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GOVERNMENT STRUCTURE AND OPERATIONS

WELFARE
CITY WINS TREBLE DAMAGES UNDER RICO

Principals of not-for-profit filed false applications to claim Jiggetts benefits. The state Office of Temporary Disability Assistance oversees the shelter allowance benefit provided as part of family assistance benefits. Applicants under the benefits program cannot apply directly to the Office, but rather must apply through the Legal Aid Society or a community- based organization approved by the state and trained by Legal Aid. While processing applications, the state discovered housing court petitions with identical index numbers and that one approved organization, the Community Law Advocates, had submitted 69 false applications. The total pay out on fraudulent claims exceeded $900,000. The state inspector general could only substantiate $334,141 in benefit pay outs. A grand jury indicted the principals, who pled guilty to several felony counts related to falsely filing Jiggetts claims and paid $140,000 in restitution. The City retained $35,000 and the rest went to the state and federal government.

The City then sued the principals under the federal racketeering laws, claiming the principals engaged in mail and wire fraud to defraud the City of $83,535. The City moved for summary judgment, arguing that guilty pleas in the criminal action established the RICO claim.

Judge Paul A. Crotty granted the City’s motion, ruling that the City had met the elements necessary to establish the racketeering claim. Judge Crotty awarded the City treble damages totaling $215,393.

City of New York v. Pollock, 03 Civ. 0253 (PAC), Mar. 2, 2006 (S.D.N.Y.) (Crotty, J.) (Attorneys: Michael A. Cardozo, Eric Proshansky, Joshua Rubin, for NYC).