Infamous Podolsky brothers being investigated for tax fraud: report

Hoteliers paid by city to house homeless may have hidden money to avoid taxes, sources tell Wall Street Journal

TRD New York /
Jan.January 18, 2019 10:05 AM

Aladdin hotel at 230 West 54th Street and Stuart and Jay Podolsky (Credit: West 45th Street Block Association and Getty Images)

They served five years probation for grand larceny and coercion in the 1980s. But now it looks like the Podolsky brothers may have been committing financial crimes too.

Manhattan federal prosecutors are investigating whether hoteliers paid by the city to house the homeless hid money to evade taxes.

Amsterdam Hospitality Group, the firm led by brothers Stuart and Jay Podolsky, allegedly hid money in attorney escrow accounts, sources familiar with the federal investigation told the Wall Street Journal.

Prosecutors are also looking into whether they overbilled subcontractors for repairs and then put the excess funds into shell accounts, according to the Journal’s reporting.

The brothers’ company has received tens of millions of city dollars to house the homeless over the last five years, in Manhattan hotels like the Aladdin Hotel, the Apollo Hotel and the Ellington Hotel, sources told the Journal.

Records show the City paid the city paid $5.4 million in the fiscal year 2018 alone to house homeless people at the Aladdin, near Times Square.

The city currently houses around 60,000 people shelters and hotels, spending about $384 million annually.

The exact size of the Podolskys’ empire is hard to pin down because they use a series of shell companies to operate their properties and avoid the scrutiny of city officials and auditors, sources familiar with the brothers’ business practices told the Journal.

A spokesperson for the brothers said they were unaware of any investigation and maintained that they never attempted to keep the family name out of the public record. “As with any large company, a team of accountants, both in house and out, prepare the tax returns for the various companies and individuals,” the representative said.

The brothers and their company have been embroiled in controversy for decades, including allegations from tenants and housing activists that their properties are unsafe.

In 1986, the Podolskys pleaded guilty to charges of grand larceny and coercion, after they were indicted for using illegal means to force tenants out of apartments, including paying men to harass and forcibly evict tenants.

The current probe into the Podolsky’s business appears to be connected to the guilty plea of their former employee, George Dfouni, in a wire fraud and tax evasion case in New Jersey last year, according to the Journal. Prosecutors in that case that Dfouni he stole portions of payments that he negotiated for the Amsterdam Hospitality Group while working there, embezzling nearly $14 million from the company. They also say that between 2007 and 2014 Dfouni didn’t report $28 million in income to the Internal Revenue Service. [WSJ] – Decca Muldowney


Related Articles

arrow_forward_ios
J.C. Penney at the Westfield South Shore mall in Long Island and  J.C. Penney CEO Jill Soltau (Google Maps; Getty)

J.C. Penney to keep Bay Shore outpost open for now

J.C. Penney to keep Bay Shore outpost open for now
Signature Bank CEO Joseph DePaolo and New York Community Bank CEO Joseph Ficalora (Photos via Getty; Facebook; iStock)

NYC’s multifamily lenders see shares tumble in 2020

NYC’s multifamily lenders see shares tumble in 2020
The analysis predicts that office vacancies across the world will continue upward (iStock)

Report: Office market won’t return to glory until 2025

Report: Office market won’t return to glory until 2025
Korean wave pours into U.S. commercial real estate

Korean wave pours into U.S. commercial real estate

Korean wave pours into U.S. commercial real estate
The Martinique hotel (Wikipedia, Google Maps)

Operator of Martinique Hotel in Manhattan files for bankruptcy

Operator of Martinique Hotel in Manhattan files for bankruptcy
CEO Mark Tritton and 410 East 61st Street (Getty, Google Maps)

Bed Bath & Beyond will permanently close UES store

Bed Bath & Beyond will permanently close UES store
A rendering of 556 West 22nd Street (Photo by BASIS Independent Schools)

Private school to expand in former Chelsea Art Museum building

Private school to expand in former Chelsea Art Museum building
With about $23 billion of hotel-related CMBS loans in forbearance, more lenders are looking to offload those mortgages. (iStock)

Hotel industry is in trouble and more lenders want out

Hotel industry is in trouble and more lenders want out
arrow_forward_ios

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

Loading...