HJ410070RT; HJ410121RO
                                  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

          ------------------------------------X 
          IN THE MATTER OF THE ADMINISTRATIVE    ADMINISTRATIVE REVIEW
          APPEALS OF                              DOCKET NO.: HJ410070RT     
                                                              HJ410121RO     
                

             Isaac Hagoel, tenant, and           DRO DOCKET NO.: ZHD410216R  
             West 34th Apts. Corp., owner,
                  
                                                  
                                  PETITIONERS   
          ------------------------------------X                             


           ORDER AND OPINION GRANTING TENANT'S PETITION FOR ADMINISTRATIVE 
          REVIEW AND DENYING OWNER'S PETITION FOR ADMINISTRATIVE REVIEW


          On October 14, 1993 the above named petitioners filed Petitions for 
          Administrative Review against an order issued on September 10, 1993 
          by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New 
          York concerning the housing accommodations known as Apartment 8E at 
          455 West 34th Street, New York, New York wherein the Administrator 
          determined that the owner had overcharged the tenant.

          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 Section 2526.1(a) and (f) of the 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 appeals.  

          This proceeding was originally commenced by the filing in April, 
          1993 of a rent overcharge complaint by the tenant, in which he 
          stated that he had commenced occupancy on April 1, 1992 at a rent 
          of $650.00 per month.

          The owner was served with a copy of the complaint and was requested 
          to submit rent records to prove the lawfulness of the rent being 
          charged.  In answer to the complaint, the owner submitted leases 
          and evidence of improvements.
          In an order issued on September 10, 1993 the Rent Administrator 
          determined that the tenant had been overcharged in the amount of 












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          $5,776.10 as of September 30, 1993, and directed the owner to 
          refund such overcharge to the tenant as well as to reduce the rent.  
          The Administrator allowed an increase for a tenant beginning 
          September 1, 1991, and disallowed most claimed increases because 
          the invoices had dates later than the date the tenant commenced 
          occupancy.

          In his petition  (Docket No. HJ410070RT), the tenant contends in 
          substance that there was no new tenant in occupancy from September, 
          1991 through April, 1992.  [The owner claims mid-February, 1992.]  
          With his petition the tenant has enclosed a copy of an affidavit, 
          submitted in the earlier proceeding, in which the former handyman 
          states among other things that there was no new tenant between the 
          tenant registered on April 1, 1991 and the time the complainant 
          took occupancy on April 1, 1992.

          In its petition (Docket No. HJ410121RO), the current owner asserts 
          in substance that the DHCR disallowed $3,733.60 claimed by the 
          former owner because the invoice dates were later than the 
          complainant's starting lease date; that purchase orders and 
          delivery were actually in March, and all work was actually done 
          prior to the tenant's occupancy; that the reason two bills have a 
          July date is because most of the former owner's bills were paid 
          after 90 days; that the purchase orders for the vendors submitting 
          those bills have an agreement that that they would be paid after 90 
          days; that there are affidavits from contractors showing that the 
          work was done in March; that the tenant signed a lease rider 
          showing the work that was to be done before he moved in; that he 
          has not claimed that the work was not done; that the  building was 
          brought from a foreclosure; that the former owner was in bankruptcy 
          and paid all their bills late; and that the current owner should 
          not be held responsible for the former owner's damages.

          With its petition the owner has enclosed the following documents, 
          all of which were submitted in the earlier proceeding:
           
           1) A March 26, 1993 Referee's Deed wherein West 34th  Apartments
          Corporation was conveyed the subject building, which had  earlier
          been foreclosed upon against 455 West 34th Associates in a Supreme 
          Court judgment entered on June 4, 1992.

          2) A purchase order signed by David Malek  (hereafter referred to 
          as "former owner,"  although he was actually an agent)  of  Malek
          Management for 455 West 34th Street  Associates.   This  was  for
          Odessa Piping and Heating  to  "[i]nstall  kitchen  sink  at  new
          cabinets and hook up gas line at new stove in apartment  8E"  for
          $450.00.  It stated "Date Services Rendered March 27, 1993," which 
          is one day after the current owner bought the building  from  the
          referee.  [The date may have been  intended  to  be  1992,  which
          mistake may  have  occurred  because,  as  noted  infra,  of  the
          possibility that David Malek composed it in 1993 for the purpose of 






          HJ410070RT; HJ410121RO


          the overcharge proceeding.]

          3) A July 1, 1992 invoice from Odessa for $450.00 to hook up  the
          kitchen sink, move the gas line and hook up a new stove.

          4) A cancelled check for $220.00 dated August 20, 1992 and made out 
          to Yefim Goldshmidt, the owner of Odessa.

          5) A July 29, 1993 affidavit by Yefim Goldshmidt that he did  the
          work in March of 1992 and received payment in full in August, 1992. 
          This affidavit was notarized by David Malek.

          6) A purchase order from David Malek for Mikhail Mandel to "[r]ip 
          out all old cabinets and install new sheet rock and prepare it so 
          we can install the new kitchen and remove all garbage at apartment 
          8E."  This purchase order also states "Date Services Rendered March 
          27, 1993."

          7) A July 7, 1992 invoice from Mikhail  Mandel  for  $575.00  for
          having "[g]utted entire kitchen,"  "[i]nstalled new sheet  rock,"
          "[i]nstalled new plywood floor," and "[r]emoved all debris."

          8) Cancelled checks to Mikhail Mandel dated August 27,  1992  and
          September 2, 1992 for $285.00 and $290.00.

          9) A July 29, 1993 affidavit by Mikhail Mandel that he "gutted the 
          entire kitchen, prepared kitchen for installation and removed all 
          debris in March of 1992," and that he was paid in full with checks 
          in August and September of 1992.  This affidavit was also notarized 
          by David Malek.

          10) An invoice from Empire State Supply Company, dated  April  1,
          1992 for $2,408.55, stating that it had "[d]elivered new  kitchen
          cabinet with all the [indecipherable] attachments."

          11) Cancelled checks to Empire State dated May 13, 1992, October 5, 
          1992 and December 10, 1992  for  $978.37,  $851.88  and  $578.30.
          Between the three checks, memorandum notations refer to  #162721,
          152901, #127620, #128949 and #121105.  (The single  invoice  from
          Empire State does not  have  a  number  visible.)   There  is  no
          affidavit from anyone connected with this vendor.

          12) A proposal from Schwartz and Rinaldo Construction,  Inc.  for
          "[i]nstallation of a kitchen cabinets in apt. 8E" for $300.00  on
          completion.  It does not  mention  any  apartment  number.   This
          proposal is dated April 1, 1992, the beginning date of the tenant's 
          lease.

          13) A cancelled check to Schwartz and Rinaldo dated April 2, 1992 
          for $300.00.













          HJ410070RT; HJ410121RO


          14) A July 29, 1993 affidavit by someone signing for Schwartz and 
          Rinaldo that  "I installed the new kitchen cabinets in the  above
          mentioned apartment in the month of March of 1992 and I was paid in 
          full."  This affidavit was also notarized by David Malek.

          The preceding claimed increases had all been  disallowed  by  the
          Administrator, who had allowed an increase only for a new  stove,
          new refrigerator, and reglazing of the tub and tub wall tiles.

          In answer, the tenant asserts in substance that the receipts  and
          payments  claimed  by  the  owner  are  fabrications;   that   no
          improvements  were  made  after  his  tenancy  began;  that   the
          improvements are not noted on the 1992 registration as they would 
          have been if they had actually  been  done  before  he  commenced
          occupancy on April 1, 1992; that Odessa Piping and Heating  never
          did the work claimed;  that  the  kitchen  walls  show  only  the
          "original" and unimproved appearance; that the kitchen was  never
          "gutted"; that no plywood was installed on the floor; that acrylic 
          tiles were simply glued directly on the cement floor in a haphazard 
          manner; that $773.99 is highly suspect for the mini-size stove and 
          refrigerator; that only the bathtub was resurfaced; that the wall 
          tiles remain in their original worn condition; that $2,408.55 is an 
          unbelievable price for two small kitchen cabinets of simple pressed 
          woodboard, with handles missing; that installation of the cabinets 
          was done by the superintendent with another building worker, rather 
          than by Schwartz and Rinaldo for $300.00; and that there was no new 
          tenant from September, 1991 to February, 1992.

          With his answer the tenant has enclosed the original of a  letter
          prepared by him  (and identical, other than the date and a  fresh
          signature,  to  an  original  letter  submitted  in  the  earlier
          proceeding), and signed by John Smith, in which Mr. Smith  states
          that he was the former handyman of the subject building; that  he
          and another co-worker did certain work in the subject apartment in 
          preparation for the  complainant's  occupancy;  that  they  glued
          acrylic tile directly to the cement floor, using no plywood; that 
          he installed the sink, without having to do any additional plumbing 
          work; that neither Odessa Plumbing nor  Mikhail  Mandel  had  any
          involvement in the work; that he, rather than Schwartz and Rinaldo, 
          installed cabinets, which were worth no more than $300, not $2,408; 
          that the bathroom wall  tile  was  never  refinished;  that  only
          reglazing on the bathtub was done; and that no new tenant lived in 
          the apartment between the tenant in occupancy on April 1, 1991 and 
          the complainant.

          In response, the owner contends that the tenant's lease stated that 
          renovations would be done prior to his moving in.

          In answer, the tenant asserts that the lease referred to work that 
          was to be done; that not all items were  done,  or  done  by  the
          contractor claimed; and that the costs are inflated.






          HJ410070RT; HJ410121RO



          A hearing was scheduled to resolve  the  factual  disputes.   The
          Notice of Hearing stated among other things that the owner should 
          produce the contractors who allegedly  performed  the  work.   In
          preparation for the hearing, a DHCR staff  member  inspected  the
          subject apartment on December 24, 1993.   He  reported  that  the
          kitchen walls were plaster, not sheetrock; that the wall cabinets 
          were of painted pressed board, with no  handles;  that  the  sink
          [probably actually sink base] was of painted sheet metal; that it 
          could not be ascertained if there was plywood under  the  kitchen
          tiles; that the bathtub had been reglazed; and that the wall tiles 
          were the originals as installed many years ago.

          A hearing was held on January 4, 1994.  The owner did not bring in 
          either contractors, or David Malek (the former owner at the time of 
          the alleged improvements, who also notarized the 1993  affidavits
          from the contractors).  The owner did bring in the  originals  of
          five invoices, copies  of  three  of  which  had  been  submitted
          previously,  and  another  copy  of  the  lease  of  the  alleged
          immediately prior tenant.  The tenant brought in John Smith.  Based 
          on the credible evidence of record, the Administrative Law  Judge
          found that there was insufficient evidence to support the owner's 
          claim for improvements beyond those items (stove, refrigerator, and 
          reglazing of the bathtub and tub walls) already allowed; that the 
          statements  of  contractors  notarized  by  David  Malek  were  a
          fabrication; that it appeared that there had been an attempt by the 
          current and/or former owner to exaggerate or fabricate some of the 
          improvements; and that there was insufficient evidence to find that 
          a new tenant had lived in the apartment beginning  in  September,
          1991, both because of the testimony of  John  Smith  as  well  as
          because the lease of the alleged tenant contained no  address  or
          apartment number for the housing accommodations.

          The Commissioner is of the opinion  that  the  tenant's  petition
          should be granted, and that the owner's petition should be denied.

          Based on the inspection, the  testimony  of  John  Smith  at  the
          hearing, and the owner's failure to present evidence to controvert 
          them or to support a claim  for  the  allowance  of  the  claimed
          additional improvements or the occupancy of the alleged new tenant, 
          the Commissioner adopts the recommendation of the  Administrative
          Law  Judge  that  the  owner  not  be  allowed   any   additional
          improvements, and that the alleged new tenancy (accepted  by  the
          Administrator)  from  September,  1991  to  February,   1992   be
          disallowed.

          While the  Administrative  Law  Judge  found  that  some  of  the
          previously-submitted invoices were suspicious, there is also reason 
          to suspect that the two (original) invoices submitted for the first 
          time at the hearing are false.  One is a handwritten March 16, 1992 
          invoice on a form from  Mikhail  Mandel  for  kitchen  tiles  for












          HJ410070RT; HJ410121RO


          $622.43.  (His only other invoice had been a typed one dated July 
          7, 1992, which included installation of a new plywood floor in the 
          kitchen.)  The other new (original) invoice is  on  a  form  from
          Odessa Piping and Heating dated March 17, 1992 for  $3,139.25  to
          "[i]install new kitchen sink with cabinets for 2 walls in kitchen. 
          Remove old kitchen from apartment and remove rubbish.  Everything 
          in kitchen."  (Their only other invoice had been one dated July 1, 
          1992 to hook up the sink and stove, and move pipes as  necessary,
          for $550.00.)  The invoice from Odessa for $3,139.25  appears  to
          almost completely overlap the approximately $3,500 in invoices to 
          gut the entire kitchen and remove all debris (Mikhail Mandel), to 
          hook up the sink and stove (Odessa), to furnish cabinets  (Empire
          State Supply), and to install the cabinets (Schwartz and Rinaldo). 
          This new invoice from Odessa also  appears  to  be  in  the  same
          handwriting (actually printing) as the new invoice  from  Mikhail
          Mandel.  The previously submitted documents concerning Odessa are 
          also suspect.  The printing on the purchase order by David  Malek
          for Odessa to install the sink and stove is also very similar  to
          the July 1, 1992 letter   on letterhead from Odessa.   (Actually,
          the letter is on a concocted letterhead.  It can be seen  that  a
          sheet of paper was put over most of an invoice form from  Odessa.
          Portions of the tops of several words on  the  invoice  form  are
          visible where they were not quite covered over.)  Basically, based 
          on the foregoing observations, as well as John  Smith's  credible
          testimony, the inspection, and the tenant's photographs, there is 
          good reason to suspect that (other than the invoice for the stove 
          and refrigerator in an amount consistent with current prices) every 
          single  purchase  order,   invoice   and   affidavit   concerning
          improvements is false, whether or not David Malek had a  hand  in
          them.

          Taking the disallowance of the alleged prior tenancy into account, 
          the Commissioner has recalculated the lawful stabilization rent and 
          the amount of overcharge.  They are set forth on an amended  rent
          calculation chart attached hereto and made a part hereof.

          With regard to the owner's contention that it bought in foreclosure 
          and should not be responsible for the former owner's damages,

          Section 2526.1(a)(1) of the Rent Stabilization Code provides that:

               Any owner who is found by the  DHCR,  after  reasonable
               opportunity to be heard, to have collected any rent  or
               other consideration excess of the legal regulated  rent
               shall be ordered to pay to the tenant a penalty equal to 
               three times the amount of such excess, except as provided 
               under subdivision (f) of this section.   If  the  owner
               establishes by a preponderance of the evidence that the 
               overcharge was not willful, the DHCR shall establish the 
               penalty as the amount of the overcharge  plus  interest
               from the date of the first overcharge on or after April 






          HJ410070RT; HJ410121RO


               1, 1984, at the rate of interest payable on a  judgment
               pursuant to Section 5004 of the Civil Practice Law  and
               Rules, and the order shall direct such a payment to  be
               made to the tenant.  

          Further, Section 2526.1(f)(2)  of  the  Rent  Stabilization  Code
          provides that:

               For overcharge complaints filed or overcharges collected 
               on or after April 1, 1984, a  current  owner  shall  be
               responsible for  all  overcharge  penalties,  including
               penalties based upon overcharges collected by any prior 
               owner.  However, in the absence  of  collusion  or  any
               relationship between such owner and  any  prior  owner,
               where no records  sufficient  to  establish  the  legal
               regulated rent were provided  at  a  judicial  sale,  a
               current owner who purchases upon such judicial sale shall 
               be liable only for his or her portion of the overcharges, 
               and shall not be liable for treble  damages  upon  such
               portion resulting from overcharges caused by any  prior
               owner.  Such penalties shall be  subject  to  the  time
               limitations set forth in paragraph (2) of subdivision (a) 
               of this section.  [Emphasis added]

          However, this is not a situation where an owner defaulted because 
          of not obtaining rent records from a receiver.  There are plenty of 
          rent records in the present case.  There is the lease of the tenant 
          in occupancy on April 1, 1991; there are cancelled checks;  there
          are purchase orders and  invoices;  there  are  even  affidavits,
          supposedly from contractors, obtained by the former owner  during
          the course of the overcharge proceeding.  It might be thought that 
          the receiver would also have had access to most of these records. 
          There is no reason not to hold the current owner liable for treble 
          damages on all overcharges collected from the  tenant  since  the
          inception of his tenancy in April, 1992.


          This order is without prejudice to any rights the owner may have to
          proceed  against  any  prior  owner  in  a  court  of   competent
          jurisdiction.

          The owner is directed to reflect the findings and  determinations
          made in this order on all future registration statements, including 
          those for the current year if not already filed, citing this Order 
          as the basis for the change.  Registration statements already  on
          file, however, should not be amended to reflect the findings  and
          determinations made in this order.  The owner is further directed 
          to adjust subsequent rents to an  amount  no  greater  than  that
          determined by this order plus any lawful increase.

          The Commissioner has determined in this Order and Opinion that the 












          HJ410070RT; HJ410121RO


          owner collected overcharges of $7,598.80.  This Order  may,  upon
          expiration of the period for seeking review  of  this  Order  and
          Opinion pursuant to Article Seventy-eight of the Civil Practice Law 
          and Rules, be filed and enforced as a judgment or not in excess of 
          twenty percent per month of the overcharge may be offset  against
          any rent thereafter due the owner.  Where the tenant credits  the
          overcharge, the tenant may add to the overcharge,  or  where  the
          tenant files this Order as a judgment, the County Clerk may add to 
          the overcharge, interest at the rate payable on a judgment pursuant 
          to Section 5004 of the Civil Practice  Law  and  Rules  from  the
          issuance date of the Rent Administrator's Order to  the  issuance
          date of the Commissioner's Order.

          THEREFORE, in accordance with the Rent Stabilization Law and Code, 
          it is

          ORDERED, that the tenant's petition be, and the  same  hereby  is
          granted; that the owner's petition be, and the  same  hereby  is,
          denied; and that the Rent Administrator's order be, and the  same
          hereby is, modified in accordance with this order and opinion.  The 
          lawful stabilization rent and the amount of the rent overcharge are 
          established on the attached chart, which is fully made a part  of
          this order.  The total overcharge is $7,598.80 as of September 30, 
          1993, including excess security of $138.16.

          ISSUED:



                                                                      
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner
    

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