Photo Courtesy of Google
This 10-unit apartment building on 160th Street in Fresh Meadows is at the center of the AG’s suit.
By Forum Staff
A borough real estate company engaged in a years-long fraudulent scheme to avoid paying more than $479,000 in property taxes, manipulate tenants’ leases, deceive regulating agencies, and profit off the sale of a 10-unit apartment building in Fresh Meadows based on a false rent roll, according to a lawsuit recently filed by State Attorney General Barbara Underwood.
Ram Cohen, Eldad Cohen, and their company, ERC Holding, LLC constructed 160th Street apartment building from 2006 to 2009. They applied to the City Department of Housing Preservation and Development for a tax exemption under 421-a of the Real Property Tax Law, which reduces property taxes for eligible new construction condominiums and rentals. Although the Cohens had initially intended to make the building a condominium, in 2009 they decided to operate the building as a rental.
The 421-a tax exemption rules required the Cohens to obey rent stabilization laws when renting out apartments. Underwood’s lawsuit alleges that they never did. Instead, while receiving the 421-a tax benefits for five years, they allegedly gave tenants unregulated leases, which did not offer any of the tenancy protections guaranteed by rent stabilization laws. In 2014, the AG’s office directed the Cohens to register the apartments with the State Division of Housing and Community Renewal and begin treating tenants as rent-stabilized—as is required in order to obtain the tax benefit. As alleged in the suit, the Cohens continued their fraud by making it appear that they were moving to comply with rent-stabilization laws, without actually treating their tenants as rent-stabilized or registering the proper rents.
The lawsuit further alleges that the Cohens continued their fraud by listing inflated rents on all leases while having tenants agree in a separate rider to pay a lower rent. The Cohens allegedly kept these lower rent riders secret from regulating agencies, banks, and a prospective purchaser to make it appear that the building was more valuable than it actually was. By the time the Cohens sold the building in 2016 for $3,750,000, they had never disclosed the true rents paid by tenants to the purchaser or the regulating agencies.
The Cohens are currently running another fraudulent scheme in which they pay their employees’ wages through a corporation registered in the name of a property manager of another Queens building, according to the lawsuit. Rather than pay their employees directly, with payroll taxes withheld, they allegedly pass employees’ wages through this shell corporation, off the books.
Underwood’s lawsuit seeks to bar the Cohens and their company from doing business in the Empire State real estate industry, and require them to repay all illegally avoided property taxes and profits from the sale of the building, as well as civil penalties and costs.
“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 attorney general added.
