The focus of the probe is Miranda's enforcement of unlicensed smoke shops, how cash is seized during the investigations and his role in the National Latino Officers Association.
Miranda is chair of the National Latino Officers Association and city investigators are looking for any connection between donations to the organization and enforcement by the agency.
Investigators are also looking into how cash from the businesses is seized and invoiced during operations, following complaints from the smoke shops and their lawyers.
During testimony before the City Council last week, Miranda said property seized during the operations is vouchered by the NYPD, and not his agency.
Complaints about the vouchering process were filed with DOI, prompting the inquiry.
Miranda's officers have shuttered more than 1,100 illegal pot shops since May and confiscated tens of millions in contraband.
Part of what is confiscated at each padlocked store is cash and the DOI investigation is focusing on the allegation that some of that cash has not been returned to businesses.
"Almost every store that we represent, every one has said what they get the money back, it is less than what was in there when it started," said attorney Lance Lazzaro.
Lazzaro represents more than 100 businesses that have been raided for allegedly selling marijuana illegally. He said that surveillance cameras are usually turned off by the sheriff's department while the NYPD confiscates the cash.
Mayor Eric Adams said $78 million has been brought in from illegal cannabis and he has confidence in the operation.
But Lazzaro said he has confidence in his clients.
"One store recently we tried to get a voucher for and the voucher is missing, which means the $1,600 in this particular store that was in the register, we can't even make a claim for it because it's just gone," Lazzaro said.
Adams' office put out a statement highlighting the success of illegal marijuana enforcement:
"The New York City Sheriff Department works day in and day out to protect New Yorkers, particularly young people, from the health and safety threats being posed by illegal cannabis shops, and through 'Operation Padlock to Protect,' we have already shut down more than 1,100 illegal shops and seized an estimated $66 million in illegal products. We continue to act in accordance with the law to protect public safety."
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