DUMBO — Neighborhood real-estate titans and key donors to Mayor Bill de Blasio collected more than $90 million in tax breaks by promising to provide affordable housing, even as they illegally de-regulated rent-controlled units and harassed tenants, a new lawsuit charges.
Father-son power players David and Jed Walentas and associates of their real estate company Two Trees squeezed residents of 125 Court St., near State Street, increasing their rents and sending notes claiming that residents owed past due amounts, according to the suit filed by the tenants association.
“The defendants’ unlawful acts are part of an overall pattern and practice of fraudulent management and extortion, all directed at the goal of illegally increasing regulated rents or evicting tenants entitled to rent regulation,” the tenants' lawyer, Matthew Berman, wrote in the lawsuit.
According to court papers, the Walentas failed to make basic repairs to address violations and altered documents regarding rental histories to allow them to collect more from tenants each month, according to court papers.
The scheme was “intended to create a climate of hopelessness and fear among tenants,” and drove up the turnover rate to 300 percent between 2005 and 2013, far higher than the citywide average, the suit charges.
But a representative for Two Trees insisted the tenants who filed the suit have lived in the building for more than a decade and never filed a complaint and added that the ones who were mistakenly overcharged were refunded in 2012.
“The complaint is baseless and defamatory,” said Paul Shechtman, who’s representing Two Trees. “This case wouldn’t even stand a chance in Housing Court, and it’s an even more outrageous case in federal court.”
However, the plaintiffs claim an ex-Two Trees employees is serving as an informant, and told them that the defendants “sat down and agreed in advance to part in an unlawful scheme to illegally charge inflated rents to rent-stabilized tenants,” according to the court papers.
The Walentas also “engaged in mail fraud, wire fraud, extortion, obstruction of justice and transportation of stolen property” to execute their plan, the lawsuit alleges.
The suit was first reported by the New York Post.
City Hall didn't respond to a request for comment.
