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Fraud Cases

Of all the different types of crimes DOI investigates, fraud is one of the most prevalent.

Large-scale Fraud:

  • A DOI probe led to the largest recovery for the City from a criminal investigation - the prime contractor in the CityTime case, SAIC, agreed in 2012 to repay $500 million for the fraud that was perpetrated in the project. DOI worked relentlessly with the U.S. Attorney for the Southern District of New York to come to this settlement in the criminal case. The result is the greatest example of DOI’s role and contribution to City government – uncovering wrongdoing and ensuring that the City recoups the funds lost as a result of fraud.  The half-billion dollar recovery is in addition to the ongoing criminal probe that has resulted so far in the charging of 11 individuals and one corporation, two guilty pleas with cooperation agreements, and the identification, seizure and/or freezing of more than $50 million connected to the defendants. Additionally $2.5 million dollars was returned by SAIC in 2011 to the City coffers related to the improprieties.
  • In 2012, DOI arrested a supervising Fire inspector for receiving tens of thousands of dollars in bribes in exchange for, among other corrupt acts, ignoring or minimizing fire safety violations at day care centers. His arrest is the latest in an extensive DOI investigation that uncovered a $1 million day care fraud and bribery scheme and has led to six City employees and eight day care operators pleading guilty so far, including the supervising Fire inspector. 

Housing Fraud:

  • DOI is committed to rooting out tenant fraud, a crime that siphons much-needed funding from those who are entitled to affordable housing subsidies. Since 2002, DOI has arrested more than 660 individuals, both City employees and others, for abusing City housing programs, including the theft of more than $14 million in government housing funds.
  • In 2010, a former supervisor at the City Department of Housing Preservation and Development (“HPD”) was sentenced to 1⅔ to five years for selling Section 8 vouchers for cash bribes of up to $7,000. The defendant abused her access to HPD’s automated systems and paper records to alter hundreds of Section 8 applications to generate vouchers that were marketed to ineligible tenants through intermediaries in upper Manhattan and the Bronx. DOI’s investigation also led to 29 criminal convictions. DOI’s investigation exposed and ended a flourishing black market in illicit Section 8 vouchers, and uncovered the theft of hundreds of thousands of dollars. 

  • A Williamsburg resident was charged in 2010 with advertising her New York City Housing Authority ("NYCHA") apartment on Craigslist and profiting not only by illegally subletting it for six months but also by collecting advance rent from multiple apartment-seekers simultaneously, reneging on the deals, and pocketing the victims’ payments.

  • DOI also works with federal authorities on housing fraud cases. In 2007, a DOI investigation led to federal charges against 29 individuals in connection with defrauding New York’s Section 8 program of more than $1 million in housing subsidies. Participants in the Section 8 program consist of low-income families who can choose housing in the private market. Under the program, a housing subsidy is paid directly to the landlord and the family pays the difference between the actual rent and the subsidy amount.

Employee Fraud:

These cases range from employees filing false medical notes to large-scale public corruption cases.

  • DOI has identified and stopped City employees who fraudulently obtained unemployment insurance payments by falsely claiming to the New York State Department of Labor that they were unemployed when in fact they were working for a City agency and receiving City wages. DOI has arrested 122 City employees since 1998, most of them “seasonal” employees, who illegally collected more than $430,000 in unemployment insurance benefits.  DOI’s effort in this area has expanded to a data-match initiative in which we recently joined with the State Department of Labor to establish a data-matching system that will compare State and City databases to catch City workers who are simultaneously collecting City paychecks and unemployment payments. This data share will increase efficiency in identifying fraud, and will identify it faster minimizing the risk and financial loss to the City.

  • DOI’s investigation into fraud allegations at the City-run television station, NYC-TV, uncovered a conspiracy scheme to defraud the City of tens-of-thousands of dollars. The investigation resulted in the 2008 arrest of the station’s now-former Chief Operating Officer and the owner of VRT Multimedia, Inc., a private company. They were charged with diverting to VRT more than $60,000 in payments from advertisers that should have gone to NYC-TV for production work. DOI investigators found that between March 2007 and April 2008 the two defendants split the diverted funds. In 2010, the two defendants were sentenced to prison terms.

  • In 2008, DOI uncovered and halted two significant and long-running embezzlement schemes within the City’s Administration for Children’s Services (“ACS”) involving the theft of hundreds-of-thousands of dollars by two long-term fiscal managers of that agency and associates who were non-City employees. Seven individuals have been arrested in two overlapping schemes and they have been convicted of federal crimes.

  • In 2007, DOI investigated a rash of sick and medical leave fraud perpetrated by City employees who submitted fake doctors’ notes to various agencies; DOI made 13 arrests in total of employees from the Fire Department of the City of New York (“FDNY”) Emergency Medical Service, the Department of Juvenile Justice (“DJJ”), the Department of Environmental Protection (“DEP”), the Department of Citywide Administrative Services (“DCAS”) and the Office of Administrative Tribunals and Hearings (“OATH”), which is the agency responsible for conducting disciplinary cases when City employees engage in wrongdoing.

  • In 2005, the former Director of Management Information Systems and the former Director of Records at the Office of the Chief Medical Examiner (“OCME”) were arrested in connection with the theft of millions of dollars, much of which were from federal funds meant for the creation of a computer system to track and identify forensic evidence collected to help identify victims of the September 11th terrorist attacks at Ground Zero. DOI’s investigation found a complex scheme by which numerous OCME computer contracts were steered to several companies that performed little or no work for OCME. The two individuals pleaded guilty in the fall of 2007 in U.S. District Court in Manhattan. In 2008, Natarajan “Raju” Venkataram was sentenced to 15 years in prison and ordered to pay $2.9 million in restitution and forfeiture and Rosa Abreu was sentenced to over 5½ years in prison and ordered to pay more than $1 million in restitution and forfeiture. In addition, DOI investigators successfully traced financial transactions to India, which has resulted in the City’s recovering $6.12 million that was embezzled in the scheme.

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