LEG A L DIVISIONS
“Smoking Out” Illegal Cigarette Ventures
Division attorneys entered into a court-ordered
consent decree closing down tobacco shop
Island Smokes after the City sued it for
evading cigarette taxes through a “roll-yourown” cigarette business. The Division also
?led a federal lawsuit against a Kentuckycentered ring of individuals and companies
that operated over the Internet as signi?cant
sources of bootlegged cigarettes in New York
City, in violation of federal cigarette traf?cking
and racketeering statutes.
PHOTO: TIMES SQUARE
Settling an Illegal Billboard Case
for $3 Million
The City reached a $3 million settlement
with private company Lamar Advertising
in December 2011 over penalties the
company had incurred for operating illegal
billboards. Under the settlement, Lamar
paid $3 million and agreed to remove over
1,000 illegal signs, many in residential
areas. The company also agreed to remove
the structures used to support the signs to
prevent others from illegally posting signs
and avoid potential problems with graf?ti and
vandalism. This case is part of a larger effort
to enhance public safety and quality of life
and collect penalties imposed on those who
break City codes and rules.
AFFIRMATIVE
LITIGATION
CHIEF Gail Rubin
DEPUTY Eric Proshansky
The Affirmative Litigation Division represents the City as plaintiff
on a wide range of issues, including civil racketeering, fraud,
nuisance, restitution, antitrust, products liability, breach of
contract, insurance, and State and federal funding for government
programs. The Division protects the City’s interests and advances
the City’s agenda by commencing claims and recovering monies
owed to the City.
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Shutting Down Out-of-State Gun Dealers
Who Sought to Avoid an Injunction
The City prevailed on an appeal by two
out-of-state gun dealers seeking to avoid
an injunction requiring that their sales be
monitored by a court-appointed Special
Master. The City’s lawsuit against 27 outof-state gun dealers to curb the traf?cking
of illegal guns into the City—many of which
ended up in the hands of criminals—was
largely resolved through settlements. These
two dealers defaulted and then challenged
the court-imposed injunction. The Second
Circuit Court of Appeals af?rmed the default
judgments against the dealers, determined
that an injunction can be imposed upon them,
and remanded the case to the District Court
to “?ne-tune” the terms of the injunction.
Holding Banks Accountable for
Foreign Currency Exchange Transfers
New York City joined the New York State
Attorney General in bringing claims against
the Bank of New York Mellon for improper
foreign currency exchange transactions that
impacted the City’s pension funds. Over a
10-year period, the bank consistently gave
the worst or nearly the worst interbank rates
of the trading day to its customers. The bank
made nearly $2 billion from these trades over
that period, and the City pension funds lost
tens of millions of dollars.
PR ACTICE SPOTLIGHT
Recovering Money from
Pharmaceutical Companies
after Medicaid Fraud
The City has netted over $45 million
thus far in settlements with defendants
in a litigation involving Medicaid fraud
by virtually all the major pharmaceutical
companies. In August 2004, the
Division—together with outside
counsel—?led a federal action against
44 pharmaceutical companies alleging
that these companies reported grossly
in?ated average wholesale prices and
other prices of their drugs. Because
Medicaid reimburses based on average
wholesale price, a higher average
wholesale price gives the retailer an
incentive to purchase that company’s
drug over others. This fraud resulted in
the City, State, and federal governments
grossly overpaying for drugs.
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