After spending much of the pandemic skipping rent, the city’s largest parking operator is avoiding paying its creditors by fraudulently concealing its garages’ profits, multiple lawsuits allege.
By September of last year, Icon Parking had racked up at least 16 lawsuits from landlords including SL Green and Brookfield Properties, which claimed Icon collectively owed them over $7.5 million in rent. In court, Icon argued that the pandemic had prevented it from keeping up with its payments.
Meanwhile, Icon continued “to collect hundreds of thousands of dollars in parking fees,” said Bradley Silverbush, an attorney who represents one of several plaintiffs pursuing claims against the company.
State Supreme Court decisions throughout the past year dismissed Icon’s defenses and ordered the parking provider to pay up — $500,000 last October, nearly $400,000 this spring and, most recently, more than $350,000 in September.
But next week, Icon will find itself in court over allegations that it concocted a fraudulent scheme to sidestep those judgments the same way it avoided paying rent: diverting money from its garages into the accounts of investors and holding companies so that it could cry poverty and delay payment.
The first, brought on July 28 by P & S 95th Street Associates — Icon’s landlord at 182 East 95th Street — alleged that while the plaintiff won a money judgment against Icon in the spring, Icon had not paid it as of mid-summer.
According to the complaint, P & S learned from bankruptcy filings that Icon performs daily “cash sweeps” in which its garages transfer all of their income to parent company Icon Holdings, which then channels the large majority of funds into its own accounts or those of Icon owner HPS Investment Partners.
The idea, the plaintiff alleged, is to intentionally render the LLCs affiliated with the individual garages “unable to pay their obligations to landlords and other creditors” as Icon Holdings and HPS make off with the profits.
The transfers constitute fraud under New York’s debt laws, the complaint alleges, because they were made to insiders, concealed from the landlord, comprised all or most of the tenants’ assets and left the tenant without sufficient funds to pay the plaintiff.
“They moved any revenue generated by the individual garages into a separate ‘master account’ so as to remove it from the reach of creditors, including its landlords,” said Deborah Riegel, an attorney for the plaintiff.
A second complaint filed two days later by Icon’s landlord at 30 West 63rd Street levels many of the same accusations, including that Icon “wrongfully exploited the Covid-19 pandemic by continuing to collect revenue from parking customers without paying rent or for their use and occupation of the premises for as long as possible.”
Neither Icon Parking nor HPS could be reached for comment. An attorney representing Icon did not immediately respond to a request for comment.
The fraud allegations come as Icon faces at least 10 lawsuits brought by landlords seeking approximately $9.2 million in back rent.
The co-op board at Gramercy Park Towers recently won a $364,000 judgment against Icon for failing to pay rent on a garage beneath the 269-unit building at 201 East 17th Street. A hearing set for Nov. 8 will also consider Icon’s ejection from the premises.
The fraud suits both have appearances set for Nov. 10.