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Arrests made in fraud case.

After a 20-month investigation, Federal criminal bribery and fraud charges have been filed against 29 people for participating in a scheme to defraud New York City of millions of dollars in property taxes. The group, that is expected to swell to over 200 people, used city computers to manipulate debits and credits, wiping out property taxes estimated to total about $13 million along with another $7 million in interest charges on 1,500 city properties.

The individuals already arrested and arraigned include the former Deputy City Collector in Brooklyn, Basil Randolph Jones, who is also the owner of Aston-Jones Management of Brooklyn. Jones applied for Housing Preservation Development housing contracts without disclosing his city employment status.

Sources said he appeared on television responding to tenants complaints and another Finance official saw him. That led to his arrest for submitting fraudulent documents. Jones continued to work his property tax fraud gambit even after he no longer worked for the city. Eventually, he was recruited to wear a wire-tap and helped snare other defendants.

Those arrested include brokers, expeditors and owners, as well as other city employees.

The investigation, conducted by Department of Investigations Assistant Commissioner Vincent E. Green and DOI staff, with the assistance of the Federal Bureau of Investigation, is continuing.

Defendants are being arraigned in either the Eastern District Court or the Southern District, depending on the location of the property.

The city employees were able to exploit quirks in the old computer program to wipe out property tax charges in several different ways, including crediting payments to the wrong lots.

While the city's new $100 million plus computer system, FairTax, was designed in part to keep many of these scams from occurring, it has its own drawbacks and is still being modified by Finance. Because it was designed not to allow interest from being wiped out in order to deflect the fraud, for instance, it created a series of internal accounting problems when taxpayers were wrongfully charged interest for late payments that were not late but merely posted late.

DOI Acting Commissioner Frank Maas said, "While computers can serve as an instrumentality of crime... in this case, the same computer system used to perpetrate the fraud enabled the city to trace the fraudulent entries."
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Title Annotation:New York, New York property tax scheme
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Nov 27, 1996
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