FG 410258-RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
GERTZ PLAZA
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
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IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.: FG 410258-RO,
FG 410356-RT
Polsim Consultants, Inc., DISTRICT RENT ADMINISTRATOR
(Fredric Kupersmith, DOCKET NO.: ZCL-410010-RP;
President), owner, and ZL-3115145-RT;
David Neiger, tenant, L-3115146-RT;
CDR 18097;
Prime Tenant of Apt. 2C:
Amy Kupersmith
PETITIONER
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ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE REVIEW
IN PART
On July 15, 1991 the above named petitioners filed Petitions for
Administrative Review against an order issued on June 12, 1991 by
the Rent Administrator, 92-31 Union Hall Street, Jamaica,
New York concerning housing accommodations known as Apartment 2C
and Apartment 3A at 239 East 81st Street, New York, New York
wherein the Rent Administrator determined that the owner and the
prime tenant of Apartment 2C had overcharged the tenant.
The Commissioner notes that this proceeding was filed prior to
April 1, 1984. Sections 2526.1(a)(4) and 2521.1(d) of the Rent
Stabilization Code (effective May 1, 1987) governing rent
overcharge and fair market rent proceedings provide that
determination of these matters be based upon the law or code
provision in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
The issue in these appeals is whether the Rent Administrator's
order was warranted.
The applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law and Sections 2526.1(a) and 2526.1(d) of the
current Rent Stabilization Code.
The Commissioner has reviewed all of the evidence in the record
and has carefully considered that portion of the record relevant
to the issue raised by the administrative appeal.
This proceeding was originally commenced by the filing in March,
1984 of rent overcharge complaints by the tenant, in which he
stated (in Docket No. L-3115145-R) that he had commenced
occupancy of Apartment 2C as a purported subtenant of one of the
owner's daughters, Amy Kupersmith, at a rent of $600.00 per month
FG 410258-RO
pursuant to a lease commencing July 23, 1982, and in which he
stated (in Docket No. L-3115146-R) that he had commenced
occupancy of Apartment 3A at a rent of $420.00 per month pursuant
to a lease commencing January 16, 1983. He contended that the
owner had informed him that the former prime tenant of Apartment
2C, Linda Naslanic, had assigned her lease to Amy Kupersmith with
the understanding that Ms. Naslanic had the option of returning
on June 30, 1983; that if she did not exercise her option then
the tenant would have the first option to become the prime tenant
at a rent of "under $500.00"; and that a security deposit of
$900.00 would be necessary because he was subleasing a furnished
apartment. He contended that Amy Kupersmith never resided in
Apartment 2C; that he was told by Linda Naslanic that when she
left in July of 1982 she had a rent of $422.00 in a lease that
ran until June 30, 1983 [he later amended this to $322.40]; that
on January 15, 1983 he moved from Apartment 2C to Apartment 3A;
that Mr. Kupersmith would not let him swap apartments unless he
bought the furniture in Apartment 3A (some of which, he was told,
belonged to Linda Naslanic and some to Ronni Kupersmith, the
owner's other daughter and allegedly the prime tenant of
Apartment 3A) for $1,800.00; that Mr. Kupersmith refused to
bargain for either additional items or a lower price, saying
"[y]ou are buying an apartment. The $1,800 represents the amount
of rent you will save over the next 10 months between your
current rent of $600.00 and the new rent of $420.00"; that Mr.
Kupersmith agreed to accept the $900.00 security deposit on
Apartment 2C as a down payment and to have the tenant pay six
further installments to Ronni Kupersmith c/o Polsim Consultants;
that several of the items were never delivered to the tenant,
including the sofa and the cot bed; that others were discarded as
useless; and that the owner has practiced similar "key money"
arrangements on other tenants.
In Docket No. L-3115146-RT (Apartment 3A) the owner was
requested to submit a complete rental history from the base date
and was informed of the possibility of treble damages. The only
reply from him was four letters stating that he had not received
the tenant's complete complaint. Based on an answer from the
tenant that the owner had made an adjustment, and that the tenant
had cashed the check as being an incomplete settlement, without
prejudice to his rights, the Administrator terminated the
proceeding on June 13, 1986 on the grounds that the parties had
negotiated a settlement and requested that the case be closed.
The tenant appealed this in ART 11245-L. On November 22, 1988 an
order was issued remanding the proceeding for a determination on
the merits of the tenant's overcharge complaint. The new
proceeding was assigned Docket No. L-410010-RP, and also included
a reconsideration of Docket No. L-3115145-RT (Apartment 2C).
In Docket No. L-3115145-RT the owner stated that he bought the
building in 1977 to move his family into; that he was forced to
incorporate to obtain bank financing; that the Conciliation and
Appeals Board would not allow him to refuse to renew leases in
order to take possession of apartments for his family, since he
owned the building as a corporation and not an individual; that
he has therefore waited for apartments to become vacant for his
family; that Apartment 2C became available in July of 1982 and
was rented to his daughter Amy Kupersmith, who shortly thereafter
sublet it to the tenant and returned to college in Albany; that
FG 410258-RO
it was their expressed intent to sublet such apartment until his
daughter completed her studies and returned; that the tenant
paid his rent checks to Amy Kupersmith c/o Polsim Consultants,
Inc.; that he sent them to Amy Kupersmith c/o Kupersmith who
maintain a mail drop at 239 East 81st Street; that they were
forwarded to Amy Kupersmith in Albany; that there is no "illusory
prime tenancy" scheme; and that the Courts have found in similar
circumstances that subleases to an owner's children were not an
attempt to evade the rent stabilization laws.
During the course of the proceeding the owner maintained that he
did not have to submit rental records for Apartment 2C for the
period prior to the sublease to his daughter. Amy Kupersmith
contended that her prime rent of $545.00 per month entitled her
to sublease the furnished apartment to the tenant for $600.00;
that she collected $900.00 in security, which was returned to the
tenant when he departed, although she did not keep a cancelled
check or get a receipt to prove that it was refunded by being
applied to the purchase of her furniture; and that she received
employment from a New York City firm after graduation and
continued to live in Apartment 2C as a full time resident.
On October 20, 1989 the Administrator issued an order finding no
overcharge in the subtenant's rent, but directing the refund of
$900.00 excess security from Amy Kupersmith. Copies of the order
were sent only to the tenant's attorney, and to the tenant in
care of his attorney. Both were returned by the Postal Service.
On January 17, 1991 the Administrator issued a notice of intent
to reopen the proceeding, and to consolidate it with Docket No.
L-3115146-RT in Docket No. CL-410010-RP.
In the new proceeding the tenant contended among other things
that Amy Kupersmith's rent for Apartment 2C clearly could not
have lawfully been $545.00, since Linda Naslanic had a rent of
$322.40; that even Ms. Kupersmith's assertion of her entitlement
to a 10% furnishings allowance was patently false, since the
December 21, 1982 [5 months after the tenant commenced occupancy
and less than 1 month before he moved to Apartment 3A] letter
from the owner to Linda Naslanic about the purchase of her
furniture indicates that the furniture did not even belong to Ms.
Kupersmith; that her assertion that the security deposit was not
returned because of an arrangement to purchase furnishings is
another indication of the fraudulent nature of her tenancy,
because there never was such a purchase arrangement between
himself and Amy Kupersmith; that the $900.00 was in fact
confiscated by Mr. Kupersmith as part of an illegal $1,800.00
"key money" payment he required as a condition of giving the
tenant a lease on his present apartment, number 3A; that the
"Bill of Sale", ambiguously phrased as to the actual furnishings
to be delivered [and signed on December 22, 1982, one day after
Mr. Kupersmith wrote Linda Naslanic to confirm the purchase of
some of her furnishings in Apartment 2C for $675.00], was
executed by the tenant with Ronni Kupersmith, the owner's other
daughter, allegedly for furnishings contained in Apartment 3A;
that the remaining $900.00 of "key money" was paid in 6
installments to Ronni, not Amy, Kupersmith; that most of the
"furnishings" were never actually delivered; and that it is clear
that these two apartments were controlled not by distinct, bona
fide tenancies of Amy and Ronni Kupersmith, but by "shams"
FG 410258-RO
arranged by Fredric Kupersmith, President and Managing Agent for
Polsim Consultants, Inc.
In reply, the owner asserted among other things that Apartment 3A
was rented to Ronni Kupersmith when it became available in
September, 1982; that she vacated only when another, more
attractive apartment became available in the building; that she
took residence in Apartment A until 1986; that the tenant did not
pay the rent for Apartment 3A to Ronni Kupersmith c/o Polsim
Consultants, Inc., but rather to Ronni Kupersmith c/o Amy
Kupersmith in Apartment 2C; that the checks were then forwarded
to Ronni Kupersmith at her University [all but one of the $150.00
checks made out to Ronni Kupersmith and endorsed by her were then
endorsed by Fredric Kupersmith]; that the tenant was happy to be
able to purchase the furnishings from Ronni Kupersmith; that the
owner understood that the tenant was able to bargain the price
down from $2,500.00 to $1,800.00, and to stretch half the
payments out over six months [the tenant contended that his
dealings concerning the furnishings were directly with the
owner]; that a father has an obligation to assist his children
when they are out-of-town students nearing college graduation;
and that the tenant was advised several times and clearly
understood that he was dealing with Ronni Kupersmith at all
times. [Elsewhere the tenant had contended that he had never had
dealings of any kind with Ronni Kupersmith, and that all of the
arrangements regarding his two tenancies were conducted with Mr.
Kupersmith.]
In an order issued in Docket No. CL-410010-RP on June 12, 1991,
the Administrator found an overcharge of $1,983.50, including
"excess security" of $900.00, by Amy Kupersmith for Apartment 2C
based on no increase in a lease assignment rather than a sublease
from July 1, 1982 to June 30, 1983, and an overcharge of
$17,919.40, including a "fixture fee" of $900.00, by Polsim
Consultants for Apartment 3A as of June 30, 1991 as a result of
using the DHCR default formula to establish the tenant's initial
rent, and imposing interest on overcharges occurring on and after
April 1, 1984.
In his petition against the order, the tenant contends in
substance that the Administrator should have awarded treble
damages and legal fees, and should find Amy Kupersmith to be an
illusory tenant so that he can enforce the order against Polsim
Consultants for that portion of the overcharge.
The owner did not submit an answer to the tenant's petition,
although given an opportunity to do so.
In his petition, the owner asserts in substance that the tenant's
sublease from July 23, 1982 to June 30, 1983 did not cover the
July 15, 1982 to August 31, 1984 term of the prime lease [the
owner cites the June 17, 1982 non-stabilized Standard Form of
Apartment lease between Amy Kupersmith and Polsim Consultants];
that the tenant therefore received a sublease and not an
assignment; that Amy Kupersmith's history of moving into
Apartment 2C after graduation and maintaining her proven prime
residence there for many years is proof that she had a true lease
and not an assignment; that the tenant was correctly charged 10%
over Amy Kupersmith's rent of $545.00 for a furnished apartment;
FG 410258-RO
that the tenant has admitted that the $900.00 security deposit
for Apartment 2C was returned when he requested Amy Kupersmith to
turn the $900.00 over to Ronni Kupersmith to assist in paying for
furniture in Apartment 3A; that the agreement for Ronni
Kupersmith's furniture was a tenant/subtenant sale and not an
owner/tenant exchange of goods and services; that the owner
should therefore not have to furnish proof of value or to refund
the $900.00 collected for furnishings; and that a rental history
for Apartment 3A was submitted on February 6, 1991. With his
petition the owner has enclosed leases from 1973 and invoices for
$1,273.20 for a new refrigerator, bath cabinet, custom blinds and
air conditioner.
In answer, the tenant generally repeats previous assertions
regarding the owner's submission of inconsistent documents and
his failure to submit evidence that his daughters actually paid
rent. He also contends in substance that the leases and invoices
now submitted by the owner were not submitted below and should
not be considered; that Apartment 3A contained an ancient air
conditioner, which soon had to be replaced, when he commenced
occupancy in January, 1983, even though the owner was granted a
rent increase for supposedly having installed a new unit in 1979;
that bath cabinets and venetian blinds may not form the basis for
a rent increase; that the refrigerator, if new in 1979, certainly
aged quickly; and that there is no proof of payment regarding any
of the alleged improvements.
The Commissioner is of the opinion that these petitions should
be granted in part.
The state legislature has acted to encourage legitimate
subletting to protect the primary residence of a person who must
perchance be away from hom (i.e. on business) for a brief period
of time (Section 223-b Real Property Law). Where, however, the
so-called "prime tenant" rents dwelling unit(s) not for his or
her own use and occupancy but as a middleman for re-rental to an
actual occupant at amounts and under terms of tenancy wholly
inconsistent with the law, the true tenant in occupancy is
deprived of his or her right to pay no more than the lawful rent
due the owner, his or her choice of renewal lease terms, base
date services, and/or protection from stabilization system and
Section 62 of the former Rent Stabilization and Sections
2525.3(d) and (e) of the current Code bar a "prime tenancy"
rental pattern as an evasion. The DHCR will not countenance such
an evasion and shall void illusory prime tenancies. To do
otherwise could render the Rent Stabilization Law wholly
ineffectual: that which cannot be done direcly would simply be
done in the name of a third person were the DHCr to ignore this
practice.
Courts have defined an illusory prime tenant as "a party who,
while assuming the guise of a prime tenant, enters into a
sublease arrangement which has the effect, directly or indirectly
of evading the requirements of the Rent Stabilization Law
(emphasis added)." Avon Furniture Leasing, Inc. v. Popolizio,
500 N.Y.S.2d 1019, appeal denied 508 N.Y.S.2d 1028. One typical
type of illusory prime tenancy occurs where the prime tenant has
an identity of interest with the owner, where the prime tenant
never takes possession, where the subtenant pays rent directly to
FG 410258-RO
the owner, and where the owner evades the Rent Stabilization Law
by being able to overcharge the subtenant and/or deny the right
to a renewal lease. Another typical type of illusory prime
tenancy occurs where the prime tenant is not an alter ego of the
owner, but where such prime tenant evades the Rent Stabilization
Law, while failing to take possession, by charging an unlawfully
high rent to a subtenant who pays rent directly to such prime
tenant.
The Commissioner is of the opinion, based on the evidence in the
record, that the tenancies of the owner's daughters Amy
Kupersmith (Apt. 2C) and Ronnie Kupersmith (Apt. 3A), prior to
occupancy of these apartments by the tenant herein, were sham
tenancies; that the Kupersmith daughters were illusory tenants
or prime tenants, the the "prime tenancy" of Amy Kupersmith
attempted to be a combination of the two types of typical
illusory prime tenancies mentioned above, allowing Amy Kupersmith
to receive a rent in excess of the lawful rent for an apartment
which she did not actually occupy pursuant to her own lease or
sublease, and by allowing her father (whether or not Amy
Kupersmith actually gave the excess rent to him) to have leases
to justify rents for the complainant and future tenants which
would actually be unlawfully high; and that the "subleasing" of
Apartment 2C was in fact an assignment by which Amy Kupersmith
gave the complainant all of the rights which she actually
possessed to that apartment.
To aid in understanding the sham tenancies and misrepresented
transactions involving the owner and his daughters, a chronology
of some events and documents is set forth below, with
parenthetical remarks.
2C-1 June 17, 1982: Date of sublease from Linda Naslanic to
Amy Kupersmith from July 1, 1982 to June 30, 1983 at
rent of $322.40. [In a March 14, 1984 affidavit Linda
Naslanic states that she was paying $322.40 in June,
1982, that she was refused permission to sublet, and
that she was required to sublet to Amy Kupersmith. She
enclosed cancelled rent checks for $322.40, and a
December 21, 1984 letter from the owner agreeing to
terminate her lease expiring January 31, 1984 as of
December 31, 1982. (The earliest lease submitted by
either the owner or Amy Kupersmi h in Docket No. L-
3115145 was her "prime lease" commencing July 15,
1982). See also documents in 2C-2 and 2C-9 conflicting
with this sublease]
2C-2 June 17, 1982: Date of non-stabilized lease between the
owner and Amy Kupersmith from July 15, 1982 to August
31, 1984 at rent of $545.00. The owner also supposedly
collected a $545.00 security deposit from his daughter.
[See also documents in 2C-1 and 2C-9 conflicting with
this lease.] This lease did not mention the prior
tenant's rent.
2C-3 June 25, 1982: Date of letter from the owner to Linda
Naslanic stating that he will not hold her responsible
for the rent if the subtenant Amy Kupersmith does not
FG 410258-RO
pay it, but in such event the lease will terminate 30
days later.
2C-4 July 23, 1982: Date of sublease between Amy Kupersmith
and the tenant from July 23, 1982 to June 30, 1983 at a
rent of $600.00. Security is $900.00, and the
overlease is stated to end on June 30, 1983. [See 2C-2
and 2C-9 for leases conflicting with this overlease
expiration date].
2C-5 July 26, 1982: Date of letter from the owner to the
tenant stating that the tenant will have first option
on the apartment if it becomes available, that "I must
add that there will probably be some sale of the
Apartment's furnishing connected with the new lease,"
and that the rent would probably be under $500.00.
2C-6 December 21, 1982: Date of letter from the owner to
Linda Naslanic confirming an agreement that he is
buying her furniture (except for the sofa) for $675.00
and that her lease due to expire January 31, 1984 will
terminate December 31, 1982.
2C-7 December 22, 1982: Date of Bill of Sale with Ronni
Kupersmith for the tenant to buy some of the furniture
in Apartment 3A. (But Amy Kupersmith claimed in one
submission that she kept the $900.00 security for the
purchase of her furniture in Apartment 2C and that
"[h]e gave me an additional $900.00 to complete this
transaction.")
2C-8 January 15, 1983: Date that the tenant moves from
Apartment 2C (subleased from Amy Kupersmith) to
Apartment 3A (allegedly the former primary residence of
Ronni Kupersmith).
2C-9 March 14, 1984: Date of stabilized lease between the
owner and Amy Kupersmith from July 15, 1982 to August
31, 1984 at a rent of $545.00. A rider states that the
prior tenant Linda Naslanic had a rent of $425.78. (See
also documents in 2C-1 and 2C-2 conflicting with this
lease.) This is the lease originally submitted by the
tenant on March 1, 1984 and by the owner on October 24,
1984. After the tenant submitted evidence on September
24, 1986 that Linda Naslanic last had a rent of
$322.40, the owner on February 26, 1991 submitted the
non-stabilized lease (mentioned in 2C-2), dated June
17, 1982, which did not state the prior tenant's name
or rent.
2C-10 June 1, 1986: Date that Amy Kupersmith supposedly moves
from Apartment 2C to Apartment 1D after getting a job
in New York City.
2C-11 October 28, 1986: Date of answer from Amy Kupersmith
claiming that the $900.00 was returned when the tenant
left, although she did not keep a cancelled check or
get a receipt [the tenant contends that it was retained
by the owner as half of the "key money" demanded for
FG 410258-RO
him to be given a lease for Apartment 3A. See also 2C
12 for Amy Kupersmith's later change of position]; that
the July 23, 1982 sublease incorrectly gave the prime
lease date as July 1, 1982 rather than July 15, 1982 [a
mistake probably made because the sublease between
Linda Naslanic and Amy Kupersmith (not mentioned by Amy
Kupersmith or her father) began July 1, while the two
"prime leases" between Amy Kupersmith and her father
began July 15]; that her driver's license since 1982
lists her primary and only residence as 239 East 81st
Street [with no apartment number claimed, in this
building owned by her family and which the owner has
stated has a 'mail drop' used for forwarding the
tenant's checks to both Amy and Ronni Kupersmith]; and
that she has witnesses and documents to confirm her
residence since 1982 [although this claim proves too
much, if it is an assertion about the subject
apartment, as opposed to living in or at least
receiving mail elsewhere in the building: both of the
leases between her and her father at a rent of $545.00
state that they begin on July 15, 1982, and the
sublease with the tenant began only 8 days after that.
The complainant contends that she used the building as
a mail drop, and that she lived in Apartments 1C or 1D
during summer vacations].
2C-12 October 11, 1989: Amy Kupersmith states in a submission
that "[t]he return of $900.00 was applied as a Credit
towards the $1,800.00 he paid me for the purchase of my
furniture which he then moved from Apartment 2C to
Apartment 3A. In other words, Mr. Neiger accepted a
Credit of $900.00 (his Security Deposit) and gave me an
additional $900.00 to complete this transaction." [See
also 2C-11 for a conflicting claim].
2C-13 February 26, 1991: The owner submits Amy Kupersmith's
1983 tax return (dated April 14, 1984) with a
handwritten address of Apartment 2C, as well as 1984
and 1985 tax returns with pre-printed address labels.
The owner also submits affidavits from three of Amy
Kupersmith's friends. Kathryn B. stated that Amy
Kupersmith "began residency in Apartment 2C...in July,
1982. She moved in approximately June, 1986 to
Apartment 1D..." [But the tenant began his occupancy
July 23, 1982; Amy Kupersmith could have "begun
residing" for 8 days at most]. Lesley B. stated that
"Amy Kupersmith established her primary residence at
Apartment 2C at 239 East 81 Street. She lived in the
building until sometime in 1989. She switched from
Apartment 2C to 1D sometime in 1986." [This does not
state when she began living in Apartment 2C]. Jodi L.
stated that Amy Kupersmith "rented an apartment at 239
East 81st Street (apt. 2C) in July, 1982. She
maintained this apartment as her primary residence
until the summer of 1986 when she moved to apartment
1D..." [She indeed "rented" Apartment 2C, with 3
different leases or subleases, all starting in July,
1982 at a rent of $322.40 or of $545.00. She certainly
did not occupy the unit from July 23, 1982 to January
FG 410258-RO
15, 1983. She apparently was living in the apartment
at least as of 1986 when she moved to Apartment 1D].
Mr. Kupersmith has had some difficulty in maintaining consistency
in his submissions and in the documents which he prepared for the
tenant and his daughters to sign. The March 14, 1984 stabilized
lease with his daughter for Apartment 2C through August 31, 1984
at a rent of $545.00 and stating a previous rent of $425.78, and
possibly prepared to help furnish a basis for a continuous
stabilized rental history, is only moderately different from the
June 17, 1982 lease, (non-stabilized and not mentioning the
prior tenant's rent) with her for the same rent and term.
However, the owner, who did not submit any prior tenants' leases
for the apartment, apparently did not foresee that the
complainant would be able to obtain a copy of the sublease from
Linda Naslanic to Amy Kupersmith to June 30, 1983, of Linda
Naslanic's rent checks for $322.40, or of the December 21, 1982
letter from the owner to Linda Naslanic which agreed to terminate
her lease on December 31, 1982 rather than January 31, 1984.
Absent these documents, the leases submitted by the owner for Amy
Kupersmith would give the impression that she had a normal lease
expiring August 31, 1984, and that she was subleasing to the
tenant for the first half of her lease term. In reality, at the
time that the tenant's sublease was signed [and indeed up until
two weeks before the tenant vacated], Amy Kupersmith had legal
rights to Apartment 2C, obtained by her sublease form Linda
Naslanic, only until June 30, 1983. She gave away all of those
rights when she subleased to the tenant to that date, so the
purported sublease was actually an assignment.
The file for Docket No. CL-410010-RP contains a February 6, 1991
submission by the owner which includes a rental history chart for
Apartment 3A from 1973. The owner contends in this appeal that
he had also submitted leases and other documents to support that
chart. The only February 6, 1991 submission from the owner
contained in the file of the proceeding before the Administrator
is a photocopy of a 4-page answer, which includes a rental
history chart listing leases and rents from the base date, which
mentions that the owner is enlosing Attachments [plural] to
answer the tenant's complaint, and which notes that it is being
mailed by Certified Mail receipt #P 281-400-942. With his
petition the owner has enclosed a February 6, 1991 mailing
receipt for #P 281-400-942, with a basic postage of $2.90. This
postage is consistent with the 1 pound, 12 ounce weight of the 28
Attachments which the owner claims to have submitted on February
6, 1991. This postage is not consistent with the four pages
actually contained in the record. It appears that the DHCR
photocopied the text of the answer when it was received, and
subsequently lost the originals, including approximately 135
pages of attachments. The Commissioner therefore considers it
appropriate to accept those attachments which the owner has
submitted. The Commissioner has made use of those leases and
documents to calculate the lawful stabilization rents and the
amount of overcharge. They are set forth on a an amended rent
calculation chart attached hereto and made a part hereof. No
increase has been allowed for Ronni Kupersmith's lease commencing
September 11, 1982 as the owner has submitted no evidence, such
as rent checks, or a check for the security deposit which her
lease claims she paid, to show that hers was a legitimate tenancy
FG 410258-RO
warranting a rent increase. Indeed, unlike the case with
Apartment 2C, where there is at least evidence that Amy
Kupersmith lived in the apartment beginning at some point after
the tenant vacated it, it appears likely that Ronni Kupersmith
has never resided in Apartment 3A. The tenant submitted an
affidavit from the long-time occupant of Apartment 3C, across the
hall from Apartment 3A, that she told the tenant of a vacancy in
Apartment 3A after Joanne Wilhelm vacated, that she does not
remember anyone occupying the apartment between Joanne Wilhelm
and the tenant, and that she does not recall seeing Ronni
Kupersmith in the building or listed on any mailboxes. Since the
owner stated that Ronni Kupersmith was a college student, and
since the tenant occupied Apartment 3A beginning in January,
1983, it seems most likely that she was away for the 1982-83
academic year and did not live in the apartment at or after the
time that she signed a non-stabilized lease with her father on
September 11, 1982.
While the tenant contended in an answer that a prior tenant Mary
Donia visited Apartment 3A in 1984 and noticed no improvements,
this assertion is not sufficient to negate the invoices for new
equipment submitted by the owner. Regarding the increase for the
air conditioner, the tenant's contention that it was an ancient
one which was soon replaced would at most indicate that another
unit was put in for which no further increase was charged.
(Indeed, no increase would generally be allowed for a new unit
installed during the useful life of a unit for which a new
equipment increase was previously allowed).
Regarding the $1,800.00 which the owner alleges was for the
purchase of furniture from Ronni Kupersmith, as evidenced by a
December 22, 1982 Bill of Sale, and which the tenant alleges was
largely mandatory "key money": The Bill of Sale was for a chest
on chest, bathroom carpet and louvered blinds, which were in
Apartment 3A, and a cot and convertible sofa, which were in
Apartment 2C. The value of the convertible sofa can be seen by
the fact that Ronni Kupersmith had the option, if the sofa could
not be delivered, of substituting a bar stool, a TV stand, 3
cardboard transfiles, a towel holder, a Vogue picture and dishes
for four people. In fact, the confirmation letter that the owner
had written to Linda Naslanic, one day prior to the Bill of Sale
between the tenant and Ronni Kupersmith, had specifically
excluded the convertible sofa from purchase. Given the
apparently limited value of the furnishings that the tenant was
receiving; the fact that the July 26, 1982 letter from the owner
to the tenant regarding the possibility of a "direct lease" for
Apartment 2C stating that" I must add that there will probably he
some sale of the Apartment's furnishings connected with the new
lease" could be read as an indication that the owner intended to
require the purchase of furniture as a condition for the tenant
being given his own lease; the fact that the tenant has sworn
that all arrangements for the rental of both apartments,
including the demand that the tenant sign the "Bill of Sale" for
unwanted furnishings as a precondition for obtaining a lease for
Apartment 3A, were carried out between himself and the owner,
with no conversations or correspondence with either Amy or Ronni
Kupersmith; and the fact that 5 of the 6 checks from the tenant
to Ronni Kupersmith for the $900.00 balance for the furniture
FG 410258-RO
were cashed by the owner, leads to a conclusion that the owner
was actually requiring "key money" under the pretext of the
tenant's supposedly voluntary purchase of some furnishings, which
furnishings appear to have been worth nowhere near $1,800.00 and
most of which the tenant contends were not even given to him.
(The Commissioner notes that the new equipment installed in 1979,
for which the owner charged a rent increase, included $412.61 for
one 52" wide and two 31" wide custom blinds in this one-room
apartment. The "Bill of Sale" with Ronni Kupersmith has the
tenant supposedly paying for blinds. In addition, as mentioned
above, it appears that the convertible sofa from Apartment 2C was
not available for delivery to the tenant). It appears that
there was minimal involvement by the owner's daughters in his
"key money" scheme. Amy Kupersmith, who might be expected to
remember whether or not, as she claimed on October 11, 1989 to
have done, she sold her furniture for $1,800.00 and received
$900.00 from the tenant as well as retaining the $900.00
security deposit for herself, was apparently not aware that her
father had set up the transaction so that it was in Ronni
Kupersmith's name and so that the checks were sent to Ronni
rather than to Amy Kupersmith. [On October 28, 1986 Amy
Kupersmith had alleged that she had returned the $900.00
deposit]. This order continues holding Amy Kupersmith liable for
the $900.00 security deposit which she was holding in trust
pursuant to a binding contract, the sublease agreement. While
the tenant has stated that it was applied to the purchase of the
furniture [a/k/a "key money"], there has been no evidence
submitted that Amy Kupersmith was directed or authorized by the
tenant to pay the money over to Ronni Kupersmith or her father,
nor is there any documentation that it was actually paid over.
In addition, Amy Kupersmi h has not appealed Order No. ZCL-
410010-RP, which among other things held her solely liable for
the $900.00 security deposit. This order is without prejudice to
any rights which Amy Kupersmith may have against her father or
her sister in a court of competent jurisdiction.
Because of the limited value of whatever "furnishings" the tenant
actually received as a result of the owner's key money scheme,
this order also continues holding the owner liable for the return
of the $900.00 "fixture fee".
Section 2526.1(a)(1) of the current Rent Stabilization Code
provides in substance that treble damages shall be imposed on
overcharges occurring on and after April 1, 1984 unless an owner
establishes by a preponderance of the evidence that the
overcharge was not willful. The Commissioner does not consider
the owner to have rebutted the presumption of willfulness, so
treble damages have been imposed.
While Amy Kupersmith apparently resided in Apartment 2C at some
point subsequent to the tenant, the Commissioner considers her
"prime tenancy" commencing July 15, 1982 to have been an
illusory one perpetrated by the owner to unlawfully increase the
stabilized rent for legitimate tenants. Because both the owner
and Amy Kupersmith participated in common in this scheme,
including the joint signing of both a non-stabilized lease to
August 31, 1984 at a rent of $545.00 on the same day that Amy
Kupersmith subleased from Linda Naslanic to June 30, 1983 at a
rent of $322.40, and of a stabilized lease 21 months later, also
FG 410258-RO
to August 31, 1984, which falsely stated that Linda Naslanic had
a rent of $425.78, the Commissioner finds them to be jointly and
severally liable for the $1,132.75 overcharge on Apartment 2C,
whether or not the owner was directly paid rent money by the
tenant.
Section 2526.1(d) of the current Rent Stabilization Code provides
in pertinent part that an owner may be directed to pay a tenant's
reasonable costs and attorney's fees. The tenant did not request
them in the proceedings before the Administrator, so the
Administrator was warranted in not awarding them.
Because this order, similarly to the Administrator's order,
concerns overcharges only through June 30, 1991, the owner is
cautioned to adjust the rent, in leases after that date, to
amounts no greater than that determined by this order plus any
lawful increases, and to register any adjusted rent, with this
order being given as the reason for the adjustment.
This order may, upon the expiration of the period in which the
owner and Amy Kupersmith may institute a proceeding pursuant to
Article seventy-eight of the civil practice law and rules, be
filed and enforced by the tenant in the same manner as a
judgement or not in excess of twenty percent thereof per month of
the overcharge owed by the owner may be offset against any rent
thereafter due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is
ORDERED, that these Petitions be, and the same hereby are,
granted in part and that the Rent Administrator's Order N . ZCL-
410010-RP be, and the same hereby is, modified in accordance with
this Order and Opinion. The lawful stabilization rents and the
amount of overcharge are established on the attached chart, which
is fully made a part of this order. The total overcharge as of
June 30, 1991 is $900.00 solely attributable to Amy Kupersmith;
$1,132.75 jointly and severally attributable to Amy Kupersmith
and Polsim Consultants, Inc.; and $30,111.55 solely attributable
to Polsim Consultants, Inc.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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