Letitia James Bans Landlord Raphael Toledano From Real Estate for 5 Years

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East Village landlord Raphael Toledano has been banned from practicing real estate for five years after the state prosecutor levied penalties and oversight against him for tenant harassment and fraud in 2019, Attorney General Letitia James announced.

Investigators found that Toledano continued those practices after 2019, so the New York Supreme Court ruled he would be banned from real estate and he would first need to petition the court to get back into the business. He agreed to pay $3 million in damages and penalties in 2019 and will now be required to give an additional $500,000 to James’ office from sales of his current properties to cover past-due penalties.

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James determined in 2019 that Toledano had harassed his tenants, primarily in the East Village, through coercive buyouts and illegal construction practices while also failing to provide rent-regulated tenants with utilities, repairs and other required services. 

It’s unclear how large Toledano’s portfolio is, or was, but properties mentioned in the criminal complaint include 222 East 27th Street, a 20-unit, five-story walk up in Kips Bay, and 444 East 13th Street, a six-story building with 15 units in the East Village. At least some of Toledano’s purchases in this area were financed by Madison Realty Capital

Madison Realty Capital did not immediately respond to a request for comment.

At the latter address, the criminal complaint alleges that Toledano filed unwarranted or baseless eviction cases against tenants; locked tenants out and physically removed them from the premises; increased their rents and deregulated their apartments; withheld essential services, including gas, hot water and heat; rendered the building uninhabitable by performing dangerous construction and demolishing the building; and falsely reporting tenants to the police for illegal activities.

He also misrepresented himself as a lawyer while attempting to rent three- and four-bedroom apartments, when legally they were only designed as one- or two-bedrooms, according to the attorney general’s office.

“New York tenants can breathe more easily knowing that Rafi Toledano is no longer in the real estate business,” James said in a statement. “Through his deceptive and illegal actions, Toledano caused incredible pain and suffering to hundreds of vulnerable families, who are still feeling the effects of his harassment today.”

Though Toledano agreed to the attorney general’s terms in the 2019 settlement, James determined that he hid business practices from the independent monitor put in place at the time.

Tenants rights group, Cooper Square Committee, said Toledano’s temporary ouster from the industry was the result of years of organizing on the part of residents and called the landlord’s attempts to make conditions unlivable a “cartoonish” take on a common practice among shady owners.

“While Toledano’s story and his attempts to use dangerous construction and intimidation in order to harass and displace rent-regulated tenants were cartoonish, they are all too common in the New York real estate industry,” Liam Reilly, housing organizer for Cooper Square Committee, said in a statement. “This settlement is a welcome result of years of committed organizing by Tenants Taking Control [formerly known as the Toledano Tenants’ Coalition], who have been steadfast in their demands for safe conditions and basic dignity in their homes.”

In 2019, Toledano was also ordered to have no direct contact with tenants; hire an independent management company for his properties; and pay damages and penalties.

The landlord violated these terms by diverting funds from a reserve account established by the agreement, not making penalty payments, and failing to maintain his properties in a manner that complied with protected tenant protection laws, according to James’ office.

“Tenants are not pawns to be abused and discarded in big real estate’s illegal, money-making schemes,” Sandra Mayer, a former tenant of Toledano’s, said. “At least one bad-acting chess piece has been removed from the board in New York.”

Toledano founded Brookhill Properties, Adele Realty and Regal Property Group, all of which were mentioned as defendants in the most recent filing by the attorney general’s office

Attempts to reach Toledano for comment were unsuccessful.

Mark Hallum can be reached at mhallum@commercialobserver.com.