual sex offenders have been removed by these sites.
• In 2008, Attorney General Cuomo secured agreements with every major Internet Service Provider in New York state requiring them to block access to child pornography Newsgroups, a major supplier of illegal images. The ISPs also agreed to purge their servers of child pornography Web sites. More information about this initiative can be found online at www.nystopchildporn.com.
• Two weeks ago, Cuomo announced his intent to sue Tagged.com over significant and serious lapses in its response to user reports of graphic images of children being sexually abused, inappropriate sexual communications between adults and minors, and content that advocates pedophilia on the site.

The hash value database will be under the cooperative supervision and maintenance of the Attorney General's Office and DCJS. The matter is being handled by Acting Chief of the Internet Bureau Karen Geduldig, and Investigator Milton Branch of the Attorney General's Organized Crime Task Force (OCTF), under the supervision of Senior Policy Advisor Matthew Brotmann.

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ATTORNEY GENERAL CUOMO ANNOUNCES INDICTMENT OF BRONX RECYCLER FOR FALSIFYING DOCUMENTS TO HIDE ILLEGAL DUMPING

Yesterday, Attorney General Andrew M. Cuomo announced an indictment of Salvatore Cascino and Bronx County Recycling, LLC for filing false documents with the State of New York to hide illegal disposal of solid waste.

According to the indictment, Cascino failed to list on three annual filings (2008, 2009, 2010) with the Department of Environmental Conservation (DEC) that unauthorized solid waste was received at Bronx County Recycling. Cascino was arraigned on three counts of Offering a False Instrument for Filing in the First Degree before Acting Supreme Court Justice Daniel Lamont, in Albany County Supreme Court. Cascino was released on own recognizance pending a July 1 court date.

"This recycler dumped dangerous construction debris and then routinely filed false reports with the State to hide his crime, as charged in today's indictment," said Attorney General Cuomo. "My office is committed to the protection of New York's citizens and the conservation of the environment."

This indictment follows a previous indictment in Columbia County, alleging that between December 2008 and July 2009, Cascino and Bronx County Recycling recklessly operated an unpermitted landfill on New York State Route 9G in the Town of Clermont, where more than 70 cubic yards of solid waste was disposed of illegally. Attorney General Cuomo also filed a motion to force compliance with a consent decree prohibiting Cascino and his companies from accepting any solid waste at Copake Valley Farm. A 2009 search revealed that more solid waste had been dumped there since the effective date of the Consent Decree. Recent results of sampling of the solid waste revealed that it contained low levels of friable asbestos, which is regulated by DEC as a hazardous air pollutant. The motion is pending and seeks an order requiring Cascino and the other defendants to promptly clean up the waste under DEC supervision.

"Once again, Mr. Cascino is facing charges for allegedly flouting environmental laws and putting public health and safety at risk. This is simply unacceptable," said State Environmental Conservation Commissioner Pete Grannis. "Our agency is committed to working with the Attorney General to prosecute such cases to the fullest extent in order to prevent improper dumping and ensure a safe environment."

Bronx County Recycling, LLC, is a registered construction and debris processing facility located at 475 Exterior Avenue in the Bronx,. A registered construction and debris processing facility is permitted to accept only uncontaminated, rock, asphalt, dirt and concrete and reprocess it for limited designated and permitted uses.

Attorney General Cuomo thanked the DEC for its assistance in the investigation. The case is being handled by Assistant Attorney General James Woods and Assistant Attorney General Catherine Leahy Scott under the supervision of Criminal Prosecutions Bureau Deputy Chief Richard Ernst and Bureau Chief Gail Heatherly with assistance by Michael Myers from the Attorney General's Environmental Protection Bureau.

The charges against Cascino and Bronx County Recycling are merely accusations. The defendants are presumed innocent until and unless proven guilty.

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ATTORNEY GENERAL CUOMO SUES NYC DEVELOPER FOR ILLEGALLY RAIDING CONDOMINIUM'S RESERVE FUND

Lawsuit Seeks $7.4 Million in Restitution and to Bar Developer from Future Sales

Yesterday, Attorney General Andrew M. Cuomo filed a lawsuit charging the developers of the Rector Square Condominium in Battery Park City with defrauding purchasers out of approximately $7.4 million by raiding a reserve fund meant to ensure the health and safety of residents and instead using the money for personal and unrelated business purposes.

The Attorney General's investigation revealed that while developers YL Rector Street, LLC and its principal, Yair Levy, had promised tenants and owners that the reserve fund would be set aside for making repairs, improvements and replacements necessary for their health and safety, they instead depleted the fund leaving residents with a mere $70. A review of the Condominium's financial records uncovered that Levy misused millions of dollars of the residents' money for personal and general business expenses, including making credit card payments and writing checks to himself and relatives.

"It is unconscionable that the developer pocketed a fund established to protect residents," said Attorney General Cuomo. "Today's lawsuit sends a clear message to property developers that deception and fraud will not be tolerated. Purchasers and tenants are entitled to full and honest disclosure and must be able to rely on all representations made to them."

The lawsuit, filed in New York State Supreme Court in Manhattan, alleges that YL Rector Street, LLC and Levy violated New York's Martin Act for fraudulent conduct in connection with the sale of real estate securities and Executive Law 63(12) for persistent fraud and illegality in the conduct of a business. The suit seeks restitution, damages and penalties from Levy and YL Rector Street LLC, and also seeks to bar Levy from offering real estate securities for sale in New York State in the future.

The Rector Square Condominium conversion plan was filed with the Attorney General in May 2007, and the developers undertook renovations in 2007 and 2008. Under New York City law and the Attorney General's regulations for condominium conversions, the developers were required to create a reserve fund of approximately $7.4 million for Rector Square residents to address health and safety issues that may arise in the future. Although the developers represented they would comply with this law, they instead raided the reserve fund for personal and unrelated business purposes.

The case is being handled by Assistant Attorney General Jeffrey Rendin and Assistant Attorney General Lewis Polishook under the supervision of Deputy Attorney General for Economic Justice Michael Berlin and Executive Deputy Attorney General for Economic Justice Maria Vullo.

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ATTORNEY GENERAL CUOMO SUES IMMIGRATION SERVICES COMPANIES FOR TARGETING AND DEFRAUDING HAITIANS IMPACTED BY RECENT EARTHQUAKE

Victims Paid Large Sums for Legal Services that the Companies Were Not Authorized to Perform and Often Did Not Provide

Lawsuits Seek to Shut Down Companies and Obtain Restitution for Victims

Attorney General Andrew M. Cuomo today announced lawsuits against several companies for targeting the Haitian community with fraudulent immigration services after the January earthquake that devastated much of the Haitian capital region.

The lawsuits allege that the companies and their owners - who are not lawyers - have been illegally providing legal advice and services to Haitian immigrants. As non-lawyers, the owners are prohibited from providing legal advice or representing anyone before immigration authorities. Further, the lawsuits allege that the companies are charging Haitian immigrants thousands of dollars for processing immigration applications that could be filed for free through a waiver. This case is part of the Attorney General's ongoing investigation into immigration fraud.

The Attorney General filed lawsuits against: Chay Pa Lou Community Center, Inc., Delegue Tax Consultant, Inc., and their owner and operator Jean Michel; as well as Rincher's Multi-Service a/k/a Rincher Bookstore a/k/a Rincher Associates a/k/a Haitian American Entrepreneur's Group, LLC, and their owners and operators Deslande Seixas-Rincher, and Sharlene Seixas-Rincher. All companies are located in Brooklyn, New York.

"In light of the recent devastating earthquake in Port-au-Prince, New York's Haitian residents have sadly been a target for immigration scams, bringing further pain to a community that has already suffered so much," said Attorney General Cuomo. "These cases are a part of my office's ongoing crackdown on immigration scams throughout New York and I urge anyone who has been affected by this type of fraud to contact my office."

After the earthquake in Haiti in January 2010, the United States Department of Homeland Security allowed Haitian citizens in the United States to seek Temporary Protected Status ("TPS") to stay in the country for eighteen months. After Homeland Security made its TPS announcement, the Attorney General's office received complaints that Haitian immigrants were being targeted through advertisements by companies offering fraudulent and illegal immigration services at exorbitant prices.

The Attorney General's investigation revealed that these companies charged Haitian immigrants for processing immigration applications that could be filed for free through a waiver or for a nominal fee. The companies also charged some immigrants for processing applications even when they were not even eligible to stay in the United States. Further, some immigrants paid for application processing and legal services that were never provided.

The lawsuits seek to permanently shut down these companies and prevent them from providing immigration legal services. The lawsuits also seek restitution for the victims who have paid thousands of dollars for legal services the companies were not authorized to provide and in many instances did not provide. The Attorney General is authorized to seek an injunction, penalties of up to $7,500 per violation and restitution. The companies owned and operated by Jean Michel face liability for over 100 known violations; the companies owned and operated by the Seixas-Rinchers face liability for over 30 known violations. The Attorney General previously obtained a court order against Chay Pa Lou Community Center, Inc., which has frozen their assets and precludes them from destroying documents and transferring assets.

The Office of the Attorney General will coordinate with several New York legal associations to help handle the companies' existing cases and to protect innocent victims.

Under state and federal law, only lawyers or accredited representatives can represent individuals before immigration authorities. Under New York State law, it is unlawful to mislead or defraud any person in immigration-related services. New York law also requires anyone providing immigration services to comply with advertising, signage, and surety requirements, and to give consumers written contracts in both the consumer's native language and English that detail their services and cancellation policy. Further, it is illegal for not-for-profit immigrant service providers to charge excessive fees for services; the services must be provided free of charge or at a very nominal rate.

• In April 2010, the Attorney General shut down American Immigrants Federation for defrauding immigrants with false promises of citizenship, engaging in the unauthorized practice of law, and illegally charging exorbitant fees for services. The organization, its president Estela Figueredo, and its affiliates had to shut down all of their operations and pay $1.2 million in restitution.

• In March 2010, the Attorney General obtained a $3 million court judgment against a Queens County individual, Miriam Hernandez, for defrauding immigrants by claiming that she could help them gain citizenship.


• In January 2010, the Attorney General sued and obtained a temporary restraining order against International Immigrants Foundation, International Professional Association, and their President Edward Juarez for engaging in fraud and the unauthorized practice of law. The case is currently pending in the New York State Supreme Court.


• In August 2009, the Attorney General shut down three companies - Immigration Solutions and Systems, Inc. and its owner Mary DiSerio of Manhattan; Alisandra Multiservices, Inc. and its owner Sandra A. Peguero of Brentwood, Long Island; and All Immigration Services and its owners Ruth A. Shalom and Isaac Shalom of Great Neck, Long Island - for providing unauthorized and fraudulent legal services to immigrant communities and required that they pay full restitution to all victims. The companies were required to pay more than $100,000 in penalties and were permanently prohibited from operating immigration services businesses.


• In August 2009, the Attorney General sued three companies - Immigration Community Service Corporation and its owner Vincent I. Gonzalez; Professional Solutions Consultants (d/b/a Reliable Clerical Services and Reliable Immigration Services) and its owner Clover A. Perez; and Centro Santa Ana and its owner Ana Lucia Baquero - all located in Queens for providing unauthorized and fraudulent legal services to immigrant communities and is seeking injunctive relief, restitution, and penalties. These cases are currently pending in the New York Supreme Court.

Edward Dominguez, Executive Director of Catholic Migration, said, "As Haitians continue to focus on recovery and rebuilding, it is reassuring to know Attorney General Cuomo is taking these steps to ensure that victims, their families, and others in the community are not being taken advantage of by fraudulent immigration organizations. We look forward to continuing to work with the Attorney General's Office in identifying perpetrators and bringing them to justice."

Chung-Wha Hong, Executive Director of New York Immigration Coalition, said, "We welcome our growing Haitian community to New York, many of whom have been displaced by a horrible and unspeakable tragedy. For any individual or group to try to scam these families who are trying to rebuild their lives is akin to another atrocity. Attorney General Cuomo's efforts to protect Haitian immigrants and all New Yorkers from scam artists and deceptive ploys are to be commended."

The immigrant community is a vital part of the fabric of New York State. There are more than 3,000,000 immigrants living in New York State. Immigrants from 148 different countries represent thirty-six percent of New York City's population, forty-three percent of its workforce, and sixty percent of homeowners.

All New Yorkers should be aware of organizations and not-for-profits providing immigration services for exorbitant fees and without the proper accreditation. A list of free and low-cost immigration services that are available through not-for-profits and attorneys can be found through the U.S. Department of Justice, the New York State Immigration Hotline, and the Board of Immigration Appeals. Haitians staying in the United States only have until July 20, 2010 to apply for TPS.

The cases are being handled by Assistant Attorney General Vilda Mayuga and Assistant Deputy Counselor Elizabeth De León, and Investigators John McManus and Angel Laporte, under the supervision of Special Deputy Attorney General for Civil Rights Alphonso B. David and Chief Counsel for Civil Rights Spencer Freedman.

If you have been a victim of immigration assistance fraud, please contact the Attorney General's Immigration Services Fraud Unit Hotline at (866) 390-2992 or visit www.ag.ny.gov.

The lawsuits are available at www.ag.ny.gov.

Attachments:

• Chay Pa Lou Community Center, Inc. Complaint
• Rinchers Complaint

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ATTORNEY GENERAL CUOMO ANNOUNCES CONVICTIONS OF FORMER CITY WATER SUPERINTENDENT AND FILTRATION PLANT EMPLOYEE FOR DUMPING SLUDGE INTO SUSQUEHANNA RIVER

Susquehanna is the Primary Drinking Water Supply for Binghamton, Johnson City, and Other Downstream Communities

Yesterday, Attorney General Andrew M. Cuomo announced that a former city water filtration plant superintendent as well as a plant employee were convicted of illegally dumping sludge into the Susquehanna River. The river is the primary drinking water supply for Binghamton, Johnson City, and other downstream communities.

Daniel E. Rose, 31, of Port Crane, a former filtration plant employee, was found guilty by Broome County Court Judge Joseph F. Cawley after a non-jury trial on one count of knowingly discharging pollutants into state waters (class E felony). Kevin E. Transue, 55, who currently resides in Florida and is the former filtration plant superintendent was found guilty of three counts of violating a New York State Department of Environmental Conservation permit that had been issued to the plant by failing to file a required annual report with the DEC (class A misdemeanor). Rose faces a prison term of up to 1 1/3-to-4 years and Transue faces up to two years in jail. Sentencing is scheduled for September 8th.

"The failure of these public employees to do their jobs properly resulted in a preventable, and ultimately criminal, discharge of sludge into the Susquehanna River," said Attorney General Cuomo. "Environmental crimes impact all of us and my office will have zero tolerance for anyone who violates the laws that protect the land and water."

Video shot by DEC investigators that was presented at trial clearly shows a sludge discharge directly into the Susquehanna River while Rose was on duty. The judge also found that Transue failed in his duties to monitor and report discharges. The discharge is contrary to the DEC permit that was first issued to the plant in March 2001. The permit only allows for the discharge of water into the river under specific limited circumstances.

As part of the purification process at the Binghamton water filtration plant, chemicals are introduced to water drawn from the river, which combine with sediments and other impurities, and then settle to the bottom of sedimentation basins. The remaining water is then further treated for public consumption. The separated chemicals and sediments, referred to as "sludge," are then drained to the sewer system where the sludge is treated and legally disposed of.

The Susquehanna River is one of the longest rivers in the United States, and the longest on the Eastern Seaboard. It runs from Otsego County through Pennsylvania and parts of Maryland before emptying into the Chesapeake Bay.

The Attorney General thanked the DEC for its assistance in the investigation.

This case is being prosecuted by Assistant Attorney General Nicholas DeMartino, of the Criminal Prosecutions Bureau, under the supervision of Deputy Bureau Chief Richard Ernst and Bureau Chief Gail Heatherly. The investigation of this matter was conducted by Department of Environmental Conservation Police Investigator James Boylan and DEC Lt. James Masuicca..

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ATTORNEY GENERAL CUOMO ANNOUNCES ARREST OF TWO PORT CHESTER CONTRACTORS FOR STEALING MORE THAN $2 MILLION IN WAGES ON LOCAL GOVERNMENT CONTRACTS

Officials at Leed Industries Corp. also charged with falsifying records to cover up crime

NEW YORK, NY (May 13, 2010) - Attorney General Andrew M. Cuomo today announced the arrests of two Port Chester contractors for allegedly failing to pay approximately $2 million in wages to workers who performed roofing work on numerous schools and other public buildings in Westchester, Dutchess, and Putnam counties.

Larry Dominguez (President) and Evelio Elledias (Vice President) of Leed Industries Corporation ("Leed"), sometimes operating under the name Hi-Tech, are each charged with 290 counts of Falsifying Business Documents in the First Degree (a class E felony), 290 counts of Offering a False Instrument for Filing (a class E felony), and one count of Grand Larceny in the Second Degree (a class B felony). In addition, each defendant is charged with 19 counts of Failure to Pay Wages (a class A misdemeanor). Among the allegations, employees were forced to work as many as seven days and 80 hours per week at wages far below what they were supposed to receive.

"These builders are accused of a criminal scheme that cheated their own workers as well as taxpayers so they could line their pockets with millions in public funds," said Attorney General Cuomo. "These schemes will be uncovered and the employers who violate the law will be held accountable."

Beginning in April of 2007, Leed entered into a series of roofing contracts with school districts and other local government entities including the Yonkers Police Department 3rd Precinct, the John Jay Historic House in Katonah, and Pawling Elementary School. In all, 18 local entities were billed approximately $11 million. Of that, Dominguez and Elledias are accused of keeping more than $2,275,500 that was intended for the workers on the jobs.

Government contracts in New York State require contractors to submit certified weekly payroll reports as a condition of payment. With each request for payment, Leed submitted certified weekly payroll reports signed by either Dominguez or Elledias. The payroll reports submitted by Leed failed to list most of the individuals who actually worked at the sites, but instead listed Dominguez, Elledias, and friends who never worked on the site. For the actual workers that were listed, only a fraction of the hours they worked were listed and the wages reported to authorities were well above what the defendants were in fact paying.

State Labor Commissioner Colleen C. Gardner said, "In this difficult economy when families are struggling, no one should be short changing workers out of their hard earned pay. We will continue to work with Attorney General Cuomo to ensure that the prevailing wage laws are complied with around New York State."

For the grand larceny charge, Dominguez and Elledias could each face sentences of up to 25 years in prison if convicted. For the E felony charges, they could face up to four years. The misdemeanor counts carry a potential sentence of one year in jail.

The arrests are part of Attorney General Cuomo's ongoing efforts to hold employers responsible for criminal violations of the laws affecting workers. Yesterday, Cuomo announced the arrest of Queens contractor Kostas "Gus" Andrikopoulos of Hara Electric Corporation for allegedly failing to pay more than $2 million in wages to employees who worked on numerous schools throughout New York City. More information on that case is available at www.ag.ny.gov/media_center/2010/may/may12a_10.html.

This case is being handled by Assistant Attorney General Rachel Gold; Investigators Andres Rodriguez and Louis Carter, under the supervision of Georgia Nurse; and Department of Labor Public Work Wage Investigator Jean Messier. The case is being supervised by Deputy Attorney General for Social Justice James Rogers, Deputy Criminal Prosecutions Bureau Chief Felice Sontupe, and Labor Bureau Chief Patricia Kakalec.

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

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ATTORNEY GENERAL CUOMO SUES BANK OF NEW YORK MELLON UNIT FOR DECEIVING CLIENTS IN CONNECTION WITH MADOFF-RELATED INVESTMENTS

Internal E-Mails Reveal Ivy Asset Management and Its Co-Principals Deliberately Misled Clients ~Ivy's Years of Fraud Cost Hundreds of Investors Over $227 Million and Drained Dozens of NY Pension and Welfare Funds

Yesterday, Attorney General Andrew M. Cuomo filed a lawsuit against Ivy Asset Management, LLC ("Ivy"), its former Chief Executive Officer Lawrence Simon, and its former Chief Investment Officer Howard Wohl, for deliberately misleading clients about investments tied to Bernard L. Madoff. The suit alleges that Ivy and the two principals kept their clients in the dark about damaging financial information about Madoff so Ivy could bring in millions in advisory fees.

Ivy is a New York-based investment adviser that is wholly owned by Bank of New York Mellon. Between 1998 and 2008, Ivy was paid over $40 million to give advice and conduct due diligence for clients with large Madoff investments. The lawsuit alleges that while conducting this due diligence, Ivy learned that Madoff was not investing funds as advertised. However, internal e-mails reveal that Ivy did not disclose this information to clients for fear of losing revenue from fees. As a result, Ivy's clients lost over $227 million after Madoff's Ponzi scheme collapsed. Among the victims were hundreds of investors as well as dozens of New York union pension and welfare plans.

"Ivy and its former co-principals saw the trouble with Madoff coming around the bend, but instead of guiding their clients through the financial waters, they sold them down the river," said Attorney General Cuomo. "These defendants violated their basic responsibility as investment advisers by putting their own financial interests ahead of their clients. They shamelessly profited off of their own clients' impending misfortune and we are holding them accountable for their actions."

The damaging information that Ivy discovered about Madoff and then failed to disclose includes:

• In 1997, Ivy learned that there were not enough options to support Madoff's purported trading strategy. Specifically, the volume of Standard and Poor's 100 Index options ("OEX") available would only support half of the amount of assets Ivy believed Madoff had under management. This strongly suggested that the trades Madoff had been reporting were not actually being made.
• Between 1997 and 1998, Madoff gave Ivy three vastly different explanations as to where and with whom he traded OEX options, all of which were inconsistent with Ivy's observations and understanding of OEX options.
• Ivy received information from industry contacts indicating that Madoff was misusing client assets to fund his broker-dealer business instead of investing the money as he claimed he was doing.

Internal documents obtained through the Attorney General's investigation reveal that Ivy, Simon, and Wohl knew that investing with Madoff was too much of a risk:

• An internal Ivy memorandum from 1997 about Madoff states, "[t]his is a clear example of our inability to make sense of Madoff's strategy, and one where his trades for our accounts are inconsistent with the independent information that is available to us."
• When writing to a subordinate in 2002, Wohl wrote "Ah, Madoff, You omitted one possibility - he's a fraud!"
• When listing managers who should be recommended to a prospective client in 2003, Wohl wrote, "Madoff (NOT!)."

Internal e-mails reveal that Simon and Wohl intentionally failed to disclose their doubts about Madoff to their clients with heavy Madoff-related investments:

• On December 16, 1998, the day after Madoff gave Ivy his third explanation about his option trades, Wohl recommended to Simon that Ivy withdraw all of the funds they personally managed from Madoff, including some of their own money, writing:
  "I'm concerned that he [Madoff] now admits that he does not execute all of the index options on the exchange that there are 'unknown' counterparties that if these options are not paid off he'd lose less than 100%. It remains a matter of faith based on great performance - this doesn't justify any investment, let alone 3%."
• In response, Simon argued that Ivy should not withdraw the investment it had placed with Madoff because that could lead Ivy's clients to withdraw their money from Madoff as well, which would significantly impact their total revenue, writing:
  "Amount we now have with Bernie in Ivy's partnerships is probably less than $5 million. The bigger issue is the 190 mil or so that our relationships have with him which leads to two problems, we are on the legal hook in almost all of the relationships and the fees generated are estimated based on 17+% returns .... [to be] $1.275 Million... Are we prepared to take all the chips off the table, have assets decrease by over $300 million and our overall fees reduced by $1.6 million or more, and, one wonders if we ever "escape" the legal issue of being the asset allocator and introducer, even if we terminate all Madoff related relationships?"

The suit further alleges that Ivy, Simon, and Wohl deliberately misled clients with heavy Madoff-related investments:

• In 1999, Ivy sent letters to clients falsely stating that, "we have no reason to believe there is anything improper in the Madoff operation."
• Between 1998 and 2004, Ivy sent numerous letters to their heavily Madoff-invested clients falsely listing Ivy's only concern about Madoff to be an "ability to manage what must be an enormous pool of capital with such consistently outstanding results."

The lawsuit charges Ivy, Simon, and Wohl with violating New York's Martin Act for fraudulent conduct in connection with the sale of securities; violating Executive Law 63(12) for persistent fraud in the conduct of business and for persistent illegality; and breaching their fiduciary duty in connection with the advice they gave to their clients.

Attorney General Cuomo's lawsuit seeks payment of restitution, damages, and penalties from Ivy, Simon, and Wohl, as well as the disgorgement of all fees that Ivy received. The lawsuit also seeks to bar Simon and Wohl from acting as investment advisors.

The lawsuit was filed in New York State Supreme Court in Manhattan and is available at www.ag.ny.gov.

This investigation is ongoing.

This investigation is being conducted by Senior Enforcement Counsel Roger Waldman, Assistant Attorney General Kate Burson, and Assistant Attorney General Shmuel Kadosh, under the supervision of Special Deputy Attorney General for Investor Protection David A. Markowitz and Executive Deputy Attorney General for Economic Justice Maria Vullo.

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ATTORNEY GENERAL CUOMO DEDICATES $500,000 TO SUPPORT AREA FARMERS' EFFORTS TO REDUCE LAKE CHAMPLAIN WATER POLLUTION

New Grant Program Helps Champlain Valley Farmers Improve Operations, Further Limit Discharge Into Lake Champlain

Funding Comes from Cuomo's 2007 Settlement with American Electric Power

ALBANY, NY (May 10, 2010) - Attorney General Andrew M. Cuomo today announced that his office is dedicating $500,000 to create a new grant program to help local farmers fight water pollution in Lake Champlain. The funds, from a settlement that Cuomo secured in a court-ordered settlement with American Electric Power, will assist farmers in the southern Champlain Valley to further improve operations and reduce stormwater discharges of nutrients from their land.

Reducing nutrient pollution, particularly phosphorous, is one of the highest priorities for protecting Lake Champlain. Areas of the Lake, especially its southern segments, suffer from impaired water quality due to excessive phosphorous. Area farmers have for years taken steps to reduce runoff, and Cuomo's funding is designed to expand these important efforts.

"This important investment in New York's future will help sustain the Champlain Valley's agricultural economy while preserving one of the state's most majestic natural resources," said Attorney General Cuomo. "By dedicating these funds, we will help support local farmers who are working to improve their operations while being responsible stewards of the environment."

Cuomo's funding will create a new grant program to support farmers in the southern Champlain Valley in continuing to improve their operations and limit stormwater discharges of phosphorous from their land. For example, program funding could be used by farmers to;

• Better control stormwater runoff from plowed fields, milk houses, manure storage areas and barnyards
• Develop "nutrient management plans" that help avoid applying excess fertilizers to farmlands
• Preserve "buffers" of vegetation that serve to intercept and remove nutrients from runoff before they reach the Lake

Excess phosphorus in lakes can promote the rapid growth of algae and other plants, a phenomenon known as "eutrophication." The eutrophication of lakes can lead to number of serious harms, including giving water an unappealing taste, color and odor, and starving it of oxygen needed to support large and diverse populations of fish and other aquatic organisms. This can substantially reduce a lake's ecological, aesthetic, recreational and economic value.

Captain Mickey J. Maynard of Lake Champlain Angler Charters and president of the Lake Champlain Chapter of Trout Unlimited said: "As a charter boat captain and life-long angler on Lake Champlain, I know first-hand that the watershed is the economic and recreational lifeblood of the region. I applaud Attorney General Cuomo for his commitment to a clean environment, and his determination to safeguard this vital resource. Kudos to Cuomo for his leadership in this battle."

Dean Norton, president of the New York Farm Bureau said, "We are grateful to Attorney General Cuomo for making funds available to our farmers to bolster the efforts they are already taking to protect the precious waters of Lake Champlain. We commend the Attorney General for helping our family farms."

Brian Ziehm, President of the Washington County Farm Bureau said, "Champlain Valley farmers strive everyday to be good stewards of the land. In these tough economic times, we are especially thankful for Attorney General Cuomo's funding which will help to further improve our environmental practices and protect the waters we depend on."

Erik Leerkes, President of the Essex County Farm Bureau said, "Every good farmer knows that protecting the environment is a crucial part of their business. Attorney General Cuomo's funding will assist the ongoing efforts of Champlain Valley farmers to improve our water quality in an affordable manner, benefitting both our local farms and Lake Champlain."

Dave Wick, President of the Champlain Watershed Improvement Coalition of New York (CWICNY) said, "The CWICNY greatly appreciates the Attorney General's tremendous efforts to secure and direct these important, needed funds to the southern Lake Champlain basin. These dollars will assist farmers to undertake additional best management practices that will improve their operations and the Champlain environment. CWICNY looks forward to working with the farmers and partners from New York and Vermont to effectively reduce phosphorus inputs and improve water quality in Lake Champlain."

Funding for Cuomo's new grant program comes from a landmark 2007 settlement that a coalition of states and environmental groups - led by New York and the federal government - reached with American Electric Power (AEP), the nation's largest power company, for violations of the federal Clean Air Act. From this settlement, Cuomo secured millions of dollars for environmental projects over five years - the largest payment for such projects ever received from a New York State settlement under the Act - with $500,000 designated towards implementing projects, in cooperation with the State of Vermont, to benefit Lake Champlain.

The new grant program will be administered by the Lake Champlain Basin Program of the New England Interstate Water Pollution Control Commission, an interstate agency established by the US Congress in 1947 to serve New York and states in the New England region. The Lake Champlain Basin Program has extensive experience managing grant programs related to water quality improvement programs in the Champlain Valley. The grant program's funding will be focused on projects that limit agricultural discharges of phosphorous to southern Lake Champlain, and the program will seek to split the total money awarded evenly between New York and Vermont farmers.

More information about the program can be obtained by contacting the Lake Champlain Basin Program at 802-372-3213 or visiting www.lcbp.org.

Cuomo has made a number of past investments from the AEP settlement into protecting and improving environmental and public health in New York, including:

• $1.9 million to create a new oil energy efficiency pilot program, administered by the New York State Energy Research and Development Authority, to help New York's neediest families cope with the high cost of home heating oil;
• $500,000 towards the creation of a solar power facility in Saratoga County that will help prepare New York's workforce for future "green jobs" in the renewable energy field by providing hands-on education and training in state-of-the-art solar electric technologies; and
• $500,000 towards an innovative program to protect thousands of schoolchildren in Westchester, Putnam and Dutchess counties from harmful air pollution by upgrading approximately 140 school buses in the three counties with state-of-the-art anti-idling technologies.

The case is being handled by Assistant Attorney General Robert Rosenthal and Policy Analyst Jeremy Magliaro of the Environmental Protection Bureau, under the supervision of Acting Bureau Chief for Environmental Protection Lisa Burianek.

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ATTORNEY GENERAL CUOMO SUES WNY LAWYER FOR UNLAWFUL DEBT COLLECTION PRACTICES

Suit claims attorney sold use of his name to debt collectors so they could threaten and intimidate consumers

Yesterday, Attorney General Andrew M. Cuomo today announced his office has sued a Western New York lawyer who sold debt collectors the use of his name, which the debt collectors then used to intimidate consumers by threatening bogus legal action. The action is the latest in Attorney General Cuomo's ongoing probe into unlawful debt collection practices.

Cuomo's office sued Williamsville-based attorney John P. Nicolia after an investigation determined that he collected $141,000 in fees in return for allowing debt collectors to threaten consumers across the country by using his name and his law firm's name. In reality, Nicolia never provided any actual legal services for the debt collection company, Eastern Asset Management.

"The lawsuit alleges that this attorney knowingly allowed a debt collection firm to use his name to threaten, intimidate, and harass consumers, while he sat back and profited without having to do any actual work," said Attorney General Cuomo. "Our investigation into illegal debt collection practices has uncovered layer upon layer of abusive acts, and we will continue to root out the bad players in this industry."

An investigation by Attorney General Cuomo's Office determined that Nicolia, despite being paid $69,000 in 2008 and $72,000 in 2009, has no records to show that he provided any legal services to the debt collection companies. However, the collectors employed his name repeatedly - with Nicolia's knowledge - in attempts to collect debts:

• Collectors who called the consumers to collect on the debts claimed that they were calling from, or working with, "the Law Office of John Nicolia."
• Collectors sent standardized "settlement" letters citing non-existent judgments to consumers believed to owe debts, claiming "...our legal counsel, John Nicolia, Esq. may review the status of your particular case at anytime."

The debt collection company, after invoking Nicolia's name, often falsely stated that the consumers:

• Had lawsuits filed against them
• Would have their driver's licenses suspended
• Would be charged with a crime
• Would be imprisoned or lose their property if they didn't pay

Attorney General Cuomo's lawsuit seeks a court order barring Nicolia from allowing debt collection companies to use his name, as well as imposing significant civil penalties against Nicolia for the violations.

The federal Fair Debt Collection Practices Act and the New York State debt collection and consumer protection laws prohibit the following conduct: posing as an attorney, threatening lawsuits or other legal action which cannot be taken, saying a consumer committed a crime or will be arrested, and talking with third parties except to get location information. The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification.

Since commencing the statewide initiative in May 2009, Cuomo has shut down 14 debt collection and affiliated process serving companies and required others to reform their deceptive practices. His office has also garnered criminal convictions against 10 collectors who engaged in especially egregious and threatening actions against consumers. The investigation is ongoing and lawsuits against several other collection companies are pending.

Cuomo urges consumers to visit www.NYDebtHelp.com to learn their rights. The site allows victims of debt collection and debt settlement companies quick access to the Attorney General's office to file complaints, and outlines the stages of the Attorney General's investigation.

The matters are being handled by Assistant Attorney General James Morrissey under the supervision of Deputy Attorney General for Regional Affairs J. David Sampson and Special Deputy Chief of Staff Mitra Hormozi.

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CUOMO ANNOUNCES ASTRAZENECA TO PAY N.Y. NEARLY $45 MILLION TO SETTLE CLAIMS OF OFF-LABEL DRUG MARKETING AND KICKBACKS

AstraZeneca promoted drugs for purposes other than what was approved by the FDA, made illegal kickbacks to physicians

New York's portion part of $520 million multi-state/federal settlement

NEW YORK, N.Y. (April 27, 2010) - Attorney General Andrew M. Cuomo today announced that New York state will receive nearly $45 million as part of a $520 million federal and multi-state settlement with AstraZeneca LP (NYSE: AZN) concerning allegations that the large pharmaceutical company provided kickbacks to doctors and engaged in an off-label marketing campaign to promote its antipsychotic drug Seroquel.

International drug manufacturer AstraZeneca allegedly paid for physicians to travel to resort locations to "advise" the company about how to market the drug for unapproved uses. The company also paid the physicians to serve as authors of articles written by AstraZeneca and its agents, and to conduct studies for unapproved uses of Seroquel. The settlement resolves claims that, as a result of these promotional activities, AstraZeneca caused physicians to prescribe Seroquel for children, adolescents and dementia patients in long-term care facilities, which are not medically accepted uses that state Medicaid programs would reimburse.

"This case is another example of a pharmaceutical company using kickbacks and deceptive practices to profit while pushing its products for unapproved uses," said Attorney General Cuomo. "The settlement reflects the seriousness of the allegations and sends a clear message to all drug manufacturers that medicines must be marketed in a safe and fair manner."

Seroquel is part of a newer generation of antipsychotic medications ("atypical antipsychotics") used to treat certain psychological disorders. From January 1, 2001 through December 31, 2006, AstraZeneca promoted the sale and use of Seroquel for certain uses that the Food and Drug Administration (FDA) had not approved.

The settlement resolves an investigation into promotional activities by AstraZeneca that were directed not only to psychiatrists but also to primary care physicians and other health care professionals for unapproved uses in the treatment of medical conditions such as aggression, Alzheimer's disorder, anger management, anxiety, attention deficit hyperactivity disorder, dementia and sleeplessness.

While a physician can prescribe drugs for an unapproved use, federal law prohibits a manufacturer from promoting a drug for uses not approved by the FDA. Under the agreement, AstraZeneca must pay a total of $520 million in civil damages and penalties to compensate Medicaid, Medicare and various federal healthcare programs. New York state will receive nearly $45 million as part of the settlement, and other states will receive payments based on usage of Seroquel. AstraZeneca will also enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of the Inspector General, which will closely monitor the company's future marketing and sales practices.

This settlement is based on qui tam cases that were filed in the U.S. District Court for the Eastern District of Pennsylvania by private parties who filed actions under state and federal false claims statutes (relators). A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted the settlement negotiations with AstraZeneca on behalf of all the settling states. Team members included representatives from New York, Massachusetts, Illinois, Ohio, New Jersey, Texas and California.

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State Comptroller Thomas P. DiNapoli Statement on Pension Fund Investigation

"I am outraged by the criminal acts that occurred during the Hevesi Administration. Anyone who has violated the law and the public trust must be held accountable.

"As the Attorney General's investigation has revealed, I inherited a mess. But it is a mess that I have fixed. I have thoroughly and methodically evaluated and reformed the operations and investment policies of the Pension Fund.

"While some public officials have touted proposals of varying merit, I have ended the potential for the shameful corruption that had plagued the Pension Fund. I have banned placement agents and lobbyists and ended "pay to play" in the pension system. I continue to urge the SEC to implement a national ban on "pay to play."

"I have managed the Office of the State Comptroller and the New York State Common Retirement Fund with transparency and integrity from the start of my tenure. Any suggestion or innuendo to the contrary is baseless.

"The Attorney General was asked today whether I have been interviewed as part of this investigation. The answer is no.

"I have built my career in public service on honest and ethical behavior. My decisions and reforms protect the interests of the one million members of the New York State Common Retirement Fund and the taxpayers."

Background Information: Reforms Implemented by DiNapoli Since Taking Office

Changed the Way the Fund Does Business:

• Banned pay-to-play practices by issuing in September 2009 an executive order that prohibits the Fund from doing business with any investment adviser who has made a political contribution to the State Comptroller or a candidate for State Comptroller. The ban, which closely parallels proposed Securities and Exchange Commission (SEC) regulations, will last for two years from the date of the contribution.
• Banned the involvement of placement agents, paid intermediaries and registered lobbyists in investments with the Fund. The ban was implemented in April 2009 and includes entities compensated on a flat fee, a contingent fee or any other basis;
• Created a Pension Fund Task Force to review the practices and policies of the Fund chaired by Shannon O'Brien, the former Massachusetts Treasurer;
• Expanded internal and external vetting, review and approval of all investment decisions
• Formed a special commission, headed by former NYC-Mayor Ed Koch and Wall Street guru Frank Zarb, to review operations of the Office of the State Comptroller (OSC);
• Created a mandatory ethics training program for all staff, including the Comptroller;
• Drafting legislation to codify the pension fund reforms to eliminate the potential for abuse in the future.

Strengthened Oversight of the Fund:

• Partnered with the State Insurance Department to develop new regulations governing the operations of the Fund;
• Hired an independent consulting firm to conduct a compliance review of every transaction approved by DiNapoli since he took office in February 2007;
• Hired an outside law firm and an independent investment consulting firm to review Fund investments with firms under investigation by the New York Attorney General and the SEC;
• Created Inspector General position as recommended by the Koch-Zarb Commission, to monitor and review investment transactions and the activities of the Comptroller and all OSC employees;
• Hired Special Counsel for Ethics to monitor and review investment transactions and to develop and implement a comprehensive ethics program.

Increased Transparency in Fund Transactions:

• Releases monthly reporting on investment transactions completed by the Fund since February 2007, including placement agent and intermediary information where applicable;
• Publicly announces pension fund performance quarterly instead of annually;
• Initiated a comprehensive review of all Fund external consultants and the development of a more comprehensive pool of external consultants.

Proposed Campaign Finance Reform:

• Comptroller DiNapoli also proposed Campaign Finance Reform legislation for the public funding of Comptroller campaign in 2010 to eliminate the opportunity for candidates to be influenced by wealthy donors and other interests. Even without changes in the law, DiNapoli has voluntarily limited the contributions to his campaign to less than one-half the legal limit.
  

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ATTORNEY GENERAL CUOMO'S FIGHT AGAINST CORRUPTION IN THE STATE PENSION FUND NETS FOUR MORE COMPANIES AND ONE INDIVIDUAL

Quadrangle, Global Strategy Group, Kevin McCabe, GKM, and Platinum Advisors Will Pay Nearly $12 Million to New York State and Comply with the Attorney General's Code of Conduct

Common Cause and NYPIRG Join in Call for Reforms to Sole Trustee Pension System in New York

Yesterday, the New York Attorney General's Office today announced agreements with two investment firms and three unlicensed brokers in the Office's ongoing public pension fund investigation.  Good government groups Common Cause and NYPIRG also joined the Attorney General in calling for reforms to the sole trustee pension system in New York. Cuomo made the announcement as millions of Americans filed their tax returns.

Cuomo has authored a sweeping pension reform bill - "Taxpayers Reform for Upholding Security and Transparency" ("T.R.U.S.T.") - that would replace the sole trustee at the New York State Common Retirement Fund with a board of trustees and eliminate pay-to-play in state public pension funds. 

Under the agreements, Quadrangle Group LLC ("Quadrangle") will pay $7 million; GKM Newport Generation Capital Services, LLC ("GKM") will pay the equivalent of $1.6 million; political consulting firm Global Strategy Group ("Global"), Jon Silvan, CEO, will pay $2 million; California lobbying firm Platinum Advisors ("Platinum") will pay $500,000; and unlicensed placement agent Kevin McCabe will pay $715,000.

Along with the nearly $12 million that will be repaid to New York State, the parties will comply with the Attorney General's Public Pension Fund Reform Code of Conduct.

Two of the agreements announced today ("Quadrangle" and "GKM") are with investment firms that paid fees to Henry ("Hank") Morris, then-Comptroller Alan Hevesi's paid political adviser, to arrange investments from the New York State Common Retirement Fund (the "CRF").  The CRF is the biggest pool of money in the state and the third largest pension fund in the country, most recently valued at approximately $129 billion.

Quadrangle stated, "We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller's political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund.  That conduct was inappropriate, wrong, and unethical.  We embrace the reforms in the Attorney General's Code of Conduct, including the campaign contribution and placement agent ban, which are vitally necessary to eliminate pay-to-play practices from the public pension fund investment process.  We urge others in the industry to follow."

Quadrangle has agreed to fully cooperate with the Attorney General's investigation as to Rattner and others.

The three other agreements announced today ("Global", Kevin McCabe, and "Platinum") result from the Office's inquiry into the use of unlicensed intermediaries (placement agents) at New York public pension funds.  In May 2009, the Attorney General's Office subpoenaed investment firms and their agents in connection with New York public pension fund investments after determining that 40 to 50 percent of agents acting to secure investments from the state and city pension funds were unregistered. 

The facts found by the Attorney General's Office in this regard are as follows:

• Quadrangle retained Morris as a placement agent to increase from $25 million to $100 million an investment Quadrangle was seeking from the CRF.  In the middle of the investment decision-making process, Quadrangle also arranged a DVD distribution deal for a movie produced by the brother of then-CRF Chief Investment Officer David Loglisci.  Under the agreement with the Office, Quadrangle will pay $7 million, $5 million of which will be returned to the CRF and $2 million of which will go to the State Treasury.  The Office's agreement with Quadrangle expressly does not cover former Quadrangle Managing Principal Steven Rattner.
• Global received a total of approximately $1.3 million for facilitating public pension fund investments in private equity funds managed by Intermedia Advisors, LLC and Clayton, Dubilier & Rice. Global has agreed to pay a total of $2 million to New York State.
• Kevin McCabe partnered with Hank Morris in Purpose LLC ("Purpose"), a company that was not a broker-dealer.  Through Purpose, Morris and McCabe facilitated an investment in the GKM Fund from the CRF in 2004, with an additional allocation in 2006.  McCabe's share of the fees amounted to approximately $477,000.  McCabe has agreed to pay New York State a total of $715,000.
• GKM paid Morris and his partner, Kevin McCabe, to arrange $800 million in capital commitments from the CRF to GKM's captive fund-of-funds ("the GKM Fund").  The CRF has terminated GKM as the general partner of the GKM Fund.  Under its agreement with the Attorney General's Office, GKM has agreed to relinquish all interest it had as general partner of the GKM Fund, including but not limited to paid-in capital, the right to carried interest, and unpaid management fees.  This interest, which has been valued at approximately $1.6 million, will now go to the CRF.
• Platinum and its founding principal Darius Anderson are registered lobbyists in California.  In 2004, before Anderson obtained a securities license, Ares Management LLC paid Platinum fees totaling approximately $337,000 in connection with investments from both the CRF and the New York City pension funds.  Platinum and Anderson have agreed to pay New York State a total of $500,000.

All five of the signatories have agreed to comply with Attorney General Cuomo's Public Pension Fund Reform Code of Conduct.  Among other things, the Code of Conduct bans the use of placement agents to solicit investments from public pension funds, and prohibits investments within two years of any campaign contribution from the investment firm to the Comptroller or other elected trustee.

Under state and federal law, people engaged in the business of effecting transactions in securities are required to be licensed and registered with a broker-dealer.  To determine whether a securities broker is licensed and registered, visit www.finra.org/investors/toolscalculators/brokercheck/index.htm.

Susan Lerner, Executive Director of Common Cause/NY said, "We need transparency and accountability - not just among our top state leaders and legislators, but also wherever and whoever handles public funds.  Attorney General Cuomo's sweeping investigation into the public pension fund has uncovered conflicts of interest, improprieties, and outright criminal acts by those we trust with our money.  Common Cause applauds the Attorney General's work on behalf of taxpayers and state pension recipients and will work to help him pass this important reform legislation."

Russ Haven, Legislative Counsel for the New York Public Interest Research Group (NYPIRG), said, "After decades of controversies, we believe it's time to follow the vast majority of other states and entrust investment decisions for the state's $130 billion pension fund to an independent board.  More decision makers and tight conflict of interest and pay-to-play prohibitions will create greater oversight and boost public confidence in the system."

To view the agreements and documents related to today's announcement, please visit www.ag.ny.gov.

PENSION REFORM BILL

Attorney General Cuomo has proposed a sweeping pension reform bill that would replace the sole trustee at the New York State Common Retirement Fund with a board of trustees and eliminate pay-to-play in state public pension funds.  The legislation, entitled, "Taxpayers' Reform for Upholding Security and Transparency" ("T.R.U.S.T."), has received bipartisan support.

The bill would institutionalize Cuomo's Public Pension Fund Reform Code of Conduct and provide additional civil, criminal, and administrative penalties and sanctions to ensure firms and individuals are held accountable for violations of the new law.  The bill would increase the rigor, integrity, and transparency of the investment process by eliminating campaign contributions by firms investing public pension money and banning the use of intermediaries paid to open the door to public pension fund investments.  The legislation would also strengthen enforcement by adding misdemeanor and felony provisions and authorizing the Attorney General to commence civil actions to enjoin ongoing violations and impose civil penalties.

BACKGROUND INFORMATION

Last year, Cuomo announced his Public Pension Fund Reform Code of Conduct, which, among other things, bans investment firms from compensating intermediaries for introductions to public pension funds.  With today's agreements, fifteen firms have endorsed the Code: investment firms The Carlyle Group, Riverstone Holdings LLC, Pacific Corporate Group Holdings, LLC, HM Capital Partners I, Levine Leichtman Capital Partners, Access Capital Partners, Falconhead Capital, Markstone Capital Group, Ares, Freeman Spogli, Quadrangle, and GKM; placement agent Wetherly Capital Group; political consulting firm Global Strategy Group; and lobbying firm Platinum Advisors.

Thirteen of these firms collectively have agreed to return more than $100 million associated with CRF investments; these funds will principally be provided to the CRF for the benefit of the pension holders.  Payments from individuals bring that total to more than $130 million for the CRF and the State.

Attorney General Cuomo's investigation into corruption at the CRF has also led to a number of criminal charges and six guilty pleas to date, including guilty pleas by former Liberal Party Chair Ray Harding, investment advisor Saul Meyer, hedge fund manager Barrett Wissman, Julio Ramirez, an unlicensed placement agent, and venture fund manager Elliott Broidy.  A seventh indictment against Hank Morris remains pending and Morris is presumed innocent until and unless proven guilty in court.

The Attorney General thanked the United States Securities & Exchange Commission for their cooperation in the investigation.  The SEC, in July 2009, proposed new pay-to-play rules that would institutionalize Cuomo's Code of Conduct nationwide.

This investigation was conducted by Deputy Chief of the Public Integrity Bureau Stacy Aronowitz and Assistant Attorneys General Emily Bradford, Rachel Doft, Noah Falk, and Amy Tully, under the supervision of Special Deputy Attorney General for Public Integrity Ellen Nachtigall Biben and Special Counsel to the Attorney General Linda A. Lacewell.

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CUOMO TO TAKE LEGAL ACTION AGAINST SMARTBUY AND ITS AFFILIATED COMPANIES FOR PREYING ON MEMBERS OF THE MILITARY WITH FRAUDULENT AND DECEPTIVE PRACTICES

Cuomo's investigation determines that SmartBuy engaged in deceptive lending practices and usury targeting soldiers and their families

Yesterday, Attorney General Andrew M. Cuomo announced that his office has initiated legal action against SmartBuy and its affiliated companies for targeting soldiers with fraudulent and deceptive business practices.

An investigation by Cuomo's office determined that the company and its affiliated lenders targeted soldiers with so-called "financing" offers of monthly payments that were actually open-ended loan agreements, costing the soldiers thousands of dollars extra for consumer electronics.

"The specific intent of this business was to target soldiers on the move, fleecing them for thousands of dollars and leaving them with little recourse," said Attorney General Cuomo. "We have no tolerance for companies or individuals who take advantage of those serving in our military."

Cuomo's office sent a notice of proposed litigation to six affiliated entities, including Frisco Marketing of N.Y., LLC, doing business as SmartBuy and SmartBuy Computers and Electronics; Integrity Financial of North Carolina, Inc.; Britlee, Inc.; GJS Management, Inc.; Rome Finance Company, Inc. and Rome Finance Co. LLC, all owned and/or operated by Fayetteville, N.C.-based John Paul Jordan, Stuart Jordan and Rebecca Wirt, and Concord, California-based William Collins and Ronald Wilson.

The Attorney General's Office claims that the SmartBuy operation "engaged in illegal, deceptive and fraudulent business practices, including but not limited to fraudulently and deceptively selling electronics with financing agreements to federal employees, and in particular, military employees; violating New York State usury and banking laws by engaging in unlicensed lending and charging illegal rates of interest; and violating the State Fair Debt Collection Practices Act."

In 2008, SmartBuy's collective locations across the country brought in between $32 and $36 million. Until recently, SmartBuy operated a store front and kiosk in the Salmon Run Mall. Once the business became aware of the Attorney General's investigation and expected legal action, SmartBuy abruptly shut down the location.

Attorney General Cuomo's investigation has determined that all SmartBuy locations across the country are set up in close proximity to large military establishments and communities. Consumers who did business with SmartBuy or any of its affiliated organizations are urged to contact Attorney General Cuomo's Watertown Regional Office at 315-785-2444.

The matter is being handled by Assistant Attorney General-In-Charge of the Watertown Regional Office Deanna Nelson under the supervision of Deputy Attorney General for Regional Affairs J. David Sampson and Special Deputy Chief of Staff Mitra Hormozi

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