State charges 2 with improper renting practices
Long Island Press, January 21, 1974
A Flushing real estate broker and the manager and principal owners of a Kew Garden Hills garden apartment complex have been accused to the Department of State of improper renting practices, The Press has learned.
Named in the complaint filed by Anthony Pacifico, the department investigator, were Lawrence Sklar, president of Rabern Properties, Inc., 143-08 Roosevelt Ave., and Andrew Guthartz, manager of the 504-family Carlton Gardens complex, whose offices are at 73-07 153rd St.
The complaint, which was sparked by an Aug. 27 Press Spotlight article into the renting practices at the development, accused Guthartz during 1972 and 1973 of wrongly directing potential tenants to Rabern where they were charged brokerage fees, though no “service” was provided. Fees ranged from one to one and a half month’s rent. Rents ranged from $175 to $220 per month.
The pair was also accused of “fraudulent practices” by engaging in a “scheme” to get the Human Resources Administration to approve leases to welfare tenants that violated its guidelines.
Specifically, Sklar was charged with preparing “fabricated leases” which welfare tenants had to show HRA to get the maximum rents allowed by the agency. After the sample leases were approved, Sklar “did destroy” the “fabricated leases” and had the tenants sign leases with higher rents, the complaint said.
Why did the tenants agree? One tenant told The Press, “if you want an apartment, you do what they say.”
Named were Carlton’s principal owners, Alexander Herman, who has a brokerage office at 350 Fifth Ave., Manhattan, and his brother, Stuart Herman, who does business as Residential and Industrial Equities at 200 West 57th St. They were cited in the complaint to “determine whether they knew or should have known of the scheme…”
All four have real estate licenses which could be revoked or suspended if the charges are proved to the hearing officer’s satisfaction. The department, which controls all brokerage licenses in the state, has scheduled a hearing on the charges Jan. 31 at 10:30 a.m. at its offices at 270 Broadway, Manhattan.
The Press Spotlight article focused on the alleged steering scheme and how the welfare tenants, mostly mothers with children, were forced to make up the difference between the HRA checks and the actual rents from their twice monthly checks for food and clothing. Some said they had to borrow to meet the increased fees. (HRA regulations limit fees to one month’s rent.)
Not reported by The Press, however, was the complaint’s charge that Sklar shared the improperly collected commissions with janitors and superintendents of the various Carlton buildings by paying them “sums of $25 to $100.” It gave no explanation for why Sklar allegedly would split his fees with janitors and superintendents.
Directing potential tenants to a broker, as well as splitting fees with unlicensed persons not involved in the “service” run counter to the Real Property Law which gives the department regulatory power over the licenses.
If the charges prove true, HRA will have been the chief victim. From the period November 1972 to August 1973 alone, about 70 welfare families moved in. For just those 70 families the department may have wrongly paid out at least $14,000 in taxpayers’ money for fees.
Only 13 welfare families were named in the complaint, however. They were among about 25 families that filed complaints with Pacifico when he came to Carlton to take testimony last Nov. 8.
In addition to the hearing, the Carlton principals are scheduled to be represented at Queens Housing Court tomorrow morning for allegedly failing to repair about 800 violations of the city’s Housing Code, according to Richard Huffman, an attorney for the Housing and Development Administration’s Housing Litigation Bureau.
Huffman said HDA is seeking “injunctive relief” to force the owners to (1) fix up the development, which has become a pocket slum in a middle-class area in recent years, and (2) maintain it once it is repaired.
The development is the first in Queens and the largest in the city to face civil prosecution by HDA under state legislation which created the Housing Court as of Oct. 1.