Local laws and code enforcement are just as important as the Mueller's Russia report

Real estate pirates like Trump & Kushner have schemed unchecked for decades and now their shoddy standards are ours

Published March 24, 2019 8:00AM (EDT)

 (Getty/Sean Gallup)
(Getty/Sean Gallup)

With the Mueller report floating out in the ethers much of the nation is wringing their hands over the seeming inability of the legal system to hold Donald Trump accountable for what millions of Americans suspect are high crimes and misdemeanors. 

This is a good inflection point to reflect on just where did the self-promoter-in-chief come from. What is the nature of the social ecology of the place that spawned him, his son-in-law Jared Kushner and much of the rest of their posse? Despite losing the popular vote, they are now riding roughshod over the “free world” as they inspire the retro-rise of a fresh crop of authoritarian leaders around the world.   

New York City’s self-image is as a 24-7 cosmopolitan center of culture, commerce and free expression. But in reality, it is very much a systemically corrupt company town. It’s not unlike a coal mine town in Appalachia or a banana republic where a multinational is stripping the land of a natural resource while paying the government to oppress the people that have the misfortune to live there.

Historically, it has usually been only a federal prosecutor who is up to the task of holding a larger than life New York City real estate baron like Trump to account for breaking the law. In 1973 it took the Department of Justice to stand up to Trump’s father Fred, who along with his son Donald, were listed as defendants in a federal racial discrimination housing complaint over allegations that for years they turned away African-Americans looking to rent one of their apartments.

“Rather than quietly trying to settle — as another New York developer had done a couple of years earlier — he [Trump] turned the lawsuit into a protracted battle, complete with angry denials, character assassination, charges that the government was trying to force him to rent to ‘welfare recipients’ and a $100 million countersuit accusing the Justice Department of defamation,” reported the Times. “When it was over, Mr. Trump declared victory, emphasizing that the consent decree he ultimately signed did not include an admission of guilt.”

But in an investigation in 2016 the Times used “decades-old files from the New York City Commission on Human Rights, internal Justice Department records, court documents and interviews with tenants, civil rights activists and prosecutors” that “uncovered a long history of racial bias at his family’s properties, in New York and beyond.”

New York City’s real estate industry rewards the kind of bullying swagger that Michael Cohen, Trump’s enforcer and fixer, described when he testified before the House Oversight Committee. That sense of confidence that the rules don’t apply to you are reenforced by a local legal/regulatory system for the real estate industry that in reality is easily evaded. 

Case in point the Kushner Companies, which was originally founded by convicted felon Charles Kushner, and run by his son Jared up until his taking a role in the Trump administration. A joint investigation by the Housing Rights Initiative, a non-profit tenants rights group, and New York City Council Member Ritchie Torres, who chairs the Council’s Oversight Committee, revealed the company had a regular pattern and practice of falsifying construction permits so as to conceal from local officials that the apartments they were working on contained rent regulated units. 

With that accomplished, the developer was able to use construction as a way to drive out the tenants that had been stripped of the protections they were entitled to as tenants in rent stabilized apartments. That, in turn, paved the way to make room for new tenants that would be anxious to pay whatever the insane New York City rental market would bear. 

After the joint investigation documented that Kushner had falsified the dozens of building permit applications the company was fined $210,000 by the city’s Department of Buildings in August.

Yet, incredibly, the non-profit tenants group and Council Member Torres found that even after the company was fined by the real estate friendly Department of Buildings, the agency had failed to flag that Kushner Companies didn’t have a Certificate of Occupancy for nine of its apartment buildings where tenants were paying rent.

“Just like it is illegal for a driver to operate a vehicle without a license, it is illegal for an owner to operate a building without a certificate of occupancy,” Torres told reporters at a press briefing held last week outside Kushner’s  666 Fifth Avenue office tower. 

“So, why does Kushner insist on operating outside the law? Why does it insist on committing perjury? Why does it insist on operating buildings without a certificate of occupancy?” he asked.  “It is because the goal is to evade scrutiny of its construction practices. Kushner Properties is engaged in what I call the weaponization of construction — the use of construction as a weapon of harassing tenants out of their apartments and deregulating units out of existence.”

When real estate developers and landlords operate outside the law really bad things happen. People can die, as they did in the 2015 lower Eastside gas explosion that destroyed three buildings and killed two people. In that case, two building owners, a contractor and two plumbers were indicted for criminally negligent homicide. 

Last year, the Associated Press reported that Kushner Companies had accumulated over $500,000 in unpaid fines. But that’s just a drop in the $1.5 billion in fines that are outstanding, much of it for building and construction code violations industry wide. And under New York City’s ‘etch-a-sketch’ pro-landlord laws, the fines just disappear if they go unpaid for eight years. In the fiscal year ending in 2017, that meant $94 million in New York City fines were just written off,  according to reporting by CBS News.

In New York City, the three-headed hydra of the real estate, development and construction industries has an unparalleled strangle hold on local and state politics. For generations now, they have been renting the elected leaders with a never-ending stream of campaign cash and revolving door opportunities.

Over the years the political class and their patrons have been so intertwined it is hard to distinguish them from each other. The vast sums of tax deductible philanthropy from the real estate sector has guaranteed that the moguls names are enshrined in marble at the entrances to the world class medical, cultural and higher education institutions that the Big Apple is known for. 

Both Governor Andrew Cuomo and Mayor Bill de Blasio have taken millions from this all powerful sector. The state legislature and New York City Council  are also beneficiaries of this largesse that came even as the ranks of the homeless reached record levels and millions of families struggle mightily to pay their rent. 

And while progressives went to war over the $3 billion tax abatements offered out-of-towner Jeff Bezos and Amazon, it was just another day in Gotham when the Bloomberg Administration gave $6 billion in supports to help New York City real estate mogul  Stephen Ross and his Related Companies develop the Hudson Yards luxury housing and shopping complex on the Westside. 

This axis of influence and avarice extends into the local legal system that regulates developers, thanks to New York State’s system of electing local county district attorneys and certain classes of judges,  which provides yet another giving opportunity for the real estate industry and their lawyers. 

Consider the October, 2017 investigation by the New Yorker, ProPublica and WNYC entitled “How Ivanka Trump and Donald Trump Jr., Avoided a Criminal Indictment . It tracked how an investigation in 2010 by the Manhattan District Attorney’s Major Economic Crime Bureau just went away after a long-time Trump fixer intervened.

“For two years, prosecutors in the Manhattan District Attorney’s office had been building a criminal case against them for misleading prospective buyers of units in the Trump SoHo, a hotel and condo development that was failing to sell,” according to the New Yorker account. “Despite the best efforts of the siblings’ defense team, the case had not gone away. An indictment seemed like a real possibility. The evidence included emails from the Trumps making clear that they were aware they were using inflated figures about how well the condos were selling to lure buyers.” 

But after a May, 2012 visit to the District Attorney’s office from Marc Kasowitz, a long-time Trump lawyer and big donor to Cyrus Vance Jr., who argued to drop the case. Vance did exactly that.

Vance defended his decision to the New Yorker. “‘I did not at the time believe beyond a reasonable doubt that a crime had been committed,’ he told us. ‘I had to make a call and I made the call, and I think I made the right call.’” 

“But, less than six months after the D.A.’s office dropped the case, Kasowitz made an even larger donation to Vance’s campaign, and helped raise more from others — eventually, a total of more than fifty thousand dollars,” according to the New Yorker account. “After being asked about these donations as part of the reporting for this article—more than four years after the fact—Vance said he now plans to give back Kasowitz’s second contribution, too. ‘I don’t want the money to be a millstone around anybody’s neck, including the office’s, he said.’”

This is the same city in which, during the Bloomberg years, the NYPD illegally stopped and frisked hundreds of thousands of young men of color, only arresting a tiny fraction of them. In 2017 the city had to payout $75 million to settle a lawsuit that alleged that between 2007 and 2015 the NYPD had written some 900,000 so called “quality-of-life”  violations “regardless of whether any crime or violation” had actually occurred. 

During the 2016 GOP primary debates Trump described the transactional nature of how things worked for him as a New York City real estate developer. “I was a businessman,” he said. “I give to everybody. When they call, I give . . . When I need something from them, two years, three years later, I call then, and they are there for me . . . and that’s a broken system.”

From at least the founding of our nation, New York City’s soulless mercantilism has been its defining characteristic. It’s where, during the Revolution, the British based their military headquarters and where wealthy loyalists found refuge

No matter what hangs in the balance, when it comes to a choice between money and humanity, commerce has always prevailed in New York City.  By the time of the advent of the Civil War, New York City was so deeply enmeshed in the profitable slave trade that Fernando Wood, the Mayor at the time, suggested that it secede from the union to insure its continued prosperity. 

Today, the moral choices are just as stark. In Manhattan,

a single residence on Central Park South recently sold for $238 million; and that’s in a city where every night over 22,000 children are homeless.

By Bob Hennelly

Bob Hennelly has written and reported for the Village Voice, Pacifica Radio, WNYC, CBS MoneyWatch and other outlets. His book, "Stuck Nation: Can the United States Change Course on Our History of Choosing Profits Over People?" was published in 2021 by Democracy@Work. He is now a reporter for the Chief-Leader, covering public unions and the civil service in New York City. Follow him on Twitter: @stucknation

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