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Tuesday, July 17, 2018

Reprinted with permission from ProPublica.

 

Tenants of the Baltimore-area apartment complexes owned by Jared Kushner’s real-estate company have brought a class-action lawsuit against the firm’s property management arm over its aggressive pursuit of tenants for allegedly unpaid rent.

The lawsuit, filed Wednesday in Circuit Court for Baltimore City, alleges that the management company and related corporate entities have been improperly inflating payments owed by tenants by charging them late fees that are often unfounded and court fees that are not actually approved by any court. This, the lawsuit charges, sets in motion a vicious cycle in which tenants’ rent payments are partly assessed toward the fees instead of the actual rent owed, thus deeming the tenant once again “late” on his or her rent payment, leading to yet more late fees and court fees. Making matters worse, the 5 percent late fees are frequently assessed on principal that includes allegedly unpaid fees, not just the rent itself. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges.

“The routine practice of charging tenants illegal fees combined with filing eviction proceedings against tenants who have paid their rent on time is predatory and destructive to hard-working Marylanders and their families. This is yet another example of corporations profiting from deceptive policies,” said Chelsea Ortega of Santoni, Vocci & Ortega, a Baltimore-area firm that has also brought class-action suits for similar “fee-churning” practices against two other large property management companies in the area. In this case, the firm is working with Brown Goldstein & Levy, a Baltimore firm specializing in civil rights cases, and the Public Justice Center, a civil legal aid office based in Baltimore that has also brought cases against area landlords over similar practices.

A spokesman for the Kushner Companies declined to comment on the particulars of the lawsuit. “We will respond to the complaint at the appropriate time in the legal proceedings,” he said.

The family-controlled Kushner Companies purchased apartment complexes with about 5,500 units in the Baltimore area as part of a $371 million deal in 2012, and added three more complexes a year later for $37.9 million. After several subsequent deals, the company now manages a total of 15 complexes in the Baltimore area, with a total of close to 9,000 units. Jared Kushner, who was instrumental in the purchases, stepped down as the company’s CEO when his father-in-law, Donald Trump, won the presidency. Kushner has become one of Trump’s senior advisers in the White House.

The suit follows a May 23 article jointly published by ProPublica and The New York Times Magazine that detailed the Kushner Companies’ highly litigious dealings with the people who rent its apartments. The company, which shares ownership in some of the complexes with other partners but runs them all through its Westminster Management subsidiary, has brought hundreds of cases against current and former tenants in local courts.

Many of the cases involved former tenants who had moved out of the complexes several years prior to the Kushner Companies’ purchase of them. And some involved tenants who possessed clear evidence that they did not owe the money the company claimed, yet were pursued anyway for several years, with late fees and court fees piling on top of the original claims. The article also described shoddy conditions that many tenants contend with at the complexes, including mice, leaky roofs and mold.

In response to questions for the May 23 article, the Kushner Companies’ chief financial officer said that its approach when it came to pursuing tenants was in line with industry practices and that it had a fiduciary duty to its ownership partners to collect all money owed by current and former tenants.

A subsequent report by The Baltimore Sun last month found that in some cases, Kushner Companies went to even greater lengths: Since 2013, corporate entities affiliated with the company sought the civil arrest of 105 former tenants at the company’s 17 Maryland complexes (it also owns two in the Washington suburbs) for failing to appear in court to face allegations of unpaid rent. Twenty former tenants were in fact briefly detained, the Sun reported.

In response to the stories, Maryland’s two U.S. senators and four of its House members, all Democrats, last month sent a letter to Kushner Companies asking for some of the firm’s records. The lawmakers noted that the complexes rely heavily on tenants with Housing Choice (Section 8) rental vouchers, and thus must comply with a host of Department of Housing and Urban Development regulations. The lawmakers demanded, among other things, all notifications from HUD, public housing authorities, inspection companies or local jurisdictions identifying defects in the complexes in the past three years; all complaints from residents about maintenance and repair issues over the past three years; and information regarding the role played by Jared Kushner.

One of the two named tenants in the class-action suit filed Wednesday is Tenae Smith. Smith and her partner have lived at Dutch Village, a Kushner-owned complex on the northern edge of Baltimore, since 2009. Last September, water started leaking from the bathroom ceiling whenever it rained. She told the rental office repeatedly in the months following, but no one came to fix it. Finally, during a hard rain in December, she slipped on the wet bathroom floor, and had had enough. She filed a rent escrow claim in court on Dec. 19, seeking to withhold her rent until the problem was fixed. But the city inspector didn’t come to verify the problem until Jan. 11. Dutch Village finally started work on the problem on Jan. 24, just before her Jan. 30 rent escrow hearing. The judge dismissed the case, but Smith kept fighting, insisting on a reduction in rent for the months when the problem went ignored. Then, during a hard spring rain, the patched ceiling leaked again, suggesting the problem was with the roof.

Smith, who has two young children, has been in court countless times this year, arguing for her rent escrow claim and against Dutch Village’s suits demanding payment of her $795-per-month rent. Her family has also been dealing with bedbugs, a leaky sink and mold in the utility closet.

The class-action suit alleges that Dutch Village at various points charged Smith with fees for “writ filing” and “legal-summons” ranging up to $80 even though no court had awarded such fees. If Smith did not pay all of the fees along with her rent, Dutch Village sometimes rejected her rent payment, leading to yet more fees. For instance, when she paid her $795 rent for this past July, it rejected the payment and said she in fact owed $944.70 because of accumulated fees, a sum that would grow with additional late fees, agent fees and baseless court fees if it was not paid in full.

“I would pay my rent, and if I was late, I would pay a 5% late fee, but the fees kept adding up,” Smith said in a statement paired with the lawsuit. “I work full-time and made regular payments, but they kept taking me to court for eviction and piling on the fees.”

The other named plaintiff is Howard Smith (no relation), a retiree who has lived in the Kushner-owned Carroll Park Apartments in Middle River, east of Baltimore, for 10 years. He has been hit with a string of late fees and court fees and eviction notices even though he has arranged to have his rent automatically debited from his bank account every month. He has also suffered repeating flooding in his ground-floor unit, including in 2015 after a mentally unstable tenant above him left the tub running, causing Smith’s ceiling to collapse. That tenant subsequently shot two employees in the rental office.

The class-action suit alleges that on several occasions in the past two years, after Smith paid his rent in full, Carroll Park misallocated a portion of that payment to non-rent charges, deemed his rent to be late, then charged him a “legal-summons fee,” even though no court had awarded such a fee at the time, as well as a “legal-agent fee,” and then filed an eviction notice to spur payment of the full bill. Smith complied, fearful of eviction.

“Adding small but improper fees to the rent of tenants living paycheck to paycheck, then misallocating rent payments to those fees in order to generate more fees, is a scheme that preys on working-class tenants,” said Andrew D. Freeman of Brown, Goldstein & Levy. “Westminster Management’s misuse of Maryland courts’ eviction proceedings to force tenants to pay these improper fees makes this scheme all the more deplorable. It must be stopped.”

One former tenant pursued by Kushner Companies has already received legal relief. Kamiia Warren, a home health care worker, moved her family out of the Cove Village complex in Essex, just east of Baltimore, in 2010 after her elderly neighbor started behaving erratically toward them. Warren got the necessary written approval from the on-site manager to leave in advance of her lease’s expiration. But three years later, after Kushner Companies bought the complex and took over management of it, she received notice that a Kushner subsidiary, JK2 Westminster, was suing her for $3,014.08 for having broken her lease.

Warren was initially unable to locate the document showing she had permission to leave, and a Baltimore County judge awarded JK2 Westminster a judgment of nearly $5,000 against her, including court and late fees. The Baltimore-area law firm that handles all of the cases against the Kushner Companies’ local tenants then got a court order to garnish Warren’s wages and bank account — she changed jobs soon afterward, but her bank account was cleaned out.

Around the same time, she got her hands on a copy of the document showing she had received permission to move and presented it in court, but the Kushner attorneys kept up their pursuit, eventually securing a court lien against her for the remaining $4,615 she allegedly owed. That lien has marred her credit record, making it hard for her to secure loans, including the one she would need to launch the small assisted living center she dreams of opening.

But after the ProPublica/New York Times article appeared, featuring her treatment by Kushner Companies, lawyers at the Baltimore office of Ballard Spahr, a nationwide law firm, stepped forward offering to take on Warren’s case pro bono. They contacted the Kushner Companies’ local lawyer, Jeffrey Tapper, and earlier this month, the company agreed to a stipulation releasing Warren from the $4,615 lien — more than seven years after she moved out of Cove Village.

Do you have access to information about the Trump family’s business activities that should be public? Email alec.macgillis@propublica.org, or here’s how to send tips and documents to ProPublica securely.

 

 

25 Responses to Baltimore’s ‘Kushnerville’ Tenants File Class Action Against Landlord

  1. No wonder the orange orangutan likes his son in law so much. They are two peas in a pod! The worst part of this is that millions of Americans are either indifferent or approve of the predatory, and often discriminatory, practices used by the scumbags that have taken over our government.

    • Rather Dom,

      Wealthy people stay that way by squeezing people when they can. Was it really any different with John D. Rockefeller? So I see this more endemic to “wealth” than anything specific to Trump or Kushner.

      It’s why we need a strong, active government: to balance the power between Landlords and Tenants, Management and Labor, Polluters and the Public.

      • I so agree. The very idea that we as a democracy would jeopardize the middle and lower income class so the top 0.01% can be richer than the entire bottom 90% is ludicrous. How isn’t that a throwback to the same oligarchies of England, Spain and Russia? As we know, all 3 of those countries ended up with horrible revolutions when hungry and poor people got tired of watching their pittances being spent on Beluga caviar and champagne for the “upper classes.”

      • db, I’m not sure comparing possibly the greatest philanthropist of all time to Trump and Kushner is a fair comparison. There’s quite a difference with the way John D. ‘squeezed people’ and the way that Trump and Kushner ‘squeeze people”; John D. and his family have easily benefited America more than any other family in history. Even just the gifts he made here in my home state of Maine which include the vast expanses of Acadia National Park, which viewers/listeners of Morning America voted last year the place in America that most Americans like visit, is my mind priceless (John D. donated thousands upon thousands of acres for Americans to enjoy).

        See this from the NYTimes:

        Rockefeller Gifts Total $530,853,632

        Possessor of one of the world’s greatest individual fortunes, John D. Rockefeller was beset with pleas for help. His benefactions were huge, $530,853,632 to various institutions. He had a theory about giving that he once expressed as “to solve the problem of giving money away without making paupers of those who receive it.” Explaining his method of scientific giving, he said:

        “I investigated and worked myself almost to a nervous breakdown in groping my way, without sufficient guide or chart, through the ever-widening field of philanthropic endeavor. It was forced upon me to organize and plan this department upon as distinct lines of progress as our other business affairs.

        “I have always indulged the hope that during my life I should be able to establish efficiency in giving, so that wealth may be of greater use to the present and future generations. If the people can be educated to help themselves, we strike at the root of many of the evils of the world.”

        Created Great Foundations

        Mr. Rockefeller’s benefactions from 1855 to 1934 totaled $530,853,632, of which the greater amount went to the four great foundations he established for the purpose of handling his charities. They were the Rockefeller Institute for Medical Research, the Rockefeller Foundation, the Laura Spelman Rockefeller Memorial, in memory of his wife, and the General Education Board. The University of Chicago was another large beneficiary.

        In accordance with his philosophy of charity on a business basis he used the same system of selecting good men for the particular job at hand and then giving them free rein. His gifts were free from restrictions and the trustees were empowered to use the principal as well as the interest to further the projects they were supporting.

        The Rockefeller system of philanthropy was not to undertake directly the alleviation of a situation or condition that seemed to need correcting, but to provide the funds for a research group to carry out the work.

        His charity system was not without its critics. There were those who said that his benevolent trusts served to entrench privileged interests and promote class education. His gifts were denounced as being made with tainted money, an indirect slap at his business methods.

        Interested in Education

        A list of Mr. Rockefeller’s organized charities shows that he was chiefly interested in education, scientific research, the Baptist Church and other religious or social organizations. His chief agency of distribution was the Rockefeller Foundation, established in 1913 with a $100,000,000 capital fund, later increased by $25,000,000 in 1917. It received up to 1934 from Mr. Rockefeller $182,851,480.90. This organization was formed “to promote the well-being of mankind throughout the world.”

        World-wide in scope, its activities were largely directed to medical research in recent years. The 1936 annual report declared it to be devoted to the “advancement of knowledge with research as the chief tool.” It financed work in the natural sciences, social sciences, medical science, the humanities, public health. It does no research of its
        own.

        The Laura Spelman Rockefeller Memorial, founded in 1918, concerned itself with public administration of government activities through the clearance of information promotion of experiences among officials and government units the demonstration of innovation and
        installation of improved administration methods and devices.

        In 1929 the Spelman Memorial was merged with the foundation and the activities were carried on jointly, with the announcement that its aim was “primarily the advancement of knowledge.”

        And there’s much more here:

        http://www.nytimes.com/books/98/05/17/specials/rockefeller-gifts.html

        • I1,

          You’re talking about how Rockefeller disposed of his income.

          I’m talking about how he acquired it. Even sympathetic biographers, like Nevens, have a hard time reconciling Rockefeller’s payoffs, threats, and kickbacks with his Church Membership and later philanthropy. Unsympathetic biographers, like Ida Tarbell, have a field day.

          Kushner is like 35? Perhaps in another 35 years we can talk about what a great Philanthropist he’s been. How he’s used his money for good in America. I’m not taking bets.

          • John D. may have been ruthless with the way he did business, but he had a heart of giving and trying to do something beneficial for our planet and other people virtually all his life (from 1855 to 1934). Neither Kushner nor Trump are anything like that; Trump hasn’t donated a dollar of his own money to charity in almost the last 10 years despite being a supposed billionaire. And don’t hold your breath until Kushner does anything even remotely akin to what John D. did.

            And that goes for the Koches and virtually every other right-wing wealthy person; if they give to charity there’s virtually always some string attached to ensure that that gift benefits them or their family in some significant way.

          • db, please don’t think I’m trying to exonerate John D. for his ruthless business practices; I’m just trying to make sure everyone understands that unlike Trump and Kushner; that there was an enormous good side not only to John D. but also to the entire Rockefeller family as well. (Something that will never be said about Trump and Kushner).

            And I’d be surprised if a study was done of any successful business people who were alive during John D’s life, if his business practices were all that different given the times which were very difficult; being almost like the survival of the fittest or meanest (just think about Andrew Jackson and all the corruption that was going on in southern states). John D’s great grandson, David, died at 100 just a little while back and before passing away donated hundreds of more acres to the people on Mount Desert Island for use as a place they could walk their dogs.

            Some years before he had donated more acreage to the town of MDI with the stipulation that building lots be given to any individuals who worked on the island and whose income was at or below the median income for the island. At the same time, the property tax rate on their homes could not exceed 5 mils/1000 of property valuation.

            Trump and Kushner wouldn’t even dream of doing what John D. and his family have done for America.

          • Certainly the Rockefeller family has done lots for America. Nelson & Jay in politics also spring to mind.

            It is far too early to write the definitive biography of Jared Kushner. Who’s to say what he’ll do, for good or ill, over the next 50 years. His children may be a blessing to us all. Do not hang the guy for the crimes of his Father-in-Law.

  2. Hmmm — no wonder Jared is tRump’s top advisor — they are two peas in the same pod.
    Both as crooked as a snake’s back, with attitude to match.

  3. Something very secretive about Kushner is about to blow wide open. According to the NY Post (an ultra conservative owned paper), the Washington Post, Fortune Magazine and Mother Jones, Kushner registered in NY state as a female. This has been verified by the NY State Board of Elections.

    Now, there is nothing wrong with being transgendered. But, there is something all too smelly about him marrying Iskanka. For one thing, he avoids speaking in public. I don’t think I’ve heard him speak more than 3 or 4 times. He may be hiding the possibility of his gender preference.

    Would it be out of the realm of possibility that Trump would pay Kushner to marry Iskanka so Kushner could be the perfect foil to hide Trump and Iskanka’s incestuous relationship? Knowing what a pervert Trump is and how he alrady paid his way out of a Florida rape charge with an underage girl, as we all know the rich have lots of dirty family secrets they use their big money to hide. It wouldn’t be the first time.

  4. This is nothing but pure theft: stealing money from poor people through the use of lawyers and the court system. Everyone involved in this theft should be convicted of theft and sentenced to prison, including the lawyers. And if the judges knew that the claims were invalid, they should be impeached and removed from office.

  5. Great. It is bad enough that the slum lords of the country also are involved with not up keeping their rental apartments locally. And to boot they now have to involve “sleepy” Carson and HUD.

  6. Jared “Mr. Charlie” Kushner is playing the part of Simon Legree quite well. I suppose we have Jared’s parents to thank for having planted the seeds of greed and the cut-throat attitude to take advantage of weaker members of society. One would have thought that Jared’s parents, given the experience of inhumane treatment so many of the Jewish diaspora had to endure, would have learned the lessons of Nazi Germany’s treatment of their forebears.
    Jared like Trump knows nothing of history, nor of how lessons of the past unlearned impact current behavior.

    • Actually, the real problem for Jared Kushner is his daddy’s prison record. Kushner plays the real estate game like Daddy with a bit of the Trump fraud thrown in.

      The NY Board of Elections reported that Kushner voted as a female. So it isn’t a mistake.

  7. I always thought that the sins of the father shouldn’t be unfairly dumped on the shoulders of the son. But, in Jared Kushner’s case, he seems to want to get rich quick like his daddy with a prison sentence at the end of his efforts.

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