Fire Mitigation Industry Terror: NYC Gang Member Convicted of Extortion, Racketeering

A gang member who ran a fire restoration company has been convicted of using violence, threats of violence, and extortion to terrorize and dominate the fire restoration industry in New York City.

After presiding over a two-week bench trial in December, U.S. District Judge Jed S. Rakoff for the Southern District of New York last week found Jatiek Smith guilty of racketeering and extortion conspiracies.

Fire restoration or mitigation businesses provide repair, mitigation, demolition, and construction services to properties that have suffered fire damages. Smith was involved the practice of “chasing fires,” which refers to a fire mitigation company’s or public adjuster’s efforts to solicit business from the owners of fire-damaged properties.

One such company, First Response, primarily operated in Brooklyn, Queens, and Staten Island but also did business in the Bronx and Manhattan. Insurance companies pay for the services of mitigation companies.

After he joined First Response, Smith recruited other gang members and associates to join him at the company, a firm that he would eventually take over. He and his associates formed an enterprise that not only controlled First Response but also operated outside of First Response, court documents showed.

As the leader of this enterprise, Smith asserted control over the industry by first driving First Response’s main competitor, American Emergency Services (AES), out of the business through violence, threats, and extortion including demanding that AES pay $100,000 to continue chasing fires, the court found.

Smith Denial

Smith claimed that AES was the aggressor in the industry and he worked to reduce the conflicts and violence by standing up to AES and setting up a rotation system to assure that all chasers got a minimum number of fires each month. He maintained the system was not extortionate.

However, the judge found that Smith’s defense was undermined by the government’s proof of Smith’s use of violence and extortion to enforce the rotation.

“Offering up these benign explanations for the rotation system is akin to a mobster calling extortion payments “protection money,'” the judge wrote.

According to prosecutors, once Smith and his crew had established control over the industry, they imposed rules under which First Response got a preferential share of fires in the rotation system. Fires would be allocated first to Smith’s chasers. Also, all fires that occurred during the night or were on Staten Island belonged to Smith’s crew. The government showed how these rules were backed by threats and violence and how industry participants who violated Smith’s rules were assaulted.

After AES was forced out of the industry, other companies were also extorted by being forced by threats to join the rotation system. The judge found credible evidence that ServPro and EFS were coerced into participating in the rotation system to their economic detriment and to the advantage of Smith and his co- conspirators.

Overall, the judge found that the government proved beyond a reasonable doubt that Smith and his co-conspirators agreed to extort AES, ServPro, EFS and another individual but failed to prove extortion relating to iFlood and a contractor.

“The simple fact is that the government has put forward substantial evidence that violence and intimidation by Smith and his co- conspirators were used to enforce the rotation system,” the judge concluded.

Prosecutors’ evidence included recordings of Smith threatening to kill competitors and ordering an attack on a rival firm’s employee and videos recovered from his cellphone showing his crew members assaulting employees of rival emergency mitigation services firms.

According to the government, Smith and his crew extorted hundreds of thousands of dollars from industry participants and Smith also maximized his own profits from by concealing illegal conditions in properties and defrauding insurance companies.

Racketeering and Insurance Fraud

In terms of racketeering, Smith was charged with entering into an agreement between 2019 and June 2022 with one or more co- conspirators to conduct the affairs of an “association-in-fact enterprise” through a pattern of racketeering activity.

The judge found that there was ample proof of the actual existence of such an enterprise, of Smith’s participation in it, and of the commission of two or more continuous and related specified crimes, namely extortion and mail and/or wire fraud. The judge found the government did not prove a third charge against Smith of obstruction of justice.

Smith denied being involved in any racketeering conspiracy that committed insurance fraud. He said that while he learned at one point that conditions at homes were being concealed for insurance purposes, he said the evidence at trial showed that the relevant instances “barely even involved him, let alone constituted acts furthering the enterprise he was the supposed leader of.”

But the judge said Smith was wrong that the insurance fraud was unrelated to the purpose of dominating the fire restoration industry. The judge wrote: “Dominating the fire restoration industry, including by increasing the number of fires signed by the Enterprise, was only profitable if insurance companies paid out insurance claims. Because the insurance frauds were a means to ensure those insurance claims were paid, these frauds directly facilitated the profits generated by the Enterprise through its dominance of the restoration industry and its extortion.”

Smith’s Background

Smith, 39, a pro se defendant who handled his own defense, pointed out in his closing summation that he came from “projects, poverty, and prisons” and joined a gang at a young age. He said he grew up in a “rough neighborhood plagued with violence” and spent time in a “prison plagued with violence.” He said he has been the victim of violence by officers.

“This is what he knows and how he was raised. And despite that, violence was not his first resort. He showed restraint while being threatened, intimidated, and even shot at. But at points, his anger got the better of him,” his summation stated.

Smith admitted he has made poor choices and even committed crimes. But he insisted that none of the fights or assaults at issue in this trial occurred in order to obtain money or property from others.

“The feud with AES, the slaps and punches of public adjusters, and the violent language used toward EFS employees – none of it was in service of a racketeering enterprise aimed at extorting other individuals or companies in the fire mitigation industry,” he argued.

Smith, of Staten Island, was convicted of racketeering conspiracy, which carries a maximum sentence of 20 years in prison, and extortion conspiracy, which carries a maximum sentence of 20 years in prison.

The judge scheduled a sentencing hearing for April 12.

Prosecutors

U.S. Attorney Damian Williams, whose office prosecuted the case, said Smith’s “audacious takeover of the New York City fire mitigation industry with the help of his gang associates presented a new form of organized criminal activity” in the community.

After a federal grand jury on June 23, 2022 indicted Smith and eight others, Federal Bureau of Investigation, Homeland Security and New York police officials charged Smith and eight others including gang members with a violent racketeering and extortion conspiracy in attempting to take over an entire industry designed to help victims after a fire.