The billionaire real-estate dynasty behind Brooklyn’s hipster DUMBO neighborhood bilked struggling tenants out of a fortune in rent, a new lawsuit alleges.
The Walentas family — whose ties to Mayor de Blasio have been scrutinized in the investigations into the city’s pay-to-play scandal — allegedly filed false statements to help land $92 million in city tax breaks and other subsidies, the suit says.
Then patriarch David, son Jed and associates used “extortion’’ and other alleged forms of deceit to jack up the rents at downtown 125 Court St. over the years and illegally pocket $10 million, according to the residents’ lawyer and the document, which was filed in Brooklyn federal court Tuesday.
“This is a racketeering enterprise — it’s basically organized fraudulent activity,’’ the tenants’ lawyer, Matthew Berman, told The Post.
According to the suit, the family’s powerhouse company, Two Trees:
The building was run like a “RICO enterprise’’ complete with “mail fraud, wire fraud, extortion, obstruction of justice and transportation of stolen property,’’ the suit says.
The plaintiffs even claim to have a company mole as a witness.
That person is a former rental agent and Two Trees worker who acknowledged that the defendants “intentionally sat down and agreed in advance to take part in an unlawful scheme to illegally charge inflated rents to rent-stabilized tenants,” the suit says.
But Berman believes that the developers were only hurting themselves.
“It’s like they’re killing the goose that laid the golden egg because they’re being so greedy,” he said.
The lawsuit suggests that government officials turned a blind eye to the allegedly illegal shenanigans because they were “influenced no doubt by campaign contributions made by Defendants and their associates.
“It is a matter of public record that seven developers wrote checks totaling $245,000 to Mayor Bill de Blasio’s Campaign for One New York before de Blasio announced plans for a streetcar along the Brooklyn waterfront, with stops near the developers’ projects, including $100,000 from Defendant Jed Walentas,’’ Kralbet the suit says.
De Blasio has denied any connection between the big bucks and pushing his street-car plan.
Court papers describe the Walentases as a $4 billion family empire “known for its singular role in transforming the Brooklyn neighborhood of “DUMBO” (an acronym for Down Under the Manhattan Bridge Overpass) where the company’s holdings include 12 buildings comprising more than 3 million square feet of commercial and residential real estate.’’
The family also is behind the $3 billion conversion of the old Domino Sugar factory in Williamsburg into luxury pads.
Two Trees bought the 125 Court St, property at Atlantic Avenue in 2003 for $16.5 million, according to reports.
They then went after millions of dollars in public funding by promising to provide rent-stabilized and affordable housing, the suit says.
But over the years, the developers knowingly misrepresented the market value of units so they could illegally inflate rents, the court papers say.
The lawsuit adds that “despicably, Defendants even perpetrated this fraud upon the low-income tenants of the units designated as ‘affordable housing.’ ”
The tactics led to a 300 percent tenant turnover rate at the building between 2005 and 2013, or 10 times the citywide figure, the suit says.
Berman said he is seeking $10 million in back rent for his clients.
A rep for the Walentases and Two Trees, Jeremy Soffin, said, “This is a press release, not a legitimate legal complaint. The courts have repeatedly ruled in our favor on these frivolous complaints from market-rate tenants looking for any excuse not to pay their rent.”
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