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Last year, some 53 million Americans filed their taxes from the comfort and convenience of a personal computer. This year, more are expected to do so. (See Tech Links in the News for the Web sites to file for federal and state taxes, and to file for an extension.) Clearly, the computer-savvy are less worried about transmitting personal information over the Internet.
But in fact, while there are precautions to take when filing taxes – experts recommend the use of a personal computer used only by the tax filer – there is an increasing problem of cyber-crime, and nowhere more than in New York.
This month, Howard Carmack was found guilty of sending over 800 million spam messages from e-mail accounts that he opened under the names of two unsuspecting upstate New York residents.
This is the first case of identity theft -- a crime under New York State law since October 2002--prosecuted by the state Attorney General’s office. New York was one of the last states in the country to enact such legislation. "The guilty verdict shows that those engaged in identity theft and cyber-crime will be discovered, prosecuted, and convicted of their crimes," said Attorney General Eliot Spitzer.
Identity theft is “crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain” according to the U.S. Department of Justice. These crimes include fraud involving credit cards, telephones, utilities, banks and loans.
Currently, identity theft is a serious problem in New York City. In 2001, New York had the highest number of identity theft victims nationwide. Nationwide, there were over 160,000 victims of identity theft in 2002 according to the U.S. Federal Trade Commission. In 2003, the city had almost 9,000 acts of identity theftas compared to Rochester (355), Buffalo (208), Yonkers (147) and Syracuse (91).
While the increased use of computers to store sensitive information is one reason for the rise in identity theft, often criminals steal paper records to get access to personal information. With only someone’s name, date of birth, social security number or credit card number, an identity thief can cause substantial financial damage. In January 2004, New York State passed a law requiring businesses to remove the expiration date and print only the last five digits of credit cards from receipts.
Credit card fraud is the most common type of identity theft. In recent years, criminals have attacked computer systems and used hand-held technology to steal personal information from Automated Teller Machines, a practice called “skimming.” For example, last December three men stole $225,000 from 300 cardholders by stealing personal information from an ATM in a Manhattan candy store.
Currently, the City Council Committee on Consumer Affairs has three bills under consideration aimed at protecting and informing consumers about identity theft. These bills make businesses and the government responsible for protecting sensitive personal information. The first would allow the commissioner of the Department of Consumer Affairs to suspend, revoke or refuse to renew business licenses if the business has violated New York State identity theft law two or more times. The other two proposed laws require city agencies and businesses licensed by the Department of Consumer Affairs to inform citizens when there has been a security breach of their personal information.
At a time when more--not less--personal information is being collected and stored in government and private sector computer databases, it is vital that New York City agencies and businesses be penalized if they are not able to guarantee the security of such information. Moreover, since New York State has been slow in implementing such legislation, it is important that the city move quickly to pass identity theft legislation to stop the high rates of the crime in New York City.
However, in the end, citizens—not governments and businesses--should be the true owners of their personal information and identities. Ken Jordan, an independent writer and digital media consultant, has collaborated with technologists and activists to develop an innovative proposalon how to best give citizens control of their personal information. It envisions a system of “online citizenship” that will not only curtain identity theft but also allow New Yorkers to participate more effectively in decision-making on local issues faced by the city.
Laura Forlano is a doctoral student studying communication technology policy at Columbia University.
Assemblyman Daniel ODonnell from the Upper West Side and his partner John Banta are among 13 same sex couples who have commenced a lawsuit against the State of New York and the New York State Department of Health, claiming the right to marry. According to the complaint, which seeks to declare the state's Domestic Relations Law unconstitutional, "they are here to ask that this Court perform what is perhaps its most solemn and sacred duty -- namely, ensuring that the basic rights of being a New Yorker and an American are extended to all... ."
The case of Sylvia Samuels, Diane Gallagher et al v New York State was filed in Supreme Court in Albany on behalf of couples from various parts of the state including Brooklyn and Manhattan. The complaint alleges that "the institution of marriage reflects legally the reality of life as a committed couple, creating vitally important protections, rights and obligations." The plaintiffs submit that "marriage is the universally recognized social structure...both a personal and a very public commitment.”
The lawsuit, the third such to be commenced in New York this year, relies on the equal protection and due process clauses of the State Constitution which protects against discrimination based on sexual orientation. "Denying same sex couples the ability to marry...deprives them of the equal protection of the laws based on their sexual orientation." Plaintiffs' counsel argue that New York State's constitution guarantees same sex couples the right to marry, but that the Domestic Relations Law which governs marriage does not. This law, they argue, is therefore unconstitutional. Specifically, it “discriminates based on gender because it allows a man and a woman to marry, but does not allow a man to marry a man, or a woman to marry a woman."
According to the complaint, the plaintiffs’ rights of free speech have also been violated. "Marriage is an important public act of speech that represents to the community at large the nature of two people's commitment to each other. The public expression of emotional support and public commitment two people make when they marry is a unique form of public expression that can only be made through a civil marriage ceremony or contract. " Equal access to this "unique public act of speech must be provided equally regardless of gender or sexual orientation."
Court papers filed refer to earlier discriminatory marriage laws such as disallowing slaves to marry and criminalizing interracial marriage. But plaintiffs argue, " Having created the institution of civil marriage through which individuals can proclaim their commitment in a unique way, the state cannot allow access to that institution on a discriminatory basis."
The most recent US census counted 46,449 New York State households as being comprised of same-sex unmarried partners, according to plaintiffs. They also cite an Urban Institute study that says New York City has the largest gay population of any American city. "The State of New York has had a long and distinctive tradition of affording protection to gays and lesbians...and New York has long been a center for gay and lesbian life and culture."
While plaintiffs commend efforts at civil unions and domestic partnerships, and many of them have formalized their relationship in that way, "they fall short of reflecting the commitment that two people who build a life together have, and they fail adequately to protect the relationships of same sex couples."
Some of the New York City residents have registered under the domestic partnership law, but that does not provide the same rights benefits or obligations as marriage such as medical decision making, adoption, rights of inheritance, tax benefits. Moreover, domestic partnerships are not necessarily recognized by employers, insurers or other jurisdictions.
The first named parties to the action are two women who have been together for 24 years, raised children and have grandchildren. One of them, Sylvia Samuels, who works for the city, is seriously ill and wants her partner, Diane Gallagher, to be able to make health care decisions and hospital visits which may be limited to a spouse or family member as traditionally defined.
Alice J. Muniz, a New York City police officer, working out of the 23 precinct in East Harlem, has maintained a committed relationship with Oneida Garcia for the last four years, living together in Brooklyn with their children from prior relationships. Marriage, they say, would have a positive effect on their children.
John Wessel and William O'Connor are about to celebrate the 25th anniversary of their relationship. They are in the art business and own property together. One of their reasons for wanting to marry is to benefit from inheritance tax laws now limited to married survivors only.
Attorney Daniel O'Donnell, who is the first openly gay man to be elected to the Assembly (he is also Rosie O’Donnell’s brother), has been in a couple with John Banta since they met at college in the late 1970s. They describe themselves as "soulmates," but have not registered as domestic partners. "Nothing short of marriage is acceptable," they say.
Counsel for the plaintiffs summarize the lawsuit this way: "Defendants can offer no adequate justification for the exclusoin of same sex couples from the legal institution of marriage."
The plaintiffs are represented by the Manhattan law firm of Paul, Weiss, Rifkind, Wharton & Garrison, LLP, the ACLU and the NYCLU. An answer in opposition is expected to be filed by Attorney General Elliot Spitzer.
Emily Jane Goodman is a New York State Supreme Court Justice
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The plumbing fixtures at the Metropolitan Transportation Authority headquarters at 2 Broadway can join the $7,500 thermometers in the Tweed courthouse and the Pentagon's $640 toilet seats in the annals of government waste, fraud and abuse.
Owners of Figliolia Plumbing in Brooklyn allegedly charged the authority $25.98 for lead-pipe connectors costing 49 cents each and marked up the cost of other materials by 5,000 percent as well. With the extra money, prosecutors charge, the Figliolia family bought jewelry, an indoor swimming pool, and backyard pond complete with footbridges. And some of the proceeds went for bribes and gifts to transit authority managers.
But some would accuse the Metropolitan Transportation Authority itself of even grander larceny (though perhaps not in violation of the criminal code). Before the 2002 election for governor, the MTA said it was in financial good health. But after New York State voters re-elected Governor George Pataki, who appoints the MTA board, the authority suddenly claimed it was running a $2.7 billion deficit and needed to raise bus and subway fares. Independent experts questioned the figure and discovered that the agency was keeping two sets of books to justify its wildly contradictory portrayal of its finances.
The Metropolitan Transportation Authority is just one of more than 640 authorities throughout the state. While they are created by the state government and operate for a public purpose, they are exempt from many of the rules and review under which government agencies normally operate. These authorities run the airports, operate bridges and tunnels, foster economic development, encourage development and oversee the subways and buses.
And, an increasing number of critics charge, they also:
Public authorities are the Enrons of state government, New York State Attorney General Elliot Spitzer charged in a speech last year, "hiding spots, breeding grounds for inertia, incompetence and, at times, worse." Faced with such concerns, public officials have proposed to reform the system. Ideas range from a modest directive issued by Governor George Pataki, whose appointees run many of the authorities, to State Assemblymember Richard Brodsky's call to eliminate authorities entirely.
Authorities were virtually unknown in the United States until the Great Depression, when local governments, desperate for money, cast about for new financing methods. Most of the authorities were created for a single purpose and for a limited period of time.
But Robert Moses changed all that. As Robert Caro relates in his book "The Power Broker", Moses saw that the money coming in from tolls on the Triborough Bridge far exceeded the cost of maintaining the bridge. This inspired him to create an array of authorities that could go on in perpetuity, taking money from fees such as tolls and using it to finance his other projects -- bridges, highways, parks and so on.
This arrangement lives on. Some authorities, like the New York State Housing Finance Agency or the New York State Dormitory Authority, are financing mechanisms that borrow money for allegedly public purposes. Others, such as the Metropolitan Transportation Authority, also provide a service. Still others are economic development agencies, like the Hugh L. Carey Battery Park City Authority, which plan and finance large projects thought to be beyond the capacity of local government.
The governor controls the authorities through his appointment power. The MTA, for instance, has 17 voting (and six non-voting) members, all appointed by the governor. The Battery Park City Authority has three board members and a chief executive officer, all named by the governor. In some cases, like the current Lower Manhattan Development Corporation, the city looks to be a partner, but the governor, through his appointment power, retains ultimate control.
In 1956, when there were 56 authorities, a commission reviewed their operations and eliminated 20 of those. This year, New York State Comptroller Alan Hevesi directed his staff to undertake a similar study. The report, Public Authority Reform: Reining In New York’s Secret Government (in pdf format), was issued in February. It unearthed some 643 authorities, public benefit corporations and similar quasi-public agencies, most of them focused on a particular locality or facility.
Many affect the lives of average New York City residents. This includes most (though not all) of the more than 200 authorities considered to have statewide or regional responsibilities, such as the MTA and the Urban Development Corporation. About a dozen more have specific responsibilities in New York City, such as the Water Board and the School Construction Authority.
Many authorities do good things, Hevesi said at a recent New York City bar association forum on authorities. But, he added, "They're not supervised, and many of them develop a culture of arrogance and a set of behaviors we would never accept if we knew about them."
An earlier, 2003 Hevesi report focused on one authority: the MTA. As the controversy about the conflicting sets of financial information entered the headlines -- and the courts -- the public learned more about the agency that operated with little scrutiny or oversight. The MTA has an annual budget of about $7 billion, Gene Russianoff of the Straphangers Campaign, a transit advocacy group, noted. But he said, "In the last four of five years, they issued that budget on a Tuesday and the following Tuesday, they would approve it -- a budget larger than many states -- with no hearing, no public review. They got away with this for years and years."
The uproar sparked some reforms at the agency, including new budget rules. But the MTA is not alone.
Some other examples:
-- The New York State Power Authority hired Vincent Vesce, a childhood friend of Pataki's, as an executive vice president at the salary of $186,000, according to the New York Post. The authority also hired the governor's former bodyguard for $160,000 -- and issued a waiver letting him collect his $60,000 a year state-police pension at the same time. Pataki aides told reporters the men were qualified for the jobs.
-- From 1999 to 2002, the Long Island Power Authority contracted with a former adviser to Rick Lazio, who ran against Hillary Clinton for Senate in 2000, to survey ratepayers. In addition to questioning them about their electricity needs, the poll also asked Long Island residents what they thought of Pataki and whether they would vote for Lazio or Clinton. The authority paid its acting chief financial officer almost $600,000 over 14 months -- and defied requirements that the state comptroller approve the contract.
-- The New York State Thruway Authority and Canal Corporation, which oversee the Erie Canal, sold a developer the rights to develop land along 45 miles of the canal -- all for $30,000. Although the canal corporation defended the arrangement, critics called it a "sweetheart deal" with the state doing little to advertise that canal rights were available. "The state is selling used trucks for more than it quietly sold the rights to the entire Erie Canal corridor," Assemblymember Richard Brodsky told the New York Times. Hevesi later rescinded the contract.
--The Liberty Bond program, an $8 billion plan created after 9/11 to provide financing for major projects to revitalize Lower Manhattan and aid the city economy, is coordinated by the city Economic Development Corporation, a public-benefit corporation. The watchdog group Good Jobs New York has highlighted how little affordable housing the bonds have funded, while they have been approved. for a Forest City Ratner project near downtown Brooklyn that will house the Bank of New York, a power plant in Astoria, and luxury housing.
--Last year, Attorney General Eliot Spitzer charged that the New York Racing Association, a public authority, had ignored widespread abuses by its betting clerks, including money laundering, betting and borrowing from the cash drawers. With indictments looming, Pataki selected Kenneth Cook to head the agency's security operation. According to the Albany Times-Union, Cook contributed $10,000 to Pataki's 2002 re-election campaign and worked for a firm run by friends of, and contributors to, the governor.
Then there are the authorities that seem to come more from Comedy Central. What does the Long Island Regional Ashfill Board do? Does Tuckahoe really need its own parking authority? Why does Governors Island have two separate authorities? And what about the Overcoat Development Corporation? Although it is allegedly located at 633 Third Avenue, no one there had heard of it, a New York Times reporter found. He discovered the agency is what remains of an effort to lure an Indiana coat company to Amsterdam, New York... in 1986.
Given such a checkered record, why allow authorities to exist at all?
The answer is simple -- to get money.
The New York State constitution sets strict restrictions on government borrowing. For all intents and purposes, said Charles Brecher of the Citizens Budget Commission, the state cannot borrow money unless the voters directly approve the amount of money involved and the purpose for which it will be used. And voters often say no. "As a result," Brecher said, "state functions have been starved for capital."
And so they turned to authorities. Some of the authority money comes from fees. But authorities can issue revenue bonds, bonds issued for a certain purpose that then use the proceeds generated by the project -- the tolls from a highway, say -- to pay back the debt. In theory, there is nothing wrong with this, according to an article by William Stern, former head of the state Urban Development Corporation, in City Journal. But, he said, "because revenue bonds do not even require the approval of the legislature, they escape all forms of popular scrutiny. New Yorkers, in short, never get a chance to vote down revenue bonds, as they often choose to do with general-obligation debt."
And Stern says, the authorities also "buy" state facilities, giving the state a quick infusion of cash but adding the money to the state's long-term debt. So, the Urban Development Corporation "bought" Attica Prison to help the state out of a budget crisis during the Cuomo administration.
"You don't ask children and grandchildren to pay for the services you use today," Brecher said. "The device of authority borrowing has on occasion enabled the legislature and the governor to do that."
The money involved is enormous. According to the Hevesi report, authorities account for 90 percent of state debt service payments, up from 60 percent in 1985. The state's 17 largest public authorities had $105 billion in outstanding debt in 2002; $34 billion of that debt is financed by the state itself. And it could rise even further. The state's public-authority debt service costs will increase from $2.9 billion this year to $4.6 billion in 2008, according to a projection in the state's five-year capital plan.
Beyond the money, the Hevesi report lists several other lures for politicians:
From this perspective, many of the authorities make sense. The Metropolitan Transportation Authority, for example, can serve the needs of all travelers in, to and around New York. Even Russianoff, who has often fought with the MTA, said the agency "shows both the good and the bad of public authorities."
The Battery Park City Authority also boasted a laudable public purpose: It would take the money from a large high-end office and residential development and use it to finance new affordable housing -- without taxpayers having to pick up the tab. The authority has had many successes -- developing office space, thousands of apartments, parks, esplanades and open space -- but it has not created nearly as much affordable housing as promised.
Originally, two thirds of the housing at Battery Park City was intended for people of low and moderate income. As the housing market in Lower Manhattan boomed, Governor Mario Cuomo, the state legislature and other officials decided to build luxury housing at Battery Park City and use the proceeds from that to build 24,000 low and moderate income apartments in other parts of the city.
In fact, though, only 1,557 affordable units were built with authority funding, according to a September 2000 City Project study. (See related article in Gotham Gazette, Public Subsidies Flowing Up The West Side by Brad Lander.)
Today the city uses the Battery Park City Authority's cash, and its ability to borrow money, as aids in balancing the city’s overall annual budget. The authority refinanced all of its existing debt so the city would get nearly $100 million of extra revenue for this year’s budget (and lesser amounts in subsequent years). The state legislature authorized the Battery Park City Authority to borrow an additional $150 million to buy property from the city -- another one-shot asset sale to fill the budget gap.
The money may sound like a windfall for the city, but it is not; it is closer to an accounting trick. The Battery Park City Authority’s debt now totals $1.1 billion. This means the authority will pay about $1.9 billion in debt service (paying off the interest on the bonds) through 2039, according to one bond document. The authority collects payments from Battery Park City residents and businesses in lieu of taxes. It turns some of the money over to the city -- after deducting expenses and debt service costs. In other words, every dollar that goes to the authority’s debt service is one dollar that does not go to the city.
Now, Mayor Michael Bloomberg has announced that the city will use $350 million from the Battery Park City Authority to help pay for the proposed Jets Stadium and Javits Convention Center expansion.
Authorities in general will play a big role in Bloomberg's ambitious plans for the West Side. The Hevesi report points out that the Empire State Development Corporation, run by long-time Pataki associate Charles Gargano, controls 90 authorities, including the Lower Manhattan Development Corporation, the New York Convention Center Development Corporation (the Javits Center) and the Pennsylvania Station Redevelopment Corporation (the new rail station). Add in the MTA, which controls the rail yards in the West 30s; the Hudson River Park Trust (largely controlled by the governor), the Port Authority and the Battery Park City Authority and it is clear that the big decisions about the West Side will be made outside the normal political channels. The City Council and the state legislature will be excluded, and much will be done without public scrutiny.
Public officials and others have offered a number of plans to reform the authority system. Dominating much of the discussion is a 113-page bill offered by Hevesi and Spitzer. It would create a commission, similar to the one almost 50 years ago, to look at the 212 statewide authorities and determine which ones can justify their existence.
Those that survive the process would have to act more like regular government agencies -- putting out their contracts for competitive bidding, for example, and then submitting them to the state comptroller for approval. The measure also requires that the authorities make their financial reports public. Overall, Hevesi said, "We don't want [the authorities] to be stripped of their ability to perform services, but we want them to respond as government agencies should."
The Assembly, controlled by Democrats, has approved another reform package that overlaps with some of Hevesi's proposals. Introduced by Brodsky, it would give the state attorney general the power to appoint an independent inspector general for authorities and would put the authority finances back in the state budget.
The Republican-controlled State Senate has not voted on that measure. Asked his response to reforming authorities, Senate Majority leader Joseph Bruno said, "It's time for us to take a look at a lot of things, and authorities are one. We're looking at consolidation as a way of saving taxpayers money."
Pataki has not formally weighed in on the plan, although a spokesperson told the New York Sun that the governor has already taken some of the steps recommended by Hevesi. Pataki has issued a directive saying authorities must follow the "best practice" principles of private businesses and in February an aide to the governor reportedly asked heads of the state's authorities to submit a plan for reform to the governor by May 14.
But others question whether any of these reforms address the real problems. For example, Brecher of the Citizens Budget Commission says that they would not keep the authorities from creating more and more debt. To solve this problem would require changes in the constitution.
Brodsky questions the existence of authorities altogether. The reason the authorities are not accountable, he said, is that they have been removed from the legislative process. "We learned from our earliest days of American democracy that we are different, not because we have photogenic chief executives, but because we have legislative bodies specifically set up for the purpose of checking executive power," Brodsky said. "What has happened here is a classic example of the failure of American democratic institutions to live by the principles of democratic and constitutional law."
In an ideal state, he said the state government would have the power to issue revenue bonds and authorities would be abolished. But Brodsky conceded that such a massive change would be impossible and so is backing the more modest Assembly package.
Of course, passing that or the Hevesi-Spitzer plan may prove difficult in Albany. The State Senate may be less anxious to reform a system that, with a Republican governor, largely benefits Republicans. More cynical observers can wonder whether in 50 years another commission will review the state authorities and wonder why New York needs an Overcoat Development Corporation.