The state agency that licenses real estate brokers opened an investigation this week into two of the city’s top retail brokers based on court testimony from one of them saying that about a decade ago they accepted a $100,000 cash commission in order to avoid paying income taxes.
The state Department of State began looking at the commission fee to brokers Jeff Winick, CEO of Winick Realty Group, and Cory Zelnik, CEO of Zelnik & Company following testimony from Zelnik in April that they took the cash commission with the purpose of avoiding taxes.
“We’ve opened a file on this case, and, if charges are brought, the brokers could potentially lose their licenses or face other penalties Joel Barkin, spokesperson for the Department of State, said in an e-mail today. “Non-payment of taxes is a demonstration of untrustworthiness,” under the state’s real property laws, he said.
Zelnik, who was president of Winick Realty until 2006, provided the testimony in April during the ongoing federal trial against two former Duane Reade executives, Anthony Cuti and William Tennant, charged with securities fraud. The government says Cuti and Tennant used dozens of sham retail lease transactions, most involving entities controlled by Jeff Winick, to inflate the drug store earnings.
Although the $100,000 payment was made about 10 years ago, there is no statute of limitations on enforcement cases, Barkin said.
However, should they lose their licenses, they could later reapply to hold them again, Barkin said.
Neither Zelnik nor Winick responded to requests for comment. In the past, they have said they cannot comment on aspects of the trial while it is ongoing.
The investigation is into the individuals Winick and Zelnik, not their companies, Barkin said.
The state began the investigation after Zelnik’s testimony was brought to the attention of the agency this week, Barkin said.
Zelnik Told The Court on April 13 that in either 1999 or 2000 he and Winick accepted $100,000 in cash in a briefcase for a leasing commission. Zelnik took about $25,000 of that, and Winick received about $50,000, he said. Zelnik did not specify what happened to the other $25,000, but they had another partner at the time and it may have gone to him.
When asked what was the purpose of accepting the cash, Zelnik Told The Court: “To not pay taxes.”