To the uninspired landlord, classic measures like routine harassment, cutting off heat, and baseless evictions may seem like the best way to squeeze tenants. Not so for 560-568 Audubon Realty and its principals Fred and Alex Hay, the Anna Delveys of real estate, who invented a collection of fake tenants in their Manhattan building to illegally jack up rents. The scheme worked like this: The landlord registered fictional tenants as paying higher rent than the actual, living tenants. When the fake tenants “vacated” the apartments, the landlord was able to game the rent-stabilization system to inflate rents for future, real tenants.
When a probe by the attorney general, in response to a suit brought by tenants, demanded proof of security deposits and rent payments of 49 tenants that that had been registered as living in their buildings, the landlord could only come up with nine. Based on a review of the documents, the attorney general’s office found “that these registered tenants may have been illusory or fictitious.” The landlord also falsely claimed to have performed apartment renovations, which allowed them to further raise rents.
The schemers were ultimately victims of their own hubris: The whole thing was put into motion after they tried to collect money from a tenant they had previously evicted. As The Real Deal reported, one of their (real) tenants, Marlene Santos de Martin, went to a law firm after she got a nonpayment suit from 560-568 Audubon Realty months after she had already been evicted. The firm advised her to request her unit’s rental history from the state. It was only then, when reviewing the rent records, that they realized the landlords had claimed to lease her apartment to a new (fake) tenant before she had even moved out.
From The Real Deal:
The lease signed by the fake tenant — “Amanda Nunez” — reported a rent of about $2,854 to the state, more than twice the $1,350 that de Martin had paid. To justify $2,854, the owner would have had to spend more than $50,000 on improvements. The lawsuit, filed in 2016, alleged the work never happened.
When a real person named Maria de la Rosa leased the apartment in 2011, she agreed to pay about $3,360 per month. That’s 149 percent more than what de Martin had paid, and would have required $106,200 in improvements plus the vacancy increase, the tenants’ complaint said. For good measure, the landlord told the state she was paying even more — $3,486.
You kind of have to admire the grift; the landlord created a whole building full of Amandas (fake) who are very happy to pay sky-high rents for their unrenovated, previously affordable apartments. (“Who really needs stainless-steel appliances when you love your brilliant and handsome landlords,” (fake) Amanda said when reached by Curbed for comment.) It was a fantasy world that was thankfully unraveled by the tenants (real) who were being fleeced, who will now get reimbursed for the inflated rents. It’s not quite a happy ending: The landlord won’t actually be fined, but I bet they had to at least promise to never invent a building full of fake tenants again. I’m sure they’ve learned their lesson!