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Schneiderman: Settlement with Bharara and Bronx provider, UPS untaxed cigarettes lawsuit, restaurant wage case, state worker payroll fraud.
Text of press releases.

News from Attorney General Eric T. Schneiderman

February 18, 2015

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
Twitter: @AGSchneiderman


Medicaid And Medicare Fraud Investigation Revealed Compassionate Care Hospice Of New York Submitted Reimbursement Claims For Services Not Rendered Or Inadequately Provided

NEW YORK – Attorney General Eric T. Schneiderman today announced that New York State and the United States have entered into a $6 million settlement agreement with a hospice agency regarding allegations that it submitted false and fraudulent claims to the state Medicaid program and Medicare for hospice services not rendered or inadequately provided by Compassionate Care Hospice of New York, LLC (CCH-New York). The settlement, approved today in U.S. District Court by Judge J. Paul Oetken, resolves a joint investigation between Attorney General Schneiderman and U.S. Attorney Preet Bharara.

CCH-New York’s principal place of business is in the Bronx with a satellite office in Brooklyn. CCH-New York is an affiliate and/or subsidiary of Compassionate Care Hospice Group, Ltd (CCH Group). The $6 million settlement will provide $1.68 million back to Medicaid, of which $1.08 will go to New York State. The remainder of the settlement funds will go back to the Medicare program.

“Those who defraud Medicaid are looting from taxpayers and depriving vulnerable New Yorkers of important medical care, and my office will hold them accountable” said Attorney General Schneiderman. “Today’s settlement will recover the Medicaid funds that were improperly obtained, along with extra statutory damages.”

According to the allegations made by the state and federal governments, from May of 2010 through September of 2011, CCH-New York and CCH Group knowingly submitted or caused to be submitted claims for reimbursement to Medicaid for service purportedly rendered by CCH-New York’s Bronx location at 6661 Broadway and received payment thereon for hospice services not rendered or inadequately provided.

As part of the settlement agreement, CCH-New York and CCH Group admitted to the following conduct:

Between May 2010 and September 2011, CCH-New York, at its Bronx location, did not treat certain of its patients according to an individualized plan of care;

Between May 2010 and September 2011, CCH-New York, at its Bronx location, did not adequately maintain a system of communication and integration among its interdisciplinary team, to ensure that plans of care were being followed for each patient;

Between May 2010 and September 2011, CCH-New York, at its Bronx location, failed to make certain nursing services routinely available on a 24-hour basis, 7 days a week;

Between May 2010 and September 2011, CCH-New York, at its Bronx location, failed, in certain instances, to ensure that its nursing services were provided in accordance with the plan of care;

Between May 2010 and September 2011, CCH-New York, at its Bronx location, failed to maintain adequate clinical records;

Between July 2010 and April 2011, CCH Group failed to provide sufficient oversight of CCH-New York’s Bronx location to ensure that the compliance audit results for that location reflected adherence to all applicable regulations.
The agreements – one with the State and one with federal authorities - followed a joint investigation by the Attorney General’s Medicaid Fraud Control Unit and the United States Attorney’s Office for the Southern District of New York. The investigation came after allegations were lodged by a whistleblower who was a former employee at the company’s Bronx location, alleging violations under the New York False Claims Act and federal False Claims Act. Following the investigation, the offices intervened in the whistleblower case and filed their respective Complaints-In-Intervention against CCH-New York and CCH Group. As part of the settlement agreements, CCH-New York and CCH Group entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services’ Office of the Inspector General.

Compassionate Care Hospice of New York, LLC is a for-profit hospice provider with its principal place of business located in Bronx, New York and a satellite office in Brooklyn. Compassionate Care is an affiliate of Compassionate Care Hospice Group, Ltd., an Illinois corporation with its principal place of business in Parsippany, New Jersey, which has subsidiaries and/or affiliates in 22 states, including New York, all of which provide for-profit hospice services.

Attorney General Schneiderman thanks U.S. Attorney Preet Bharara’s Office for its assistance in the investigation.

The state case was handled by Special Assistant Attorney General Jill D. Brenner and Associate Auditor Investigator Deowattie Persaud and former Senior Special Investigator Carlos Miranda, with the assistance of the Supervising Investigator Victor Maldonado and Deputy Chief of Investigations Downstate Kenneth Morgan, Medical Analyst Maureen Kurth, and the late Cassandra Bethel, Chief of Patient Protection, New York City Region. The Medicaid Fraud Control Unit is led by Acting Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.


February 18, 2014

New York City Press Office / 212-416-8060
Albany Press Office / (518) 776-2427
Twitter: @AGSchneiderman


Shipping Giant Allegedly Made Nearly 80,00o Separate Illegal Shipments During A Four Year Period

Schneiderman: Trafficking Cigarettes Damages Our Health; Hurts Our Pocketbooks

NEW YORK – Attorney General Eric T. Schneiderman and New York City Corporation Counsel Zachary W. Carter today announced the filing of a multimillion-dollar lawsuit alleging that United Parcel Service, Inc. unlawfully shipped over 136 million contraband cigarettes – or nearly 700,000 untaxed cartons— across New York State in violation of federal and state laws. The lawsuit was jointly filed in federal court in Manhattan by the State of New York and City of New York.

“Our lawsuit alleges that UPS blatantly disregarded New York and federal tax and public health laws, by shipping tens of millions of cheap, untaxed cigarettes to New Yorkers,” said Attorney General Schneiderman. “We contend that UPS cost this state millions in revenue and is helping to make illegal, low-cost cigarettes available to our young people, who are disproportionally lured to smoking by lower costs. If we are committed to discouraging our kids from smoking we must stop the flow of untaxed cigarettes. To limit smoking, which remains the number one preventable public health crisis today, we must stop the flow of illegal cigarettes and enforce the law.”

"UPS has deliberately turned a blind eye to the fact that millions of dollars’ worth of untaxed cigarettes are shipped each year through its facilities, as outlined in our complaint,” said New York City Corporation Counsel Carter. “We allege that the entities that ship these cigarettes through UPS earn enormous profits by avoiding the payment of required taxes and that the fees collected by UPS to ship these untaxed cigarettes are paid out of these illegal profits. Today's action is intended to take the profit out of this enterprise for UPS and to seek penalties sufficient to discourage other common carriers from facilitating the illegal sale and delivery of untaxed cigarettes."

The joint complaint against UPS alleges that, between at least 2010 and 2014, the company made more than 78,500 illegal shipments of cigarettes to consumers and other unauthorized recipients in New York State, amounting to over 683,000 cartons of untaxed cigarettes and a direct tax loss to the state and city of over $29.7 million and $4.7 million, respectively. The lawsuit maintains that the shipments were in clear violation of both federal and state laws, as well as a settlement UPS entered into with the New York State Attorney General’s Office in 2005, in which UPS agreed to cease all cigarette deliveries to unauthorized recipients, such as residences and unlicensed dealers, both in New York and throughout the country. The lawsuit further alleges that the company engaged in a pattern of racketeering activity with various cigarette dealers to traffic contraband cigarettes in violation of the federal anti-racketeering statute.

Of the total number of UPS deliveries in New York State, the complaint alleges that almost 36,000 went to addresses in the five boroughs and at least 70 were marked in UPS’s own records as having been handed to a child. Under New York law, it is illegal to sell cigarettes to minors.

The joint investigation and lawsuit are based on subpoenaed UPS documents, which allegedly show that UPS made tens of thousands of shipments of cigarettes to New York consumers from unlicensed cigarette vendors located on Indian Reservations throughout the state. As outlined in the complaint, the shipments violated New York Public Health Law 1399-ll, which prohibits, among other things, direct shipment of cigarettes to homes or residences in the state. In addition, as these cigarettes allegedly did not bear New York State or New York City tax stamps, the shipments violated the federal Contraband Cigarette Trafficking Act (CCTA), which specifically prohibits shipments of more than 10,000 untaxed cigarettes in a jurisdiction where cigarette tax stamps are required by state or local law.

The alleged shipments by UPS are also prohibited by the federal Prevent All Cigarette Trafficking (PACT) Act and by New York State tax law. With multiple violations of the federal CCTA, UPS engaged in a pattern of racketeering activity with the various cigarette dealers. Thus, the lawsuit maintains that New York State is entitled to treble damages under the federal Racketeer Influenced and Corrupt Organizations Act, also known as the RICO Act, amounting to over $89 million.

The Assurance of Discontinuance agreement reached with UPS in 2005 provides that that company must pay the State a stipulated penalty of $1000 per violation, amounting to approximately $78.5 million.

The complaint seeks damages and penalties totaling over $180 million:

$78.5 million: Penalties due to the State as a result of violations of the OAG’s 2005 agreement
$89.1 million: Treble damages for the State under RICO
$14.1 million: Treble damages for the City under RICO
The UPS lawsuit is similar a $70 million joint suit filed against FedEx in 2014 for allegedly shipping illegal cigarettes to New Yorkers. More information about that suit is available here.

Attorney General Schneiderman has led anti-smoking initiatives, including a national effort calling on major pharmacies to stop selling tobacco products. In addition, to further combat the likelihood of nicotine addiction among our youth, Attorney General Schneiderman has sponsored a multi-state effort by state attorneys general urging the federal Food & Drug Administration (“FDA”) to enact regulations restricting the manufacture, marketing and advertising of electronic cigarettes (e-cigarettes). For more information on these initiatives, click here.

His office has also successfully undertaken a number of efforts to keep tobacco out of the hands of young New Yorkers. Under his leadership, the state’s Tobacco Compliance Bureau has cracked down on websites illegally selling cigarettes, which provide teens with easy access to tobacco, and shut down so-called “roll your own” cigarette shops both Upstate and in New York City, which were popular among teenagers and young adults. The Attorney General’s Organized Crime Task Force has also taken down a cigarette trafficking ring that operated up and down the Eastern Seaboard.

The New York City Law Department has initiated numerous suits against cigarette traffickers. The office has partnered with the Attorney General’s office in actions against FedEx and UPS, has concluded successful lawsuits against other home delivery services, common carriers, cigarette wholesalers, reservation and internet cigarette sellers and out of state suppliers. The City prevailed against a challenge by the major tobacco manufacturers to a local law that prohibits the sale of discounted cigarettes (e.g. two packs for the price of one).

The lawsuit against UPS is being handled on behalf of the State by Assistant Attorney General Christopher K. Leung with Dana Biberman, Bureau Chief of the Attorney General’s Tobacco Compliance Bureau. The Executive Deputy Attorney General for Social Justice is Alvin Bragg and the office’s First Deputy for Affirmative Litigation is Janet Sabel.

The lawsuit is being handled on behalf of the City by Assistant Corporation Counsel Leonard Braman with Eric Proshansky, Deputy Chief of the Division of Affirmative Litigation of the New York City Law Department. Division Chief is Gail Rubin. The office of the New York City Sheriff supported the investigations.


News from Attorney General Eric T. Schneiderman

February 17, 2014

New York City Press Office / 212-416-8060
Albany Press Office / 518-473-5525
Twitter: @AGSchneiderman


Paul Hurley, Owner Of Desmond's Steakhouse & Grill Was Convicted Of Failing To Pay Workers At Famed 7th Avenue Eatery And Was Sentenced To Pay Restitution

Schneiderman: Employers Cannot Finance Their Economic Ventures On The Backs Of Their Employees

NEW YORK - Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Paul D. Hurley and Portmarnock Restaurant Corp., d/b/a Desmond's Steakhouse & Grill, for failing to pay wages to workers who were hired at various stages during the opening of the 7th Avenue restaurant. Hurley and the corporation were each convicted of Failing to Pay Wages as an unclassified misdemeanor under Section 198-a(1) of the New York State Labor Law. At the time of his plea, Hurley admitted to shortchanging 54 workers out of $100,000 by falsely promising them that they would be paid in the future to induce them to continue working without wages during the opening nights of the posh eatery.

“Employers cannot finance their economic ventures on the backs of their employees,” said Attorney General Schneiderman. “Asking employees to forego the payment of wages to aid a restaurant in its opening is unacceptable and the failure to pay them for the back wages once the restaurant has established itself as a prime New York eatery is reprehensible.”

Hurley, 49, of New Rochelle and his corporation were sentenced earlier today in Manhattan Supreme Court before the Honorable Charles H. Solomon. He and the corporation were sentenced to pay $100,000.00 in back wages as restitution, $3,989.00 in Unemployment Insurance Contributions to the New York State Department of Labor, and a conditional discharge. The $100,000.00 has been turned over to the Office of the Attorney General for distribution to the workers. Hurley is the sole owner of Desmond's Steakhouse and Grill located at 515 7th Avenue.

Employees were hired from October 2012 through February 2013 to prepare the restaurant for its opening on February 25, 2013. The restaurant opened, and employees worked for weeks without pay. By the beginning of April 2013, the employees, including managers, chefs, administrative staff, and servers, were owed more than $100,000.00 During this time, Hurley asked his employees to stay on without pay during the opening of the restaurant based upon his promise that they would be paid in full once the restaurant established itself as a first class dining destination. Hurley reneged on his promise and legal obligations, even though the business began to thrive. As a result of this gross inequity, many of his employees stopped working in April of 2013.

Under New York State's minimum wage laws in 2013, employers were required to pay $7.25 an hour (as of December 31, 2014 the New York State Minimum Wage has increased to $8.75 per hour) and overtime at one and a half times their rate of pay for hours worked in excess of 40 hours a week. The law also requires that manual workers, such as wait staff and kitchen staff, be paid weekly and within 7 days of the date that wages were earned.

According to the indictment and plea entered by Hurley and Portmarnock Restaurant Corp., d/b/a Desmond's Steakhouse & Grill a general manager is owed $31,157.00 for work from October 2012 to April 2013 and at least twelve other employees who are owed in excess of $2,000.00 for uncompensated work. By the beginning of April 2013, Desmond's Steakhouse & Grill had approximately 54 employees who were owed a total of $100,000.00.

The investigation was conducted by Investigator Edward Ortiz and Supervising Investigator Luis Carter, under the supervision of Deputy Chiefs Kenneth Morgan and Vito Spano and Chief Dominick Zarella.

The case is being prosecuted by Labor Bureau Assistant Attorney General Matthew Ross, under the supervision of Labor Bureau Criminal Section Chief, Richard Balletta, Labor Bureau Chief Terri Gerstein, Executive Deputy Attorney General Alvin Bragg, and Executive Deputy Attorney General Kelly Donovan.


February 17, 2014

New York City Press Office / 212-416-8060

Albany Press Office / 518-776-2427 

Twitter: @AGSchneiderman


Indictment Accuses Albany-Based ITS Employee With Time And Attendance Larceny And Offering For Sale Over $100,000 Of Counterfeit Cell Phone Cases

NEW YORK – Attorney General Eric T. Schneiderman and Inspector General Catherine Leahy-Scott today announced the indictment of Wajahat A. Abbasi, an employee of the New York State Office of Information Technology Services, for stealing over $38,000 from the state by charging time for which he was not present at work. Abbasi is accused of not being present for significant periods of time on fifty-three separate occasions for which he collected pay from January 2013 to December 2014. In addition, Abbasi is alleged to have possessed for sale over $219,000 in counterfeit cell phone cases. Wajahat A. Abbasi has been charged today with 57 felony counts including Grand Larceny and Trademark Counterfeiting and faces up to 15 years in state prison. Abbasi was arraigned before The Honorable Peter Lynch in Albany County Court.

“Those who serve the public must be held to high ethical standards, and when individuals abuse the trust placed in them, there must be consequences,” said Attorney General Schneiderman. “When public employees fail to work the hours for which they are paid, they steal from taxpayers and deprive the public of services they expect.”

“Those who work in the public sector and provide services for the people of the state of New York are expected to accomplish their work duties in a responsible and law abiding fashion,” said Inspector General Scott. “The defendant allegedly abused his position and authority by trafficking in illegal goods on the Internet while on state time. He will be held accountable not only for this activity but also for the falsification of his time and attendance records, which amounts to a larcenous theft from the state.”

Abbasi was a computer programmer for the Office of Information Technology Services (ITS), based in the Office of Temporary and Disability Assistance at 40 N. Pearl Street in Albany. During the time period when he is accused of collecting pay while not being present for work, he was running a series of businesses that sold technology equipment through Ebay and Amazon. According to court papers, a search warrant conducted at his home in Colonie yielded over $219,000 worth of counterfeit cell phone cases from the manufacturers Griffin, Otterbox and Urban Armor Gear. Investigators from the Inspector General had previously purchased counterfeit cases from Abbasi-controlled companies on Amazon and Ebay.

The indictment charges Wajahat A. Abbasi with one count of Trademark Counterfeiting in the First Degree (a Class C felony); two counts of Trademark Counterfeiting in the Second Degree (a Class E felony); one count of Grand Larceny in the Third Degree (a Class D felony); and fifty-three counts of Offering a False Instrument for Filing in the First Degree (Class E felonies). The top count of the indictment carries a potential prison term, with a maximum sentence of 5 to 15 years.

Prosecuting the case are Assistant Attorney General Christopher Baynes of the Attorney General’s Public Integrity Bureau with assistance from Senior Counsel Darren Miller of the Public Integrity Bureau. The Public Integrity Bureau is led by Bureau Chief Daniel Cort, Deputy Bureau Chief Stacy Aronowitz, and Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The investigation was handled by Investigator Mark Spencer, with support from Antoine Karam and Dominick Zarrella of the Attorney General's Investigations Bureau, with assistance provided by Forensic Auditor Jason Blair and Legal Support Analyst Sara Pogorzelski.

The Attorney General’s Office thanks the Inspector General’s Office for their collaboration on this case.

The charges are merely accusations and all defendants are presumed innocent unless and until proven guilty in a court of law.