By: Ellen Cans
On Friday, New York State Attorney General Letitia James announced she reached a settlement with Ink Property Group of Manhattan for an alleged multiyear scheme.
As reported by Crain’s NY, James alleged that the landlord purchased apartment buildings and then tried to replace its middle-class tenants with wealthier ones, through buyouts or harassment. The allegations say the company would also exaggerate about high-rent occupants to bolster the appearance of their buildings’ financial health, in a scheme to extracted millions of dollars from lenders across the region, court documents say. The scheme included nearly four dozen properties in neighborhoods including Crown Heights and Greenpoint in Brooklyn and Ridgewood in Queens—as well as the modest structure at 767 Hart St. in Bushwick, Brooklyn.
As of Friday, Ink has come to a settlement with the AG’s office to pay $1.75 million to preserve affordable housing—to make up for harassing tenants by illegally offering to buy out their rent-stabilized leases, in a bid to vacate their units and re-list them as market-rate housing, James said. Ink will also need to pay $400,000 to tenants who experienced hardships while Ink let buildings deteriorate in an effort to drive them out, the Attorney General’s Office said. The AG added that over 28 apartments that had been deregulated will be re-regulated. “Lying and cutting corners to evade rent stabilization is one of the oldest tricks of the trade, but Ink’s years of exploiting our hardworking neighbors without consequences end here,” James said in a statement. “These tenants organized and fought back, and because of their efforts, they will be compensated for the suffering they’ve survived.”
The AG caught onto Ink’s ploy when residents who were offered buyouts caught on to the alleged scheme. In 2016 Ink and its principals purchased a 3-story, six-unit building for $1.11 million. The firm allegedly immediately set out to clear out the residents. Two residents, who were paying $575 and $900 per month, were offered buyouts, which goes against a safeguard put in place to protect rent-regulated tenants, as per court documents. As per Crain’s, one the landlord got the tenants to leave, it went to lenders with leases showing that the two apartments were now renting for much higher rates–at $2,600 per month. In fact, however, James discovered that those units remained vacant. That didn’t matter much though—the ploy worked to secure Ink a loan in the amount of $825,000 from Hanover Community Bank on Long Island.
The next year, in 2017, tax records show that similar additional funding of $700,000 was obtained from Brick Sunset Capital, a private-equity group in Manhattan. Ink continued on to the next building, using the same buyouts method to get rid of four rent-stabilized units at 767 Hart. Ink claimed the four recently emptied apartments were then leasing for $3,000 to $3,200 monthly. These apartments were indeed rented out, but James’s office said, that none of the tenants were paying over $2,700 at the time. This time too, the company got loans, based on the inflated numbers. One was from Signature Bank, in the amount of $2.2 million.
Ink partners did not reply to Crain’s request for comment.