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Judge Rules Against Kushner Companies In Massive Tenant Lawsuit

Reprinted with permission from ProPublica

It's been six years since Dionne Mont first saw her apartment at Fontana Village, a rental housing complex just east of Baltimore. She was aghast that day to find the front door coming off its hinges, the kitchen cabinet doors stuck to their frames, mouse droppings under the kitchen sink, mold in the refrigerator, the toilet barely functioning and water stains on every upstairs ceiling, among other problems. But she had already signed the lease and paid the deposit.

Mont insisted that management make repairs, but that took several months, during which time she paid her $865 monthly rent and lived elsewhere. She was hit with constant late fees and so-called "court" fees, because the management company required tenants to pay rent at a Walmart or a check-cashing outlet, and she often couldn't get there from her job as a bus driver before the 4:30 p.m. cutoff. She moved out in 2017.

Four years later, Mont has received belated vindication: On April 29, a Maryland judge ruled that the management company, which is owned by Jared Kushner's family real estate firm, violated state consumer laws in several areas, including by not showing tenants the actual units they were going to be assigned to prior to signing a lease, and by assessing them all manner of dubious fees. The ruling came after a 31-day hearing in which about 100 of the company's current and former tenants, including Mont, testified.

"I feel elated," said Mont. "People were living in inhumane conditions — deplorable conditions."

Maryland Attorney General Brian Frosh brought the consumer-protection case against Westminster Management, the property-management arm of Kushner Companies, in 2019 following a 2017 article by ProPublica and The New York Times Magazine on the company's treatment of its tenants at the 15 housing complexes it owned in the Baltimore area, which have served as profitable ballast for a company better known for its gleaming properties in New York. The article revealed the company's aggressive pursuit of current and former tenants in court over unpaid rent and broken leases, even in cases where tenants were in the right, as well as the shoddy conditions of many units.

To build its case, the attorney general's office subpoenaed records from the company and solicited testimony from current and former tenants, who provided it via remote video link to Administrative Law Judge Emily Daneker late last year.

In her 252-page ruling last week, which was first reported by the Baltimore Sun, Daneker determined that the company had issued a relentless barrage of questionable fees on tenants over the course of many years, including both the fees identified in the 2017 article and others as well. In more than 15,000 instances, Westminster charged in excess of the state-maximum $25 fee to process a rental application.

In more than 28,000 instances, the company also assessed a $12 "agent fee" on court filings against tenants even though it had incurred no such cost with the courts — a tactic that Daneker called "spurious" and which brought the company more than $332,000 in fees. And in more than 2,600 instances, the Kushner operation assessed $80 court fees to tenants at its two complexes within the city of Baltimore, even though the charge from the courts was only $50. "The practice of passing court costs on to tenants, in the absence of a court order," Daneker wrote, "was deceptive."

The manifold fees suggested a deliberate strategy to run up tenants' tabs, Daneker wrote, repeatedly calling the practices "widespread and numerous." She concluded that "these circumstances do not support a finding that this was the result of isolated or inadvertent mistakes."

Daneker also found that the company violated consumer law by failing to have the proper debt-collection licenses for some of its properties and by misrepresenting the condition of units being leased to tenants. However, she found that the attorney general's office did not establish that the company violated the law in several other areas, such as by misrepresenting its ability to provide maintenance on units or in some of its calculations of late fees.

Kushner Companies, which has since sold some of the complexes and put others of them on the market, declined to be interviewed for this article. A statement from Kushner general counsel Christopher Smith suggested that the ruling amounted to a victory for the company, despite the judge's many findings against it. "Kushner respects the thoughtful depth of the Judge's decision, which vindicates Westminster with respect to many of the Attorney General's overreaching allegations," Smith said.

In previous statements, the company had alleged that Frosh, a Democrat, had brought the suit for political reasons, and was singling out the company owned by the then-president's son-in-law for a host of practices that the company said were common in the multi-housing rental industry. In her ruling, Daneker stated that she found no evidence of an "improper selective prosecution" in the suit.

The attorney general's office declined to comment, noting that the case is not yet final. Each side will next have the chance to file exceptions, as objections are known, that will be considered by the final arbiter in the consumer protection division of the attorney general's office. The state's lawyers will also propose restitution sums for tenants and a civil penalty. Once the consumer protection arbiter issues a ruling, both sides will have the right to challenge it in the state's appeals courts.

Also awaiting resolution is a separate class-action lawsuit brought by tenants that alleges, among other things, that the company's late fees exceeded state limits. A Court of Special Appeals judge has yet to issue a ruling following a January oral argument on the plaintiffs' appeal of previous rulings against both their attempt to certify themselves as a class and against the substance of their claim regarding late fees.

Despite the drawn-out process, including a three-month delay because of the pandemic, former tenants took satisfaction in the first judicial affirmation of their accounts of improper treatment. Kelly Ziegler, an orthodontic assistant, lived for two years in Highland Village, just south of Baltimore. She also didn't get to see her unit before she moved in, in 2015, and was confronted with a litany of problems: a leak from the tub into the kitchen, a loose bedroom window that she worried her young child might fall out of, and a roach infestation so bad that she couldn't use her stove. After some neighbor kids rolled a tire into her yard to use as a swing, she was fined $250 with no warning. "They did a lot of petty stuff," she said.

But when she asked to break her lease over the problems with the house, management warned her that they would take her to court. She finally got out of the lease in 2017.

When the attorney general's office approached Ziegler over her case, she was eager to share her experience. But when she found out that the complex was owned by President Trump's son-in-law, she started to worry she would face repercussions for speaking out. "It made me scared that I was doing something wrong. This is a person with power," she said. She said that her grandmother tried to reassure her: "You don't have anything to worry about. You've done nothing wrong."

Kushner has of course since left the White House and moved to Florida. Ziegler now lives with her family on a dead-end street in southwest Baltimore. It's near a high-crime strip where, not long ago, a 17-year-old friend of her daughter was fatally shot. But Ziegler is still glad to be out of Highland Village, out of Kushner's reach.

"I hope I don't run into him," she said.

New Capitol Riot Videos Pulled From Far-Right Parler Site

Reprinted with permission from ProPublica

The man's smartphone camera pans the crowd on the east side of the U.S. Capitol. It's smaller than what had amassed on the west side, but still an impressive sight. As he pans from atop the steps, he gives a front-line dispatch at 2:10 p.m., an hour after President Donald Trump had finished his remarks goading on the thousands of supporters who had come to Washington to protest the official certification of his electoral defeat.

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Germany Saved Workers From Pandemic Unemployment — With Great Success At Low Cost

Reprinted with permission from ProPublica.

The global coronavirus pandemic threw Petra Hamann's job into peril faster than just about any other. She is a physical therapist, a profession that is all about close proximity to others, with a clientele that leans toward older people, exactly the population most vulnerable to the virus. In March, she and the rest of the 10-person therapy group that employed her lost virtually all of their clients, first as a result of clients' fears about coming in for appointments, then as a result of government stay-at-home orders.

But neither Hamann nor anyone else in her group lost their job. Instead, they were kept on and, even while having zero clients, received 60 percent of their normal pay. As about half her clients gradually started to return in recent weeks, she began making 80 percent of her usual pay (including compensation for the clients who had not come back). And she was able to do so without having to negotiate any paperwork or online bureaucracy; she and her co-workers simply signed a form from their employer.

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The Rent Is Still Due In Kushnerville

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

It was the day after April rent was officially due — April 6 — and Kevin Maddox was officially late. The week before, he had lost both of his jobs within a few days of each other. Both were at food-service warehouses. “My job is to get the food to the restaurants, and if no one's going to the restaurants, then I'm out of a job," Maddox said. So he filed for unemployment and now stood outside his small rental row house just beyond the Baltimore city line watching his young daughter as she rode around in her plastic car.

His spirits were relatively high, all things considered. Both employers told him they'd take him back, as soon as things opened back up. That maybe helped explain why he still wore the cap from one of the warehouses: Maines Paper & Food Service Inc.

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Baltimore Judge Allows Class Action Suit Against Kushner Companies

Reprinted with permission from ProPublica.

 

 

Kushner Companies Loses a Key Motion in Class Action Filed by Baltimore Tenants

A Maryland judge is allowing a class action lawsuit against Jared Kushner’s family real estate company to proceed, in a ruling that denies most of the company’s arguments to dismiss the case over its treatment of tenants at large apartment complexes in the Baltimore area.

The lawsuit, filed last September in the Circuit Court for Baltimore City, alleges that the Kushner Companies’ real estate management arm, Westminster Management, has been improperly inflating payments owed by tenants by charging them late fees that are often baseless and in excess of state laws limiting them to 5 percent of rent. The suit also claims that Westminster was making some tenants pay so-called court fees that are not actually approved by any court. The suit alleges that the late fees and court fees set in motion a vicious churning cycle in which rent payments are partly put 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. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges.

The lawsuit followed a May 2017 article co-published by ProPublica and The New York Times Magazine that described the highly aggressive legal tactics used by Kushner Companies to pursue tenants and former tenants at 15 apartment complexes in the Baltimore area.

The company’s motion to dismiss the lawsuit was heard on Wednesday by Barry Williams, the same judge who presided over the cases against the six police officers involved in the arrest and transport of Freddie Gray, the 25-year-old Baltimore man who suffered fatal injuries after being taken into custody in 2015. None of the six officers was convicted.

In his ruling, Williams denied the bulk of the company’s motion to dismiss the case, including its argument that too much time had passed since the events the suit described. Williams also rejected for now, deeming it premature, the company’s argument that each tenant’s situation is too unique for the group to constitute a single class.

Williams did grant a couple of points in the company’s motion. Most notably, he granted the company’s motion to dismiss the count of the lawsuit alleging that the company’s treatment of tenants represented a breach of contract.

Andrew Freeman, a lawyer representing the tenants, said dismissing the breach of contract count had little practical effect, given that this count provided no damages beyond what the tenants would recover under the separate claim that the company’s late fees exceeded state limits.

Freeman cheered the ruling overall. “We are very pleased that Judge Williams recognized that plaintiffs have a claim for a violation of Maryland’s laws that protect tenants from excessive late fees and forbid landlords from threatening tenants with eviction for those not paying those fees, and that he refused to dismiss our class action allegations,” he said. “We look forward to proceeding with the case on behalf of the many hundreds, if not thousands, of Westminster Management’s tenants who have been victimized by those illegal fees.”

Michael Blumenfeld, a lawyer representing the Kushner Companies, said the company was pleased that Williams had limited the lawsuit on a few points, and indicated that the company still plans to challenge the assertion that the tenants make up a single class. “Kushner Companies looks forward to presenting these issues to the court soon,” he said. The company declined to comment on the merits of the lawsuit at the time it was filed, but did respond to questions about its tactics for the May 2017 article, saying that its approach to pursuing tenants was in line with industry practices and that it had a fiduciary duty to its partners to collect all money owed by current and former tenants.

The lawsuit now moves to the discovery stage. A hearing on the tenants’ claim to class certification could happen as soon as September.

In November, Kushner Companies and related corporate entities named in the suit sought to have the case transferred from state court to federal court, which would spare the company from having to face a jury drawn only from Baltimore. To prevail on such grounds, the company had to show that none of its ownership partners were Maryland residents. The company requested that its list of partners be sealed from view, citing the “politically-motivated innuendo” that could result from the high degree of media interest in Jared Kushner, President Donald Trump’s son-in-law and senior White House adviser, who has recused himself from a role in the family companies.

The request to shield the partners’ identities was challenged by ProPublica, the Baltimore Sun, the Washington Post, the Associated Press, and Baltimore TV station WMAR-TV. In January, a federal judge ruled against the request to seal the partners’ identities. As a result, the company opted to keep the case in state court after all.

Kushner Companies is also facing a separate lawsuit filed this month by tenants in New York, alleging a whole other set of behaviors in that much different real estate market: that it used harassing tactics to drive them out of their apartments in order to charge higher rent. The company has called that suit “totally without merit.”

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Kushner Companies Will Fight Transparency In Court

Reprinted with permission from ProPublica.

 

Jared Kushner’s family real estate company has backtracked on its effort to have a lawsuit filed against it by tenants of its Baltimore-area apartment complexes moved to federal court, after a judge ruled that this transfer would require it to reveal the identities of its investment partners.

The tenants’ class-action lawsuit was filed in the Circuit Court for Baltimore City in September, four months after a ProPublica article co-published with the New York Times Magazine described the highly aggressive tactics used by Kushner Companies to pursue tenants and former tenants over allegedly unpaid rent or broken leases. The lawsuit alleged that Kushner Companies, which owns 15 large apartment complexes in the Baltimore area, was improperly piling late fees and court fees onto tenants’ bills, often in excess of state limits, and using the threat of immediate eviction to force payment.

In early November, the various Kushner affiliates named in the lawsuit filed a request to have the case moved from the state court, where it would be heard by a Baltimore City jury, to the federal courts, where it would be heard by a jury drawn from a broader geographic swath of Maryland. To get approval for this request, Kushner Companies had to show that none of the investors it has brought in as partners on the complexes are based in Maryland.

The Kushner affiliates also filed a motion in federal court seeking to have the list of the investment partners shielded from public view, citing the high degree of media interest in Jared Kushner, who as Kushner Companies CEO presided over the purchase of the complexes before moving into the White House to serve as senior advisor to President Donald Trump, his father-in-law. “Given the tenor of the media’s reporting of this case, including politically-motivated innuendo no doubt intended to disparage the First Family, there is foreseeable risk of prejudice to the privacy rights and reputations of innocent private investors,” the Kushner lawyers wrote.

ProPublica and four other news organizations challenged the motion to keep the list of partners secret. And on Jan. 26, U.S. District Court Judge James K. Bredar ruled against the Kushner request for shielding the partners’ identities.

In that ruling, Bredar set a Feb. 9 deadline for the Kushner affiliates to submit the partners’ names to the court. But instead of doing so, the affiliates filed a short motion in federal court today asking to have the case moved back to the Circuit Court for Baltimore City. The aborted transfer has effectively resulted in a three-month delay in the tenants’ claims being heard.

Kushner Companies’ reluctance to disclose its partners in the complexes, which were purchased in 2012 and the years following, comes amidst new revelations about the company’s international investment ties. The New York Times reported last month that Kushner Companies last spring secured a $30 million equity investment in the Baltimore complexes and others of its holdings from Menora Mivtachim, a large Israeli insurer, just as Jared Kushner was about to make his first official trip to Israel as Trump’s designated broker of Israeli-Palestinian negotiations. Also last month, a New Yorker article described the Kushner Companies’ aggressive pursuit of Chinese investors in its real estate ventures. There has also been widespread scrutiny of a meeting in December 2016 between Jared Kushner and the head of a Russian state-owned bank, which may or may nothave involved the matter of Russian investment in the Kushner Companies’ debt-strapped trophy building in New York, 666 Fifth Avenue.

Asked to elaborate on the decision this afternoon, Kushner Companies spokeswoman Christine Taylor said simply, “Our counsel on this matter has determined that the case should be remanded to state court.”

 

Judge: Kushner Companies Must Reveal Identities Of Real Estate Partners In Maryland Lawsuit

A federal judge in Maryland ruled Friday that Jared Kushner’s family real estate company could not keep secret the identities of its partners in Baltimore-area apartment complexes that are the subject of a class-action lawsuit by tenants.

The class-action lawsuit was filed in September, following a May article co-published by ProPublica and The New York Times Magazine that described how Kushner Companies have used highly aggressive tactics in pursuing payments from tenants and former tenants of 15 large apartment complexes it owns and manages in the Baltimore area.

The lawsuit, filed in the Circuit Court for Baltimore City, alleges that the Kushner Companies’ real estate management arm and related corporate entities have been improperly inflating payments owned by tenants by charging them late fees that are often baseless and in excess of state limits and court fees that are not actually approved by any court. The suit alleges that the late fees and court fees set in motion a vicious cycle in which rent payments are partly put 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. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges.

Kushner Companies and its co-defendants sought to have the case transferred from state court to federal court, which would spare it from having to face an all-Baltimore City jury. To have this transfer approved, the defendants needed to show that none of their ownership partners were residents of Maryland. The defendants requested that their submission of the list of partners be sealed from public view, citing the high degree of media interest in Jared Kushner, President Trump’s son-in-law and senior White House adviser.

“Given the tenor of the media’s reporting of this case, including politically-motivated innuendo no doubt intended to disparage the First Family, there is foreseeable risk of prejudice to the privacy rights and reputations of innocent private investors,” wrote Westminster Management, Kushner Companies’ real estate management arm, in a court filing in November.

This request to seal the partners’ identities was challenged several weeks later in a joint filing by ProPublica, the Baltimore Sun, the Washington Post, the Associated Press, and Baltimore TV station WMAR-TV. They argued that the press has a “presumptive right” to view court documents, and that the Kushner Companies had not identified the “compelling government interest” that is required to block public access.

In his ruling Friday, U.S. District Court Judge James K. Bredar stated that the high level of public interest in Kushner and his business associates if anything enhanced the case for maintaining access to the identities of the defendants in the case.

“The Defendants are no doubt correct that the presence of the Kushner (and therefore Trump) families in this case has raised its profile and attracted significant, though perhaps not ‘unprecedented,’ media attention,” Bedar wrote. “But increased public interest in a case does not, by itself, overcome the presumption of access. In fact, it would logically strengthen it, particularly when the interest is due to the presence of important public figures in the litigation. In such an instance, the public’s desire to evaluate the Court’s decision-making is likely augmented. And beyond this apparently inevitable media scrutiny, Defendants have largely relied on ‘vague superlatives’ and insinuations instead of demonstrating specific harms.”

Several recent news reports have given a hint of just how far-reaching the network of investors in the Maryland apartment complexes could be. The New York Times reported earlier this month that Kushner Companies last spring secured a $30 million equity investment in the Baltimore complexes and others of its holdings from Menora Mivtachim, one of Israel’s largest financial institutions, just as Jared Kushner was about to make his first official visit to Israel as President Trump’s designated broker of Israeli-Palestinian negotiations. More recently, a New Yorker article described the Kushner Companies’ aggressive pursuit of Chinese investors in its real estate ventures.

In his ruling, Bedar gave the defendants until Feb. 9 to provide the list of their ownership partners. The Kushner Companies could opt instead to return the case to the Circuit Court in Baltimore, if the firm decides the downsides of having to disclose the investment partners in the complexes outweigh the downsides of having the case heard by a Baltimore jury.

A request for comment from Kushner Companies’ spokesman was not immediately returned Friday afternoon. A lawyer for the plaintiff tenants, Andy Freeman, said he and his colleagues on the case had not yet gotten any indication of how Kushner Companies planned to proceed.

“We’re pleased with the ruling. We don’t think that parties to federal litigation should be able to conceal their identity,” Freeman said. He added: “This is just the first step in moving toward justice for the tenants.”

 

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