Smart Apartments, a short-term housing operator that put up visitors in illegally converted apartment buildings, will pay a $1 million penalty to the city and be permanently banned from running its operation, according to Mayor Michael Bloomberg’s office.
The settlement, which comes at the close of a lawsuit the city filed in New York State Supreme Court against Smart Apartments in October 2012, provides for a restitution fund for Smart Apartment tourists affected by the company’s misleading practices. The company has also agreed to cease advertising its residential apartments for stays of less than 30 days.
“Unregulated illegal hotels are unsafe and pose a danger to the community and those who unwittingly use them,” Bloomberg said in a statement. “Today’s settlement will remove dangerous and illegal conditions, and ensure we continue to safeguard the quality-of-life of both residents and tourists in our city.”
The city filed the lawsuit following a year-long investigation into Smart Apartments’ accommodations, having been tipped off by a number of 311 calls and other complaints. A New York State judge ruled in the city’s favor back in February, barring Smart Apartments, led by Robert “Toshi” Chan, from operating or advertising. The $1 million in damages is the full amount sought by the city in the suit. — Julie Strickland