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New York City Victimized By Computer Fraud

At least 4 former city employees and 22 landlords charged in real estate tax scam totalling over $13 million.

By Brian McWilliams, PCWorld   

Evidently the City of New York failed to keep that in mind when it set up a computerized system for recording real-estate tax payments from property owners. Late last week, the city%squots department of investigation said city employees manipulated the system to wipe out millions of dollars in taxes for landlords who paid bribes.

Kevin Ryan is with the city%squots department of finance, which handles tax payments. He says the city has brought charges against 29 people, including four former department employees and 22 landlords. The case involves %dquotapproximately 1,500 properties owned by hundreds of property owners,%dquot said Ryan. The city of New York plans to recover $13 million in property taxes, plus another $7 million in interest.

Ryan explains the scam as follows: %dquotIn exchange for bribes of 10% of the tax liability owed on a property, they would wipe out the liability on the property. All or part of the payment from a legitimate property owner was misapplied to one or more properties owned by other property owners who were corrupt. And they would have their tax balance eliminated or reduced.%dquot

The city began investigating the tax fraud ring, which is believed to have started in 1992, after several department of finance employees began acting suspiciously and receiving an unusual number of visitors at work, according to Richard Laconte, of the city%squots department of investigation.

He says that, at the time, the city%squots tax software had no built-in safeguards against records being falsified by employees. %dquotUnfortunately, they had [full] access [to the system],%dquot said Laconte.

The defendants face federal bribery and fraud charges and could be sentenced to up to 10 years in prison per count. The city of New York has recently installed a new system which prevents fraud of this sort from occurring in the future.