The Real Deal New York

Affiliate of Kaled Management agrees to pay tenants of J-51 building $850K

Company was getting tax benefits for rent stabilized units despite removing them from program, lawsuit claimed
By Eddie Small | December 05, 2018 02:30PM

Tenants at a Murray Hill apartment building will receive $850,000 in rent refunds following a settlement they reached with their landlord Hewlett Associates, according to the watchdog group Housing Rights Initiative.

A lawsuit against Hewlett, generated by HRI and filed by the law firm Grimble & LoGuidice, claimed that apartments in 144-90 41st Avenue had been illegally removed from the rent stabilization program even as the landlord continued to receive the J-51 tax subsidy for rent stabilized apartments. The settlement will impact about 80 tenants at the building who were part of the class-action suit.

The largest rent refunds by unit are for $26,664, $24,195 and $21,500, according to HRI.

“J-51 fraud has accelerated New York’s housing crisis for years, and this case is just the first step in remedying that,” said Grimble & LoGuidice attorney Shaina Weissman. “My goal is to stabilize every J-51 apartment in New York City.”

Adam Leitman Bailey, who represented the landlord, which is affiliated with the Kalikow family’s Kaled Management, said that the company had already started issuing rent credits to tenants before the lawsuit.

“At the very end, when we’re almost done giving them their money back, this law firm jumps in, sues, and then gets the money,” he said, “but it was already in the process of being done anyway.”

In a statement, HRI said that after receiving J-51 compliance letters from the Division of Housing and Community Relations, Kaled set the rents at the incorrect amount and gave back “only a fraction of what it stole from tenants.”

The housing group also generated a case against Kaled earlier this year for allegedly overcharging tenants while receiving tax benefits for rent-stabilized apartments at Trafalgar Apartments on Union Street in Flushing. That case is ongoing.

Clarification: This story has been updated to reflect that the party that was sued is Hewlett Associates, an affiliate of Kaled Management.