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Federal Government Could Recoup Millions From Independence Plaza Ruling

By Julie Shapiro | September 1, 2010 3:05pm | Updated on September 2, 2010 6:02am
The federal government is seeking tens of millions of dollars from the owner of Independence Plaza North in TriBeCa.
The federal government is seeking tens of millions of dollars from the owner of Independence Plaza North in TriBeCa.
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By Julie Shapiro

DNAinfo Reporter/Producer

TRIBECA — This week’s court ruling that Independence Plaza North is rent-stabilized could mean big bucks for the tenants who have been overcharged — and even bigger bucks for the federal government.

Over the past six years, the federal government has poured tens of millions of dollars into Independence Plaza to support the TriBeCa complex’s low-income tenants.

The federal Section 8 voucher program has allowed IPN owner Laurence Gluck to collect the full market rent for hundreds of apartments, even though the tenants living there could only pay a fraction of the cost.

But this week, State Supreme Court Judge Marcy Friedman ruled that all those apartments ought to have been rent-stabilized. If the ruling holds, it means the federal government should have been paying Gluck stabilized rates, not market rate, for more than 500 apartments at IPN.

Tenant Ed Rosner, right, celebrated the rent-stabilization decision on Tuesday with local elected officials. Rosner has been fighting since 2006 for tenants and the federal government to be reimbursed for rent overcharges at IPN.
Tenant Ed Rosner, right, celebrated the rent-stabilization decision on Tuesday with local elected officials. Rosner has been fighting since 2006 for tenants and the federal government to be reimbursed for rent overcharges at IPN.
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“By overcharging the tenants, you’ve indirectly overcharged Uncle Sam,” said Timothy McInnis, a lawyer who represents Ed Rosner, the IPN tenant who first raised this issue in 2006.

After Rosner filed a whistleblower complaint, US Attorney Preet Bharara sued Gluck last year, demanding that Gluck return the tens of millions of dollars he has received from the US Department of Housing and Urban Development, plus interest and fees.

While the federal case is separate from the state one that Friedman just decided on behalf of the tenants, her ruling could give Bharara’s case a boost.

“This decision by Judge Friedman is very good news,” said McInnis, a former federal prosecutor who specializes in whistleblower cases. “It certainly helps the federal case.”

Bharara's office, in New York's Southern District, declined to comment.

Stephen Meister, Gluck’s lawyer, plans to appeal Friedman’s decision and said the state case would need to reach a conclusion before Bharara’s complaint can move forward.

Earlier this year, Meister estimated that HUD had paid Gluck at least $60 million since 2004. Meister said it was unclear whether Gluck would be able to repay the money if ordered to do so. Gluck has defaulted on other properties, including Riverton Houses in Harlem.

At IPN, many of the Section 8 tenants are paying less than $1,000 a month for their apartments, while market rate is between $3,000 and $5,000.

Bharara’s case is still in the preliminary discovery phase.

The only major action so far was that the court denied Rosner, the IPN tenant, whistleblower status on the case. McInnis is appealing, and if Rosner is recognized as a whistleblower, he could receive 15 to 30 percent of whatever the federal government recoups, potentially in the millions of dollars, McInnis said.