Forced to pay “fees,” Carlton tenants say
Long Island Press, August 27, 1973
Tenants in a Flushing garden apartment development have charged that they were forced to pay fees to a real estate broker to get their apartments even though they first tried to rent directly from the management’s agent on the premises.
The charges, by tenants in the 504-family Carlton Gardens development located in the vicinity of 73rd Avenue and Kissena Boulevard, were leveled against the Carlton Gardens managing agent, Andrew Guthartz, and Rabern Properties, Inc., a Flushing real estate firm at 143-08 Roosevelt Ave.
If the charges are true, the Department of Social Services unwittingly would have paid thousands of dollars in unnecessary rental fees to have welfare families placed in Carlton Gardens. Currently, 213 of the development’s 504 apartments are rented by welfare clients – with about 70 of them reportedly having moved in since last November.
Carlton Gardens tenants told The Press they were sent to Rabern by the Carlton Garden management office after inquiring either in person or over the phone about renting apartments. And eight who are welfare recipients said Rabern employees provided the Department of Social Services with leases showing lower rents and fees than they actually wound up paying.
Guthartz has denied that he sent prospective tenants to the brokerage firm and Rabern president, Lawrence Sklar, has refused to comment on the allegations.
Both the state Department of State, which has jurisdiction over brokerage licenses issued in the state, and the city’s Human Resources Administration are investigating the tenants’ charges.
According to Patrick Cea, legal counsel to the Department of State, charging a fee to a person sent to a broker by a managing agent is improper “because it is not even a service.”
The Court of Appeals has held, he said, that a broker may only charge for a “legitimate” service such as finding someone an apartment.
In cases where the existence of improper practices has been proven, Cea said, brokerage licenses have been suspended by the department until illegally collected fees were returned to victims. The department action followed formal hearings convened after complaints were received, he said.
In denying the tenants’ charges, Guthartz told The Press: “If we had a vacancy, anyone who came into here (the management office) got an apartment.”
Guthartz’ statement was contested, however, by Doris Matthews, a long-time tenant who also directs the city-funded Carlton Gardens Children’s Center.
“In March,” she said, “I asked Guthartz about an apartment for my friend and he told me she would have to go to Rabern to rent an apartment.”
Her account was similar to another given to The Press by Sam Levine, a community affairs worker for the Human Resources Administration.
According to Levine, at a meeting with the leaders of the Carlton Gardens Tenants Association Guthartz “admitted to us he didn’t rent directly but sent prospective tenants to Rabern.
“This has been going on for at least two years,” said Ron Alexander, vice-chairman of the tenants group.
When confronted with the charges by Matthews, Levine and Alexander, Guthartz refused to comment.
Real estate men at Rabern have charged tenants – both welfare and non-welfare – fees as high as a month-and-a-half rent for placing them in Carlton Gardens, many tenants complained.
For just those 70 new families – who pay from $175 to $220 a month in rent – the department may have wrongly paid out at least $14,000 in taxpayers’ monies. The $14,000 figure is a conservative estimate based on an average $200 fee for each of the 70 families. Eight welfare clients interviewed by The Press said Rabern employees had a special system for dealing with them.
They said the firm’s employees regularly tailored leases to the maximum amount of money the Department of Social Services would ordinarily pay for fees and rent. They claimed that after these leases were shown to the department, and the necessary checks were issued, Rabern’s employees ripped them up.
The tenants said they were then required to pay money out of their pockets to supplement the city’s allotments.
Current Department of Social Service guidelines limit the payment of brokerage fees to one month’s rent. The department also requires two-year leases.
Welfare tenants interviewed by The Press, however, said they paid an additional half month’s rent – some for only one-year leases – ranging from $80 to $110.
Some of the welfare tenants, all women with children, said they borrowed the money to get their apartments.
In addition, the tenants were charged rents ranging from $5 to $20 per month above the department’s guidelines, forcing the welfare clients to use some of their regular allotments for food and clothing for rent.
According to Franklin White, legal counsel to the Human Resources Administration, the recipients did not break the law by showing the tailored leases to the department or by exceeding the guidelines.
White said the department on occasion has approved one-year leases and rents higher than those allowed in the guidelines. In such cases recipients make up the difference out of their twice-monthly welfare checks.
HRA guidelines state that brokerage fees should be paid “only if exploration has determined that payment of these fees is unavoidable.”
White said the department meets this stipulation by making sure leases shown to the department come from a licensed broker. He also said the recipients would have to live with the leases they signed.
When The Press asked HRA Deputy Administrator Robert F. Carroll if the department had been lax in approving the fees, he replied: “That’s like blaming a mugging victim for being mugged.”
As a result of The Press interviews, the HRA has begun an investigation to see if it should seek the return of fees paid to Rabern. According to White, the department is also looking into whether the broker may have committed any criminal acts.
Most of the welfare recipients said they accepted Rabern’s terms even though they knew they were showing the department the wrong lease.
Bessie Walls, a 24-year-old mother of two, had been trying to move out of Bedford-Stuyvesant for a year. When she was told to show welfare an unsigned display lease, she did because “when you’re looking for an apartment you have to go along with what they [the real estate agent] says.”
Ms. Walls, who moved to Carlton Gardens in June, said she paid Rabern $100 in addition to the $180 fee paid by the city. And although the original lease said she would pay $180 per month, she said she is paying $205 on her one-year lease.
In another case, Lily Bennett, a welfare recipient, was able to get some money back from Rabern with the help of Social Services.
According to her account, she was first told she would have to pay a $210 renting fee which would be covered by the department, When she returned to Rabern after having her $210-a-month lease approved, she was told she would have to pay an additional $110 in rent and fees before she could move in.
“I asked and I was told the fee was a month-and-a-half’s rent,” she said. “A man in the office told me, ‘We could charge you anything we want to under the law.'”
“I was angry,” said Mrs. Bennett, “but I didn’t say anything because I wanted to see how far they would go.”
Mrs. Bennett said she signed the lease figuring that she still had the lease she had shown welfare. When she moved into her apartment, however, she found the stove and the toilet not working.
When the repairs were not made within a couple at days, Mrs. Bennett said, she had an argument with Guthartz and threatened not to pay her rent
.
“At that point,” she said, “Guthartz told me, ‘You’ll pay that $220.’ ”
Mrs. Bennett then went home and checked the lease. “I never thought they would change the numbers,” she said.
She complained to Levine who alerted the housing section of the Social Services department. Levine said an official called Rabern and $80 was returned to Mrs. Bennett. Guthartz, however, is insisting that she pay the $220 per month, she said.
Levine said Mrs. Bennett has been advised to pay $210. “The only way I’ll pay $220,” she said, “is if a judge tells me to!”
When she went to Rabern to get the $80, Mrs. Bennett said, “They told me they were giving me a favor by letting me in because I was on welfare. I was told I was lucky I was getting the $80 because they don’t have to give me a damn thing.”
As a result of tenants’ complaints, the Department of Social Services has ceased accepting leases from Rabern, Carroll said. The action may be moot, however, since Guthartz said he is no longer renting to welfare families.
“One of the reasons a place like Carlton Gardens gets so many welfare families is because of the grapevine among recipients,” said Robert F. Carroll, deputy administrator for the Human Resources Administration.
“When a place like Carlton opens up, the word spreads like wildfire,” he added.
The official was speaking about the 504-family garden apartment complex in Flushing that has become a poverty pocket in a middle-class area in the past few years- drawing close to 50 per cent of its occupants from the city’s welfare rolls.
Carlton stands in contrast to three other garden apartment developments in its immediate vicinity: Regal, Ambassador and Queens Gardens. The four were originally part of one development built following World War II. But while they contain the exact same structures, Carlton charges higher rents.
Carlton, which has not been maintained as well as its sister developments, gets an average $5 to $10 more per month for comparable apartments.
In addition, while Rabern Properties Inc. has been charging as much as one-and-a-half month’s rent for placing families in Carlton, Regal – which is across the street – has been charging no fees. Ambassador and Queens get one-half month’s rent as a fee.
How has Carlton been able to do it?
The answer, some believe, is that Carlton has been the only one of the four renting to welfare clients.
As a result of pressure from Queens Borough President Donald R. Manes, the Carlton management ceased renting to welfare families in the first week of August. Currently, 213 of the development’s 504 apartments are rented by welfare recipients.
Manes has thus far unsuccessfully urged the Department of Social Services to draw up guidelines limiting the number of welfare families in middle-class areas. By allowing so many welfare cases into Carlton, Manes contends, the department is committing “scatter-site housing by attrition.”
But department officials maintain that to “redline” areas would be illegal. They say they cannot do this without specific authorization from the state legislature.