Forest Hills tenants deemed victims of ‘fraudulent scheme’ will receive payouts

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A Queens Supreme Court judge ruled in favor of Forest Hills tenants who claimed to have been the victims of a fraud scheme to de-regulate apartments with over 40 residents being overcharged.

Now that the case is class action, the landlord — simply referred to in court documents as 111-32 76th Avenue LLC — will possibly be paying out clients of Newman Ferrara hundreds of thousands of dollars.

It was determined through an investigation by the watchdog group Housing Rights Initiative (HRI) that the landlord had violating the J-51 tax abatement program and pushed the units out of regulation status.

Judge Timothy Dufficy said the holding company had been reaping the benefits of the tax abatements while failing to register them with the Division of Housing and Community Renewal, provide rent-stabilized leases and charge only the rent increases allowed under the law.

“It’s time for New York state to have a serious conversation about the enforcement of our rent of our rent stabilization system,” HRI Executive Director Aaron Carr said. “The customary indifference to fraud is beyond comprehension and belief.”

Tenants who rented from the defendant are eligible for reimbursement as long as they lived in the building prior to May 29, 2014.

The J-51 tax abatement is an incentive given to developers who revitalize and make other improvements to multi-family homes for a certain number of years.

J-51 tax breaks are given for 34 years to affordable housing complexes, according to the Furman Center, but most projects only get 14-year exemptions.

Most properties get abatements equal to 8.3 percent or 12.5 percent of the cost of work done each year for up to 20 years.

Editor’s note: An earlier version of this story incorrectly stated that HRI would receive proceeds from the lawsuit. We regret any confusion which may have resulted.

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