DOI issues report: “A Limited Investigative Review of CCRB Case Processing Procedures: Missing and Mishandled Cases.” The report details how "lost" or "improperly closed" cases of police misconduct were mismanaged by the Civilian Complaint Review Board.
The City sets up the Integrity Hot Line and establishes the Construction Compliance Monitor initiative. DOI appoints four monitors to oversee recovery and clean up at the World Trade Center site. The monitors are responsible for preventing and detecting fraudulent, wasteful or abusive practices at Ground Zero by any of the contractors working there.
Mayor Michael Bloomberg appoints Rose Gill Hearn, former Assistant U.S. Attorney and Deputy Chief of the Criminal Division for the Southern District of New York, as DOI Commissioner.
Mayor Bloomberg and Commissioner Gill Hearn announce the appointment of Richard J. Condon as Special Commissioner of Investigation for the New York City School District. The Special Commissioner's office is part of the Department of Investigation and is independent of the Board of Education and the Schools Chancellor.
DOI and Department of Finance (“DOF”) create a joint anti-corruption task force charged with examining the property assessment function at DOF and developing recommendations to reduce the potential for future corruption. The task force is created after DOI arrested 18 current and former tax assessors on federal bribery charges.
DOI launches a comprehensive “Corruption Prevention/Whistleblower Protection” campaign for City employees. The campaign includes lectures and the distribution of printed materials to all City employees so they can learn how to recognize and report corruption. The agency also endorses a recent revision to the City’s Whistleblower law that broadens both the category of the employees protected by the law and the nature of the type of report that would be protected.
A Federal Judge ruled in favor of closing the 1998 Memorandum of Understanding between the City and the Legal Aid Society. DOI continues to oversee the Central Punitive Segregation Unit.
DOI continues to spearhead a tort fraud task force that includes the Law Department and the City Comptroller’s Office. The task force’s goal is to identify fraudulent claims against the City, prevent them through a combination of criminal prosecutions, affirmative litigation and changes in procedures and reduce the opportunity for fraud. In 2002, the task force’s work includes the criminal prosecution of a taxi driver who filed a $50 million lawsuit against the City erroneously claiming he was beaten by Taxi and Limousine Commissioner inspectors.
DOI works diligently to restore tens of millions dollars to City coffers for restitution and loss prevention from all of its cases. In 2002, more than $44 million is levied or recovered, either through court-ordered restitutions and forfeitures, administrative fines, asset recoveries or the reinstatement of summonses or reassessments. In FY 2003, DOI has identified more than $17 million to be realized in total restitution, fines, loss prevention, forfeitures and recoveries to all City agencies and other victims.
Mayor Bloomberg asks DOI to investigate allegations that members of the New York City Fire Department (“FDNY”) at the Tottenville firehouse of Engine 151 and Ladder 76 tried to cover up an assault at the firehouse in violation of FDNY regulations and state criminal law. In March, DOI issues its report revealing that FDNY members did, in fact, cover-up the assault and that there was a breakdown in supervision at the firehouse and a complete disregard for FDNY regulations. Two FDNY lieutenants were penalized, a firehouse captain retired with a demotion and was fined, and a firefighter was convicted of second-degree assault and sentenced to one year in jail.
A six-month DOI investigation leads to the arrest of 12 individuals who pretended to be dead to remain in their New York City Housing Authority apartments. Those arrested, many relatives of the deceased, kept the apartments for their own use – in some cases for 11 years -- submitting fraudulent documents and fabricating Social Security documents to make it appear that the leaseholder was alive and resided in the apartment.
DOI issues findings and report of foster care provider, St. Christopher’s, Inc., a Dobbs Ferry, New York-based, not-for profit. DOI finds the organization engaged in a deliberate process of changing, enhancing, creating and falsifying significant portions of foster care case files in order to deceive ACS in an annual audit/review of those records. As a result of the investigation, ACS moves to cancel $86 million in contracts with the provider.
Several of DOI’s high-profile public corruption cases culminate in prison sentences for the public officials involved. Russell Harding, who was charged in 2003 with siphoning agency funds at the New York City Housing Development Corporation (“HDC”) and possessing child pornography, is sentenced to 63 months in federal prison. He is also ordered to pay $366,799 in restitution. As a result of this investigation, DOI and HDC entered into a Memorandum of Understanding that establishes and funds an Office of the Inspector General for monitoring HDC.
New York City Department of Correction (“DOC”) Bureau Chief Anthony Serra is sentenced to state and federal prison time as a result of a DOI investigation into his use of City employees to work for his personal business venture that provided services to political campaigns. The State charges were in connection with violating the New York City Conflicts of Interest Rules and misappropriating Correction property and equipment and the federal charges were in connection with tax evasion.
Bernard Kerik, former New York City Police Commissioner and Commissioner of the Department of Correction, pleads guilty to the misdemeanor crime of violating a New York City law prohibiting conflicts of interest by public employees. Kerik also pleaded guilty to the crime of failing to disclose loans obtained from a real estate developer.
DOI continues its work on Medicaid fraud investigations given the New York City Human Resource Administration’s (“HRA”) role in administering the program. Working with its law enforcement partners, DOI cases result in the arrest of more than a dozen people for Medicaid fraud, some of them HRA employees, for selling valuable Medicaid cards to people for $300-$400 cash. This case exposed a serious problem with internal control procedures pertaining to Medicaid cards. DOI worked with HRA to revise many of the procedures at HRA regarding access and the production of these cards so that these types of schemes that siphon off scarce government funds for the needy are thwarted.
In October 2006, DOI issues public findings concerning fraud and mismanagement at the City-funded Gloria Wise Boys & Girls Club. DOI found that Gloria Wise executives fraudulently siphoned more than $290,000; gave $875,000, most without informing their Board, to one executive’s private business venture; and routinely falsified records such as how public funds were spent to medical records of preschool children, including whether the children in the Gloria Wise nursery schools were actually vaccinated. Executives also attempted to conceal their misconduct and obstruct DOI’s investigation by fabricating documents and misrepresenting the facts when questioned under oath. As a result of this investigation, DOI issued a series of recommendations demonstrating ways that City agencies and not-for-profits themselves can help protect themselves against fraud and abuse. Two of the executives, Charles Rosen and Jeff Aulenbach, pleaded guilty to Grand Larceny in the Third Degree and Obstructing Government Administration in the second degree. Rosen also pleaded guilty to Forgery in the Second Degree. Each must pay back thousands in restitution and are barred from working at a not-for-profit for three years.
DOI continued to focus efforts on conducting corruption prevention awareness lectures throughout City agencies and to vendors who do business with the City. The result is that in 2007 the number of corruption prevention lectures doubled from 303 in 2006 to 640 in 2007. This City-wide lecture program has been conducted every year since 2002. It is designed to encourage people to report corruption and to serve as a deterrent. The lecture program has caused a steady increase in complaints received by DOI.
Following an 18-month investigation, DOI issues an exhaustive examination of 11 child deaths and one near fatality, revealing problems with the New York City Administration for Children’s Services (“ACS”) investigations and recommending that ACS strengthen its investigations of serious child abuse cases by hiring 100 additional Investigative Consultants. DOI conducted hundreds of interviews and undertook a comprehensive review of all relevant documents. The agency used its subpoena power when necessary and studied the 140-year history of ACS and its predecessor entities in connection with the investigation of serious abuse or neglect. DOI’s conclusion was that vital child welfare investigations need to be thoroughly conducted and call for two types of expertise: the trained social worker and the seasoned investigator.
In October, DOI held the National Watchdog Conference at Gracie Mansion, a day-long national conference that drew City, state and federal Inspectors General and integrity scholars to share various approaches and methodologies for preventing and eliminating public corruption and identifying best practices.
DOI closed out the year with a record 848 arrests. DOI’s work in 2008 included a variety of cases focused on fire and construction safety and wrongdoing at publicly-funded nonprofits. DOI dedicated substantial resources to intensive investigations of the fatal crane collapses at 51st and 91st streets, the fatal fire at 130 Liberty Street and the investigation into discretionary funds at the City Council.
Significant cases included:
- The indictment of The John Galt Corp.; Jeffrey Melofchik, Site Safety Manager for construction manager Bovis Lend Lease LMB, Inc.; Mitchel Alvo, Director of Abatement for Galt, Bovis’ subcontractor; and Salvatore DePaola, a Galt foreman. DOI had strongly objected to the manner in which the Lower Manhattan Construction Command Center permitted Bovis to hire The John Galt Corp. to demolish the building at 130 Liberty Street.
- DOI arrested more than 200 individuals who had failed to address open fire code violations as part of a continuing and joint enforcement effort with the New York City Fire Department (“FDNY”). The more than 200 individuals were arrested for failure to appear on fire code violations and brought to court to answer the citations. The effort began in 2007, included two Citywide sweeps in 2008 and, to date, has resulted in hundreds of fire code violations in mainly commercial establishments now being addressed, returning tens-of-thousands of dollars in revenue to the City. Those arrested faced fines for charges of violating the fire code in various ways, including failing to maintain a standpipe, blocking exits, overcrowding in a nightclub and improper fuel storage. The violations were issued for businesses, institutions and multiple dwellings.
- A top-to-bottom review of DOB’s Cranes and Derricks division resulted in the arrests of two veteran DOB employees, Inspector Edward Marquette, who in March was charged with falsifying Cranes and Derricks inspection records, and Assistant Chief Inspector James Delayo, who in June was charged with receiving bribes from a crane company, falsifying mobile crane inspection reports and tampering with licensing exams. DOI also worked with the Manhattan District Attorney in an investigation that resulted in the indictment of a crane company, Nu-Way Crane Service Inc., Michael Sackaris, a Nu-Way executive, and Michael Pascalli, an employee, in connection with that bribery scheme. Both of the inspectors were later convicted as were Nu-Way, Sackaris, and Pascalli.
- Based on the corruption uncovered by DOI, and as the result of a DOI recommendation, DOB overhauled the testing process it administers for Hoist Machine Operators' (“HMO”) class C licenses, designating an experienced private company to create and administer the test.
- In the spring, DOI and federal prosecutors from the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) announced that a City Councilmember’s Chief of Staff, Asquith Reid, and a staffer, Joycinth Anderson, were indicted for embezzling at least $145,000 in Council discretionary funds originally intended for three not-for profits. That prompted an outreach by DOI, urging whistleblowers to report embezzlement of City money allocated to not-for-profit organizations, which resulted in additional tips from the public. The probe into how the City Council spends its discretionary funding demonstrates the intricate nature of the investigations DOI tackles. In June 2009, Reid and Anderson pleaded guilty to embezzling City Council discretionary funds.
DOI received a tip on its hotline right after inmate Christopher Robinson was killed in October 2008, which led to the discovery of organized beatings of inmates and, in January 2009, to the indictment of three correction officers and 12 inmates on charges of participating in an assault conspiracy. DOI’s investigation found that adolescent inmates were beaten for such things as commissary money and use of the telephone.
In June 2009, DOI issues two comprehensive reports:
- One report focused on the inspectional performance of the FDNY and DOB as it related to the fatal fire at 130 Liberty Street in August 2007. Investigators reviewed thousands of records, including City rules and regulations for FDNY and DOB, inspectional reports, internal emails and memoranda and interviewed dozens of FDNY and DOB employees. The report identified “missed opportunities” to identify safety hazards in the building and recommended improved supervision.
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The second report focused on the circumstances surrounding the death of Esmin Green in the psychiatric emergency room of Kings County Hospital Center, finding serious gaps in medical care, including repeated failures to carry out medical tests and orders, a lack of monitoring, and falsification of medical records at the hospital.
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In July 2009, former New York City Councilman Miguel Martinez pleads guilty to federal fraud and money laundering charges as a result of a joint investigation by DOI and the SDNY. Martinez submitted false invoices to the City and diverted funds from nonprofit organizations that resulted in a personal benefit to him of more than $100,000. Martinez resigned from public office and was sentenced to a five-year federal prison term.
As the result of an extensive investigation by DOI, the Federal Bureau of Investigation, the U.S. Attorney's Office for the Southern District of New York and other law enforcement agencies, former labor leader and New York State Assemblyman Brian McLaughlin is sentenced to 10 years in federal prison for racketeering and was ordered to pay nearly $846,000 in restitution and forfeit more than $3 million. In a related case, a former Queens electrical contractor pleaded guilty and was sentenced to three months in prison for illegal payments to the former labor leader and State assemblyman.
DOI's focus on not-for-profit vendor fraud and the misuse of discretionary funding leads to successful and long-term results. Commissioner Rose Gill Hearn formed a special unit around this issue in 2007 after DOI conducted several investigations that exposed fraud at nonprofits by insiders and public officials. The unit consists of forensic auditors and investigators who follow the money trail. To date, the unit's work resulted in more than 30 arrests and convictions, including:
- former State Senator Efrain Gonzalez, Jr., was sentenced to seven years in prison for fraudulently using two nonprofit organizations to pay personal expenses such as membership fees for a vacation club, rent payments for a luxury apartment in the Dominican Republic, and costs related to a private cigar manufacturing and distribution company.
- two executives at a Bronx nonprofit -- Richard Izquierdo Arroyo and Margarita Villegas -- were sentenced to federal prison terms after pleading guilty to embezzling public funds from the nonprofit organization they ran.
In a case that rocked the concrete testing industry and the construction industry, Testwell, a concrete testing company, and its principals were convicted on charges stemming from their widespread falsification of concrete test results. The case exposed the enduring and widespread effect that false construction-related reports can have on public safety and confidence. The company was ordered to pay more than $1.7 million in restitution and two of its princicpals were sentenced to prison terms. Click here for release
DOI joined with the City Taxi & Limousine Commission ("TLC") and the Manhattan District Attorney to get to the bottom of taxi drivers charging customers an out-of-town rate when they were within the City limits. Investigators combed the voluminous data, found the victims, and followed the facts to the taxi drivers. As a result of the investigation, 59 taxi drivers were indicted on charges of wrongfully activiating the double-fare rate on a minimum of 300 trips and TLC added an alert to taxicab computer screens that notifies customers when out-of-town rates are activated.
Two significant, ongoing investigations marked the end of 2010:
- Using DOI's subpoena power and the skill of its investigators and auditors to trace the money, DOI exposed a massive fraud scheme in the implementation of the City's computerized timekeeping system. The investigation led to federal felony charges against six individuals, including several consultants on the project. The intense probe is characteristic of DOI's investigations, which employ investigators' expert knowledge of City operations and how fraudsters conceal their crimes and use the proceeds to benefit themselves and associates. The ongoing investigation included the continuing pursuit of assets tied to the multimillion-dollar scheme. Click here for release
- Investigators exposed a prolific criminal network exploiting the City's publicly-funded and regulated day care program that touched at least three City agencies -- Human Resources Administration, Department of Health and Mental Hygiene, and Administration for Children's Services -- and more than 30 day care centers. Seven City employees and four day care directors were charged in this ongoing probe. This investigation exemplified DOI's unique combination of law enforcement expertise and insight into City practices and procedures, which allowed it to step in quickly and safeguard the public, while also balancing the momentum of the criminal investigation. Even as the criminal probe advanced, DOI was there to immediately close the fraud gaps it found at the various City agencies, recommending unannounced site visits at the day care centers to confirm that the children for whom the City was paying were actually in attendance, rotating work locations of City employees to reduce the risk of fraternization between staff and clients, and conducting audits of files. In addition, DOI alerted the appropriate City Health officials to the need for prompt and thorough inspections of the day care facilities associated with the investigation. More than 20 day care centers were closed due to violations that were part of the fraud exposed by the investigation.
DOI's continuing investigation into the fraud involving the implementation of the City's computerized timekeeping system continued in 2011, leading to the charging of 11 individuals and one corporation, two guilty pleas, the return of $2.5 million to the City coffers, and the identification, seizing and / or freezing of approximately $50 million.
An outgrowth from a previous DOI corruption case led DOI to join forces with its federal law enforcement partners to expose a large-scale bribery and kickback scheme involving City Department of Housing and Preservation (HPD) programs, resulting in the indictment and arrest of an HPD Assistant Commissioner and six HPD developers and contractors. During the two-year investigation DOI analyzed financial records and found large cash deposits and other transactions that established connections between the HPD Assistant Commissioner and the developers and contractors, and exposed a shell company and various sham transactions that facilitated the charged criminal scheme. Because DOI's legal powers enable investigators access to City properties, books, and records, DOI was able to obtain and review key records such as personnel records, project files, and thousands of HPD emails covertly.
DOI has long worked to stop unemployment benefit fraud by City workers and this year joined with the state Department of Labor to establish a data matching system that will prevent City workers from simultaneously collecting paychecks and unemployment checks. The data share increases speed and efficiency in identifying fraud and minimizes the financial loss to the taxpayers. Since 1998, DOI has identified and arrested 122 City employess (16 in Calendar Year 2011) who fraudulently obtained more than $430,000 in unemployment insurance payments by falsely claiming they were unemployed when in actuality they were working for and receiving wages from City agencies. Most were "seasonal" City employeees.
Four years ago, DOI discovered a host of delinquent fire code violations throughout the five boroughs on commercial properties and apartment buildings relating to such fire safety issues as blocked egress, dangerous wiring, and improperly stored flammable materials. Working with the City Fire Marshals, DOI began an annual initiative (undertaken throughout the year, including a targeted approach in October, which is Fire Prevention Awareness Month) to bring these violators who had failed to respond to a criminal summons to court. The initiative has the result of ensuring that the unsafe conditions are remediated. DOI's ongoing enforcement initiative with the City Fire Marshals has resulted to date in more than 930 arrests, including approximately 176 this year, and more than 200 warrants cleared. In addition, more than $370,000 in fines were ordered.
The effort was expanded this year to include warrants involving building violations. DOI worked with the City Department of Buildings ("DOB") to track down and arrest violators who ignored or refused to remedy violations, including in illegal Single Room occupancies. The coordinated initiative, spearheaded by DOI, brought charged safety code offenders to justice, and highlighted the legal obligation of property owners and all persons to maintain safe conditions and respond in court to the City's legal notices of violations requiring corrective action. In 2011, 23 arrests were made, including some individuals with multiple warrants, and more than 35 warrants were vacated.
In March, Mayor Michael R. Bloomberg, DOI Commissioner Rose Gill Hearn, and U.S. Attorney for the Southern District of New York Preet Bharara announced that the prime contractor on CityTime, Science Applications International Corporation ("SAIC"), will pay $500 million in a settlement of charges that SAIC engaged in fraud resulting in cost overruns to implement the City's computerized timekeeping system. In May, the City received more than $466 million in connection with the case. It is the largest known financial recovery in a state or municipal fraud case. Click here for releases
In June, New York City's Global Partners Summit featured DOI's best practices for fighting corruption. The summit entitled "Public Integrity: Anti-Corruption Strategies, Economic Development and Good Governance," included representatives from 26 integrity agencies and cities from around the world. The two-day conference was developed in cooperation with DOI, featured Mayor Michael R. Bloomberg, Mayor Edward I. Koch, U.S. Attorney for the Southern District of New York Preet Bharara, and Ambassador Stuart E. Eizenstat, and was attended by delegations that included Caracas, Dubai, Hamburg, Quebec, and South Africa.
DOI published reports on an array of issues that documented: wrongdoing by Seedco, a job-placement vendor that had contracted with the City to offer employment services to the public; pension fraud perpetrated upon the New York City Employees' Retirement System, the country's largest municipal pension system, and DOI's findings of its investigation into a fatal elevator accident at 285 Madison Avenue. Copies of those reports can be found at the following link on DOI's website: http://www.nyc.gov/html/doi/html/doireports/public.shtml