AG Underwood sues Queens landlords for manipulating 421a program

Landlords Ram and Eldad Cohen allegedly avoided paying almost $500K in property taxes by breaking 421a rules

New York /
Oct.October 23, 2018 01:00 PM

71-44 160th Street in Queens with the 421a forms (Credit: Google Maps)

A pair of Queens landlords spent years cheating the state out of almost $500,000 in property taxes by manipulating the 421a program, according to a lawsuit from the New York State Attorney General’s Office.

The lawsuit seeks to ban Queens landlords Ram Cohen, Eldad Cohen and their company ERC Holding, LLC from participating in New York’s real estate industry. It also aims to force them to repay the property taxes they dodged, along with the profits they made from selling their building at 71-44 160th Street in Fresh Meadows.

The brothers finished building the 10-unit building in 2009 and applied for a tax exemption with the city under the 421a law, according to New York State Attorney General Barbara Underwood. The exemption requires the Cohens to abide by rent stabilization laws, but the suit alleges that they stuck tenants with unregulated leases instead. The attorney general’s office previously ordered the Cohens to start treating their tenants as rent-stabilized in 2014, but they did not do so, the lawsuit says.

The Cohens also tried to make their building appear more valuable than it actually was by listing inflated rents on all of their leases and giving tenants separate riders where they would agree to pay lower rents, the suit says. They kept these riders secret from banks, regulatory agencies and a prospective buyer to make the building appear more valuable than it really was and sold it in 2016 for $3.75 million, according to Underwood.

The lawsuit also claims that the Cohens are currently paying their employees through a shell corporation rather than paying them directly and withholding payroll taxes.

The Cohen brothers could not be reached for comment.

Underwood said in a statement that her office has “zero tolerance for landlords who try to defraud regulators and their own tenants.” Earlier this year, her office reached a settlement with the owner of a co-op at 417 East 60th Street who she said was also skirting rent stabilization laws.

Underwood took over for former Attorney General Eric Schneiderman earlier this year after he resigned following accusations that he had physically abused four women. She is not running in the upcoming Nov. 6 election for Attorney General, which Democratic candidate and New York City Public Advocate Letitia James is widely expected to win.


Related Articles

arrow_forward_ios
(iStock)
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Children’s Magical Garden at at 157 Norfolk Street (Google Maps, Facebook)
Children’s Magical Garden claps back against developer who claimed defamation
Children’s Magical Garden claps back against developer who claimed defamation
432 Park pad trades for $26M, supertall’s priciest deal since 2019
432 Park pad trades for $26M, supertall’s priciest deal since 2019
432 Park pad trades for $26M, supertall’s priciest deal since 2019
25 Park Avenue in Larchmont (WilliamPitt)
Estate famed for turtle soup has new distinction: $11M sale price
Estate famed for turtle soup has new distinction: $11M sale price
Travis Soukup and Yongxing Deng with Fifth Wall's Brendan Wallace (Aloft/Zack Phillips, Jeff Newton, iStock)
Appraisal startup Aloft closes $20M Series A led by Fifth Wall
Appraisal startup Aloft closes $20M Series A led by Fifth Wall
1439 Ocean Avenue in Brooklyn (Google Maps)
New York’s “worst landlord” pays the piper in $235K city settlement
New York’s “worst landlord” pays the piper in $235K city settlement
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside
9 East 68th Street, 22 East 67th Street (elliman.com, streeteasy.com)
Manhattan luxury market breaks single-week record for contract signings
Manhattan luxury market breaks single-week record for contract signings
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...