Construction applications falsely claimed no rent-controlled tenants protected by rules to prevent developers from pushing them out
Associated Press in New York
When the Kushner Companies bought three apartment buildings in Queens in 2015, most tenants were protected by rules that prevent developers from pushing them out, raising rents and turning a profit.
But that was exactly what the company then run by Jared Kushner did, with remarkable speed. Two years later, it sold the buildings for $60m, nearly 50% more than it paid.
Now a clue has emerged as to how Donald Trump’s son-in-law’s firm was able to move so fast: it routinely filed false paperwork with the city, declaring it had no rent-regulated tenants in dozens of buildings when in fact it had hundreds.
While none of the documents during a three-year period when Kushner was chief executive bore his signature, they provide a window into the ethics of the empire he ran before he became one of the most trusted presidential advisers.
“It’s bare-faced greed,” said Aaron Carr, founder of Housing Rights Initiative, a tenants’ rights watchdog that compiled the work permit application documents and shared them with the Associated Press. “The fact that the company was falsifying all these applications with the government shows a sordid attempt to avert accountability and get a rapid return on its investment.”
The Kushner Companies said in a statement that it outsources such documents to third parties that are reviewed by independent counsel, and “if mistakes or violations are identified, corrective action is taken immediately”.
“Kushner would never deny any tenant their due-process rights,” it said, adding that the company “has renovated thousands of apartments and developments with minimal complaints over the past 30 years”.
For the three buildings in Queens, the Kushner Companies checked a box on construction permit applications that indicated the buildings had no rent-regulated tenants. Tax records filed a few months later showed the company inherited as many as 94 rent-regulated units.
Housing Rights Initiative found the Kushner Companies filed at least 80 false applications for construction permits in 34 buildings across New York City from 2013 to 2016, all indicating there were no rent-regulated tenants. Tax documents show there were more than 300 rent-regulated units. Nearly all the permit applications were signed by a Kushner employee, sometimes the chief operating officer.
Had the Kushner Companies disclosed those rent-regulated tenants, it could have triggered stricter oversight by the city, including possibly unscheduled “sweeps” on site by inspectors to keep the company from harassing tenants.
Instead, current and former tenants of the Queens buildings said they were subjected to extensive construction work they believe was part of targeted harassment to get them to leave.
“It was noisy, there were complaints, I got mice,” said mailman Rudolph Romano, adding that the Kushner Companies tried to increase his rent by 60%. “They cleaned the place out. I watched the whole building leave.”
Tax records show rent-regulated units that numbered as many as 94 when Kushner took over fell to 25 by 2016.
In Kushner buildings across the city, records show frequent complaints about construction early in the morning or late at night, improper or illegal construction, and work without a permit.
At a six-story walk-up in Manhattan’s East Village that was once home to the Beat poet Allen Ginsberg, the Kushner Companies filed an application to begin construction in late 2013 that, again, listed zero rent-regulated tenants. Tax records a few months later showed seven rent-regulated units.
“All of a sudden, there was drilling, drilling … You heard the drilling in the middle of night,” said rent-regulated tenant Mary Ann Siwek, 67, who lives on social security payments and odd jobs. “There were rats coming in from the abandoned building next door. The hallways were always filled with lumber and sawdust and plaster.”
A knock on the door came a few weeks later, and an offer of at least $10,000 if she agreed to leave. “I know it’s pretty horrible, but we can help you get out,” Siwek recalled the man saying. “We can offer you money.”
Siwek sued instead. She said she won a year’s rent and a new refrigerator.
New York City council member Ritchie Torres, who plans to launch an investigation into permit applications, said: “The Kushners appear to be engaging in what I call the weaponization of construction.”
Rent stabilization is a fixture of New York City. To free themselves of its restrictions, landlords usually have to wait until rent rises above $2,733 a month, something that can take years given the small increases allowed.
Submitting false documents to the city’s department of buildings for construction permits is a misdemeanor which can carry fines of up to $25,000. But experts say it is often flouted with little to no consequences. Landlords who do so get off with no more than a demand from the city to file an “amended” form. Housing Rights Initiative found the Kushner Companies filed dozens of amended forms, most of them a year to two later.
New York City’s department of buildings declined to comment specifically but said it was ramping up monitoring of construction, hiring 72 inspectors and other staff.
“We won’t tolerate landlords who use construction to harass tenants no matter who they are,” said spokesman Joseph Soldevere.
Jared Kushner, who stepped down as CEO of the Kushner Companies before taking on his role at the White House, sold off part of his real estate holdings under government ethics rules. But financial disclosures last year showed he still owns a stake in Westminster Management, the Kushner subsidiary that oversees its residential properties, and earned $1.6m from the holding.