Port Washington – New York State Supreme Court Judge Richard Velazquez denied requests by former President Donald J. Trump, Trump Organization Inc., and others, to dismiss a proposed class action lawsuit brought by plaintiffs represented by Parker Waichman LLP against members of the Trump Family and dozens of present and former owners, management companies, and accountants claimed to have participated in or profited from a rent overcharge scheme that unlawfully inflated the rents on at least 14,000 rent-regulated apartments in Brooklyn, Queens and Staten Island from 1992 through the present day. https://www.yourlawyer.com/wp-content/uploads/2023/07/2023-06-29-Decision-Order-denying-Defendants-MTD-and-Granting-Default-vs.-Mitnick-Mazars-USA.pdf Discovery in this matter will now commence.
In a class action complaint filed by Parker Waichman LLP on March 15, 2022 (Index No. 518776/20), Plaintiffs alleged that Mr. Trump and his family members, retired Federal Court of Appeals Judge Maryanne Trump Barry, Robert S. Trump, Elizabeth Trump Grau, John W. Walter and Fred Trump, defrauded the renters in these rent-regulated apartments and violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) in a conspiracy that utilized the family’s real estate enterprise to unlawfully inflate the rents of the apartments built and owned by their father, Fred C. Trump, to unjustly enrich Donald Trump and his family. Plaintiffs claim that the Trump family did this by creating a sham company, All County Building & Maintenance Supply Corp., to artificially markup invoices for the purchase of building supplies and capital improvements used in Fred Trump’s apartment buildings. The alleged conspirators then used the artificially inflated invoices, in some cases reaching a 50% markup, as justifications for unlawful rent increases in applications submitted to state regulators at New York State Division of Housing and Community Renewal (“DHCR”).
Requesting dismissal of the Complaint, Defendants argued that Plaintiffs failed to plead their fraud and RICO claims with sufficient specificity and that DHCR’s administrative approval of the applications for rent increases based on the alleged fraudulent costs demonstrated that the costs were “reasonable.” The Court disagreed, holding that the Complaint, consisting of 315 pages and 834 paragraphs, provided Defendants with sufficient notice of Plaintiffs’ fraud and RICO claims. Further, the Court held that DHCR never determined the reasonableness of the costs or rent increases in consideration of the specific claims fraud and conspiracy alleged by Plaintiffs, and the factual and legal issues surrounding Defendants’ commission of fraud are both timely and ripe for determination by the trial court. Finally, Judge Velasquez recognized that Defendants themselves raised more questions of impropriety than defenses to defeat Plaintiffs’ allegations, noting that even the documentary evidence of past rent increases submitted in support of their requests for dismissal “seemingly reflect that a ‘rubber stamp’ may have been used by DHCR during those twelve years [between 1992 and 2004].” While it is alleged the active fraud by the Trump Defendants continued through their ownership of the buildings, the illegal increases in rent continue to the present day as the prior illegal increases form the bases for future rent increases.
Jerrold S. Parker, Founding Partner of Parker Waichman LLP, stated “The Court’s decision represents yet another legal reckoning for the former President and The Trump Organization.”
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