The Flipper's Playbook: How NYC Slumlords Terrorize Tenants And Get Away With It

CROWN HEIGHTS, BROOKLYN — For years, Beverly Thompson lived the low-key life of a rent-stabilized retiree, sharing a cramped but cozy apartment at 80 New York Ave. with her sister Barbara and their two cats. Then, a few winters ago, she met her new landlord.

Mendel Gold would soon be named No. 95 on the city’s annual “100 Worst Landlords” list. But when Thompson first met him, he was just the man who now held the $2.3 million deed for the building her family had lived in since the 1970s. Gold walked into her home with his brother, Chananya Gold, the building manager, and took a seat at the kitchen table, she recalled.

“He came into our apartment and offered us a buyout,” said Thompson, 64. It would be wise to take it, she said he told her, "Because if not, we have ways of getting you out."

Thompson didn’t know it yet, but her new landlord had built a decade-long career on flipping rent-stabilized buildings like hers to the luxury market by driving out residents, renovating their units and hiking rents, according to government records and tenant interviews.

Gold is hardly alone. A Patch investigation found that, across the city, landlords are allowed to plunder NYC’s affordable housing stock with near impunity. These landlords, our investigation found, are tapping into a government-issued toolbox of lax rules and legal loopholes that allow them to make tenants’ lives hell and cash in with few, if any, consequences.

Thompson's building, pictured above, has become a case in point. In the two and a half years since that conversation in her kitchen, the Gold brothers have transformed the four-story, eight-unit building at 80 New York Ave. into a “defective, dangerous and noxious” dump, according to lawsuits filed by tenants.

In that time, the city has issued at least 60 violations for construction hazards and quality-of-life offenses at that single property. Around $20,000 in resulting fines have gone unpaid, records show.

Yet Mendel Gold continues to ignore the violations and fines without consequence. He doesn’t have much reason to worry: The Department of Finance collects barely 1 percent of city building fines, records show. Meanwhile, tenants are often left without heat or basic services for weeks or even months, with few remedies outside of lengthy, costly litigation.

A representative for Gold defended the landlord’s record. "He is taking care of all these violations and trying to solve it, but there’s nothing major,” said a man who returned calls to Gold's office, but who gave his name only as "J. Fisher."

“When you see a violation on record, it doesn’t mean anything,” Fisher said. “All of his buildings are clean. He has good relations with all of his tenants. He has a good record and he has no issues at any of his buildings.”

In his decade as a landlord, the 20 or so buildings we could link to Gold, mapped below, have been issued more than 300 city violations. Around 200 remain unresolved, records show. At least $250,000 in resulting fines haven’t been paid.

Yet in New York City real estate, Gold is a relatively small player. As of late 2016, the city’s building owners owed almost $1 billion in collective fines — almost all issued by the Department of Buildings.

“Even though we know these tenants — many who need us most — are often living in unfathomable conditions, we aren’t holding landlords accountable,” City Comptroller Scott Stringer said in a report last year. “We’re giving landlords a free pass to break the law.”

It’s ultimately up to debt collectors from the Department of Finance, who inherit fines from the Department of Buildings, to force landlords to pay up. Their success rate is staggeringly low. In 2016, the Department of Finance said it collected just over $9 million of the more than $900 million owed.

If, after eight years, a landlord still hasn’t paid a fine, it's written off by the city, effectively expiring. More than $26 million in fines were dropped last year alone.

“There’s no one following up and enforcing these things,” said private attorney Robert Sokolski, who’s been fighting building owners in court for 20 years. “That’s why they’re not scared of it.”

The Flipper's Playbook

“First comes the intimidation,” explained Justin La Mort, a lead housing attorney at MFY Legal Services who works with low-income tenants being pushed out by their landlords. “Then comes construction harassment.”

These are among the tactics used again and again by NYC’s serial apartment flippers, according to an array of attorneys and experts who spoke to Patch.

“It’s like a playbook that is out there now,” said Brian Sullivan, the MFY lawyer helping tenants sue the Golds. “It’s really bad for tenants and it’s really bad for the neighborhood.”

In winter 2015, the Gold brothers ripped out the central heating system at 80 New York Ave., city records show. When tenants complained, according to their lawsuit, the landlords installed “large, noisy, inconvenient” heating contraptions in their apartments (pictured below).

The building's power, water and gas supplies have repeatedly been shut off, the suit says. Constant renovations have filled hallways with dust and debris. Workers have allegedly left electrical wires dangling, forced their way into apartments with no prior notice and once trapped Thompson in her unit by nailing a piece of wood over her front door. Again and again, tenants say, crews have punched holes in their walls and ceilings.

One of these holes turned first-floor resident Lisa Mathis’ kitchen cupboard into an expressway for rats crawling up from the basement, she said. (Pictured below.)

“They were coming up under my kitchen sink,” said Mathis, 56. “They were as big as kittens.”

Through it all, Mathis — along with her elderly aunt Bessie Staton and the Thompson sisters — have stood their ground. But their former neighbors, mostly immigrant families, packed up and left last year.

Patch was not able to locate those tenants to ask why they left. But current residents believe they may have been scared off by another tactic.

On multiple occasions, they said, people claiming to be immigration agents knocked on their doors.

“They were saying it loud and banging on the door, saying they were from immigration,” Beverly Thompson said. “There was a man there, holding up a badge in his hand. Then a lady pulled out a portfolio and a picture of a person. She was saying, ‘Do you know this person? We’re looking for this person.’

A representative for the Golds said: “We never did such a thing, and we don’t know about it at all.”

Patch attempted to contact Mendel and Chananya Gold at their management office in the heart of South Williamsburg’s Orthodox Jewish triangle, pictured below, multiple times by phone and in person for this story.

Finally, the man who gave his name only as "J. Fisher" called. He said he was a manager for the Golds’ business, and that he had been authorized to speak in their place.

“They are not doing interviews,” Fisher, 37, said by phone. “They are not dealing with the press. It’s their private business. They’re not politicians. They’re good fellows.”

He claimed tenants at 80 New York Ave. constantly call 311 to report problems while refusing to let the Golds send in handymen.

"All of these violations are just because the tenants refuse our actions," Fisher said. "We didn’t have access. Everything that was possible for the management to fix was fixed.

“When you run a business, sometimes you have some kinds of disagreements," he said. "Here, [Mendel] fell in with a few bad people. They’re making his life miserable. We made their lives much better. Now it’s a beautiful building."

How Do They Get Away With It?

Gold's career as a small-time Brooklyn landlord has hummed along with few snags. Despite a growing pile of unaddressed city violations and fines, the Department of Buildings has continued to sign off on his new construction applications.

DOB spokesman Andrew Rudansky declined to comment, but department insiders said that, when issuing a permit for one property, they have no way of finding out which other buildings are owned by the same person.

Other agencies with roles in regulating NYC housing had the same complaint.

They blamed this difficulty on the perfectly legal proliferation of shell companies that have been increasingly employed by landlords to insulate themselves from lawsuits, regulations and scrutiny. Each year, Patch has learned, thousands more buildings in New York City are registered not under landlords’ names, but under the names of limited liability companies, or LLCs. Records show landlords like the Golds often create a new LLC for each building they buy, leaving few clues to connect them to other problem buildings.

State law does not require LLC applicants to provide their real names or physical addresses.

A spokeswoman for New York’s Department of State said she could not provide data on how many real estate LLCs exist in NYC, as LLC creators don’t need "to set forth a specific business purpose."

City records on building ownership also likely leave out thousands of LLCs. However, they still reveal a dramatic upswing in the LLC-as-landlord trend.

Buildings Owned By LLCs In New York City

In the last decade, this data shows, the number of buildings owned by LLCs has more than doubled in NYC. The boom has hit Brooklyn hardest, where at least 5,700 buildings switched hands from human owners to LLCs within the past four years.

Anyone can create an LLC in minutes online.

"If you wanted to be a security guard or a barber, you have to be licensed,” housing attorney La Mort said. "If you want to be a landlord, you just have to have a bag of cash."

Landlords often link their LLCs to mail drops instead of physical offices. At a small shipping store at 199 Lee Ave. in South Williamsburg, pictured above, more than 1,000 LLCs receive mail in tiny brass slots. One is called "I Love My Landlord LLC."

"So every month, some poor tenants basically have to write a love letter when they send their rent check," La Mort said.

The LLC concept was invented to shield entrepreneurs from lawsuits and encourage risk. But when applied to real estate, the LLC shield “protects slumlords,” La Mort said. “You can be anonymous.”

No government agency runs a reliable database linking LLCs to landlords. A few private players have attempted to build such a tool but haven't gotten far.

Asked if the Gold brothers would be willing to provide a list of all their buildings in NYC, their rep replied: "No. We’re not here to expose ourselves and whatever."

Transplants Make The Perfect Tenants

Patch did find a list of 30 company names taped to the Golds’ mailbox — most of them LLCs.

By cross-referencing these names, pictured below, with data from four city and state agencies, we were able to identify 20 buildings owned by Mendel Gold in the Brooklyn neighborhoods of Williamsburg, Greenpoint, Bushwick, Bed-Stuy, Crown Heights and Park Slope.

Records from these buildings show that Gold and his team have perfected the art of the flip.

At least a quarter of Gold’s buildings used to be rent-stabilized, as is standard of all NYC properties with six or more units built before 1973. But he then emptied and renovated them, records show — effectively taking them off the affordable housing market.

We couldn't find any rent-stabilized tenants left at Gold's buildings, except at 80 New York Ave. Activists said they hadn't had any luck either.

But a review of 311 calls placed from these buildings showed Gold’s other tenants may have endured similarly traumatic ordeals. Soon after he bought 729 Meeker Ave. in Greenpoint in late 2014, for example, records show a sudden surge in 311 complaints reporting heat and hot water problems, a broken boiler, water leaks, crumbling ceilings and construction dust and debris.

By the end of 2015, the calls stop.

Today, the eight units at 729 Meeker Ave., pictured above, are lined in stainless steel appliances and artfully exposed brick. One of its four-bedrooms now goes for around $4,000 per month.

Multiple young professionals living at the building said they didn’t know their neighbors very well — much less the people who lived there before them.

Two miles south in Bushwick, on the front stoop of Gold’s building at 73 Jefferson St., a tenant in Puma sandals and a Canada Goose parka who called herself “Mishi” said the entire building had already been renovated when she moved in this year.

And another mile south in Bed-Stuy, inside Gold's four-story walk-up at 662 Madison St., a 20-something with a job in fashion retail had a similar report: “We don’t know the tenants from before,” he said. “It’s crazy to think what might have happened here.”

Who's To Blame?

There's no way to tell exactly how much affordable housing has been lost to flippers.

In recent years, the city’s tally of rent-regulated apartments has hovered around 1 million — half of all city housing. However, a ProPublica report in January revealed that as many as 200,000 of these units have in fact vanished from NYC's official affordable-housing registry, which is managed by the state.

A “Tenant Protection Unit” created five years ago by New York Gov. Andrew Cuomo says it has “reclaimed” some 50,000 stabilized units whose landlords quietly scrubbed them from the books.

The team also says it has forced landlords to return $3 million to renters whom they illegally overcharged.

Still, not a single landlord has gone to jail in recent years for mistreating tenants.

Even the notorious Joel and Aaron Israel, brothers found guilty last year of hiring henchmen to threaten tenants at five North Brooklyn buildings with bats, sledgehammers and pit bulls, got off with fines, community service and probation.

“It took basically two years of the media writing about the Israel brothers for them to [be arrested], and they were literally taking axes to the boiler to get people out,” La Mort said.

In Cuomo's six years as governor and NYC Mayor Bill de Blasio's three and a half years in office, both have declared themselves crusaders for the city's renting public.

A review of their initiatives shows some victories for tenants — mostly in the form of new legal resources and response teams to help them battle bad landlords. De Blasio has also succeeded in clinching a two-year freeze on stabilized rents.

Representatives for Cuomo and de Blasio didn’t respond to requests for comment from Patch.

But critics charge that Cuomo and de Blasio have failed to get to the root of the problem: the laws and loopholes making it so attractive for landlords to go after New Yorkers’ homes in the first place.

"If people don’t have incentive to change, they won't change,” tenant lawyer Sokolski said.

The LLC Loophole

The city’s rent laws are almost wholly controlled by the state — a system in place since the '70s — and New York City landlords have an outsized influence on the state's politicians. That's largely because, under state law, LLCs are treated as individual citizens, meaning that each LLC can donate up to $60,800 to a candidate through the notorious “LLC Loophole” — and real estate moguls can use their many properties to funnel millions to politicians.

The real estate industry represents the single largest contributor to state politicians in New York, according to the National Institute on Money in State Politics. Most donations are made through LLCs.

A joint investigation by ProPublica and The Real Deal found that the state politicians who receive the most money from real estate LLCs are often the same ones voting through tax breaks and other perks for NYC developers while weakening rent-stabilization laws.

And most bills that would protect tenants, the investigation found, are quickly stymied by Albany's real estate-funded majority.

The LLC Loophole's top beneficiary happens to be Cuomo himself. The governor has collected around $4.2 million from real estate LLCs over three runs for office, according to ProPublica.

Cuomo has insisted this campaign cash has no bearing on his policies. But his critics point to small legislative gifts such as 421-a tax breaks for developers — often sold as wins for affordable housing — and his middle-of-the-road approach to updating NYC rent laws, as proof he may be in landlords’ pockets.

Allies In Albany

Because the state regulates local housing law, “you have people who live hundreds of miles from New York City making decisions about New York City tenants," La Mort said.

Perhaps the most impactful of these decisions came in 1993, in the form of the Rent Regulation Reform Act.

The Act, still mostly intact today, opened up a new age of profiteering in which moving affordable housing to the luxury market was suddenly possible. It did this by setting a golden rent threshold — $2,000 per month back then — at which an apartment could be deregulated, as long as it was empty or its tenant earned a certain salary.

Landlords could then take their pick from various loopholes allowing them to nudge a unit’s rent toward this threshold. The “Individual Apartment Improvements” allowance, which lets them raise rents any time they make renovations, has become especially popular.

NYC's core set of rent laws has been updated twice under Cuomo. The latest update, in 2015, raised the threshold for flipping a unit from $2,500 per month to $2,700 — a budge in the right direction, critics said, but much too small of one to de-incentivize the flip.

Get Out Of Jail Free

As it stands, legal experts told Patch, unless a landlord is charged with a violent crime or causing physical injury to a renter, there’s next to no possibility he'll face criminal charges — even for the dirtiest tactics.

“In my 20 years, I’ve never had one case where the judge actually put the landlord in jail,” Sokolski said.

And with real estate funds running Albany, experts said, there hasn’t been much progress on passing new laws that hold landlords accountable.

The state’s top prosecutor, Attorney General Eric Schneiderman, proposed a bill in April that would make it possible to take a landlord to criminal court — not just civil — for harassing tenants.

Schneiderman said he hopes landlords can one day be tried for “more commonplace and insidious tactics, such as turning off heat and hot water, exposing young children to lead dust and making rent-stabilized buildings deliberately uninhabitable for current tenants and their families.”

But there's little evidence that politicians in Albany would get behind such a measure.

Lax City Enforcement

The Department of Finance did not respond to our inquiry about why nearly $1 billion in building violation fines have yet to be collected.

But department officials have long complained they lack basic tools for debt collection, like ways to track down building owners hiding behind LLCs or the power to place tax liens on debtors’ buildings.

That last issue could have been remedied by a City Council bill proposed in late 2015, had it not languished. The lien bill was, however, revived in the Committee on Housing and Buildings last month — placing it among a dozen or so other city bills that would right small injustices in the world of NYC real estate.

But local lawmakers complain that, without a fraction of Albany’s power over NYC rental law, there’s only so much they can do.

In a statement sent to Patch, NYC Public Advocate Letitia James said: “We see some of the worst actors hide behind pseudonyms, variations of their names, or multiple LLCs to prevent the City and advocates from knowing the full extent of violations across properties. This reprehensible behavior should be made banned, which is why I have repeatedly called on Albany lawmakers to close loopholes allowing these actions."

The House That The Gold Brothers Couldn't Flip

Lisa Mathis is tired of being cold.

The longtime 80 New York Ave. resident spoke to us on a frigid March morning inside her unheated apartment, bundled in multiple sweaters.

She was tired, she said, of having to layer her clothes just to get from the bed to the bathroom. She was tired of cold makeup, cold furniture, the cold toilet seat, she said, and tired of being ashamed to invite her grown kids home for a holiday meal.

“It sucks the life out of you,” Mathis said. “You get creaky. Sometimes it’s colder in here than it is outside.”

Together, in what local housing rights advocates call a rare show of solidarity and staying power, Mathis and her 19 neighbors have turned their Crown Heights apartment building into a symbol of protest in the neighborhood. Tenants have filed two lawsuits, withheld rent from the Golds and lodged countless complaints with the city. Every few months, they stage another rally at government offices, their landlords’ Williamsburg office building or their own beleaguered building at 80 New York Ave.

Mathis "is the one that really does the groundwork," second-floor tenant Beverly Thompson said. "She was the one [Mendel] shouldn’t have pissed off. Once he really riled her up, that was it.”

Eighty-year-old Bessie Staton “is the fighter,” Thompson said. “Bessie would be the one that argued with them, fought with them, threw them out of her apartment. But the main thing is she did research. She was the one who found out everything that was wrong in this building.”

Then there are the young folks in the renovated units.

“They’re the best," Mathis said. “I look back and I think about the dynamic of who’s in this building, and it’s such a mix of talent. Who would put that together without thinking about it?"

In one flipped unit on the third floor, a stack of protest signs with slogans like "TAKE BACK CROWN HEIGHTS" and "TURN UP THE HEAT" juts from behind a sofa.

Last summer, the five 20-somethings who share the unit taped pieces of neon paper, each one marked with a letter, into the street-facing windows of 80 New York Ave. To this day, they spell out: “N-E-E-D H-E-A-T” and “D-O-N-T R-E-N-T H-E-R-E.”

And for the South Williamsburg rally, they printed out fliers chiding the Gold brothers in Yiddish, pictured below, and handed them out to Orthodox passersby.

The building's 16 newer tenants also have a lot to gain in court. Their suit claims the Golds overcharged them for units that were going for between $500 and $1,000 before they moved in — then shot up to $4,000 in a surge that may have exceeded the rate allowed under state law.

“We charge the legal rents, according to the market," the Golds’ spokesman said.

While lawyers for the two sides try to hash out a settlement, tenants have set their sights on bringing the Gold brothers’ other buildings into the fold. They want to find out, they said, if other renters like them have been overcharged as well.

They may get lucky at 662 Madison St., where in one four-bedroom unit, records show rent was around $650 before renovations. It’s now more than $3,000.

“There’s strength in numbers,” said Joel Feingold, co-founder of the Crown Heights Tenant Union, which works to unite local renters with shared interests.

“From a strategic standpoint, the more density you have in the landlord’s portfolio, the more power you have over the landlord’s profit margin,” he said.

“The stream of money is the only thing they really understand.”

With reporting by Marc Torrence/Patch. Lead photo courtesy of Naomi Dann