Case 7:18-cv-03007-VB Document? Filed 04/06/18 Page 1 of 1 ‘40 Ra. 06/12) Sues in Civil Acton UNITED STATES DISTRICT COURT forthe Southern District of New York CITY OF MOUNT VERNON and CITY OF MOUNT) VERNON URBAN RENEWAL AGENCY ; : ) Plaintiffs) 2 v. } civil Action No, Cv-48-3007 ERNEST D. DAVIS as Mayor of Cty of Mount. =) ‘Vernon, ) ERNEST D. DAVIS as an Individual, MAUREEN) WALKER, eta ) Defenders) ) SUMMONS IN A CIVIL ACTION To: (Defondan's name and odress) ERNEST D. DAVIS. ATLANTIC DEVELOPMENT GROUP.LLC MAUREEN WALKER {TITUS MOUNT VERNON, LLC JAIME MARTINEZ PETER FINE MARCUS GRIFFITH JOHN SARACENO ‘ANDRE WALLACE LUE RIO, LLC ROBERT KELLY BLUE RIO KENWOOD, LLC WILLIAM 0 WAGSTAFF, I JOHN DOE #1 = JOHN DOE #10 A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (@(2) ot @) —you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff's attorney, ‘whose name and address are: Frank A. Acocella, Esq, ‘The Acocella Law Group, P.C. ‘2800 Westchester Avenue, Suite 405 Purchase, New York 10577 If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. ‘You also must file your answer or motion with the court, CLERK OF COURT Be ISI V. FRROKAJ ‘Signature of Clerk or Deputy Clerk Date: 04/05/2018Case 7:18-cv-03007-VB DocumentS Filed 04/06/18 Page 1 of 58 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK CITY OF MOUNT VERNON and CITY OF MOUNT VERNON URBAN RENEWAL AGENCY Plaintiffs, -against- Civil Action No: CV-18-3007 ERNEST D. DAVIS as Mayor of City of Mount Vernon, ERNEST D. DAVIS as an Individual, MAUREEN WALKER, COMPLAINT ‘Comptroller of the City of Mount Veron MAUREEN WALKER as an Individual, JAIME MARTINEZ as Planning Commissioner JURY DEMAND and Executive Director of the Mount Veron Urban Renewal Agency, JAIME MARTINEZ, as an Individual, MARCUS GRIFFITH as Councilman of the City of Mount Vernon, ‘MARCUS GRIFFITH, as an individual, ANDRE WALLACE as ‘Councilman for the City of Mount Vernon, ANDRE WALLACE ‘Asan Individual, ROBERT KELLY, as City of Mount Vernon Police Commissioner, ROBERT KELLY, as an Individual, WILLIAM ©. WAGSTAFF, Ill, ATLANTIC DEVELOPMENT GROUP, LLC, PETER FINE, BLUE RIO, LLC, (a New York Corporation), BLUE RIO KENWOOD, LLC, BLUE RIO, LLC (a Connecticut Corporation), TITUS MOUNT VERNON, LLC, and JOHN SARACENO, JOHN DOE #1 TO JOHN DOE #10 Defendants, Plaintiffs, CITY OF MOUNT VERNON and CITY OF MOUNT VERNON URBAN RENEWAL AGENCY, through their undersigned attorneys The Acocella Law Group, P. for their Complaint in the above captioned action against the defendants, allege as follows:Case 7:18-cv-03007-VB Document5 Filed 04/06/18 Page 2 of 58 FACTUAL SUMMARY 1. This action is for civil damages under the Computer Fraud and Abuse Act (18 USC §1030 et seq) and New York State laws for a variety of torts. 2. The City Of Mount Vernon Urban Renewal Agency is responsible for administering several federally funded programs for the City of Mount Vernon. 3. Amongst the programs that the Urban Renewal Agency administers are the Community Development Block Grant (CDBG) and the Home Investment Partnership Program (HOME). 4. ‘The application process for the disbursement of these funds is regulated by the United States Department of Housing and Urban Development. ‘5, It is the obligation of the City Of Mount Vemon Urban Renewal Agency and its Board Members to oversee the approval of the applications, the compliance with requirements of the funding programs, as well as the drafting and enforcement of the actual Joan documents. These obligations exist until the loans are paid back in their entirety or all of the funding requirements have been met. 6. In the case at hand, the URA through its Board members and other Defendants herein, allowed for federal funds to be converted or otherwise misappropriated at the detriment of the tax payers of the City of Mount Vernon. 7. Over Six Million Dollars ($6,000,000.00) of these funds were disbursed by the Defendants herein by the use of suspect mortgages with unconscionable terms. 8. These mortgages were and are against the policies required by the United States Department of Housing and Urban Development in issuing the loans.Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 3 of 58 9. The majority of these funds were illegally disbursed to two (2) parties and their subsidiaries in violation of the guidelines set by United States Department of Housing and ‘Urban Development. 10. Upon information and belief the Defendants worked in concert to convert the federal funds from their permitted uses to their own use and the use of others. 11. No attempt was made to repay these mortgages or to comply with the terms required by United States Department of Housing and Urban Development while the borrowers and Defendants benefitted. 12. No attempt was made to collect on or enforce the terms of the mortgages when the borrowers failed to comply with the requirements of the United States Department of Housing and Urban Development. 13, The conversion of these funds was actively concealed by the Defendants. 14, In furtherance of the conversion of these federal funds Defendants MARCUS: GRIFFITH and ANDRE WALLACE illegally gained access to the sealed Urban Renewal ‘Agency office and absconded with the files, electronic data, documents, and property of the URA that they delivered to DEFENDANT JAIME MARTINEZ . 15. In furtherance of these acts Defendant ROBERT KELLY, as Police Commissioner, ‘used his position to alter and attempt to delete the Police records pertaining to the illegal conduct of the Defendants and hindering the investigation and prosecution thereon. 16. Through the illegal and unconscionable acts of the Defendants herein the City of ‘Mount Vernon and its tax payers are being cheated out of Millions of Dollars.Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 4 of 58 PARTIES 17. Atall times relevant, Plaintiff CITY OF MOUNT VERNON (“CITY”) is and was a ‘municipality incorporated under the Iaws of the state of New York and located in the County of Westchester. 18. Atall times relevant, Plaintiff CITY OF MOUNT VERNON URBAN RENEWAL AGENCY (“URA”)is and was an Agency for the City of Mount Vernon that administers several federally funded programs. 19, Defendant, ERNEST D. DAVIS (“DAVIS”) was the Mayor of the City of Mount ‘Vernon during the a period of time from January 1, 1996 to December 31, 2007 and was then re-elected during the relevant period of time from January 1, 2011 to December 31, 2015, with his primary residence located in the City of Mt. Vernon, County of Westchester, State of New York, 20. Defendant, MAUREEN WALKER (“WALKER”) was the Comptroller of the City of ‘Mount Vernon from during the relevant period of time from January 1, 1992 to December 31, 2017, with her primary residence located in the City of Mt. Vernon, County of Westchester, State of New York. 21. Atall times relevant, Defendant JAIME MARTINEZ (“MARTINEZ”) was appointed by Davis as the Planning Commissioner and Executive Director of the URA, from on or about January 1, 2014 to February 26, 2016, with his primary residence located in the ‘Bronx County, State of New York. 22, Atall times relevant, Defendant MARCUS GRIFFITH (“GRIFFITH”) was and is a member of the Mount Vernon City Council and a Board member of the Urban RenewalCase 7:18-cv-03007-VB Document Filed 04/06/18 Page 5 of 58 ‘Agency. Upon information and belief, his primary residence is located in the City of Mount ‘Vernon, County of Westchester, State of New York. 23, Atall times relevant, Defendant ANDRE WALLACE. (“WALLACE”) was and is a member of the Mount Vernon City Council. Wallace was not a Board Member, Officer Employee or authorized agent of the Mount Vernon URA. Upon information and belief, his primary residence is located in the City of Mount Vernon, County of Westchester, State of ‘New York. 24, Atall times relevant, Defendant ROBERT KELLY (“KELLY”) was the Police Commissioner for the City of Mount Vernon, with his principal residence located in the ‘Town of Mamaroneck, County of Westchester, State of New York, 25, Defendant, WILLIAM O, WAGSTAFF, III, (‘WAGSTAFF”) was retained as a Compliance Consultant for the URA. During the relevant period of various times to December 15, 2016. Upon information and belief his primary place of business is located at 75 8. Broadway, Suite 400, White Plains, New York 10601. 26. At all times hereinafter relevant, Defendant ATLANTIC DEVELOPMENT GROUP, LLC, (“ATLANTIC”) is and was a New York Corporation duly authorized to conduct ‘business in the State of New York with its prineiple place of business located at 183 Madison ‘Avenue, Suite 1601, New York, New York 10016. 27. Atall times hereinafter relevant, Defendant, PETER FINE, (“FINE”) is and was an individual whose principle residence located, upon information and belief, in Westchester County in the State of New York. 28, At all times hereinafter relevant, Defendant BLUE RIO, LLC, (“RIO NY”) is and was a New York Corporation duly authorized to conduct business in the State of New York with,Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 6 of 58 its principle place of business located at 183 Madison Avenue, Suite 1601, New York, New York 10016. 29. At all times hereinafter relevant, Defendant BLUE RIO KENWOOD, LLC, KENWOOD”) is and was a New York Corporation duly authorized to conduct business in ‘the State of New York with its principle place of business located at 183 Madison Avenue, Suite 1601, New York, New York 10016. 30. At all times hereinafter relevant, Defendant BLUE RIO, LLC, (“RIO CT”) is and was a Connecticut Corporation duly authorized to conduct business in the State of New York with its principle place of business located at 183 Madison Avenue, Suite 1601, New York, New ‘York 10016. 31. Atall times hereinafter relevant, Defendant TITUS MOUNT VERNON, LLC, (CTITUS”) is and was a New York Corporation duly authorized to conduct business in the State of New York with its principle place of business located at 200 Clearbrook Rd., Suite 134, Elmsford, New York 10523. 32. Atall times hereinafter relevant, Defendant, JOHN SARACENO (“SARACENO”) is an individual whose principle residence located, upon information and belief, in Westchester County in the State of New York. 33, Atall times relevant, upon information and belief, Defendants DAVIS, WALKER, ‘MARTINEZ, GRIFFITH, WALLACE, KELLY, and WAGSTAFF acting individually and in concert used their elected appointed, and retained positions within the City of Mount Vernon and the URA to remove confidential and pertinent documents and files regarding Federal loans and grants without any authority by several means including violations of 18 U.S.C. 1030 the Computer Fraud and Abuse Act.Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 7 of 58 34, Atall times relevant, upon information and belief, Defendants DAVIS, WALKER, ‘MARTINEZ, GRIFFITH, WALLACE, KELLY, WAGSTAFF, and MONTGOMERY, acting individually and in concert used their elected, appointed, and retained positions within the City of Mount Vernon along with Defendants ATLANTIC, FINE, RIO NY, KENWOOD, RIO CT, TITUS and SARACENO, to convert Federal funding and property from their intended and authorized use for their own personal use and benefit at the express detriment of the City of Mount Vernon and its citizens. 35, Atall times relevant, upon information and belief, Defendants DAVIS, WALKER, MARTINEZ, GRIFFITH, and WALLACE, acting individually and in concert used their elected and appointed, within the City of Mount Vernon to enter into unconscionable loan terms 36. Atall times relevant, upon information and belief, Defendant WAGSTAFF acting individually and in concert with other DEFENDANTS, named and unnamed, used their retained positions within the URA to further the concealment of the suspect loans and conversion of federal funds from their intended use. JURISDICTION AND VENUE 37. Jurisdiction exists against the Defendants in that the case involves the violation of Federal Law. 38. Notably pursuant to 18 USC §1030 Defendants Martinez, Griffith, Wallace, and Kelly miseppropriated computer files and information of the URA and City, for their own use.Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 8 of 58 39. Defendants used computers and other technology that were the sole property of the City and URA to unlawfully and without permission steal, delete, or otherwise alter data that values in excess of six million dollars ($6,000.000.00). 40. ‘Venue is properly in the Southem District of New York pursuant to 28 U.S.C. § 1391 in that a substantial part of the events or omissions giving rise to the claim occurred, and/or a substantial part of property that is the subject of the action is situated within this District. EACTUAL ALLEGATIONS 4 ‘The URA is controlled by a five (5) member Board. 42. ‘The Board consists of the Chairman, which is the sitting Mayor, along with the Comptroller, President ofthe City Couneil, Corporate Counsel, and a Treasurer appointed by the Mayor. 43. The Executive Director of the URA is the administrative figure head of the ‘Agency, responsible for causing the plans, orders, directives, rules and contracts of the ‘Agency to be faithfully complied with, executed end performed. 44, On January 1, 2016, Richard Thomas (“Thomas”) began his new term as ‘Mayor of the City of Mt. Vernon replacing former Mayor, Defendant, DAVIS. 45, As Mayor, Thomas also became the Chairman of the Board of the Urban Renewal Ageney just as Defendant DAVIS had been before him. 46. Defendant Martinez during this time was the Commissioner of the Department ofPlanning and Community Development and Executive Director of the URA, having been appointed to that position on or about January 28, 2014 by then Mayor, Defendant DAVIS.Case 7:18-cv-03007-VB Document5 Filed 04/06/18 Page 9 of 58 47, _As Bxecutive Director of the URA Defendant MARTINEZ was charged with “the responsibilty of causing the plans, orders, directives, rules, and contracts of the Agency to be faithfully complied with, executed, and performed”. Please see By Laws of the URA attached hereto as Exhibit “A”. 48. Defendant WALKER held the position of Comptroller for approximately 24 years, until December 31, 2017. 49. ‘Due to her position as Comptroller, Defendant WALKER, also held a position on the Board of the URA alongside Defendant Davis for approximately 16 years, until Davis ‘was unseated by Mayor Thomas on January 1, 2016. 50. ‘Upon information and belief, on or about January, 2015 WILLIAM O. WAGSTAFF, II, was referred by then Mayor, Defendant Davis, as « compliance officer for the URA. 51. Defendant WAGSTAFF was allegedly retained via a consulting agreement ‘between Defendant WAGSTAFF and the URA to retum the Agency to Compliance with Federal, State, and Local Regulations. 52, The term of this agreement was for three (3) months and could be renewed by a ‘vote of the Board of the URA, which it was on several occasions 53. The consulting agreement signed by Defendant WAGSTAFF also contained a confidentiality clause along with a warranty that Defendant WAGSTAFF acknowledged that any legally binding decisions that impacted the City or the URA would be handled with the advice and Counsel of the City of Mount Vernon's Law Department.Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 10 of 58 54. Defendant WAGSTAFF was originally retained by the URA Board that included Defendant DAVIS, Defendant WALKER, Defendant MARTINEZ, and Defendant GRIFFITH. 55. Onor about early February 2016 Mayor Thomas first became aware of significant issues with the administration, accounting, and compliance factors of the URA. 56. Mayor Thomas discovered prior audits of the URA which had not been publicly released, were not disclosed to Thomas when he took office as Mayor, and were not previously disclosed during URA mectings. 57. Upon information and belief the audits and the appalling resulting reports were being actively concealed ftom Mayor Thomas by Defendant MARTINEZ, who was at the time, the Executive Director of the URA and the Planning Commissioner of the City of Mount Vernon. 58. The audits revealed egregious oversights and mishandling of funds by the previous administration. 99. Mayor Thomas uncovered email correspondence between the previous auditors of the US Department of Housing and Urban Development and previous agents of the URA. 60. ‘The audits revealed not only the failure of the URA to comply with regulations required by the U.S. Department of Housing and Urban Development Department (“HUD”) in order to receive and disburse Federal funds, but also that the URA through Defendant DAVIS and Defendant MARTINEZ had entered into agreements with unconscionably low interest rates on significant loans with no payments, not even interest payments, due until the maturity of the loan. 10Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 11 of 58 61. Moreover, these audits uncovered a discrepancy in funds in excess of Six Million Dollars ($6,000,000.00).. 62. Upon information and belief, the audits further revealed other terms of loans allowed for payments only if the project was profitable, complete, or if other loans were no longer in a superior position allowing the possiblity of these loans to never be paid back. 63. Onor about Friday, February 26, 2016, Defendant MARTINEZ was terminated ‘from his position due to the acts uncovered by Mayor Thomas and for actively concealing the findings of said audits and the notices ‘tom HUD regarding their findings. 64, The discoveries were of such severity as to subject the URA to imminent shut down if immediate steps were not taken to rectify the years of utter disregard for requirements of compliance with federal regulations. 65. HUD had sent multiple reports following in depth monitoring and reviews of ‘URA’s HOME and CDBG Programs. 66. One purpose of the HUD reviews was to determine whether the City of Mount ‘Vernon administers its HOME Investment Partnership Programs in accordance with statutory and regulatory requirements. 67. ‘These reviews documented deficiencies in compliance with statutory requirements dating back to 2012. 68. Nearly all the reports issued to URA regarding the compliance deficiencies that required immediate attention were deficient regarding the unacceptable written agreements with the borrowers of the HOME funds. 69. ‘Due to the position Defendant MARTINEZ held within the URA, the sensitive and confidential documents that were kept in his office, along with the issues uncovered by uCase 7:18-cv-03007-VB Document Filed 04/06/18 Page 12 of 58 ‘Mayor Thomas, upon his termination Martinez was escorted from City Hall by two (2) Plain Clothes Detectives from The City of Mount Vernon Police Department. 70. The City of Mount Vernon Police Department immediately took possession of Martinea’s office, and in the regular course of an investigation sealed it off, until the files, computer data, and other property could be properly inventoried the following morning. n. ‘The office was sealed off using traditional yellow police investigation tape to prevent anyone from unknowingly entering the office, 72. ‘These steps were required to protect the URA files, computer data, and property from being altered, removed, or deleted prior to being properly inventoried. 73. ‘Defendant MARTINEZ was informed that he would be able to collect his personal items as soon as the formal inventory was concluded. 74, The physical documents and computer data sealed in the office were directly related to URA business and therefore related to federal and state grant/ Joan programs as ‘well as financial disbursements, the identity of borrowers, grantees, accounting of all the federal loans and grants. 75. Upon information and belief included in these files were originals and/or seanned copies of any and all mortgage, loan documents, closing statements, grant, and compliance agreements. 76. As the Executive director of the URA Defendant MARTINEZ had a duty to censure that the terms of all the mortgage documents and grant agreements were complied with and the documents maintained in the event that enforcement actions would have to be taken to recoup said funds in the event the borrower or grantee breached said agreements. 12Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 13 of 58 77. The sensitivity and extreme importance of these documents is precisely why the Mount Vernon Police Department sealed the office until they could complete a detailed and thorough inventory of the contents of the office, files, and computer data, the following morning. 2B. On or about February 26, 2016 at approximately 9:00 pm, hours after Defendant MARTINEZ hed been escorted from the building by City of Mount Vernon Police ‘and after his office had been sealed off by Police pending a thorough inventory, an overnight ‘maintenance worker in City Hall alerted a City detective that there were two (2) men in Defendant MARTINEZ’S now former office. 79, City of Mount Vernon Police were informed and responded to the scene at which time they apprehended two (2) male suspects in the parking lot behind City Hall. 80. The two (2) male suspects were in the process of loading URA files and documents that they had removed from the URA office, into a vehicle that was being operated by Defendant MARTINEZ. 81. ‘When questioned by the Police the two men identified themselves as MARCUS GRIFFITH and ANDRE WALLACE, Defendants herein, both of whom were and are presently sitting Councilmen of the City of Mount Vernon. 82. Defendants GRIFFITH and WALLACE were observed removing stacks of files and documents from the URA office by the maintenance worker and now were loading said documents into the vehicle operated by Martinez, 83, The responding Officers had probable cause to arrest Defendants GRIFFITH and WALLACE for Trespass, larceny and possession of stoleni property and to arrest ‘Martinez for larceny and possession of stolen property. 3BCase 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 14 of 58 84, Upon Jearing the idemtty of the individuals, the responding Detectives contacted their superior officers, and upon information and belief, were instructed not to place defendants GRIFFITH, WALLACE or MARTINEZ under arrest by the Police Commissioner of the City of Mount Vernon Defendant KELLY. 85, Upon information and belief, the responding officers were instructed by defendant KELLY not to arrest or interfere with defendants GRIFFITH, WALLACE or MARTINEZ. 86. Defendants GRIFFITH, WALLACE and MARTINEZ then intentionally and knowingly departed the scene with the files, records, electronic data, documents, and property of plaintiff URA. 87, _ Neither Defendants GRIFFITH, WALLACE nor MARTINEZ had any right or authority to enter the sealed office of the URA at that hour of the night. 88. Defendants GRIFFITH, WALLACE, and MARTINEZ had no authorization to take or possess the files, electronic data, documents, and property of the URA. 89, After Plaintiff's learned of the theft of the URA property, demand was duly made upon defendants GRIFFITH, WALLACE and MARTINEZ for the return of Plaintif's property. 90. Said Defendants refused to retum Plaintiff's property and, upon information and belief, continue to possess Plaintiff's property to the detriment of not only Plaintiff's but the citizens of Mount Vernon. 91. _Appolice report ofthe incident was electronically filed the same night at 10:19PM. (Please see Incident Report attached hereto as Exhibit “B”) “4Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 15 of 58 92. This report would be the first of many fied in regards to this incident, all of which were recorded in the electronic records of the City. 93. What would normally be considered the “original” report would subsequently be altered four (4) times over the course of four (4) days. 94. ‘This first report had some material omissions in the facts of the case as ‘opposed to what was recorded. 95. The most glaring divergence from the actual occurrence to what was reduced to electronic writing was the complete absence of Defendant MARTINEZ’S name from the report. 96. ‘The witness had stated that the trespass was in the former office of MARTINEZ, the files and property were removed from City Hall and loaded into a vehicle being operated by Martinez, an individual who had been terminated from employment and escorted out of City Hall earlier in the day by Police — yet his name does not appear in the incident report, 97. Defendant WALLACE was identified as a suspect in the Trespass but aside from the written narrative there was no mention of Defendant GRIFFITH. 98. This first filed report also had an anomaly with the drafter. In the normal course ‘of business, the report would be signed by the police officer who composed it. In this case the summary of events states that the officer “and Officer Reyes” responded to the call at city hall however itis signed by Officer Reyes. 99. ‘The 2™ report was electronically filed mere moments after the first, at 10:23pm. on February 26, 2016. (Please see Incident Report 2 attached hereto as Exhibit “C”). 15Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 16 of 58 100. This report is nearly identical to the first report with the exception of a few minor changes. 101. This report is signed by Police Officer Hughes which now fits the narrative of the officer who responded with Officer Reyes as stated. 102, A." version of the incident report was electronically filed on March 2, 2016 at 3:11PM. (Please see Incident Report 3 attached hereto as Exhibit ‘D’). 103. This version of events has several changes from the original including the fact that it has Police Officer Rosa as the drafter but, yet itis not signed by Officer Rosa. 104, The City of Mount Vernon has been added as a Victim, and several codes have been entered to further classify the occurrence, including classifying the victim type es government. 105. A 4" version of the incident report was electronically filed on March 2, 2016 at 3:19PM. This version, although filed a mere 8 minutes later, contained numerous additions. It was similar to version 3 in that it was purported to be drafted by Officer Rosa but was not signed. (Please see Incident Report 4 attached hereto as Exhibit ‘E’) 106. This version finally lists Defendant GRIFFITH; however, he is categorized as a Person of Interest and his residential address is provided is in fact City Hall. 107, ‘Defendant WALLACE was now categorized as a Person of Interest and is no longer classified as a suspect. 108. Defendant Martinez is still conspicuously absent from the report. 109, A. Stand allegedly final version of the incident report was electronically filed on March 2, 2016 at 3:27PM. (Please see Incident Report 5 attached hereto as Bxhibit “F”). 16Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 17 of 58 110. This 5* version of the Report identical to the 4" version of the document with, the exception of the fact that it was once again signed by Police Officer Hughes, the drafter of the 2 report. 111, As of the final filed version of the Incident Report the Status of the Investigation was listed as “Open”. 112, Through all the versions of the incident reports, through the 3 officers that allegedly were the reporting officers and the supervising captain that approved the changes, it should be noted that the name of Defendant MARTINEZ was not added and only appears in the witness statement and interrogatories. 113, Mayor Thomas was later made aware that there was an attempt by Defendant KELLY to further cloud the investigation into the break in when he ordered a Lieutenant to request the deletion of all but 1 of the electronic and paper police reports. 114, Upon information and belief this order was in furtherance of the cover up of the illegal actions of Defendants MARTINEZ, GRIFFITH, and WALLACE just as thwarting the arrest and further investigation of those named Defendants at the time of the break in had allowed them to abscond with vital documents and property of the URA unscathed. 115. Defendant Kelly had no right to prevent the arrest of Defendants MARTINEZ, GRIFFITH or WALLACE on the night of February 26, 2016. As then Police Commissioner he knew or should have known that Defendant MARTINEZ had been escorted off the premises of City Hall earlier in the day by two (2) Plain Clothes Detectives and that his mere appearance in the parking lot at that hour of night would have been suspicious. The fact that Defendant MARTINEZ was receiving stacks of documents and property from two (2) other individuals several hours after the building has been closed for the evening should have been 7Case 7:18-cv-03007-VB Document5 Filed 04/06/18 Page 18 of 58 ‘an a real concem to the Police Commissioner and was ignored since he knew or should have known that Defendant MARTINEZ was terminated by Police earlier inthe day. Defendant KELLY had no authorization to allow Defendants MARTINEZ, GRIFFITH, or WALLACE to remove confidential documents, computer data, or any property of the URA from the office that night without recourse. 116. Defendant KELLY knew or should have known that the URA office had been sealed earlier in the day and was to be inventoried by his officers the following morning. 117. Defendant KELLY had no legitimate legal reason to allow MARTINEZ, GRIFFITH, and WALLACE to continue their criminal activity uninterrupted and to request the permanent deletion of allegedly official police records relating tothe criminal acts perpetrated against the very City he was appointed to protect. 118. Defendant KELLY subsequently admitted to Mayor Thomas that he had altered official documents and acknowledged that it was wrong for him to do so. 119. Onorabout April 6, 2016, after Defendant KELLY admitted to altering and attempting to delete official police reports to cover up the criminal activity of his ¢o- Defendants, Defendant KELLY was terminated from his position as Police Commissioner. 120, Upon the termination of Defendant MARTINEZ for cause, the Thomas administration retained Counsel to investigate the issues identified in the previously concealed audits of the URA. (the “Thomas Investigation”) 121. The Thomas Investigation uncovered the fact that the prior administration, under the control of Defendant MARTINEZ, Defendant DAVIS, Defendant WALKER and others, consistently failed to comply with or even respond to various HUD’s Orders and directives, or to comply with the terms of federal oan and grant agreements. Agency 18Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 19 of 58 staffers, including Defendant Martinez, before and after his termination, deliberately withheld vital information from Mayor Richard Thomas who was persistent in obtaining information for the benefit of the City. 122. The Thomas Investigation uncovered substantial egregious deficiencies with program compliance for the Community Development Block Grant (CDBG) program and the HOME investment Partnership program. 123. _Imadition o enforcement deficiencies, and failure to enforce requirements of borrower to abide by affirmative marketing procedures, failure to enforce the requirements for assisted Housing units, the Thomas Investigation uncovered a significant amount of loans under the programs that were not properly documented, potentially uncollectable, not compliant with federal guidelines, or de facto grants. (“Suspect Loan Transactions”). 124, The Suspect Loan Transactions, which totaled approximately six million dollars ($6,000,000.00), were all funded by federal loans and grants. 125, The Thomas Investigation also uncovered that most if not all of the original files from the Suspect Loan Transactions had been removed from the URA office. 126. Many Original copies of the Mortgage and Notes, contact information, correspondence; closing statements, title policies, economic analysis and justification ‘memorandums, the underlying applications, and more were discovered to be missing. 127, The Thomas Investigation determined thatthe terms of the Suspect Loan ‘Transactions were unacceptable and against the interests of the City, contrary to the terms of the HUD grants which funded the Suspect Loan Transactions, and overall unconscionable. 128, For example, and without limitation, certain Suspect Loan Transactions were made without conducting an economic needs analysis, or contained terms that did not require 19Case 7:18-cv-03007-VB Document Filed 04/06/18 Page 20 of 58 repayment, or contained terms that effectively rendered them unsecured, or were simply issued without any documentation whatsoever. 129, As aresult of the conduct of the Defendants and the unauthorized removal of the URA files by Defendants, they have essentially converted the federal funds that were allocated for Federal program loans and grants by preventing the URA from enforcing the ‘terms of the loans or compliance with the requirements under the Grants. 130, The Thomas Investigation uncovered that Defendants RIO NY, ATLANTIC, RIO CT, FINE, TITUS, AND SARACENO were recipients of approximately Four Million Dollars ($4,000,000.00) in these Suspect Loans. 131. On July 1,2010 URA and Defendant SARACENO, on behalf of his Corporation Defendant TITUS, entered into a mortgage agreement whereby the URA would Jend Bight Hundred Thousand Dollars ($800,000.00) to TITUS for a period of 31 years for the property located at 60 West 1* Street, Mount Vernon, New York 10550, 132, The original terms of the mortgage demanded a 5% interest rate from the time the funds were disbursed until a Certificate of Occupancy was issued on the property. This interest would be paid monthly. 133. ‘After the issuance of the Certificate of Occupancy the interest rate would drop to 3% and the interest payments would no longer be required to be paid monthly but instead and would acerue until the maturity date where it would be paid along with the principal amount. 134. ‘Payments under this mortgage were to be made to the Comptroller's office of the City of Mount Vernon. 20Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 21 of 58 135. This mortgage also had an automatic subordination clause for any existing or future mortgages that would be attached to the property. 136, The original Eight Hundred Thousand Dollars ($800,000.00) was paid out to Defendant TITUS in disbursements from November 18, 2010 through December 29, 2011. 137. The Certificate of Occupancy was issued on February 29, 2012 ~ under the terms of the mortgage the URA would only have been entitled to the 5% interest payments ‘up to that date. 138. No payments of any kind were made on this mortgage. 139. ‘The comptroller at the time that these payments were due and owing was Defendant WALKER. 140. The Mortgage agreement does provide a Thirty (30) day time to cure after formal notice of default is given. 141, Neither Defendant WALKER, in her position as comptroller or as a board member of the URA, nor Defendant DAVIS, in his position as Mayor at the time or Chairman of the Board of the URA, ever moved to declare the borrower in default of the terms of the mortgage to demand the borrower comply with the terms of the mortgage oF otherwise recoup the funds for the URA. 142, After the Certificate of Occupancy was issued and after the full amount of the Eight Hundred Thousand Dollar ($800,000.00) loan was disbursed an additional two (2) disbursements to Defendant TITUS took place totaling an additional Two Hundred Thousand Dollars ($200,000.00) above the amount of the original mortgage. 143, Upon information and belief these disbursements were made by Defendant ‘WALKER in her capacity as Comptroller by a disbursement on or about March 22, 2012 in aCase 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 22 of 58 the amount of Eighty-two Thousand Six Hundred Forty-four Dollars and Sixty-two Cents ($82,644.62) and a disbursement on or about September 28, 2012 in the amount of One ‘Hundred Seventeen Thousand Three Hundred Fifty-five Dollars and thirty-eight Cents ($117,355.38). 144, Upon information and belief any documents pertaining to the additional disbursements of the ($200,000.00) were removed from the URA office by Defendants MARTINEZ, GRIFFITH, and MARCUS in the February 26, 2016 Trespass. 145, ‘No interest payments or repayments of the additional Two Hundred Thousand Dollar ($200,000.00) disbursements were ever made by Defendant TITUS or Defendant SARACENO. 146. The additional disbursements made by Defendant WALKER were never recorded in the form of a mortgage or loan document with the County of Westchester. 147, On October 31, 2013 URA entered into an agreement with Defendant FINE. ‘on behalf of Defendant ATLANTIC to issue a loan in the amount of One Million Six ‘Hundred Fifty Thousand Dollars ($1,650,000.00) for the property located at 203 Gramatan Avenue, Mount Vernon, New York. 148. This agreement stated that interest was to accrue in the amount of 1% APR and was to be paid monthly for the term of the mortgage commencing on December 1, 2013. 149, The agreement was executed by Defendant Davis in his capacity as Chairman ofthe Boerd ofthe URA and Defendant Fine on Defendant Atlantic, (Please see 2013 Agreement attached hereto as Exhil “¢) 2Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 23 of 58 150. The 2013 agreement sets forth the terms of the loan and requirements that the borrower would be obligated to comply with in accordance with the HUD statutes and regulations in order to maintain the mortgage. 151. On December 11, 2013 the formal Note and Mortgage documents were executed, ( Please see Mortgage and Note attached hereto as Exhibit “”) 152, The mortgage terms were for the $1,650,000.00 loan to be paid back in 359 ‘monthly installments of interest only with the principal amount due on or before December 31, 2044. 153, The interest rate was to be 1% APR 154, The Mortgage Note was signed by Defendant Fine as Manager on behalf of Defendant Atlantic. 155, The Mortgage Agreement reflected the same terms that were egreed upon in the October 11, 2013 agreement. 156. An issue that is immediately apparent with this document is that although the Note and Agreement are between the URA and Defendant Atlantic ~ the Mortgage is between the URA and “Blue Rio, LLC e/o Atlantic Development” (RIO NY). Defendant Fine signed this document as Manager of Defendant Kenwood, Defendant Martinez signed on behalf of URA in his Capacity as Executive Direotor. 157. On November 4, 2013 the funds for this mortgage were disbursed to Defendant Atlantic based upon the October 11, 2013 agreement but prior to the mortgage and Note being executed. 158. The disbursement held back the amount of $13,750.00 for the interest ‘payments that would become due for the first ten (10) months of the mortgage.Case 7:18-cv-03007-VB Document 5 Filed 04/06/18 Page 24 of 58 159, For unknown reasons this mortgage was not recorded at the time of its execution. 160, On November 13, 2014 the parties appeared for a closing on a 2" mortgage ‘whereas URA would loan another $1,479,511.77 to Defendant Rio NY. (Please see Loan ‘Agreement for Assistance Under the Home Investment Partnership Program attached hereto as Exhibit ‘T”) 161. Although this closing was supposed to be for the 2"! mortgage it actually had tremendous impact on the December 2013 mortgage. 162. At this closing an “Assignment and Assumption” agreement was signed by Defendant FINE on behalf of Defendant ATLANTIC and Defendant RIO CT. Defendant MARTINEZ signed on behalf of URA. (Please see Assignment and Assumption Agreement attached hereto as Exhibit “J”) 163. This Assignment and Assumption Agreement was not merely a transfer of obligations from Defendant ATLANTIC to DEFENDANT RIO CT. Attached to this document were en amended and restated Note from the 2013 Loan and an amended and restated Mortgage from the 2013 Loan. 164, This Assignment and Assumption Agreement did not transfer the obligations ‘of Defendant RIO NY to RIO CT. 165. At the November 13, 2014 closing several of the documents from December 11, 2013 closing of the first mortgage were altered. 166. __Asof the November 13, 2014 closing the mortgage from December 2013, although fully funded, had never been recorded. 24