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HomeMy WebLinkAboutSubmittal at 01-20-2021 PZAB Mtg - Eastside RidgePz(46 Zc tec Infamous Podolsky brothers being investigated for tax fraud: report Hoteliers paid by city to house homeless may have hidden money to avoid taxes, sources tell Wall Street Journal TRD New York / Jan.January 18, 2019 10:05 AM Staff Aladdin hotel at 230 West 54th Street and Stuart and Jay Podolsky (Credit: West 45th Street Block Association and Getty Images) They served five years probation for grand larceny and coercion in the 1980s. But now it looks like the Podolsky brothers may have been committing financial crimes too. Manhattan federal prosecutors are investigating whether hoteliers paid by the city to house the homeless hid money to evade taxes. Amsterdam Hospitality Group, the firm led by brothers Stuart and Jay Podolsky, allegedly hid money in attorney escrow accounts, sources familiar with the federal investigation told the Wall Street Journal. Prosecutors are also looking into whether they overbilled subcontractors for repairs and then put the excess funds into shell accounts, according to the Journal's reporting. The brothers' company has received tens of millions of city dollars to house the homeless over the last five years, in Manhattan hotels like the Aladdin Hotel, the Apollo Hotel and the Ellington Hotel, sources told the Journal. Records show the City paid the city paid $5 4 million in the fiscal year 2018 alone to house homeless people at the Aladdin, near Times Square. The city currently houses around 60,000 people shelters and hotels, spending about $384 million annually. The exact size of the Podolskys' empire is hard to pin down because they use a series of shell companies to operate their properties and avoid the scrutiny of city officials and auditors, sources familiar with the brothers' business practices told the Journal. A spokesperson for the brothers said they were unaware of any investigation and maintained that they never attempted to keep the family name out of the public record. "As with any large company, a team of accountants, both in house and out, prepare the tax returns for the various companies and individuals," the representative said. The brothers and their company have been embroiled in controversy for decades, including allegations from tenants and housing activists that their properties are unsafe. In 1986, the Podolskys pleaded guilty to charges of grand larceny and coercion, after they were indicted for using illegal means to force tenants out of apartments, including paying men to harass and forcibly evict tenants. The current probe into the Podolsky's business appears to be connected to the guilty plea of their former employee, George Dfouni, in a wire fraud and tax evasion case in New Jersey last year, according to the Journal. Prosecutors in that case that Dfouni he stole portions of payments that he negotiated for the Amsterdam Hospitality Group while working there, embezzling nearly $14 million from the company. They also say that between 2007 and 2014 Dfouni didn't report $28 million in income to the Internal Revenue Service. [WSJ] — Decca Muldownev Share an FaceboakShare on TwitterShare on LinkedinShare via Email -L e �w11ati41q., 1"5, EXCLUSIVE: Shady real estate clan at center of New York City's plan to convert homeless apartments into affordable housing By Michael Gartland new vork Jails nc Jan 20. 2019 7:56 PM From left: Zenek Podolsky and sons Jay Podolsky and Stuart Podolsky are pictured in the 1980s. (Obtained by Daily News) The city's plan to convert nearly 500 "duster site" homeless apartments into affordable housing hinges on acquiring 17 buildings controlled by the notorious Podolsky family, known for years as one of the city's worst landlords, the Daily News has learned. The deal which Mayor de Blasio announced in December and abruptly placed on "pause" Friday — would involve the city financing the purchase of the properties at market -rate prices. That could cost the city anywhere between $40 million and $60 million or more, based on an analysis of available records. The Podolskys whose methods have included maintaining squalid buildings run with rats, raking in millions of dollars from the city to house the homeless, and allegedly forcing tenants from their apartments through intimidation — own dozens of properties throughout the city, including hotels in Midtown. Stuart Podolsky, an unidentified woman and Jay Podolsky are pictured Feb. 15, 1988. (Clarence Davis / New York Daily News) The Podolsky brothers, Jay and Stuart, are now under investigation for potentially evading taxes, according to a recent report in the Wall. Street Journal. A spokesman for the brothers said they are unaware of the probe. A de Blasio spokeswoman said the city is "putting this deal on pause to conduct additional appropriate due diligence," but declined to define the terms of that pause. The administration also did not immediately respond when asked why the landlords, who pleaded guilty to grand larceny and coercion in 1986, didn't raise hackles before learning about the federal probe. The cluster site properties in question are in the Bronx and Brooklyn. Since announcing his plans in December, Mayor de Blasio and city officials have for weeks kept the properties' locations and the landlord's identity a closely guarded secret. City Hall officials have confirmed that only one landlord controls all 17 properties and that they are in the Bronx and Brooklyn, but contend making any more information public could derail the deal. Among the 17 properties in question, four are located in Brooklyn, sources with knowledge of some of the deal's contours told The News. Two other sources confirmed the Podolskys have been negotiating with the city for months to sell. The Brooklyn properties — 1629 Eastern Parkway in Brownsville, 135 Albany Ave. in Flatbush, 594 Park Place and 1180 President St., both in Crown Heights — are all held by shell companies, city records show. Those limited liability companies all list the Podolskys' attorney, David Satnick, as the primary point of contact, according to state records. They are also tied to two holding companies, Tristate Realty Holdings and Amsterdam Hospitality, which are both family - controlled shell companies. Satnick said he is not involved in the negotiations. "I know there have been negotiations over the course of the year, but I don't know if they're going forward," Satnick said. "Let's face it, the city can take it anytime they want — whether it's through negotiating a price or through eminent domain." Satnick declined to comment on specific property addresses. Brooklyn buildings (from left) 1629 Eastern Parkway, 1180 President St., 135 Albany Ave. and 594 Park Place are all held by shell companies, city records show (David Wexler for New York Daily News) The Bronx properties — which include 941 Intervale Ave., 751 East 187th St. and 976 Tinton Ave. — are all linked to the Podolsky family through shell companies that list Satnick as the primary point of contact People living and working in the Podolsky-controlled Brooklyn properties offered scant detail about the landlords because, according to some of them, they don't know who they are. Willie Badger, 74, said he's been the super at 1180 President St. for decades, but that he doesn't know the building owner's name. Advertisement He only knows of "manage.ment," the people who occasionally provide him with new supplies. Those people, he said, are always different and always call from different phone numbers. For the past 10 years, about half of the units in the building have been used to house the homeless. "They're in some kind of program. A New York City shelter thing," he said. The super at 594 Park Place, Akim Roseman, said he doesn't know the landlord either, but heard about the city's plan to convert units into permanent housing from a tenant caseworker. Saifur Khan of Amsterdam Hospitality, which manages the building, confirmed a deal is in the works. "I don't think they're buying," he said. Officials have said the city has ruled out using eminent domain in this deal, but Mayor de Blasio himself has floated the general idea, which could take years to finalize due to likely court challenges. During his most recent State of the City speech, de Blasio again touched on the prospect of forcing landlords to forfeit property if they fail to rectify dangerous conditions. At 594 Park, inspections are constant, according to Roseman. A search of city records revealed there are four current open violations issued by the city Buildings Department Boiler Division. But that shouldn't come as a surprise. In the world of New York real estate, members of the Podolsky family are known as players with a checkered past. The farnily's now -deceased patriarch Zenek Podolsky was born in Poland and, by his own account, survived the Holocaust through working for the Gestapo as a welder who'd clean out the safes of fellow Jews sent to their deaths. Zenek Podolsky is pictured at the district attorney's office after being indicted on May 2, 1984. (Obtained by Daily News) Zenek came to Brooklyn after the war and began to buy property in Coney Island. In the '80's, the family set its sights on the Upper West Side, where prosecutors from the Manhattan DA's Office found it hired "professional vacaters" to bring in "drug addicts, prostitutes, thieves and other criminals" to.make living conditions so bad tenants would flee. Eventually, then -Manhattan DA Robert Morganthau indicted the vacaters and a dozen landlords, including Zenek and his Jay and Stuart. The trio pleaded guilty to more than two dozen felonies, with Zenek sentenced to 90 days in lockup, and his sons each getting hit with five years probation and 250 hours of community service, according to the DA's Office. "They were pretty nasty in their interactions with tenants," said Larry Wood of the Goddard Riverside Community Center, which was instrumental in bringing evidence against the Podolskys to the DA's Office. MOST READ ' The Podolsky brothers said through a spokesman they "agree with Mayor de Blasio" that cluster -site housing should be run by non -profits, not landlords. "We have worked with the city in an ethical and transparent manner for many years providing housing for some of the city's most vulnerable populations," the spokesman said. "That work continues today." Politically complicating de Blasio's plan to convert cluster units to permanent affordable housing is the fact that he accepted contributions from associates of the Podolsky clan in the run-up to his 2013 mayoral victory. DeBlasio ended up returning more than S4,950 from Alan Lapes, who has managed Podolsky properties, campaign finance records show. But he held onto more than S 10,000 in contributions bundled through Robert Hess, the now - deceased founder of Housing Solutions USA, a non-profit also tied to the Podolskys. corridor news Des giiPlaceapartment•buildings maylook quaint to passersby, but residents say units are rundown. Design Place Tenants Get Tossed Out Development project and pandemic a one -two -punch for residents Erik Bojnansky Biscayne Times Senior Writer Vera De Souza insists she's been a good tenant. She's lived in Design Place for the past eight years, and for most of that time has never missed a rent payment. That is, until COVID-19 came along and she lost her job as a restaurant worker. De Souza's rental assistance is still being processed, but in the meantime her income is limited to weekly $275 unemployment checks and whatever money she can earn selling homemade masks. On top of that she is helping her daughter-in- law, who also lives in the complex, recover from a difficult birth. De Souza said the property's , management told her they'd work with her, just as they had months ago when she first fell behind on her rent. But just 10 days before Christmas, she was served with an eviction notice. "Today, a guy knocked on my door and gave me a paper," De Souza told the Biscayne Times on Dec. 15. She is not alone. Forty eviction suits were filed by SPV Realty LLC, the owner of Design Place, between Aug. 14 and Nov 25. Of those 40 cases, 16 are still open. De Souza said she'd been told that unless management received some sort of payment, she would need to leave on Dec. 31, the date when the Center for Disease Control's national mora- torium on evictions on tenants with a proven hardship was slated to ex- pire. But the $900 billion emergency package passed before Christmas and reluctantly signed by President Donald Trump late Sunday, Dec. 27, includes rental assistance, enhanced unemployment benefits and an ex- tension of the eviction moratorium to Jan. 31, 2021. But many Design Place residents aren't waiting to be evicted. They're just packing up and leaving. "We had so many people move out of here since COVID hap- pened," said Candice Ross, a call center employee who works from her apartment. "I know both of m downstairs neighbors are gone. we are seeing moving trucks ev day now." There are 512 apartment units i Design Place, a 22.5-acre compl- : of two-story buildings located at 5 u 45 NE 2nd Ave., just outside of Mi..'s official Little Haiti district. Its a place surrounded by white w with only two entrances staffed 24-hour security. Within are trees, gardens and plastic armchair sets with large lamps on front lawns. But even though the community projects Plazas, retail and office spAce, and apar'finent units are envisioned to replace Design Place in the future. an external bohemian atmosphere, tenants interviewed by the Biscayne Times say the apartment buildings are rundown and filled with mold and pests. Design Place's ownership is controversial, too. SPV Realty LLC's director is Sharon Olson, wife of Jay Podolsky. Jay and his brother, Stuart "My neighbor ... was three months behind in rent. [Management] in "•' -e ter until she left" — Design Place tenant Podolsky, have made hundreds of millions of dollars leasing several of their hotels to New York City for use as homeless shelters. In January 2019, the Wall Street Journal report- ed that the Podolsky brothers were being investigated by federal pros- ecutors for tax fraud. In the 1980s, the two siblings and their father pleaded guilty to 37 felony charges after they hired "professional vaca- tors" to intimidate tenants to leave three of their Manhattan buil... gs, ccording to a Novembe r 13 New York DESIGNED FOR DISPLACEMENT Nevertheless, Design Place is among the few nonsubsidized rental con-, munities in the City of Miami that is somewhat affordable. Rents for one - bedroom, two -bedroom and three - bedroom apartments range from $1,200 to $1,600 a month. One longtime tenant, who didn't wish to be named for fear of retali- ation, described the complex as a friendly environment where people from diverse backgrounds live peace- fully together. "You have hardworking families here, college students, people who work for the city, people who work at minimum wage or at $12 or $13 an hour. You got lots of cooks, lots of waiters, people who have small businesses and work in health insur- ance," the tenant said. But that same tenant alleges that Design Place's management as grown more ruthless in recent nths, pressuring some residents to -aveiftheyfallbehindontheir ren ost of the people who live [here] don' . ow about the CDC moratori- um. ese are hardworking families," the to ant said. "My neighbor ... was three . onths behind rent. [Manage- ment] " timidated her until she left." SP ' ealty isn't the only apartment er that filed evictions with the court in recent months. Thousands of eviction proceedings have been initiated by landlords across Miami - Dade during two overlapping eviction 18 biscaynetimes.com corridor news ••• moratoriums - the first enacted by Florida Gov. Ron DeSantis in March, the other by the CDC in September. Still, SPV Realty did file the fifth highest number of eviction cases of any landlord in the county, according to Alana Greer, a co-founder and the director of Community Justice Proj- ect, a Miami nonprofit that provides legal services to low-income resi- dents and community groups. However, SPV Realty does have plans to knock down Design Place and replace it with a high-rise project called Eastside Ridge, a 5.4 million -square -foot miniature city with 3,300 apartment units and 418 hotel rooms, as well as offices, retail and community spaces. The City of Miami's Planning Zoning and Ap- peals Board (PZAB) will hear SPV's latest proposal on Jan. 20, 2021. Stephen Hunter Johnson, an attor- ney representing SPV Realty, denied his clients were trying to "wipe out" residents living in Design Place, dur- ing an appearance at PZAB's Dec. 2 meeting. "They are working with their ten- ants," he said. A. Vicky Leiva, another attorney representing SPV Realty, told members that when the project d commence, apartment buildings be demolished gradually and to will be transferred to available within the complex. Design Plac residents also will be offered fin cial assistance to relocate elsewhe and they'll be invited to move into Eastside Ridge, Leiva added, which will include 75 affordable housing units and 333 workforce apartments. The rest of the apartments will go for e market rate. But Greer said the development agreement that SPV Realty has of- fered to the city isfilled with loop- holes and doesn't include a guaran- tee that tenants will be able to renew their leases once the project com- mences. "The tenant doesn't have the power to renew a lease if the land- lord doesn't want to renew it," she explained. As for the workforce units SPV Realty offered, they're reserved for individuals and families making up to 140% of Miami -Dade County's median household income, which is $51,800 a year. Under Housing and Urban Development guidelines, a workforce one -bedroom apartment can rent for between $1,133 and $1,851 a month, while a three -bedroom workforce unit can be rented for between $1,571 and $2,749 a month. According to a City of Miami Plan- ning Department report, the median household annual income in Litde H. % ensus trac e between and $29,000 a year. AN ICONIC CULTURAL ENCLAVE SWALLOWED WHOLE Eastside Ridge has been panned by urban planners, affordable housing advocates and vocal residents living in Little Haiti, Buena Vista and the Upper Eastside, who feel that the project will swamp the region with additional traffic, destroy the low-rise character of the immediate sur- rounding area and speed up the pa o • entrification. e future Eas..'. ge also is less than a mile away from the Magic City Innovation District, a proposed 82 million -square - foot complex with 2,630 apartments and 432 hotel rooms, along with offices, civic spaces and retail. Ap- proved by the Miami City Commission last year, Magic City was held up by a lawsuit filed by a Little Haiti resident for several months. That law- suit was dismissed this past November, enabling Magic "This is not the time for us to bring this mega development forth, when people are wondering how they will pay their rent and how they will put food on the table." - Marleine Bastien City's team of developers to pursue their phased development plan on 17 acres of land consisting of warehous- e, vacant lots and the former Magic Trailer Park at 6005 NE 2nd Ave. eine Bastien, executive diree- e Family Action Network t (FANM), has long op both e Magic City Innovation ct and astside Ridge. (William , the res}dent who sued to stop tor 0 Move pose. Dis.• Pe agic City, is affiliated with FANM and was rep}/esented by Community Justice Project.) Bastien contends that the two massive projects will have a devastating effect on Little H ' ' Besides the potential dfsloca- on of hundreds of residents living in Design Place, she said the two projects are attracting land specula- tors who buy up properties and make it more expensive for working-class residents and small Haitian -owned businesses to remain in the area. "We have a serious housing crisis in Miami -Dade County ._ and this pandemic has exacerbated that crisis," Bastien said. "In the days ahead, things will get worse. This is not the time for us to bring this mega Eleazar Melendez of the Biscayne Neighborhood Association and Pia Palomino of FANM canvassed Design Place last month. development forth, when people are wondering how they will pay their rent and how they will put food on the table." Edward "Ned" Murray, associ- ate director of Florida International University's Metropolitan Center, agreed with Bastien's bleak assess- ment. Murray said the city's Miami 21 zoning code allows developers with more than nine acres to seek a "special area plan" (SAP) to rewrite their territory's zoning code. Devel- opers usually use the provision for massive zoning changes in exchange for "community benefits" like parks, improved roads or even financial do- nations. But instead of helping neigh- borhoods, Murray said that SAPs end up destroying them. Once Magic City Innovation District and Eastside Ridge are built, Murray predicted that "there will be no Little Haiti." The website of the Magic City Innovation District tells a different story. It claims that 11,680 jobs will be directly or indirectly created from the project, as well as 930 short-term construction jobs. Eastside Ridge's website claims that 9,093 construc- tion jobs will be generated during the development phase, while another 2,281 permanent jobs will be forged once the project is completed. Then there's the money. As part of a last-minute deal formulated by then Miami City Commissioner Keon Hardemon, Magic City's developers will pay $31 million to the Little Haiti Community Revitalization Trust, which will use the funds to provide economic development and afford- able housing within Little Haiti. Leiva said her client has offered to pay $10 million to this fund. City Clerk Todd Hannon has confirmed that the board of the Little Haiti Community Revitalization Trust has not yet been assembled. COMMUNICATION BREAKDOWN But before Eastside Ridge can get approved by the Miami City Commis- sion, it has to receive some sort of vote by the PZAB, and the PZAB has been reluctant to give it. Since June 2018, the PZAB continued or deferred Eastside Ridge at least seven times, usually with demands that the devel- January2021 19 corridor news gn Place residentCandiceRoss`= arid her 4 year -old son may relo Cate to North Miami or North Miami Beach, where it's"slightly cheaper." opers meet with FANM and area resi- dents. In November 2019, SPV Realty sued the City of Miami, demanding r d denial of the project. pril, SPV Realty's case was dismissed. Six months later, two community meetings were held on Zoom, but they were sparsely at- tended due to poor advertising and the pandemic, Bastien complained. Although SPV Realty did later agree reduce the height of the build- ing • • m 28 to 20 stories — o demands for additional affordable housing and community benefits were ignored. "This attitude of arrogance and entitlement, the lack of concern and complete disregard for the commu- nity, is really horrible," Bastien said. On Dec. 2, PZAB deferred a decisive vote for the seventh time. Instead, by a vote of 5 to 3, the board directed Eastside Ridge's develop- ment team to meet yet again with FANM and area residents about the possibility of housing Design Place's NOW OPEN FOR REGISTRATION Call now to enrol! Hybrid Program combining in person and virtual instruction. guidelines implem checks, ongoing • Accredited transition mandated by State • College Prep program with 95% of students transitioning to coUege after graduation • Enriched curriculum with variety of electives: art, music, robotics, coding ;introduction to law, sports • Hybrid program: In class and live online classes current residents at its present rental rates, or lower. As of press time, such a meeting has yet to be scheduled. De Souza said she was never informed by Design Place's manage- ent that the owners wanted to one the apartment complex and lace it with a midtown Miami - development. They never tell me anything," De uza said. "There is no communi- tion. Everything is a surprise." However, FANM community organizer Pia Palomino and Eleazar Melendez, a consultant from the Edgewater -based Biscayne Neigh- borhood Association (BNA), have been visiting Design Place to inform residents of their rights, and to find out more about their plight. Andres Althabe, director of the BNA and a former PZAB member, said his organization is concerned about the prospect of mass evic- tions at Design Place and other apartment complexes in Miami. And, he added, "I'm trying to help the community in their relationship with the developer, to see if they can come up with the best possible [plan].' Ross hadn't heard about SPV's plans to replace the complex with high-rises until the Times told her. "I mean, I think it is kind of ridicu- lous ... They're already putting every- body else out in this area," she said. Regardless, she doubts she'll stay past her lease. "I personally don't think it's worth the cost," said Ross, who pays $1,600 a month for a two bedroom. "It's OK. It's quiet. But there's always something broken. The AC constantly breaks down.... We have a pest problem." Ross suspects that many of the tenants leaving are also annoyed with the shabby conditions of their units. But, are there cheaper placesso live? Ross isn't sure, but she said she may try her luck in North Miami or North Miami Beach. "It's a little cheaper there," she said. "At least slightly." l0 ALLISON ACADEMY ENROLLMENT LIMITED APPLY NOW!! 305.9403922 1881 NE 164TH STREET N,MIAM3 BEACH, FL 33162 WWW.ALLISONACADEMY.COM LLLI'SoNAcADEMY®ALzdsooNAcADBMY:COM ACCREDITED BY: AISF, SACSICASI; COGNIA, MSA, d. NCPSA 20 biscaynetimes.com Pam -ILA eilt-tA M020106- 'ate Ra eal CtV:‘ b� Z-`G j4 w) %4 0 U ki w EAT