“We’ve worked diligently this year to restore New Yorkers’ faith in the public and private sectors, and I am proud of the progress we’ve made for the people of Western New York,” said Attorney General Schneiderman. “From cracking down on corruption in government, to rooting out fraud against taxpayers, to protecting consumers from financial crimes, and keeping our streets safe, each day we’ve moved closer to fulfilling the goal of building the best public law firm in the country to serve and protect all New Yorkers.”
The following are some of the actions Attorney General Schneiderman has taken since January:
Taxpayer Protection and Public Integrity
- Appointed public integrity officers to serve in each of the Attorney General's regional offices across the state, including Rochester, to give taxpayers a place to go to report complaints of government corruption without fear of local politics influencing the outcome.
- Launched a unique and much-needed Taxpayer Protection Bureau – designed to go after corruption in state contracts, pension fund rip-offs, and large-scale tax cheats – as part of an aggressive plan to root out fraud and return money illegal stolen from New York taxpayers at no additional cost to the state.
- Secured many major Medicaid fraud recoveries, including a record-setting settlement that required Young Adult Institute, the state's largest residential service provider, to pay $18 million in damages.
- Secured over 75 convictions of individuals who defrauded the Medicaid system in New York State, as well as in patient abuse and neglect cases.
- Initiated a unique effort to crackdown on earmarks, contracts, and other government spending through cooperation with Comptroller Thomas P. DiNapoli.
- In the administration’s first False Claims Act case, secured a $1.6 million settlement with a food service provider for illegally overcharging school districts and other education providers.
- Closed the “Helmsley Loophole” that let tax evaders off the hook. The Attorney General’s program bill, which was drafted in collaboration with New York County District Attorney Vance and signed into law by Governor Cuomo, amends a law that prohibited the state from prosecuting income tax cheats who have been previously prosecuted in federal court for the “same criminal transactions” even if the crimes are distinct.
Keeping Streets Safe and Communities Strong
In 2011, Attorney General Schneiderman’s Organized Crime Task Force (OCTF) brought a number of prosecutions against gang members, major drug traffickers, and other members of organized crime. Prosecutions include:
-Operation Snowbird: Announced the arrests of 28 individuals charged with conspiring in a massive drug distribution network that transported cocaine from Florida and New York City to be sold throughout Western New York. The Attorney General office’s seized more than $2.7 million worth of cocaine and $700,000 in cash, and arrested the defendants in a series of raids.
- Operation Beemer: The Attorney General obtained an indictment against 23 individuals accused of operating a drug distribution network that sent cocaine through the United States Postal Service (USPS) from Puerto Rico to various locations in Erie and Niagara Counties for distribution in communities throughout Western New York.
- Operation Horse Trail: In the largest heroin bust in Buffalo history, 15 individuals were charged with running a heroin distribution network in which the traffickers moved their product from the Bronx and funneled it to Buffalo.
- Operation Shamrock: The Attorney General obtained an indictment against 10 individuals for operating a prescription drug and cocaine distribution ring on Buffalo city streets. The investigation focused on the sale and resale of prescription painkillers.
- Operation Pipeline: 37 individuals were charged with participating in a major drug distribution network that was funneling cocaine from New York City, Georgia, New Jersey and Pennsylvania throughout the Capital Region and elsewhere in New York.
- Operation Bloodtrail: 41 members and associates of the violent "Bloods" street gang were charged by in three separate indictments for operating a narcotics distribution ring that sold cocaine, heroin, marijuana and guns throughout the Capital Region and elsewhere in New York. During the investigation, law enforcement seized substantial quantities of controlled substances. In 2011, 11 defendants pled guilty and two were convicted after trial. Trial defendants were sentenced to lengthy prison sentences, well exceeding life terms: one received a total of 170 years; the other was sentenced to a total of 141 years. Additionally, 27 defendants were sentenced, six are awaiting trial and two are awaiting sentencing.
- Operation Rockwell and Operation Re-Do: Announced charges against 38 individuals for their connection to two drug networks responsible for distributing cocaine throughout Central New York. The arrests and seizure of more than $200,000 in cocaine has helped to shut down a drug pipeline running from Georgia to New York City to Syracuse and Auburn for sale throughout the region.
- OCTF also investigated numerous narcotics networks operated in Cayuga, Monroe and other counties in the Syracuse area and over the course of the year brought indictments against more than 60 traffickers, seized numerous kilograms of controlled substances and seized more than $700,000 in cash.
- Operation Flatrate: The Attorney General obtained five separate indictments against 37 individuals on charges stemming from the operation of lucrative loan sharking and gambling activities closely controlled by the Gambino crime family.
- Operation Car Wars: The Attorney General obtained an indictment against 21 individuals in a takedown of an extensive automobile theft and resale ring that stole hundreds of cars worth more than $10 million.
In addition, Attorney General Schneiderman took action to keep New York’s communities safer and stronger:
- In Western New York, unveiled the “Internet System for Tracking Over-Prescribing Act” that would provide health care practitioners and pharmacists with centralized information to avoid over-prescribing, help shut down prescription drug trafficking, as well as identify and treat patients who seek to abuse prescription drugs.
- Conducted an undercover investigation and busted 10 gun sellers from across New York State who jeopardized the public’s safety by violating the state's background check requirement for the sale of firearms at gun shows.
-Following the announcement of the undercover investigation, the Attorney General joined Senator Kirsten Gillibrand in introducing the Gun Trafficking Prevention Act of 2011, a federal measure that will crack down on corrupt gun dealers and eliminate the steady flow of illegal guns into New York.
-Fought against the National Right-to-Carry Reciprocity Act, which would force states like New York to abandon its own gun laws by allowing out-of-state visitors to carry concealed firearms based on their home state's less safe laws, rather than those of the state they are entering.
- Responded to the concerns of a Buffalo community by ordering the clean-up of Central Park Plaza, a once-thriving property that became a dangerous blight. As part of the agreement, the owners of the plaza, Samuel Kurz and Central Park Plaza LLC, are now barred from owning property in Buffalo.
-Won a major court victory in defense of New York’s gun safety laws and upheld the constitutionality of the state’s handgun licensing statute.
- Protected homeowners as a national leader by fighting for a fair 50-state mortgage settlement that holds banks accountable, brings meaningful relief to New Yorkers and gets the economy moving again.
-Filed a lawsuit against the Bank of New York Mellon (BNY Mellon) for defrauding clients in foreign currency exchange transactions, seeking recovery of nearly $2 Billion.
- Released a resource guide for veterans and active duty military personnel with information related to educational and housing benefits, as well as consumer protections and other legal issues.
- Secured a $553 million multi-state settlement with seven major technology corporations alleged to have illegally conspired to artificially inflate prices for liquid crystal display (LCD) screens used in televisions, computer monitors, and laptops. New York State taxpayers may receive upwards of $11 million, in addition to restitution to compensate consumers affected by the scheme.
- Secured a $90.8 million settlement with UBS for fraudulent and anticompetitive conduct in its municipal bond derivative transactions. Of that amount, $63.3 million will go to a multistate restitution fund for governments and nonprofits that entered into municipal derivatives contracts with UBS between 2001 and 2004.
- Secured a $1.3 million settlement with Bank of New York Mellon, in conjunction with the states of Texas and Florida, for manipulative trading of auction rate securities. A subsidiary of BNYM used an intermediary to submit bids that should have been barred as self-dealing transactions, artificially lowering the clearing prices of auctions and harming investors.
- Protected constituents who would be economically harmed by the loss of the Buffalo Bills home games and the canceling of Jets and Giants training camps by investigating whether the National Football League lockout violated state antitrust laws.
- Announced a joint initiative with the State Comptroller to ensure that New Yorkers receive unpaid life insurance benefits.
- Launched a thorough review of AT&T’s proposed acquisition of T-Mobile in Rochester for potential anti-competitive impacts on consumers and businesses in Western New York. The proposed merger would create the nation’s largest wireless company with a total of 130 million subscribers nationwide, opening the door to a near duopoly shared by the merged firm and Verizon. Most recently, Schneiderman joined the U.S. Department of Justice’s antitrust lawsuit that led to the blocking of the acquisition.
-Held statewide “office hours” in communities impacted by Hurricane Irene, assisting consumers with storm-related questions and concerns related to issues such as price gouging, insurance policies and delayed debt payments so that affected New Yorkers can get back on their feet.
- Secured a $2.5 million dollar settlement with the pharmaceutical company Pharmacia Corporation for inflating the cost of drugs sold to state health programs.
- Reached a multi-million dollar agreement with Banco Espírito Santo S.A. (BES) to settle an investigation into the solicitation and sale by BES and its affiliates of securities to BES’s U.S. customers without registering itself or any of its affiliates as a securities broker-dealers or investment advisers, or any of their employees as salesmen, as required under New York’s Martin Act.
- Secured $58.75 million in restitution from Wachovia Bank and Wells Fargo Bank as part of an ongoing national investigation of alleged anticompetitive and fraudulent conduct in the municipal bond derivatives industry.
- Secured a $1.8 million settlement with the retail chain Michaels Stores, Inc. for engaging in deceptive advertising practices by misleading consumers into thinking they were receiving steep discounts over a two year period. The company will change its advertising practices and contribute $1 million in art and craft supplies to public schools throughout New York State, in addition to $800,000 in civil penalties.
- Secured a $3.1 million settlement with the major pharmaceutical company AstraZeneca, following allegations that it improperly marketed and promoted the antipsychotic drug Seroquel. The agreement is part of a record 37-state settlement totaling $68.5 million – the largest ever multi-state consumer protection-based pharmaceutical settlement.
- Secured a settlement that will refund $1.1 million to more than 5,000 New Yorkers across the state who were defrauded by a deceptive and harmful debt settlement company. Freedom Debt Relief misled debt-saddled consumers about the amount of money they would save and the services it would provide, while reaping large profits in up-front fees. The company will also pay $100,000 in penalties to the state.
- Sued the owners of Extreme Snowplowing for taking thousands of dollars from Western New Yorkers for snow removal services and failing to plow their driveways.
- Called on the Federal Communications Commission (FCC) to enact rules that would prevent unauthorized third-party charges on telephone bills or ‘cramming’ – a fraud that a recent U.S. Senate report found costs consumers upwards of $2 billion per year. This action was in conjunction with a coalition of 16 other attorneys general.
- Filed felony charges against the owner of Maxx Auto Sales, a now defunct dealership that ripped off Western New Yorkers, as well as a civil lawsuit against the owner, and obtained an order freezing his assets. He is accused of taking more than $100,000 in payments from dozens of consumers for vehicles he never delivered.
- Took action against several Western New York debt collectors who preyed on military personnel and vulnerable consumers. These included the conviction of a debt collector, the banning of an attorney from the debt collection business, and settlements with three other Buffalo-based debt collectors who threatened consumers, made false representations, and improperly called consumers at their places of employment.
- Sued the federal government for failing to commit to a full environmental review of the proposed regulations that would allow natural gas drilling – including the potentially harmful "hydrofracking" technique – in the Delaware River Basin which includes the New York City watershed.
- Led the fight for safety at Indian Point and other nuclear power facilities by challenging a decision by the federal Nuclear Regulatory Commission (NRC) that allowed the storage of high-level radioactive waste for at least 60 years after their closure without assessing the public and environmental impacts; calling on the NRC to include seismicity in the scope of review for the relicensing of Indian Point, and filing a petition to force Indian Point to comply with fire safety regulations.
- Cracked down on six website operators that illegally sold cigarettes to New York State residents, part of a disturbing trend that provides teens easy access to tobacco, and encourages a loss of hundreds of millions of dollars in state revenues.
- Secured an agreement with the former General Motors Corporation that will dedicate $154 million to the environmental cleanup and redevelopment of contaminated sites in New York.
- Took action to protect the air New Yorkers breathe by filing a lawsuit against Pennsylvania power plant Homer City Station that is emitting dangerous sulfur dioxide in violation of the federal Clean Air Act. The Office of Attorney General led a coalition of attorneys general from Connecticut, Delaware, Maryland, and Massachusetts, against efforts in the U.S. House of Representatives to remove critical environmental regulations that protect New York communities from toxic pollution; and called on the EPA to protect New York's air by implementing a proposed rule that would slash the amount of air pollution currently allowed to cross state lines.
- Created the Leadership Committee for Nonprofit Revitalization, a task force with members representing Western New York, charged with presenting a series of recommendations to the Attorney General to reduce the regulatory burdens and costs on nonprofits while strengthening nonprofit accountability.
- Launched the Religious Rights Initiative, a project of the OAG’s Civil Rights Bureau that will address religious rights issues and enforce anti-discrimination laws. The Initiative will target faith-based discrimination and violations of religious rights through public education, outreach and law enforcement, including litigation.
- Released a fundraising report documenting how for-profit “telemarketers” pocket the bulk of contributions New Yorkers give to charities. According to Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fundraisers, in 2010, an average of just 36.9 cents of every charitable dollar raised by these professional telemarketing companies actually went to charity. He also issued a guide for consumers planning on making charitable contributions with important information to ensure that donations go where intended.