Avarice by the sea

 

Queens Eagle

A group of more than a dozen Arverne by the Sea homeowners are under investigation for  illegally renting out their homes while collecting approximately $1 million in tax exemptions, the Department of Investigation said this week.

A Department of Investigation report, issued Feb. 8, includes 11 recommendations to expand city oversight and prevent violations following the investigation into a 2018 complaint.

The DOI found that there were 15 homeowners in violation of the primary residence requirement; eight used the properties as rentals or investment properties — one as a hotel that was registered with the city to collect occupancy tax — and four who each owned one property and used them as rentals instead of living there.

There were 11 homeowners with multiple Arverne by the Sea deeds.

According to the DOI, they “were in violation of primary residence requirements by illegally renting their properties while being unjustly enriched by tax exemptions meant for owner-occupied homes.”

The apartments were designated in the early 2000’s as an Housing Preservation and Development Urban Development Action Area Project with a 20-year property tax exemption to homeowners requiring they maintain the homes as their primary residences.

Impunity City 

You wouldn’t think if you looked at them on first impression, but these beautiful beach front houses are actually government sanctioned public housing…

 These Arverne homes are actually impeccably designed, a bulk of them even have patios on the top floors which resemble something like penthouse condos like on Miami and Venice Beaches  with gorgeous views of the Atlantic Ocean and somewhat pleasant views of Jamaica Bay and the poorer parts of Rockaway Beach, where there at least three public housing projects in the same neighborhood.

 You don’t have to be much of a detective to figure out why these 15 motherfuckers took advantage of a government housing program and made millions off it while getting tax breaks and write-offs for nearly a decade. It doesn’t take much sleuthing to figure out why these homes were easily poached for illegal renting and airbnb lodging and why some nefarious scumbags would conspire to take advantage of this government housing program and try to make massive profits from it.All it took was a casual bike ride around this sunny oasis of pirated housing equity, it’s gets real plain to see why some nefarious scumbags would try to take advantage of this government housing program and try to make massive profits from it. Bookending this HUD financed utopian village are two massive vacant lots, one of which is still a landfill.

 

Chon family charged with tax evasion

From NBC:

The family owners of a popular spa destination in Queens have been indicted on felony charges for failure to pay $1.5 million in taxes over the course of three years, authorities announced Wednesday.

The owners of Spa Castle Inc., a 100,000-square foot spa facility in College Point, Queens, didn't pay the sales, withholding, corporate and MTA surcharge taxes they owed from 2010 through 2013, state officials say.

"The scale of theft alleged in this case is staggering," said Acting Commissioner of Taxation and Finance Nonie Manion, who announced the indictment along with Attorney General Eric Schneiderman.
The investigation began when authorities executed a search warrant at Spa Castle Inc. in August 2015, and found records showing the spa owners underreported earnings and paid workers and vendors in cash.

Steven Chon, 57; his brothers Daniel Chon, 54, and Victor Chon, 50; and daughter Stephanie Chon, 29, were arraigned Wednesday in Queens Supreme Court. Bail has been set at $100,000 bond.

Out of state car registrations cost NY $93M

From Crains:

Newcomers are required to register their cars with New York authorities within 30 days of moving to the state, but many don't bother. As a result, they cheat the state and city out of millions of dollars in revenue while making use of precious free parking spaces.

Neither the city nor the state could provide an exact number of improperly registered cars on the road, but a 2011 state Senate report found that nearly 25% of all accidents in the state involving cars with Pennsylvania license plates occurred in Brooklyn—a number that suggests many of those cars' owners were New York residents, not visitors.

The report also found that motorists who live in New York but drive cars registered out of state cost the city $73 million in unpaid parking tickets and deprive the state of $1 million annually in fees for license plates, titles and vehicle registrations.

But those unpaid tickets and uncollected fees still take a back seat to the loss of potential sales tax revenue. A New Yorker who pays the average price for a new car—$33,560, according to Kelley Blue Book—must fork over about $3,000 in sales tax. Approximately 125,000 new cars were added to state Department of Motor Vehicles registration rolls in 2015. If up to 25% of residents' vehicles were purchased out of state, as the Brooklyn accident number suggests, New York could have lost out on more than $93 million in tax revenue.

Preet nails Cuomo donors

From The Buffalo News:

A massive pay-to-play scheme involving alleged bid rigging of state contracts involving hundreds of millions of dollars in taxpayer money was outlined by federal prosecutors Thursday in a case that targets longtime advisers and major donors of Gov. Andrew M. Cuomo.

Manhattan-based U.S. Attorney Preet Bharara’s case alleges bribery, extortion and tax evasion. It also muddies a picture of ethical cleanliness that Cuomo has sought to portray of his administration since taking office in 2011.

Bharara, the prosecutor who has brought high-profile and successful cases against a lineup of state legislators, said Albany’s plague of corruption has now touched the executive branch of government.

“I really do hope that there’s a trial in this case so all New Yorkers can see in gory detail what their state government has been up to,” Bharara said in unveiling the Justice Department’s case against nine people, including Cuomo advisers Joseph Percoco and Todd R. Howe, and Alain E. Kaloyeros, president of SUNY Polytechnic Institute.

Louis P. Ciminelli, the Buffalo developer who is chairman and CEO of LPCiminelli, also is accused in the pay-to-play scheme. But allegations stretch across the state

Business owner underreported income

From the Daily News:

The owner of an Edible Arrangements store in Queens has admitted to gorging himself on tax money, prosecutors said Thursday.

Maurice Letman, 42, of Springfield Gardens, pleaded guilty to lining his pockets with $185,000 forbidden fruit — money that should have gone to the city and state.

“Sales taxes are meant for the public treasury — not to line the pockets of businessmen,” said Queens District Attorney Richard Brown.

Letman has agreed to repay the full $185,000 plus interest and penalties.

He was charged last year with underreporting income from his Springfield Blvd. franchise of the popular fruit basket chain.

Grimm to plead guilty and may head to the pokey

From the Daily News:

After vowing to fight his criminal indictment “tooth and nail,” Rep. Michael Grimm of Staten Island has agreed to plead guilty Tuesday to a felony charge of tax evasion, the Daily News has learned.

Grimm’s admission of guilt will place his congressional career in danger, exactly seven weeks after he won reelection by an overwhelming margin.

Grimm was scheduled to enter the plea Tuesday before Judge Pamela Chen in Brooklyn Federal Court.

A Republican who served in the Marines and worked as an FBI agent, Grimm was charged in a 20-count federal indictment in April with hiding more than $1 million in sales and wages at an Upper East Side restaurant he co-owned, and with hiring undocumented immigrants.

He pleaded not guilty, and his trial was to begin in February.

Despite the indictment, Grimm trounced Democrat Domenic Recchia 55% to 42% on Nov. 4 to win a third term.

Recchia made the criminal case a central issue of his campaign, and at a debate on Oct. 17, Grimm was asked, “If found guilty, would you resign?”

“Certainly, if I was not able to serve, then of course I would step aside and there would be a special election,” he replied.

But if he can escape prison time, Grimm is expected to try to hold onto his seat, arguing he would still be “able to serve,” a source familiar with his thinking said.

Under federal law, Grimm faces up to three years behind bars on the tax evasion charge. As a first-time offender, however, he might not have to serve any time. That decision will be up to Chen when she sentences him sometime next year.

If Grimm is spared prison and refuses to resign, it would up to House Speaker John Boehner (R-Ohio) to decide whether to force him to step down.

Something else to dislike about Astoria Cove

From the Daily News:

The development group seeking city approvals to build a luxury housing complex on the Astoria waterfront has come under fire because one of its principals hired a firm connected to a scandal-scarred contractor to do work on another Queens site, the Daily News has learned.

Alma Realty, the lead builder behind the Astoria Cove project, hired the company, SSC High Rise Construction, to do foundation work at another project it is developing nearby, on Vernon Blvd.

“This contractor may be working for Alma but will not be employed at the Astoria Cove site,” said a spokesman for the Astoria Cove developers. “In light of allegations that have been brought to our attention, we are asking Alma to investigate these claims further and take the appropriate action.”

SSC High Rise Construction is run in part by Michael Mahoney, according to court filings and a signed affidavit by a former employee.

Mahoney and six companies he controlled were ordered by a state Supreme Court judge to pay $1.6 million in back wages in 2011, in regards to a suit brought by then-Attorney General Andrew Cuomo.

Cuomo charged them with withholding millions of dollars in employees’ overtime and creating a racially tiered hierarchy of wages on construction sites, where white Irish employees were paid $25 an hour, black employees received $18 and Latino employees, $15.

Mahoney also pled guilty to felony tax evasion in 2011 in a suit brought by U.S. Attorney Preet Bharara, and was sentenced to two years’ probation.

Grim news for Grimm

From Capital New York:

Rep. Michael Grimm surrendered to federal authorities on Monday morning, shortly before prosecutors at the U.S. attorney's office in Brooklyn unsealed a 20-count indictment related to Grimm's ownership of a health foods store in Manhattan.

Loretta Lynch, the U.S. Attorney for New York's Eastern District, presented the indictment at a press conference in Brooklyn, detailing a tax-evasion scheme that she said was "almost breathtaking in its simplicity."

The indictment accuses Grimm of pocketing more than a million dollars in cash payments at the Upper East Side store called Healthalicious.

"When it came to his restaurant, Michael Grimm never met a tax he didn't lie to evade," Lynch said.

The charges include mail, wire, health care and tax fraud, along with two counts of perjury.

According to the indictment, "Grimm paid a large portion of Healthalicious’ employees’ wages in cash and did not report those cash wages to federal and state authorities, thereby lowering the restaurant’s payroll tax costs."

In 2013, two former Healthalicious employees filed a federal civil lawsuit against Grimm alleging the congressman did not pay them minimum or overtime wages as required by law. During a deposition hearing for the case, Grimm allegedly lied "about several material matters in connection with the lawsuit including whether he paid his employees in cash, and if he had interacted with a payroll processing company," according to prosecutors.

The indictment comes after a two-year investigation that was believed to focus on Grimm's congressional fund-raising.

AirBnB hurts hotels

From Huffington Post:

Since the mayor's office began examining short-term rentals in 2006, it has fielded more than 3,000 complaints and issued almost 6,000 notices of violation, including fire, safety and occupancy infractions, which carry fines.

Airbnb says 87 percent of hosts in New York share the space they live in with guests. The company has called the subpoena of customer information by Attorney General Eric Schneiderman an "unfounded fishing expedition" and says hosts are responsible for following varying laws around the world.

NYC & Company, the city's official tourism agency, issued a statement saying, "This illegal practice takes away much needed hotel tax revenue from city coffers with no consumer protections against fire- and health-code violations." Neither city officials nor hotel organizations would estimate how much revenue hotels and the city might be losing.

Landlords and tenant organizations have long complained that short-term sublets are a violation of most leases and a security issue.

Having strangers coming in and out of a residential building "is a terrible problem," says Tom Cayler, chairman of the Illegal Hotel Committee for Manhattan's West Side Neighborhood Alliance. "If you come home at night and there are people in the lobby or elevator who you don't know, you should be scared."

Sam Shaber, a musician who rented space on the Lower East Side for $150 to $225 a night, says she welcomed guests from France, Argentina, Sweden and elsewhere. And she said she always got a good sense of them from online exchanges and profiles before handing over the keys.

"In this day and age of Craigslist, we have a radar for who's weird," Shaber said. "We never had one problem."

Airbnb renters say they can offer an experience hotels can't — the opportunity to live like a native in funky neighborhoods off the beaten tourist paths.

Schneiderman going after AirBnB

From the Daily News:

The state’s top cop is throwing the guest book at AirBnB — demanding host data from the 225,000 New Yorkers on the Web's biggest apartment sharing site.

Attorney General Eric Schneiderman subpoenaed the data as part of an investigation into the website stemming from a 2010 law that makes it illegal to use such sites to rent out your own apartment.
AirBnB has until Monday to turn over the data.

The site has 225,000 users in the city, but only data from those who rent out their place is being sought, according to sources. That would affect only about 15,000 of New Yorkers.

The legal strike comes just days after AirBnB CEO Brian Chesky tried to appease state lawmakers by agreeing that its users should collect the normal hotel occupancy tax and promising to work with pols to root out bad hosts.

Queens' own artistical genius

From the NY Times:

Pei-Shen Qian’s neighbors on 95th Street in Woodhaven, Queens, knew he scratched out a living as an artist: he often dried his paintings in the sun, propping them up on the weathered white siding of his modest house.

They were less clear on why he kept his windows covered, or why every so often a man in an expensive car would come to the house carrying paintings to, not from, a painter.

“He would bring a painting in and show it to him, for him to work on or fix up something,” Edwin Gardiner, 68, who lives across the street, said before pausing and adding, “I don’t know what he did with it.”

Parts of the mystery became clearer on Friday as neighbors learned that Mr. Qian, a quiet 73-year-old immigrant from China in a paint-flecked smock, is suspected of having fooled the art world by creating dozens of works that were modeled after America’s Modernist masters and were later sold as their handiwork for more than $80 million.

Mr. Qian, who came here more than four decades ago and struggled to sell his own works in this country, earned just a few thousand dollars for each of his imitations. New York was a center of the art world, but Mr. Qian told friends that he had been disheartened by the difficulties he encountered finding a foothold as an artist.

“He was kind of frustrated because of the language problem, the connection problem,” said Zhang Hongtu, a friend and acclaimed Chinese artist who lives in New York. “He was not that happy.”

Mr. Qian’s low profile as a painter has evaporated; federal authorities have decided that he was the artist whose fakes are at the heart of one of the bolder art frauds in recent memory.

A revised federal indictment handed up this week charged Glafira Rosales, one of the dealers accused of having peddled his works, with money laundering and tax evasion in connection with the sales.

The indictment does not name Mr. Qian, who could not be reached for comment on Friday, but people with knowledge of the case confirmed that he was the man referred to only elliptically in the charges as the “Painter.” Neighbors say agents with the Federal Bureau of Investigation searched his home this week.

Tax evasion pretty common

From the NY Times:

At the peak of the real estate boom, the owners of a four-story building with a couple of huge billboards in Times Square failed to report money that they received from renting the signs, evading tens of thousands of dollars a year in property taxes.

The owners went further than just omitting the billboard income; they appealed to the city for a reduction in taxes for six consecutive years. But after an investigation by the Manhattan district attorney, Cyrus R. Vance Jr., the owners paid $240,000 in back taxes as part of an agreement settling the matter.

On Wednesday, the grand jury that heard evidence in the case, as well as two others that resulted in indictments, issued an unusual report recommending a series of what it said were “desperately needed” changes to the city’s property tax system, including civil sanctions and stiffer penalties for landlords who file false documents and information.

The report suggests that this kind of tax evasion may be widespread, citing a survey that found that 60 of 100 property owners cited by the Buildings Department for improper permits had failed to report signage income to the Tax Commission.

“Reform is desperately needed,” the report said, to protect the integrity of the city’s tax system and to “maximize the tax receipts that are currently lawfully due.”

City officials, who testified extensively before the grand jury, said it was impossible to know how many of the city’s one million property owners were evading taxes by filing false income and expense statements with the Finance Department or the Tax Commission. But with $17 billion in property taxes collected in 2011, Glenn Newman, president of the Tax Commission, said “even a small amount of fraud can result in real money lost.”

Special ed school ripped off taxpayers

From DNA Info:

An audit found that a couple running a Flushing special needs pre-school bilked the state out of nearly $1.5 million over the years, which they used on their cars, kids’ furniture and even mortgage payments, authorities said.

A state comptroller's office probe of Bilingual SEIT and Preschool’s books, which has branches in Flushing and Elmhurst, found that the school's billings to the state had skyrocketed over the last decade—spiking from $808,935 in 2002-'03 to $15 million in the 2010-'11 school year, The New York Times first reported.

Bilingual SEIT and Preschool runs programs to help kids aged 3- to 5-years-old with disabilities, teaching them communication and motor skills, the company website said.

Teachers employed by the company would give the kids one-on-one lessons at home or at the pre-school.

Companies can bill the state for up to $122 per hour per child for these services-an amount that is reimbursed, whose costs are split by the state and local governments, authorities said.

But auditors found that the company was overcharging the program and noticed that the school's honchos paid themselves hefty salaries. Executive Director Cheon Park overpaid his wife Hyun Ham, who worked as a payroll clerk in the office, more than a $100,000 over a decade, according to officials.

Not just that, they also allegedly avoided paying hundreds of thousands of dollars in taxes, by working as “independent contractors,” and even billed the interest payments on their mortgages to the state.

Fighting illegal conversions a losing battle?

From City Limits:

Nizam Ahmed didn't know his basement unit was illegal back in 2004, when he purchased his two-family apartment building in Ozone Park. "It was nice," recalled Ahmed, a 57-year-old cabdriver. His loan was based on income from three units. Ahmed's family lived in the basement, while he rented the two apartments upstairs. When his second-floor tenant stopped paying rent, he asked her to move, and she reported him to the Buildings Department.

The current system leads to selective enforcement. After city inspectors fined Ahmed $800, he spent another $6,500 on a lawyer. He can't rent the basement unit, and he's now five months behind in his mortgage. He's having trouble getting a loan modification that would help prevent foreclosure. In the meantime, he works double shifts before returning home to his street of two-family homes, many with illegal apartments. "Everybody has a basement rent," he said.

Oh boo hoo. First of all, the pre-purchase inspection and C of O tell you what the home's legal use is. This entire article is written from the perspective of the "poor tenants who can't afford legal apartments" and the "poor landlords who need financial assistance to legalize their units." Here's the reality: The landlords doing this factor in the income from an illegal unit when they are deciding whether or not to buy a house. Then they take out a mortgage that they wouldn't be able to afford without the illegal unit. When they are busted, I feel no sympathy for them.

Illegal apartments bring month-to-month leases, which are usually taken by people who are transient in nature. You'll see new people going in and out of these units all the time and not know who lives on your block anymore. Plus, it diminishes the capacity of the city to provide services that people in the legal units pay for. This brings a block down and is a quality of life issue that goes well beyond "affordable housing." People who invest in one or two-family homes to settle down in have the right to expect that their standard of living will be maintained by their neighbors. But it seems that the ones doing all the illegal stuff are protected by this administration and that is why we see the decline of many formerly wonderful neighborhoods.

Maybe it's time we started reporting illegal conversions to the Dept of Finance and IRS instead of to DOB. Those agencies will be more interested in getting to the bottom of the situation and would be more likely to get landlords to cease and desist renting out illegal units. Hit them where it hurts.

In fact, the DOF suggests you do just that:

Report Tax Evasion and Fraud

Another fine upstanding jiggle joint

From the Daily News:

Robert Potenza's testimony in federal court offered a rare glimpse into the inner workings of a jiggle joint - from his $1.5 million salary to the club's $4.50 cut on every $5 ATM transaction fee.

He says the tax agents who grilled him about the finances of Gallagher's 2000 in Long Island City were babes in the woods when it came to flesh peddling.

"They didn't seem like they knew much about my business," he testified.

The feds are seeking the forfeiture of nearly $900,000 seized from Potenza's TD Bank and Merrill Lynch accounts.

Government lawyers say he made more than 100 deposits of four-figure sums to avoid federal reporting requirements for transactions over $10,000. That practice is called "structuring" and is a red flag for tax evasion.

In a civil bench trial last week, the strip club king insisted he pays his taxes and said his mammary mecca is just a cash cow.