AG James tours state with funding to fight opioid epidemic

New York Attorney General Letitia James has begun a “HealNY” tour across the state, where she is delivering the first of up to $1.5 billion to combat the opioid epidemic.

The funds, which are being delivered to each of the state’s 10 regions, come from different settlements James has negotiated following her March 2019 lawsuit against the various manufacturers and distributors that she alleges are responsible for the opioid crisis.

Within the Finger Lakes Region, total funds will be between $28.9 million and $52.7 million.
• Genesee County: $597,359.78 – $1,043,594.62
• Livingston County: $570,600.77 – $996,846.31
• Monroe County (and the city of Rochester): $10,883,598.98 – $19,250,151.60
• Ontario County: $1,101,147.15 – $1,923,717.13
• Orleans County: $347,049.64 – $606,299.83
• Seneca County: $325,185.88 – $568,103.59
• Wayne County: $835,637.20 – $1,459,868.10
• Wyoming County: $346,041.37 – $604,538.38
• Yates County: $208,393.99 – $364,066.77

“For more than two decades, New Yorkers have experienced the dire and deadly effects of opioids, but today we are starting the process of delivering up to $1.5 billion to New York’s 62 counties to help our communities rebuild,” James said in a statement. “Today, we begin to heal New York with these funds that will help turn the tide on the opioid crisis.

“As we embark on a tour across the state, we are ensuring every region and every county gets financial help to recover from the devastation that opioids have inflicted on them. The funds we’re infusing into New York today and going forward will be used towards combatting this epidemic with investments in prevention, treatment, and recovery,” James added. “While no amount of money will ever compensate for the millions of addictions, the hundreds of thousands of deaths or the countless families torn apart by opioids, this money will be vital in preventing future devastation.”

The lawsuit Attorney General James filed in 2019 was, at the time, the nation’s most extensive lawsuit against a number of manufacturers and distributors of opioids. The named manufacturers and distributors were responsible for heavily marketing opioids to doctors, hospitals, health care systems and others, which led to the overprescription of the drugs across New York and the rest of the nation throughout the last two decades.

The manufacturers named in the complaint included Purdue Pharma and its affiliates, as well as members of the Sackler family (owners of Purdue) and trusts they control; Janssen Pharmaceuticals and its affiliates (including its parent company Johnson & Johnson); Mallinckrodt LLC and its affiliates; Endo Health Solutions and its affiliates; Teva Pharmaceuticals USA Inc. and its affiliates; and Allergan Finance LLC and its affiliates. The distributors named in the complaint were McKesson Corp., Cardinal Health Inc., Amerisource Bergen Drug Corp. and Rochester Drug Cooperative Inc.

Several settlements were reached this summer including a settlement with McKesson, Cardinal Health and Amerisource Bergen that will deliver up to $1 billion to New York state. The cases against Mallinckrodt and Rochester Drug Cooperative are now moving separately through U.S. Bankruptcy Court.

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New York to receive $1.1 billion in opioid epidemic settlement

Three of the nation’s largest drug distributors have agreed to pay up to $1.1 billion to New York state to combat the ongoing opioid epidemic.

McKesson Corp., Cardinal Health Inc. and Amerisource Bergen Drug Corp. have resolved claims made by New York Attorney General Letitia James for the companies’ role in fueling the opioid epidemic. As a result, the three companies will be removed from New York’s ongoing opioid trail that is underway in Suffolk County State Supreme Court, the attorney general’s office said Tuesday.

The $1.1 billion agreement is the largest monetary settlement ever negotiated by Attorney General James.

“For more than two decades, the opioid epidemic has wreaked havoc on countless communities throughout New York and across the rest of the nation, killing hundreds of thousands of our friends and family members and addicting millions more,” James said in a statement. “And over the course of these past two decades, McKesson, Cardinal Health and Amerisource Bergen distributed these opioids without regard to the national crisis they were helping to fuel. But today, we’re holding them accountable and delivering more than $1 billion more into New York communities ravaged by opioids for treatment, recovery and prevention efforts — bringing the statewide total our office has negotiated in the last month alone to more than $1.6 billion. While no amount of money will ever compensate for the millions of addictions, the hundreds of thousands of deaths or the countless communities decimated by opioids, this money will be vital in preventing any future devastation.”

James in March 2019 filed an extensive lawsuit to hold various manufacturers and distributors accountable for the opioid epidemic. The manufacturers named in the complaint included Purdue Pharma and its affiliates, as well as members of the Sackler Family (owners of Purdue) and trusts they control; Janssen Pharmaceuticals and its affiliates (including its parent company Johnson & Johnson); Mallinckrodt LLC and its affiliates; Endo Health Solutions and its affiliates; Teva Pharmaceuticals USA Inc. and its affiliates; and Allergan Finance LLC and its affiliates. The distributors named in the complaint were McKesson, Cardinal Health, Amerisource Bergen and Rochester Drug Cooperative Inc.

The cases against Mallinckrodt and Rochester Drug Cooperative are moving separately through U.S. Bankruptcy Court. The case against Purdue and the Sacklers also is moving through U.S. Bankruptcy Court. Earlier this month however, James and a majority of states said they had approved an agreement that would force the Sacklers and entities they control to pay more than $4.5 billion for opioid abatement, as well as shut down Purdue and ban the Sacklers from ever selling opioids again. The agreement is pending court approval.

Last month, James announced an agreement with Johnson & Johnson that removed the company from New York’s opioid trial in exchange for up to $230 million for the state’s opioid prevention and treatment efforts, as well as it ending the sale of opioids nationwide.

The trial against the three remaining defendants — Endo Health Solutions, Teva Pharmaceuticals USA and Allergan Finance — is underway and will continue in state court.

As part of Tuesday’s agreement, McKesson, Cardinal Health and Amerisource Bergen will begin payments to the state in two months and will continue over the course of the next 17 years. The majority of the $1.1 billion payment will be a guaranteed base payment, with the remaining funds earmarked as incentive payments that will bar, resolve or release current and future subdivision litigation, the attorney general’s office said. In other words, the greater the level of participation from political subdivisions statewide, the more funds that ultimately will be paid out for abatement to the state and local communities over the 18 years.

In February, Attorney General James co-led a coalition of nearly every AG nationwide to deliver more than $573 million, including $32 million for New York state, toward opioid treatment and abatement in an agreement and consent judgment with McKinsey & Co. The agreement with one of the world’s largest consulting firms resolved investigations by the attorneys general into the company’s role in working for opioid companies, helping those firms promote their drugs and profiting from the opioid epidemic.

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State AG wants Kodak boss to testify about stock buy

New York state Attorney General Letitia James on Tuesday petitioned the court to force Eastman Kodak Co. CEO Jim Continenza to publicly testify about his stock purchase last year ahead of the federal government’s announcement that Kodak was in line to receive a $655 million loan to build its chemical business.

According to James, “Continenza made the purchase while he was leading secret discussions with the Trump White House and the federal government” for the loan that would enable Kodak to repurpose legacy assets here to produce drugs necessary to fight the pandemic. Continenza had purchased nearly 47,000 shares ahead of the loan announcement.

“Corporate greed will never go unchecked in New York,” James said in a statement on June 1. “As millions of New Yorkers and Americans across this nation lost their jobs and were waiting for unemployment checks, Kodak’s CEO was using insider information to illegally trade company stock. Kodak even doubled down on this fraud by relaying false information to investors before the company’s annual meeting that took place last month.

New York State Attorney General Letitia James
New York State Attorney General Letitia James

“Corporate executives don’t get to play by their own rules, which is why today’s action seeks to shine a light on Kodak and Mr. Continenza’s unlawful behavior and level the playing field,” James added. “We are asking the court to order Mr. Continenza to testify in open court, so the facts can be exposed before the American people. My office will use every tool at its disposal to hold those who violated the law accountable.”

At issue is Continenza’s purchase of 46,737 shares of Kodak stock at a weighted average price of $2.22 per share made on June 23, 2020. The stock purchase was made one week after the company filed a confidential application for the $655 million loan from the federal government to develop a new business that would produce chemicals necessary for patients hospitalized with COVID-19.

The new pharmaceutical project, also billed as a way to bring generic drug production back to the U.S., was expected to increase revenues at the company by more than $300 million annually by 2025.

Kodak officials responded to James’ petition after the bell on Tuesday, stating that Continenza was not in possession of material non-public information and, “contrary to the Attorney General’s allegations, his small stock purchase was pre-approved by Kodak’s General Counsel during an open trading window in accordance with Kodak’s insider trading policy and was subsequently found to be compliant by outside counsel in an independent investigation.” Continenza has reportedly purchased Kodak stock in nearly every open window period and has never sold any of his shares.

“This morning the New York Attorney General filed an application in New York state court seeking investigative testimony and documents from Kodak. Prior to this filing, the company repeatedly offered to make witnesses available and the Attorney General repeatedly declined,” Kodak officials said. “It is telling that she has now chosen to publicly seek this order asking for the very testimony in which she previously had no interest.”

According to the petition, “Kodak’s loan application followed extensive confidential dealings — led by Continenza personally — held directly with the White House and other federal officials.” The petition notes that Kodak gave the pharmaceuticals project a code name, “Project Tiger,” to maintain confidentiality.

Eastman Kodak Co. Executive Chairman Jim Continenza
Eastman Kodak Co. Executive Chairman Jim Continenza

On June 18, 2020, Kodak sent Project Tiger team members, including Kodak executives, an email linking to an internal memo. The memo warned that it was illegal to trade Kodak stock while in possession of material, non-public information and reminded the recipients to “pre-clear any transaction with [Kodak’s General Counsel] prior to trading,” according to the petition.

The memo stated: Kodak is a publicly traded company. It is illegal to trade in the securities of a publicly-traded company while you are in possession of material information regarding Kodak that is not generally available to the public. . . . The penalties for such illegal activity are severe and may involve fines and/or incarceration. The information you receive in the course of Kodak’s consideration of the Project may from time to time constitute such material non-public information. If you decide to trade in Kodak securities while the project is on-going, you must pre-clear any transaction with [Kodak’s General Counsel] prior to trading.

A little more than a month after Continenza’s stock purchase, Kodak signed a public letter of interest with the federal government for the loan — which had grown to $765 million — causing Kodak stock to soar. The day after the news was announced Kodak’s stock price reached a high of $60 per share, more than 27 times what Continenza had paid for the stock weeks earlier.

James’ petition also informs the court about alleged false statements Kodak made to investors about the circumstances of Continenza’s insider trading. Specifically, on May 17, 2021 — in two separate public filings with the Securities and Exchange Commission — Kodak disclosed that it anticipated being sued by the Office of the Attorney General (OAG) because of Continenza’s trading.

According to the petition, Kodak falsely stated in the disclosures that Continenza’s June 23, 2020, trading was “in compliance with the company’s insider trading policy, including pre-approval by its general counsel.” James alleges that Kodak’s insider trading policy requires pre-clearance to be sought by email at least one day prior to the trading and for the requester to receive a response approving the trading — neither of which James said occurred.

“These false and misleading disclosures occurred just two days before Kodak’s annual meeting during which shareholders voted on retaining Continenza as executive chairman of the company and on endorsing his compensation package,” the attorney general contends.

The U.S. International Development Finance Corp. scrapped the loan in August, as news of an SEC investigation into potential wrongdoing broke. An independent firm hired by Kodak to investigate the claims found that no laws were broken by the company ahead of the loan announcement.

“In addition to being wrong on the facts, the attorney general’s novel and highly problematic legal theory that seeks to impose liability in the absence of intent would have a chilling effect on directors and executives of every public company, who could never invest in their own companies without fear of having good-faith decisions, pre-approved by counsel, second-guessed by regulators and charged as insider trading,” Kodak officials said in their statement Tuesday. “We are confident that the facts and the law are on our side and are prepared to present our case in court if there becomes a need to do so.”

Shares of company stock (NYSE: KODK) closed Tuesday at $7.51 and were $7.55 in pre-market trading Wednesday.

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New York AG report details patient neglect, other conduct during pandemic

A new report from New York Attorney General Letitia James on COVID-19 deaths in nursing homes has community members and organizations statewide calling for answers and looking for solutions.

Thursday’s report — a sprawling, in-depth 76-page document — details an investigation led by James’ office into nursing homes’ responses to the pandemic. James has been investigating nursing homes throughout the state since March 2020 based on allegations of patient neglect and other conduct that may have jeopardized the health and safety of residents and employees.

Among other things, James’ office found that a much larger number of nursing home residents died from COVID-19 than the state Department of Health’s published data reflected. Those deaths may have been undercounted by as much as 50 percent, the report shows.

The investigations also revealed that nursing homes’ lack of compliance with infection control protocols put residents at increased risk of harm, and facilities that had lower pre-pandemic staffing ratings had higher COVID-19 fatality rates. Based on these findings and subsequent investigation, James will conduct ongoing investigations into more than 20 nursing homes whose reported conduct during the first wave of the pandemic presented particular concern.

The report did not name any specific nursing homes, so it is unclear whether any Rochester-area homes were involved in the investigation.

“As the pandemic and our investigations continue, it is imperative that we understand why the residents of nursing homes in New York unnecessarily suffered at such an alarming rate,” James said. “While we cannot bring back the individuals we lost to this crisis, this report seeks to offer transparency that the public deserves and to spur increased action to protect our most vulnerable residents. Nursing home residents and workers deserve to live and work in safe environments, and I will continue to work hard to safeguard this basic right during this precarious time.”

On April 23, the Office of the Attorney General set up a hotline to receive complaints relating to communications by nursing homes with family members prohibited from in-person visits and formally initiated a large-scale investigation of nursing homes’ responses to the pandemic. OAG received more than 770 complaints on the hotline through August 3, and an additional 179 complaints through November 16. OAG also continued to receive allegations of COVID-19-related neglect of residents through pre-existing reporting systems.

The investigations found that:
• A larger number of nursing home residents died from COVID-19 than the Department of Health data reflected;
• Lack of compliance with infection control protocols put residents at increased risk of harm;
• Nursing homes that entered the pandemic with low U.S. Centers for Medicaid and Medicare Services (CMS) staffing ratings had higher COVID-19 fatality rates;
• Insufficient personal protective equipment (PPE) for nursing home staff put residents at increased risk of harm;
• Insufficient COVID-19 testing for residents and staff in the early stages of the pandemic put residents at increased risk of harm;
• The current state reimbursement model for nursing homes gives a financial incentive to owners of for-profit nursing homes to transfer funds to related parties (ultimately increasing their own profit) instead of investing in higher levels of staffing and PPE;
• Lack of nursing home compliance with the executive order requiring communication with family members caused avoidable pain and distress; and
• Government guidance requiring the admission of COVID-19 patients into nursing homes may have put residents at increased risk of harm in some facilities and may have obscured the data available to assess that risk.

New York state has some 619 nursing homes, with 401 of those facilities listed as for-profit, privately owned and operated entities. Of the state’s for-profit facilities, more than two-thirds — 280 nursing homes — have the lowest possible CMS Staffing ratings. The Staffing rating reflects the number of staffing hours in the nursing department of a facility relative to the number of residents.

As of Nov. 16, 3,487 COVID-19 resident deaths — more than half of all deaths — occurred in these 280 facilities. Some of these facilities have also been known to transfer facility funds to owners and investors, rather than use them to invest in additional staffing to care for residents, James noted.

Sen. Samra Brouk, D-Rochester, a member of the Senate Committee on Health, on Thursday said that she will co-sponsor S1168, the “Safe Staffing For Quality Care Act” to address inadequate staffing levels in nursing homes and acute care facilities.

“Today’s report on COVID-related nursing home deaths from the attorney general confirms what we already suspected — inadequate staffing levels, poor compliance with infection control protocols and a lack of transparency are serious problems that need to be addressed,” Brouk said. “Now that we have this information we must act quickly to enact the recommendations laid out by the attorney general and prevent future harm to nursing home residents and workers. This legislation is a step in the right direction to make sure we learn from our mistakes.”

The bill would require acute care facilities and nursing homes to implement nurse-to-patient ratios in all nursing units. It would set minimum staffing requirements such as requiring every such facility to submit a documented staffing plan to the state, and require facilities to maintain staffing records during all shifts.

“I want to thank Attorney General Tish James for her leadership on this important and timely issue. This report is hard to read. Every statistic is a human being, and part of a family and our community. The COVID-19 pandemic has taken a heartbreaking toll that we must never forget,” said state Assemblywoman Sarah Clark, D-Irondequoit. “While this report brings some clarity to the situation facing our nursing home residents, families and employees, it truly exposes how much work we have ahead of us to protect our most vulnerable populations and give them the quality of life they deserve. Now is the time for legislative action that will increase transparency with DOH numbers and improve oversight of the nursing home industry as a whole. We need to invest more resources into workforce development and the Ombudsman program, which is often the lifeline protecting residents in long term care facilities. Lastly, we must make sure the vaccine is immediately made available to every resident and staff member.”

The New York State Nurses Association said the report confirmed what we already knew: that many long-term care facilities lacked adequate PPE, basic infection control procedures, safe staffing and quarantine protocols to mitigate the spread of the virus.

“A key finding of the report is that poor staffing increased mortality rates, adding to the large body of evidence that shows safe staffing saves lives,” the association said in a statement Thursday. “The majority of long-term care facilities are privately-owned, for-profit corporations. These facilities had a financial incentive to understaff before the pandemic. And during the pandemic, chronic understaffing, mixed with cutting corners on health and safety, had deadly results. The report clearly underscores why relying on for-profit companies for safety-net healthcare is a tragic mistake.”

The Long Term Care Community Coalition also noted that the report’s findings reinforce the need for minimum staffing standards, increased financial accountability and meaningful regulatory oversight to ensure the quality of care, quality of life and dignity for long-term care residents in New York.

“This shocking yet unsurprising report must serve as a wake-up call that vulnerable residents and their families deserve better,” said Richard Mollot, LTCCC’s executive director. “Many of the failures documented in this report have been going on for years and have only been exacerbated by the COVID-19 pandemic. It demonstrates that the long-standing system of accepting and paying for substandard nursing home care has been harmful for residents, their families and the public at large. We thank Attorney General James for undertaking this important work and shedding light on the catastrophic impacts of both COVID-19 and inadequate quality assurance on nursing home residents.”

Assemblyman Brian Manktelow, R-Lyons, is calling on the state Legislature to strip Gov. Andrew Cuomo of his “emergency powers,” as a result of the report.

“It is downright despicable for the governor to have allowed for the underreporting of the deaths due to COVID-19 in nursing homes,” Manktelow said in a statement Thursday. “These are people’s family, friends and loved ones, they deserve to know what has really been going on. He has also allowed nursing homes to continue to skirt infection control protocols. Given that the elderly are one of the most vulnerable portions of our population, this is completely unacceptable and must be addressed immediately, especially as COVID-19 numbers are back on the rise. We do not need a repeat of what happened last year.

“You can’t fix a mistake by making another. It was a mistake by the governor directing nursing homes to take COVID-19 positive patients, and it would be a mistake for him to retain his emergency powers. We need to return power to the Legislature,” Manktelow added.

The report makes a number of recommendations, including:
• Ensure public reporting by each nursing home as to the number of COVID-19 deaths of residents occurring at the facility — and those that occur during or after hospitalization of the residents — in a manner that avoids creating a double-counting of resident deaths at hospitals in reported state COVID-19 death statistics;
• Enforce, without exception, New York state law requiring nursing homes to provide adequate care and treatment of nursing home residents during times of emergency;
• Require nursing homes to comply with labor practices that prevent nursing homes from pressuring employees to work while they have COVID-19 infection or symptoms, while ensuring nursing homes obtain and provide adequate staffing levels to care for residents’ needs;
• Require direct care and supervision staffing levels that: (1) are expressed in ratios of residents to RNs, LPNs and CNAs; (2) require calculation of sufficiency that includes adjustment based on average resident acuity; (3) are above the current level reflected at facilities with low CMS Staffing ratings; and, (4) are sufficient to care for the facility’s residents’ needs reflected in their care plans;
• Support manufacturing of PPE to facilitate sufficient supply of PPE for purchase by nursing homes. Enforce requirements that nursing homes have sufficient inventory of PPE for all staff to be able to follow infection control protocols;
• Ensure that adequate COVID-19 testing is available to nursing home residents and employees and require nursing homes to test residents and staff in accordance with CDC and DOH evidence-based guidelines;
• Formally enact and continue to enforce regulatory requirements that nursing homes communicate with family members of residents promptly, but not later than within 24 hours, of any confirmed or suspected COVID-19 infection, and of any COVID-19 confirmed or suspected death; among other things.

The full report can be found here.

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Report: Professional fundraisers kept 28% of donations last year

As Giving Tuesday, and closer to home, ROC the Day, draw closer, New York Attorney General Letitia James has released a new report that shows that nearly one-third of charitable donations ended up in the pockets of professional fundraisers, rather than the charities they were intended for.

“Every year, New Yorkers give generously to charity. Unfortunately, not all the money they donate reaches the charities they intend to help,” James said. “Today’s report highlights the high percentage of charitable dollars that are pocketed by outside fundraisers rather than reaching the charity itself. My office will continue to combat charity fraud, and I encourage all New Yorkers to follow our tips to ensure that their money is going to a reputable source this holiday season.”

Some 2 million New York taxpayers reported $42.5 billion in charitable giving in 2017, the most recent year available. This amount is up dramatically from $37 billion the previous year, the report notes.

Many charities use professional, for-profit fundraisers as outside contractors to educate donors about their mission and increase returns. Fundraisers can play a critical role in furthering a charity’s mission, and many belong to professional associations that require them to commit to a code of ethics.

These fundraisers’ campaigns in New York are the focus of the Pennies for Charity report. In recent years, Pennies for Charity has documented a steady improvement in the percentage of funds charities receive from campaigns conducted by professional fundraisers.

New York has a robust charitable sector, supported by generous giving by its residents. In 2019, more than $1.2 billion was raised in New York state through 824 fundraising campaigns conducted by professional fundraisers on behalf of charities. These campaigns, which are the focus of the report, used a range of methods including special events, direct mail and telemarketing.

Though many fundraisers’ diligence and expertise help charities achieve their goals, some collect fees so large that charities receive only a small fraction of the total money donated. Some fundraisers also partner with sham charities to give potential donors misleading information.

This past year, Operation Bottomfeeder, an enforcement initiative of the Office of the New York State Attorney General, shut down several fraudulent fundraisers and the charities that hired them

Of the more than $1.2 billion raised in New York, charities netted more than $918 million, or 72 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $364 million, or 28 percent. This is in line with an overall improvement in amounts retained by charities, which the report attributes to a variety of factors including enforcement and donor education efforts by the Charities Bureau.

Percentages to charities and fundraisers from Pennies For Charity
Percentages to charities and fundraisers from Pennies For Charity

The report also analyzed current fundraising trends, such as the rise in online giving. Telemarketing, while continuing to decline as a fundraising method, remained among the costliest mechanisms, with 196 telemarketing campaigns by fundraisers retaining more than 50 percent of funds raised for charities.

Other significant findings from analyzing the 824 fundraising campaigns covered by this report include:

• In 254 campaigns, or roughly 31 percent of the campaigns covered in the report, fundraisers retained more than 50 percent of the funds raised.
• In 144 campaigns, or 17 percent, fundraising expenses exceeded charitable revenue. In 2019, this loss to charities totaled more than $17 million.
• Of the $481.8 million raised by professional fundraisers through telemarketing, charities kept $189.6 million, while the fundraisers netted $242.2 million.

The attorney general’s office suggests that donors take time to research a charity before giving and to know where the money is going. Additionally, donors should be wary of deceptive tactics and emotional appeals and never to disclose personal information.

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at

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DHS lifts ban on New York’s Trusted Traveler Program; Schumer seeking investigation

The Department of Homeland Security on Thursday said it will lift its ban on the Trusted Traveler Program (TTP) for New York residents, following the amendment of the Green Light Law, which allows undocumented immigrants to receive driver’s licenses. In response to the sudden backpedaling, U.S. Sen. Charles Schumer is asking the U.S. Inspector General for an investigation.

In February, DHS banned New Yorkers from the expedited border crossing service, which includes Global Entry, NEXUS and others, due to “state legislation that restricts CBP’s access to certain criminal history information maintained by the New York Department of Motor Vehicles.”

Mark Morgan
Mark Morgan

“Nothing is more important than the safety of the United States and our citizens, and the New York Green Light law makes us less safe and shields criminals,” said U.S. Customs and Border Protection (CBP) Acting Commissioner Mark Morgan at the time. “We recognize that many New York residents and businesses will be negatively affected by this change, but we cannot compromise the safety and security of our homeland. When states take negative measures that hinder our ability to protect our great country, we must respond.”

In April, the Green Light Law was amended to allow some information sharing.

DHS officials on Thursday said that while New York had amended the law, allowing for information sharing of state Department of Motor Vehicle records “as necessary for an individual seeking acceptance into a trusted traveler program, or to facilitate vehicle imports and/or exports,” the state continues to withhold information from CBP and Immigration and Customs Enforcement for other enforcement efforts.

Chad Wolf
Chad Wolf

“We appreciate the information sharing to CBP for the trusted travel program, which enables DHS to move forward and begin once again processing New York residents under the Trusted Travel Program. Nonetheless, local New York law continues to maintain provisions that undermine the security of the American people and purport to criminalize information sharing between law enforcement entities,” said Acting Secretary of Homeland Security Chad Wolf in a statement.

DHS in Thursday’s statement also said that blocking federal law enforcement officers from accessing DMV records creates “a significant threat to both public safety and officer safety.” Officials evoked the Sept. 11, 2001, terrorist attacks — after which the DHS was formed — stating that the data provided by state officials is vital to identify foreign terrorist connections and build criminal cases and identify criminal suspects including gang members, sex offenders, drug smugglers and others.

“The Green Light Law ultimately undermines the efforts of law enforcement officers, criminalizing their mission to secure the nation and the American people from threats and furthering the risk to their own lives,” Wolf said. “When jurisdictions like New York fail to cooperate with federal authorities, they operate more like refugees from criminal behavior, not sanctuary havens.”

Thursday’s decision may have been predicated on the Trump Administration’s belief that New York was alone in its policy limiting data sharing found in motor vehicle records. In fact, several states have similar policies.

In a court filing Thursday, attorneys for the federal government acknowledged that other states had similar laws, but those states were not targeted by the ban. Attorneys apologized for the error in Thursday’s court filing and asked permission to withdraw motions seeking dismissal of the lawsuit that New York Attorney General Letitia James filed against DHS and CBP in February.

“Defendants deeply regret the foregoing inaccurate or misleading statements and apologize to the Court and plaintiffs for the need to make these corrections at this late stage in the litigation,” Acting U.S. Attorney Audrey Strauss wrote in the filing. Wolf did not address the court filing in his statement.

In a statement Thursday, James applauded DHS’ decision to lift the ban.

New York State Attorney General Letitia James
New York State Attorney General Letitia James

“The Trump Administration backing down and restoring Global Entry and other Trusted Traveler Programs to New Yorkers is a victory for travelers, workers, commerce and our state’s economy,” James said in the statement. “This policy was political retribution, plain and simple, which is why we filed our lawsuit to stop the president from targeting and punishing New Yorkers in the first place. We will continue to defend New York’s right to pass its own laws and will fight to protect our state’s residents anytime they are bullied by the president because safety and fairness are not mutually exclusive under the law.”

On Friday, U.S. Sen. Charles Schumer asked U.S. Inspector General Joseph Cuffari to investigate why and how false statements were made by DHS officials to the Justice Department, the public and the court.

“Yesterday, in a filing in U.S. District Court in New York, the Justice Department was forced to make the extraordinary admission that officials at the Department of Homeland Security had made inaccurate or misleading statements to the court about the Department’s February 2020 decision to bar New Yorkers from several Trusted Traveler programs, including Global Entry and TSA PreCheck,” Schumer wrote in a letter to the Inspector General. “While it has always been obvious that the department’s action was taken in political retaliation against residents in my state, DHS had maintained – until now – the implausible explanation that New York’s policies were somehow a threat to national security.”

Schumer went on to say that lying to a federal court is a very serious matter and there must be accountability for the persons involved. He asked that the department conduct an investigation and provide answers to the following questions:

  • Did officials within DHS order, direct, encourage or suggest that these false statements be made to the Justice Department, the public or the court?
  • With whom outside DHS did officials discuss the false narrative, including officials at the White House, Justice Department and other agencies?
  • To what extent were discussions of the false narrative by DHS, Justice Department or White House officials conducted via electronic mail or messaging?
  • Did White House officials, up to and including the President, order, direct, encourage or suggest that DHS bar New Yorkers from the Trusted Traveler programs and use a false narrative to justify that decision?

“Given that the Administration’s actions in this case involve potential violations of criminal law, I urge you to treat this investigation urgently and report your findings as quickly as possible,” Schumer wrote.

CBP this week said the Trusted Traveler Programs enrollment centers will remain closed until at least Sept. 8, 2020. CBP said the enrollment centers would remain closed “to ensure the health and safety of program applicants and CBP personnel during the COVID-19 pandemic.”

The decision was made, CBP officials said, in consultation with agency health and safety experts who continue to watch “the increase in COVID-19 cases across the United States.”

In order to minimize the impact of the enrollment centers’ closure on Trusted Traveler Programs applicants, CBP has extended the period of time that applicants have to complete the enrollment process, the agency said. Every applicant now has 545 days from the date that CBP conditionally approves his or her application to complete the enrollment process. In addition, CBP will extend for up to 18 months the program benefits of members who apply for renewal before their current membership expires.

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State recoups $57,000 from McFadden fraud

New York has recouped more than $57,000 in state and taxpayer funds that were pocketed or misallocated by former Quad A for Kids Executive Director Adam McFadden.

New York State Attorney General Letitia James on Monday said her office accepted a repayment of $57,598 from the Rochester Area Community Foundation Initiatives Inc. without penalty due to RACFI’s prompt self-disclosure of the misconduct. The funds will be returned to the Office of Children and Family Services.

“Adam McFadden abused the public trust and the office he held by misusing state and taxpayer funds intended for children’s after-school enrichment programs,” James said in a statement. “Any organization that accepts taxpayer dollars has a responsibility to account for those funds and ensure they serve the public good, not allow one individual to personally benefit from those funds. RACFI’s prompt and active steps to identify and correct the misconduct and scandal surrounding this incident, and immediately report the misuse to my office are to be commended. Mr. McFadden’s behavior should never be tolerated, which is why I will continue to fight for the effective and corruption-free use of state money to benefit New York’s children and other vitally important causes.”

Adam McFadden
Adam McFadden

On February 22, 2019, McFadden — who was also vice president of the Rochester city council — was arrested and charged with federal crimes associated with a scheme to defraud the Rochester Housing Authority. RACFI hired an independent forensic accounting firm to investigate McFadden’s use of its program funds in his capacity as executive director of Quad A for Kids. RACFI also promptly notified the Office of the Attorney General (OAG) that state grant funds may have been affected and what steps it was taking to confirm the amounts misappropriated.

RACFI’s investigation confirmed that McFadden diverted $57,598 of the nonprofit’s program funds, the vast majority of which he kept for personal use. Those funds included state grant money — specifically the Advantage After School Program grant funds — which were intended to fund quality after-school programs for local children.

In connection with federal investigations, McFadden has pled guilty to felony wire fraud for engaging in a scheme to defraud the Rochester Housing Authority, to felony wire fraud for submitting false invoices and receipts to RACFI for reimbursement, and to filing a false tax return. RACFI has terminated McFadden’s employment, and, as a result of his guilty pleas, he has also been removed from public office.

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New York AG issues warning to 17 area medical transport companies

New York State Attorney General Letitia James has ordered 78 medical transportation companies and providers of transportation services to Medicaid recipients statewide, including 17 in the Rochester area, to stop providing group rides.

An individual in the AG’s office said this week that because the investigation was active the names of the providers could not be released.

A statewide investigation conducted by the attorney general’s Medicaid Fraud Control Unit revealed that dozens of transportation providers have failed to follow the state’s requirements explicitly prohibiting medical transportation providers from conducting medical transports with more than one occupant per vehicle.

Despite the prohibition, the 78 providers continued to conduct group rides, which often involve transporting multiple individuals to medical appointments or clinics, officials said in a statement.

“We have invested a particularly high level of trust in our medical services providers during this crisis,” James said in the statement. “For these companies to continue to conduct group medical transport rides in the face of an explicit prohibition during the unprecedented outbreak of a highly contagious disease is simply and completely unacceptable. We take these violations very seriously and my office will deploy any legal means necessary to stop providers from endangering erring patients and the general public.

In addition to Rochester’s 17 companies, some 31 companies in Buffalo had violated the prohibition, 15 companies in Syracuse and 15 companies in Albany. The state Department of Health had issued the guidance on March 21 in response to the rapidly expanding coronavirus pandemic.

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Follow Velvet Spicer on Twitter: @Velvet_Spicer