Indictment is First Under Office’s New Housing & Tenant Protection Unit
Instead, they were rented out at higher rates for years — sometimes more than $1,000 per month above the approved affordable level — to renters who did not qualify for affordable housing. The defendants are charged in five separate New York State Supreme Court indictments with multiple charges including Grand Larceny in the Second Degree, City Criminal Tax Fraud and Offering False Instrument for Filing in the First Degree. [1]Manhattan District Attorney Alvin L. Bragg, Jr. and New York City Department of Investigation Commissioner Jocelyn E. Strauber announced the indictment of developers JOEL KOHN, MICHAEL AMBROSINO, ALEN PAKNOUSH, MENDEL GOLD, IOAN SITA and GHEORGHE SITA, and their real estate corporations, for defrauding New York State’s 421-a tax exemption program meant to promote affordable housing, and collectively reaping more than $1.6 million in illegal property tax benefits.
The investigation revealed that these developers, who owned six different Brooklyn apartment buildings, allegedly violated the terms of the 421-a program by submitting falsified documents to the City and State, claiming the designated affordable units would be rented to qualified tenants. Under the terms of the program, developers agreed that those affordable apartments can only be rented to income-qualified tenants approved by the New York City Department of Housing Preservation & Development (“HPD”).
Instead, they were rented out at higher rates for years — sometimes more than $1,000 per month above the approved affordable level — to renters who did not qualify for affordable housing.
The defendants are charged in five separate New York State Supreme Court indictments with multiple charges including Grand Larceny in the Second Degree, City Criminal Tax Fraud and Offering False Instrument for Filing in the First Degree. [1]
This indictment comes days after D.A. Bragg announced the Office’s first-ever Housing & Tenant Protection Unit, which targets systemic criminal harassment of tenants and abuse of government programs by landlords and developers.
“These developers allegedly abused a government program meant to provide New Yorkers access to desperately needed affordable housing. Not only did they illegally charge substantially higher market rents for years, but they did so while personally reaping the benefits of generous property tax abatements. When I announced our Housing & Tenant Protection Unit last week, I said that we would take a targeted approach to complex and pervasive criminal activity that diminished our already limited stock of affordable housing, and this case is an example of just that,” said District Attorney Bragg.
The buildings involved in the indictment are:
70 Bushwick Avenue, Brooklyn, owned by JOEL KOHN and BUSHWICK POWERS LLC • 300 Eldert Street, Brooklyn, owned by MICHAEL AMBROSINO and AMBROSINO EQUITIES-300 ELDERT LLC • 682 Bushwick Avenue, Brooklyn, owned by ALEN PAKNOUSH and BUSHWICK PLAZA LLC • 305 Stockholm Street, Brooklyn, owned by IOAN SITA and GHEORGHE SITA and 305 STOCKHOLM LLC • 140 Stanhope Street, Brooklyn, owned by MENDEL GOLD and 140 STANHOPE GROUP, LLC • 1140 Bushwick Avenue, Brooklyn, owned by MENDEL GOLD and 1140 REALTY CORP. LLC
DOI Commissioner Strauber said, “At a time when affordable housing is crucial for New Yorkers, and for the City’s recovery from the pandemic, these landlords, as charged, enriched themselves by fraudulently obtaining over $1 million in tax credits from the City that were intended to promote affordable housing. Instead, it is alleged that these landlords charged higher rents to New Yorkers, made no attempt to determine if they qualified for such housing, and made misrepresentations to the City to obtain tax credits to which they were not entitled. DOI and our partners at the Manhattan District Attorney's Office and the City Department of Housing Preservation and Development will continue to protect affordable housing benefits for New Yorkers who are eligible for them and hold accountable those who exploit these tax credits for their personal gain.”
The 421-a program was a tax benefit designed to incentivize the creation of affordable housing within new multi-family apartment buildings. The program grants generous tax breaks to property developers who agree to reserve a certain percentage of the building’s apartments as affordable units.
Tenants would apply through the City’s Housing Connect portal — also known as the affordable housing lottery — and their applications would be presented to HPD for review and approval. Affordable units can only be occupied by tenants approved by HPD.
As alleged in court documents and statements made on the record, from 2011 to 2019, the defendants violated the rules of the 421-a program and submitted documents to the City and State falsely attesting that they were renting the designated affordable units in accordance with 421-a rules. In reality, they were renting units at higher rents to unauthorized tenants who had not been approved by HPD.
[1] The charges contained in the indictment are merely allegations and the defendants are presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.
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