Smart Apartments to pay $1M to end illegal housing suit

From left: Mayor Bloomberg and Robert "Toshi" Chan
From left: Mayor Bloomberg and Robert "Toshi" Chan

Smart Apartments, a short-term housing operator that put up visitors in illegally converted apartment buildings, will pay a $1 million penalty to the city and be permanently banned from running its operation, according to Mayor Michael Bloomberg’s office.

The settlement, which comes at the close of a lawsuit the city filed in New York State Supreme Court against Smart Apartments in October 2012, provides for a restitution fund for Smart Apartment tourists affected by the company’s misleading practices. The company has also agreed to cease advertising its residential apartments for stays of less than 30 days.

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“Unregulated illegal hotels are unsafe and pose a danger to the community and those who unwittingly use them,” Bloomberg said in a statement. “Today’s settlement will remove dangerous and illegal conditions, and ensure we continue to safeguard the quality-of-life of both residents and tourists in our city.”

The city filed the lawsuit following a year-long investigation into Smart Apartments’ accommodations, having been tipped off by a number of 311 calls and other complaints. A New York State judge ruled in the city’s favor back in February, barring Smart Apartments, led by Robert “Toshi” Chan, from operating or advertising. The $1 million in damages is the full amount sought by the city in the suit. — Julie Strickland