AG Sues Fresh Meadows Landlords For $500K Property Tax Fraud
/By Christina Carrega
A pair of Fresh Meadows property owners are in hot water for skipping out on paying almost $500,000 in taxes and deceiving their tenants’ leases in order to profit off the sale of the building, authorities announced on Tuesday.
When Ram Cohen, Eldad Cohen and their real estate company ERC Holding, LLC. built a multi-story apartment building at 71-44 160th Street in Fresh Meadows, they applied to the New York City Department of Housing Preservation and Development (HPD) for a tax exemption under 421-a of the Real Property Tax Law.
The program reduces property taxes for eligible new construction condominiums and rentals as well as requires property owners to obey rent stabilization laws when renting out apartments, however, the Attorney General’s lawsuit alleged in a civil lawsuit that they never did.
“As we allege, these landlords fraudulently secured hundreds of thousands of dollars in tax breaks by illegally abusing the 421-a programs and deceiving tenants about their rights,” said Attorney General Barbara Underwood in a statement. “We have zero tolerance for landlords who try to defraud regulators and their own tenants – and we won’t hesitate to prosecute those who try to line their pockets at the expense of New Yorkers.
The lawsuit seeks an injunction to bar the Cohens and their company from doing business in the state’s real estate industry, pay the $479,000 in property taxes they avoided to pay and give back the $3.75 million they received when they sold the building in 2016 as well as other damages.
For five years the Cohens got away with giving their tenants unregulated leases. The Attorney General’s Office warned them to properly register the building with the State Division of Housing and Community Renewal and to charge their tenants the proper rent-stabilized rate, to no avail.
“I applaud Attorney General Underwood for taking these bad actors to task and putting landlords throughout New York on notice that deceptive practices will not be tolerated,” said New York City Department of Housing Preservation and Development Commissioner Maria Torres-Springer. “This lawsuit lets both landlords and tenants know that if owners abuse the rent stabilization laws that exist to protect tenants, the City and State will use all resources available to hold them accountable.”
The Cohens are also accused in the lawsuit of paying their employees with funds funneled through the name of a property manager of another Queens building. Rather than pay their employees directly, with payroll taxes withheld, they allegedly pass employees’ wages through this shell corporation, off the books, prosecutors said.