Brooklyn Developers Charged in Housing Fraud

Prosecutors announced that Brooklyn real estate developers were indicted for allegedly defrauding the state’s tax exemption program meant to promote affordable housing.

Joel Kohn, Michael Ambrosino, Alen Paknoush, Mendel Gold, Ioan Sita and Gheorghe Sita, and their real estate corporations, were charged in five separate New York State Supreme Court indictments with multiple charges including Grand Larceny in the Second Degree, City Criminal Tax Fraud and Offering False Instrument for Filing in the First Degree.

“These developers allegedly abused a government program meant to provide New Yorkers access to desperately needed affordable housing. Not only did they illegally charge substantially higher market rents for years, but they did so while personally reaping the benefits of generous property tax abatements. When I announced our Housing & Tenant Protection Unit last week, I said that we would take a targeted approach to complex and pervasive criminal activity that diminished our already limited stock of affordable housing, and this case is an example of just that,” said District Attorney Alvin Bragg.

The 421-a program was a tax benefit designed to incentivize the creation of affordable housing within new multi-family apartment buildings throughout the city. The program grants generous tax breaks to property developers who agree to reserve a certain percentage of the building’s apartments as affordable units.

An investigation revealed that each defendant allegedly violated the terms of the program from 2011 through 2019. According to court documents, the defendants, who owned six buildings in Brooklyn, allegedly submitted documents to the City and State falsely attesting that they were renting the designated affordable units in accordance with 421-a rules. In reality, they were renting units at higher rents to unauthorized tenants who had not been approved by HPD. Some of the charges were more than $1,000 per month above the approved affordable level.

The buildings involved in the indictment are:

70 Bushwick Avenue, Brooklyn, owned by Kohn and Bushwick Powers LLC
300 Eldert Street, Brooklyn, owned by Ambrosino and Ambrosino Equities-300 Eldert LLC
682 Bushwick Avenue, Brooklyn, owned by Paknoush and Bushwick Plaza LLC
305 Stockholm Street, Brooklyn, owned by Ioan Sita and Gheorghe Sita and 305 Stockholm LLC
140 Stanhope Street, Brooklyn, owned by Gold and 140 Stanhope Group, LLC
1140 Bushwick Avenue, Brooklyn, owned by Gold and 1140 Realty Corp. LLC

As a result, the defendants allegedly collectively reaped more than $1.6 million in illegal property tax benefits.

“At a time when affordable housing is crucial for New Yorkers, and for the City’s recovery from the pandemic, these landlords, as charged, enriched themselves by fraudulently obtaining over $1 million in tax credits from the City that were intended to promote affordable housing,” said New York City Department of Investigation Commissioner Jocelyn E. Strauber. “Instead, it is alleged that these landlords charged higher rents to New Yorkers, made no attempt to determine if they qualified for such housing, and made misrepresentations to the City to obtain tax credits to which they were not entitled. DOI and our partners at the Manhattan District Attorney’s Office and the City Department of Housing Preservation and Development will continue to protect affordable housing benefits for New Yorkers who are eligible for them and hold accountable those who exploit these tax credits for their personal gain.”