Preet Bharara sues Glenwood Management, alleging fair housing accessibility violations


The office of U.S. Attorney Preet Bharara has filed a Federal lawsuit against 421-a apartment building developer Glenwood Management Corporation over violations of Fair Housing Act accessibility standards.

The civil complaint filed by the Government in the United States District Court for New York’s southern district cited building features, like excessively high thresholds to individual apartments, interior apartment rooms, and mailboxes, that constituted violations under the Fair Housing Act.  In the Government’s view, Glenwood has had a "pattern or practice" of violating the accessibility requirements in the Fair Housing Act, and the complaint cited inaccessible conditions in other Glenwood apartment buildings, including those located at 160 West 62nd Street and 329 West 38th Street in Manhattan, adding that inaccessible conditions could also exist at five other Glenwood apartment buildings at 1775 York Avenue, 1930 Broadway, 240 East 39th Street, 10 Barclay Street, and 320 West 38th Street.

The Fair Housing Act was a Federal law passed during the Civil Rights era to fight housing discrimination.  As amended, the Fair Housing Act prohibits housing discrimination based on disability.  Given the civil rights implications, the U.S. Attorney’s Office filed the civil lawsuit in cooperation with the Civil Rights Division of the U.S. Department of Justice.

According to a copy of the lawsuit, provided to Progress Queens by the U.S. Attorney’s Office, the Government also sued Liberty Street Realty, LLC, the Glenwood-affiliated limited liability company that owns the apartment building at 10 Liberty Street, and Stephen B. Jacobs Group, PC, the architectural firm, which participated in the design and construction of the apartment building.  Progress Queens attempted to reach the main office of Glenwood for comment.  However, before a reporter could ask the first question, a Glenwood employee hung up the phone.  The U.S. Attorney’s Office had no public comment to make about the lawsuit.

Glenwood's role in the "cauldron of corruption" in Albany

Glenwood was a key player in the Federal corruption trials against former New York State Assemblymember Sheldon Silver (D-Lower East Side) and former New York State Senator Dean Skelos (R-Rockville Centre).  Those corruption trials involved the close relationships between real estate developers and state legislators, large campaign contributions, and the earning of outside income or “no show” jobs, which, cumulatively amounted to the theft of honest services by publicly-elected government officials, according to the prosecutors’ charges.  Leonard Litwin, the beneficial owner of Glenwood, was reported to have been an unindicted co-conspirator in some of the schemes.  Some Glenwood lobbyists, such as Charles Dorego, testified in Assemblymember Silver’s trial under a nonprosecution agreement with the U.S. Attorney’s Office.  Each of former Assemblymember Silver and former State Senator Seklos and his son were found guilty on all counts in their respective trials last year.  Until now, no prosecutorial action had been taken against Glenwood on any count.

According to New York City tax records, 10 Liberty Street received the 421-a property tax abatement for the city’s 2015-2016 fiscal year. 

The 421-a tax abatement program has been shown to spur large campaign contributions by real estate developers to state legislators and to state-wide elected officials, such as Gov. Andrew Cuomo (D-New York) and State Attorney General Eric Schneiderman (D-New York).  These large campaign contributions have provided to real estate developers great influence in setting state policy on rent regulations and rent protections for tenants. 

In respect of State Attorney General Schneiderman, Glenwood’s campaign contributions may have created a potential conflict of interest for the highest-ranking state prosecutor and is in contravention to the campaign fundraising practices of previous State Attorney Generals, who would refuse to accept campaign contributions from real estate developers.  For a time, former State Attorney General Robert Abrams (D-New York) used to have a voluntary ban on accepting campaign contributions from developers with business before New York State.  In the opinion of the Editorial Board of The New York Post, elected officials, including State Attorney Schnedierman, should return the campaign contributions they received from Glenwood.

That Glenwood’s Fair Housing Act accessibility violations are being prosecuted by the U.S. Attorney’s Office represents another failure by municipal and state prosecutors to hold the real estate industry accountable, particularly since the Federal lawsuit cited parallel legal authority under New York City Local Law 58.  In many news reports, Progress Queens has noted that municipal and state prosecutors do not investigate or prosecute serious allegations of corruption.  At times, the same observation has been made of the U.S. Attorney’s Office. 

A political context to the extra scrutiny on Glenwood

Notwithstanding the action by Federal prosecutors, sources questioned why the U.S. Attorney’s Office would single-out Glenwood.

Given that Glenwood did not face prosecution in the Federal corruption trials of former Assemblymember Silver and former State Senator Skelos, perhaps this accessibility violations lawsuit was a way for the U.S. Attorney’s Office to hold Glenwood accountable to the public in some way, said John Fisher, the founder of the tenant resource Web site, TenantNet.

Speaking of the political context of the lawsuit that singled-out Mr. Litwin but did not include other developers, Mr. Fisher said, “I’m not saying he shouldn’t be held accountable.  I’m just not seeing other landlords being held accountable.” 

Given the parallel legal authority under Local Law 58, Mr. Fisher noted that tenants could have been registering complaints with the city’s Commission on Human Rights, which, amongst other issues, oversees complaints about housing discrimination.  As reported by Progress Queens, Mayor Bill de Blasio (D-New York City) appointed in 2014 a real estate lobbyist, Jonathan Greenspun, to the Commission on Human Rights.  Mr. Greenspun’s lobbying firm has represented such clients as a David Koch-backed Super PAC and BFC Partners, a real estate developer, which invested in a consortium that made a controversial purchase of a portfolio of project-based, Section 8 buildings previously owned by the New York City Housing Authority.

City Hall was mum about why the city’s Commission on Human Rights never took legal action against Glenwood under Local Law 58, and City Hall has not commented about the use of 421-a tax breaks to subsidize the construction of apartment buildings that were not designed to be compliant with the Fair Housing Act.  It is also not known what probes city building agencies will make to ensure Fair Housing Act compliance by other developers.  Speaking of accessibility violations in apartment buildings developed by other real estate corporations, Mr. Fisher, the tenant advocate, told Progress Queens that there were likely “similar situations all over town.”

A request made by Progress Queens to Mayor de Blasio’s chief spokesperson for housing, Wiley Norvell, was not immediately answered.

Federal action in the face of local and state inaction

Another view about the Government’s lawsuit against Glenwood holds that the Glenwood lawsuit may serve as signaling by the U.S. Attorney’s Office that Federal prosecutors may have other ways to keep a check on real estate developers in New York City, if the U.S. Department of Justice does not authorize corruption probes against developers, their lobbyists, and the significant government officials, who enable real estate developers to set land use and rent regulation policies that do not serve the public’s interest.

The lawsuit by the U.S. Attorney’s Office was filed months after State Attorney General Schneiderman announced a multi-agency campaign to bring into rent regulation compliance approximately 2,000 affordable housing units created by the controversial 421-a tax abatement program.  However, the State Attorney General’s efforting to claw back deregulated apartments were revealed to be woefully insufficient, given an estimate by a ProPublica investigation that revealed up to 200,000 apartments may have been illegally deregulated by landords receiving the 421-a and J-51 tax abatements. 

State Attorney General Schneiderman's compliance actions were announced nearly two months after his office denied for a second time a request filed by Progress Queens under the state's Freedom of Information Law, seeking records of complaints filed with his office in respect of affordable apartment units created under the 421-a tax abatement program.  At the time when the State Attorney General's Office first denied the Progress Queens FOIL request, representatives of the state's prosecutors' office improbably claimed that they did not track complaints made to the State Attorney General's Office by type of housing program.

The only prominent probe undertaken by District Attorney Cyrus Vance, Jr. (D-Manhattan), against the real estate industry involved the bribing of city building inspectors.  But no major corruption case involving the controversial 421-a tax abatement program or wide-ranging accessibility violation case has been brought by the Manhattan prosecutor’s office.  District Attorney Vance’s recent record as a prosecutor has come under fire by The New York Times.

Besides being implicated in corruption cases, the 421-a tax abatement program has also received bad press.  Some tenants in 421-a affordable apartment units have complained of various forms of housing discrimination ranging from not being able to access all common or amenities areas of a building to being forced to use segregated entrances known as "poor doors."

This is the second prominent accessibility enforcement action brought by the U.S. Attorney's Office.  Lara Eshkenazi and Jeannette Vargas, federal prosecutors with the U.S. Attorney's Office for New York's southern district, sent a warning letter in December 2015 to the de Blasio administration, pointing out the findings of an investigation of the lack of compliance by the New York City school system with the Americans with Disabilities Act.

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