Pinnacle RICO Settlement Upheld by Federal Appeals Court

Published: October 1, 2013 in the New York Times

Court Upholds a Settlement Affecting 20,000 City Renters
By MIREYA NAVARRO

A federal appeals court has upheld a settlement affecting more than 20,000 rent-regulated tenants in New York City, clearing the way for them to seek individual compensation from their landlord for rent overcharges and other complaints.

In its decision on Monday, the United States Court of Appeals for the Second Circuit ruled that the 2011 settlement of the tenants’ class-action lawsuit against the Pinnacle Group, a large New York landlord, was “fair, reasonable and adequate.”

Under the Pinnacle settlement, the court concluded, all class members benefited from new procedures and “best practices” that the company agreed to follow in carrying out rent increases and evictions. The company also agreed to have a court-appointed administrator hear the tenants’ individual complaints of illegal rents and harassment and determine compensation.

The amount could reach more than $10 million, depending on how many tenants make claims, said Richard F. Levy of Jenner & Block L.L.P. who negotiated the settlement on behalf of the tenants and who said he was “exhilarated” by the court decision.

“These people have been waiting for a long time,” he said.

The tenants’ suit against Pinnacle, filed in 2007, made novel use of a law typically associated with the Mafia and other organized crime groups, the Racketeer Influenced and Corrupt Organizations Act, known as RICO. The tenants accused the company of engaging in a conspiracy to fraudulently increase rents in more than 400 buildings that it owned in the city. The appeals court called the tenants’ original racketeering case “a daring and unconventional effort” that achieved important benefits for the tenants under the settlement “against significant odds.”

Crooked Man

There was a crooked man, and he walked a crooked mile.
He found a crooked sixpence upon a crooked stile.
He bought a crooked cat, which caught a crooked mouse,
And they all lived together in a little crooked house,
His crooked cronies he would meet, not that far from crooked creek.

How the DHCR Inspector Was Duped

Here is how 85 Columbus Corp at 101 West 85th Street (the Brockholst) tried to push through a $1.755 million MCI rent increase against the tenants.

On the days before (September 27-28, 2009) the DHCR Inspector arrived (September 29,2009) to inspect the exterior pointing, they cosmetically corrected all evidence of inadequate exterior pointing as would have been shown by multiple leaks in public area walls and ceilings. Ari Paul would not allow any tenants to speak with Cambos Kyriakos, the DHCR Inspector.

Approximately one month before the DHCR inspection, apartments 2-4, 3-4, 4-5, 6-1, 6-3, 6-14 had rooms shortened by the addition of Durock cement walls added over the areas of exterior wall leaks. Tenants were threatened with eviction if they did not allow the cosmetic work to be completed. Some tenants had physical injuries and destroyed personal property as result of the inexperience of the workers.

 

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