The New York City Department of Consumer Affairs has secretly ordered agents to dole out a minimum number of fines to small businesses, while also pressuring judges to rule in favor of the city during the appeals process, the Daily News claims in an exclusive report.

The paper reports that documents they have obtained and whisteblowers in the agency reveal disturbing practices, in which inspectors are ordered to fine one in four businesses they visit, administrative law judges are pressured to side with the city, and whopping fines are disproportionately smothering minority-owned and outerborough businesses.

The News reports:

Agency inspectors are tracked each month by the number of citations they write. They are urged to “keep numbers high,” and most are expected to maintain a “25% threshold,” the documents show. That means they should produce an average of one violation for every four businesses they inspect.

… The News also interviewed more than a half-dozen Consumer Affairs Department employees, who shed light on the city’s clandestine cash cow.

“I was recently given a bad evaluation for not meeting my 25% quota,” one angry inspector told The News. “They want us to look for anything to go after a business.”

The businesses include bodegas, catering halls, discount stores, gas stations and hair-braiding shops. Some have been forced out of business due to staggering violations that often cost owners tens of thousands of dollars.

“Instead of protecting consumers, the entire agency has been turned into a piggy bank for the city,” a high-ranking Consumer Affairs Department official disgusted with the agency’s actions said. “And the people being victimized the most are immigrant businesses that can’t afford good lawyers.”

Even the agency’s judicial process, in which a business owner can challenge a fine at a hearing, has been tainted by the drive for more revenue, the employees claim. Top brass routinely pressure administrative law judges presiding at those hearings to rule in the city’s favor. And agency bosses have have edited judges’ opinions before they were issued, according to documents and emails obtained by The News.

If the judges, who are supposed to be impartial, resist the pressure, they say, they get overruled by superiors, who must sign off on any rulings. At least two of those judges recently filed formal complaints with the city Department of Investigation over the actions of their supervisors.

The paper also noted that whatever pressure may or may not exist on administrative judges, the number of successful appeals has certainly seen a sharp decline.

The number of violations that business owners were able to get dismissed at impartial hearings has steadily plummeted, from nearly 13% in 2009 to less than 5% last year. “We’re going after places like hair-weave salons that the department doesn’t even license for not having a customer refund policy posted on their walls,” one inspector said. “We never used to do that.”

In response to the newspaper’s investigation, the Department of Consumer Affairs denied the existence of any such quota or pressure on judges.

The paper also cited several examples of devastating fines placed on small businesses for relatively minor infractions. One involved a $14,000 fine doles out to a 99-cent store. The inspector found 14 plastic, brightly colored toy dart guns, and deemed them in violation of the law since the barrels were not capped. He was fined $1,000 per 65-cent gun.

Another involved a bodega with an unlicensed sidewalk fruit stand. The stand’s owner admitted to operating without a license since it was revoked in 2010, and agreed to pay a fine. But the city argued that he should pay a $100 fine – for each of the 939 days that had passed since his license was revoked. That’s $93,900.

Public Advocate Bill de Blasio has slammed the agency in the wake of the report.

“Before an inspector even walks through the door, the fix is in. City Hall is out to squeeze small businesses any way it can. We see it every day with nuisance fines that can literally kill a business. To find out that even the appeals process is rigged against business owners is completely outrageous. This is government at its worst—and this needs to end now,” de Blasio said in a press release.

De Blasio previously commissioned his own study, which found that the number of city fines against small business had nearly doubled – a 70 percent jump – from 2002, when Mayor Michael Bloomberg took office, to 2012. Fines totaled $4 million in 2002, but by 2012 they had reached $14 million. Moreover, the report found, inspections spiked in the outerboroughs even while they plummeted by 14 percent in Manhattan.

The public advocate has sent a letter to DCA Commissioner Jonathan Mintz and Bloomberg, criticizing the heavy handed fines and promising a renewed inquiry into DCA’s practices in light of the report.

You can read the full letter below:

Hon. Michael Bloomberg

City Hall

New York, NY 10007

Jonathan Mintz

Commissioner

Department of Consumer Affairs

City of New York

42 Broadway

New York, NY 10004

Dear Mayor Bloomberg and Commissioner Mintz:

I was appalled to read this morning in the New York Daily News about allegations that the Department of Consumer Affairs (DCA) has secretly been using a quota system to increase fine revenue from small businesses.[1] According to multiple sources and documents cited in the article, for several years, DCA inspectors have been instructed to fine at least 25 percent of the businesses they inspect, and top city officials have pressured administrative law judges into ruling against small business owners when they contest these quota-driven fines. This shameful pattern of behavior, if true, represents an astonishing breach of public trust and abuse of power.

The allegations are in direct conflict with what DCA has repeatedly told the public about its guidelines for enforcement personnel. DCA has always maintained that no quotas exist, despite the dramatic increase in fines during the Bloomberg Administration. In 2012, pursuant to an investigation into the increase in citywide fine revenues, I personally asked DCA for a variety of information regarding agency fining practices. Specifically, I asked whether DCA places any quotas, goals, guides or other numerical markers on the number of violations issued. DCA responded to my inquiry on August 9, 2012, stating: “DCA does not place or impose on its enforcement personnel any quotas or numerical markers when issuing notices of violation.” According to the Daily News, by this time, DCA’s quota program was in full force.

As you know, following repeated requests, our office was forced to bring litigation to compel the disclosure of the information my office sought from DCA. The information obtained from that lawsuit showed a dramatic increase in fines, which my office published in a report titled “Borough Bias: How the Bloomberg Administration Drains Outer Borough Businesses.” If the Daily News’ allegations prove to be true, DCA’s failure to provide my office with documents showing the existence of a quota system is a violation of the New York City Charter and the terms of our settlement agreement.

If there is any truth to the allegations laid out in today’s Daily News article, immediate changes need to be made at DCA – changes that cannot wait until a new administration takes over in 2014. The full scope of the DCA’s quota system and the improper influence of the adjudication process must come to light. Therefore, pursuant to the authority granted to my office under Section 24 of the Charter of the City of New York, I hereby request the following information:

  • I renew my request to know whether the DCA places any quotas, goals, guides or other numerical markers on the number of violations issued, or revenue generated, by each DCA inspector and seek any and all documents describing such practices.
  • The total number of hearings conducted by DCA each year from Fiscal Year (“FY”) 2002 through FY 2013 (to date).
  • The total number of administrative hearings in which all violations were ultimately discarded from FY 2002 though FY 2013 (to date).
  • Any and all communications between the Director of Adjudication at DCA and Administrative Law Judges from FY 2002 through the present.
  • Any and all communications between the Director of Adjudication and other DCA personnel regarding ongoing adjudication proceedings from FY 2002 though the present.
  • Any and all communications between DCA personnel and Administrative Law Judges concerning adjudication proceedings from FY 2002 through the present.

Please provide a response to the data requests no later than 5 p.m. on July 1, 2013, and a response to the communications requests on a rolling basis, beginning no later than 5 p.m. on July 1, 2013. If you have any questions regarding this request, please contact my General Counsel, Steven Newmark, at 212-669-7200 or [email protected]. Thank you very much for your anticipated prompt response.

Sincerely,

Bill de Blasio

Public Advocate for the City of New York

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  • http://www.flickr.com/photos/lisanne001 Lisanne!

    Seems that the Bloomberg administration is going to make sure that everyone shops only at the approved locations, i.e; big box stores and other chain operators.


  • Arthur Borko

    This is no different then sending a mobster capo to bust up a shop for protection money. This is disgusting. I’m ashamed to live somewhere this is possible and accepted and not prosecuted.


    • donbloomberg

      The Mafia Capo gave you something for your money. Your kneecaps remained in place and the neighborhood stayed clean. Don Bloomberg just comes back for more and tells you that you are on your own.. if you can’t afford sell to a nice developer friend of his, who will get billions in tax gifts.


  • Chris Rossi

    As a small business owner in downtown Brooklyn I can attest that these allegations are absolutely true. I have owned and operated a process serving company since August 2007. I wasn’t even in business for 6 months before I had an on-site investigation which resulted in no violations. Afterward I’ve been harassed by the DCA with subpoenas and fines for record keeping guidelines which, in my opinion, are designed specifically so that you cannot understand how to comply with them.

    Bloomberg and Mintz (who only got the commissioner position b/c he’s Bloomberg’s buddy) ARE CROOKS. They target businesses/industries that cannot afford lobbyists. It’s a damn shame that after the recession this is how local governement treats it’s small business owners. I am very disturbed that the city I have lived and worked in my entire life has been the biggest obstacle I’ve had to face as a small start up company. I hope they go to jail for what they’ve done to all entrepreneurs in the greatest city in the world.


  • Local Broker

    This cant be true. They are from the govt. they are supposed to help and take care of you. Why would they want to fine and tax people for no good reason. I am sure this is a big misunderstanding and whoever this whistle blower is will be dealt with for all the lies. What needs to happen now is form another govt. agency that oversees the other agency.

    like Lisanne! said in a previous post “it’s government “of the people, by the people, for the people”.”


    • levp

      Your views, actually, are well defined in political science: https://en.wikipedia.org/wiki/Anarcho-capitalists

      Unfortunately, not compatible with U.S. Constitution. But good for blog posts, nonetheless.


      • Local Broker

        When you say unfortunately, would you be on board with that or you like being told what to do and how much you have to pay for every move you make in life? Last year i looked into starting a retail business that was new to me and doesnt exist in our local market. When i was done doing my homework on what i would need to get permission and permits i found out it would take at least a year if i was lucky and thousands of dollars before i even invested $1 into the actual business.


        • levp

          I’m not saying that current NYC (or U.S. in general) system of government is even close to perfect.

          But we need some government to delegate responsibilities and administer common areas, so the idea is to find a compromise between nothing and everything.

          A person named Bill Miessner (who is smarter than me) posted the following, that I much like, on Facebook earlier today:

          Neither communism nor unregulated capitalism are compatible with a highly functional society. Laissez faire capitalism (LFC) and Marxism (communism) are historically linked in that communism is an overreaction to the severe abuses of LFC.

          While both philosophies seem good in theory they fail miserably in practice, mostly due to their inherent flaw in not fully accounting for human nature.

          Unrestrained capitalism fails because it allows unrestrained selfish behavior – resulting in monopolies and the concentration of wealth in a small group – as evidenced by the Robber Barons in the U.S. in the 1890s (Rockefeller, Carnegie, Vanderbilt, JP Morgan, etc.). Communism fails because is squashes ambition and the pride of ownership. Under communism more people may be equal, but they are equally poor. It’s a fact of nature that humans are selfish and want to be rewarded for their hard work – and are more responsible with things they own!

          The best system seems to be a compromise between the two extremes (with variances depending on culture and circumstances) – one that provides direct benefits for effort (including private property), yet also places restraints on individualism and freedom for the common good.


          • Local Broker

            I agree with a lot of that. I am not saying we dont need government but we dont need them involved in every aspect of our lives. We should not have to live our lives worried that the govt. is coming to fine and tax us when all we are doing is trying to make a living. As for the pols being caught in illegal activities i dont know for a fact but i get a feeling that someone somewhere forgot to pay someone else off or pissed off the wrong person. Someone ratted them out, otherwise no one would be looking into any of them. The govt. went from being there to make sure there was order to over reaching into anything they think they can get away with.


          • guest

            someone’s smarter than you?


          • levp

            I know, right?


    • levp

      Also, that “another govt. agency” already exists: see the part of the article that starts with “Public Advocate Bill de Blasio has slammed the agency in the wake of the report.”

      The Public Advocate also serves as an ombudsman for city government, providing oversight for city agencies, investigating citizens’ complaints about city services and making proposals to address perceived shortcomings or failures of those services.

      https://en.wikipedia.org/wiki/New_York_City_Public_Advocate

      In cases of corruption and/or fraud, there is DOI:

      The New York City Department of Investigation (DOI) […] serves as an independent and nonpartisan watchdog for New York City government. Major functions include investigating and referring for prosecution cases of fraud, corruption, and unethical conduct by City employees, contractors, and others who receive City money. […] DOI lastly investigates members of the public who engage in corrupt, fraudulent, or unethical activities.

      https://en.wikipedia.org/wiki/New_York_City_Department_of_Investigation


      • Local Broker

        I would think at this point you would recognize sarcasm. All those oversight agencies are doing their job so well. I like that part about independent and nonpartisan. You cant possibly believe that the people running these agencies are not being influenced or bribed at every turn.


        • levp

          Not having seen any evidence or even known anybody who works for DOI, all I can say is “Who knows?” But there are yet others above them – such as U.S. Attorney, etc.

          Recent successful prosecutions of various NY politicians are encouraging.


    • http://www.flickr.com/photos/lisanne001 Lisanne!

      And Jefferson said that people get the government that they deserve. What percentage of New Yorkers vote in elections? How many show up at administrative meetings open to the public? How many take an activist role of some kind to change things are wrong with the practices of government?

      It is indeed government “of the people, by the people and for the people”. But government assumes consent when few show an interest in having an voice on how it operates.


      • Local Broker

        Most people are to busy trying to figure out how they are going to pay their next bill and feed their kids. “But government assumes consent when few show an interest in having an voice on how it operates.” What?


        • http://www.flickr.com/photos/lisanne001 Lisanne!

          Guess what, if you take that approach then you abdicate the right to complain about what the government does. Getting involved in some fashion is not a luxury, it is a necessary act for all of us.


          • Local Broker

            So you are saying that if i never go to a community meeting, elected officials can do whatever they want because i was not there? Do you read what you write?


          • http://www.flickr.com/photos/lisanne001 Lisanne!

            If it was just you who didn’t participate you could rest easy knowing that others would make the effort and your concerns would be addressed. But few do, the ones who do are “the usual suspects”. Thusly, things continue as they do, and nothing changes.


          • Local Broker

            You keep going in circles and never make a real point or answer the actual question.


          • http://www.flickr.com/photos/lisanne001 Lisanne!

            You’re not asking any real questions.


    • guest

      you hit it on the head, local. The usual suspects ust blame the people they don’t like, and go on with the big government-is-great pipe dream.


  • BrooklynBus

    I still remember Bloomberg’s campaign literature from his first term. He promised to be a different type of mayor, one that is innovative who uses the latest technology and will devise new innovative methods to raise revenues.

    So what a he done? Raised real estate taxes through the roof, raised parking meter rates every six months, raised all fines so that a $100 fine for a minor sanitation infraction is now normal, and driven small businesses into the ground, all while supporting his wealthy friends. 311 is burdeoned with problems. Problems are closed out without being solved, and you have to keep running after them for follow-up. Yes, innovation and technology at its finest.


  • guest

    Enough! When will we rise up? Arrest Michael Bloomberg. Charge with appropriate crimes. Everything that has occurred within the last 4 years during the illegal third term should be null, void and reversed.


  • Zalman bl

    This systom is what killing our economey.

    We need a leader, like David Storobin, that will get rid of these corrupt practices.


    • levp

      LOL! Try to say that again with a straight face…


      • http://www.flickr.com/photos/lisanne001 Lisanne!

        I was also thinking that this has to be a joke, but not a very funny one.


      • Zalman bl

        This is no joke, this is killing small business. Only a republican that is against Big government will do some thing to stop this C***

        I’m afraid the man you call a joke might be your next council-member – just be ready!


        • levp

          Bloomberg was re-elected mayor in November 2005 by a margin of 20 percent, the widest margin ever for a Republican mayor of New York.

          https://en.wikipedia.org/wiki/Michael_Bloomberg


          • Zalman bl

            Correct and he also abandoned the party for their same ideological reasons I mentioned


          • Maxwell Smart

            yeah and it only cost his honorable billionaire a measly 25 million


        • Brightonresident

          A Republican that is against big government— that’s an oxymoron if I ever heard one! Republicans say they want small gov’t but always increase it while cutting taxes on the rich!


          • Zalman bl

            Now that was a joke, lol


          • levp

            Just as if on cue, our local Republicans help make my (and Brightonresident’s) point: http://www.sheepsheadbites1.com/2013/06/golden-tax-breaks-developers/


          • Zalman bl

            What does that have to do? Why is cutting taxes growing government?!


          • levp

            Because these measures only serve to enrich friends of these politicians (such as in this case), at the expense of everybody else.

            See also: https://en.wikipedia.org/wiki/Crony_capitalism


          • Zalman bl

            Let’s be honost; In NY, there’s corruption on both sides of the aisle. Both Republicans and Democrats get involved in crony capitalism.

            Now that we solved crony capitalism consider this; Overall, republicans are for a lot more of a smaller government then the democrats would ever wish fore – now that’s a fact and saying the contrary just makes you sound ridicules.


          • levp

            Except smaller government is not my goal at all – it is actually fairly low on my list of priorities. Thus, the last Republican I might have remotely considered voting for was Gen. Dwight Eisenhower.


          • Zalman bl

            Thats your choice; Just keep my original comment in mind.

            That is… if you don’t like what you read in this article (ticketing quota for small business) a Republican (in most cases) is the one that is most likely to change this C***

            Therefore it is clear that we need David Storobin – and it’s no joke because people’s livelihood is at stake.


          • levp

            Bottom line is this: Republicans on all levels run on small government, deficit and apple pie on every table. Once they gain power, they go back to controlling women’s uteri and paying off their cronies (don’t forget EV1L gayz as well).

            Case in point: just from today (Tuesday) – http://www.usatoday.com/story/news/politics/2013/06/18/abortion-bill-house-vote/2435353/


          • Zalman bl

            So your asking republicans, in the name of small government, to allow you to kill whoever you wish, correct? If you view abortion as killing an innocent human life, which many people do, then It makes sense to restrict it, doesn’t it? Just think… we know you can.


          • Zalman bl

            The above being said; Republicans are Anti-regulation, and pro small business and entrepreneurship – democrats are only worried about how they can control your life and wouldn’t do anything to change the corruption mentioned in this article –

            Good night, hope you get up on time for work (oh, you don’t work for a living… right, your on food stamps and section 8 … now that, explains everything)


          • http://www.flickr.com/photos/lisanne001 Lisanne!

            Presume much, know little?


          • Zalman bl

            Looking for attention? This article is already 2 days old and you couldn’t find anything better to do?


          • http://www.flickr.com/photos/lisanne001 Lisanne!

            I’m not wasting much energy on this. But you seem to have a lot of time on your hands.


          • Zalman bl

            Crony’s are only possible when government feels it can get pick winners and losers (remember solyndra?) If Republicans were to get their way, government officials would never be in the position to support crony capitalism.


          • levp

            I seem to recall a certain Republican president whose administration funneled billions of dollars to Halliburton and other “friends” in the military-industrial complex.


    • Anonymous

      Nice try, Storobin.


      • Zalman bl

        Grow up


  • Alex C

    “smothering minority-owned” businesses is I guess white businesses in the Bronx, which has only 29% white population. All the small businesses I know that closed in Brooklyn due to over-regulation and over-taxation were white businesses too.


    • http://www.sheepsheadbites1.com/ Ned Berke

      This is where context matters, buddy. The phrase was “disproportionately smothering minority-owned and outerborough businesses.”

      Disproportionately. And outerborough.


  • Metsknicks

    Another example of “Daddy Warbucks” Bloomberg’s gestapo tactics. As a result of his huge business experience, I thought he was a great choice to lead the city following 9/11. Sadly, he has made me regret feeling that way. He’s turned into a power hungry dictator that doesn’t care about mom and pop businesses that were, are and always will be the backbone of our economy.


  • M. Smart

    Throughout history the world’s greatest cities have fallen, Athens, Alexandria, …Rome, Hollywood NYC is no exception


  • BrooklynBus

    This is an important story. Have any of the TV stations picked up on it?


    • http://www.flickr.com/photos/lisanne001 Lisanne!

      It’s sad when TV news has more clout than print media.


    • guest

      They are too busy reporting on Kim Kardashian’s baby.


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