Brokerage Firm Hits Back on City’s Lawsuit

NEW YORK CITY—An attorney representing the owner of a brokerage firm and his wife criticized litigation filed yesterday by New York City alleging that the firm had engaged and profited from a $20-million illegal short-term rental operation primarily through Airbnb from 2015 to 2018.

New York City filed an 82-page civil complaint against Manhattan brokerage firm Metropolitan Property Group, its founder Sami Katri and his wife and real estate agent Shely Katri, as well as three of its former agents Maxim Beckman, Simon Itah and Alon Karasenty. The city charges in its lawsuit that Metropolitan Property Group, the Katris and the agents, along with 18 alleged corporate entities affiliated with the employees, turned at least 130 apartments across 35 residential buildings, including one entire building in East Harlem, into illegal short-term rentals primarily through Airbnb.

“Illegal hotels take precious housing away from New Yorkers and destabilize our communities. My administration is cracking down on corporate operators to ensure residents and visitors are safe and are treated fairly,” said Mayor Bill de Blasio in a statement.

Douglas Pick, a partner in the Manhattan law firm Pick & Zabicki LLP, strongly denied the charges and criticized the action against his clients—Metropolitan Property Group and Sami and Shely Katri.

He tells Globest.com that he will be filing a motion to dismiss the claims against Metropolitan Property Group and the Katris. Pick says that he tried to discuss the litigation with the city’s legal department, but was rebuffed. Pick notes that the three agents named as defendants were “disassociated” from Metropolitan Property Group in August 2017 and that at no time has Metropolitan Property Group been involved or had any interest in Airbnb operations.

Pick adds that one of the agents was dismissed because the brokerage firm found out that the agent might be affiliated with Airbnb, which “is contrary to the purpose of Metropolitan Property Group. We lease commercial and residential space. We cannot have people working with Airbnb.”

Pick who did not identify the agent that was dismissed due to the possible Airbnb connection, adds, “Metropolitan Property Group never had and never will have any interest in any Airbnb. It goes against their corporate charter. This is simply guilt by former affiliation.”

He also charged that Metropolitan Property Group had no affiliation with any of the other 18 entities the city charges are affiliated with the firm. In fact, he noted that Metropolitan Property Group, II, Inc., which is listed as a defendant, is no longer in operation. He said the litigation has a number of mistakes because the city did not do its due diligence.

The city charges that MPG and their employees advertised short-term rentals on Airbnb through approximately 250 listings via approximately 101 host accounts using various fake identities. Nearly 70% f locations advertised omitted the house number for the rental location. The platforms’ data shows the same contact information was often used to set up the distinct host accounts.

Users who advertise housing for rent on booking platforms were allowed to use fake identities, create multiple host accounts, and omit location information, obstructing enforcement as well as consumers’ ability to receive complete information and track reviews. In response to community complaints, the city stated that OSE conducted inspections and issued violations in five buildings named in the lawsuit. OSE then utilized data obtained from the platforms via administrative subpoena to connect illegal activity to the ring of real estate professionals.

OSE was also able to determine the 18 entities it charges in court documents were affiliated with MPG and its employees received at least $20.7 million in short-term rental revenue through Airbnb alone from 2015 to 2018. MPG employees conducted 13,691 short-term rental transactions, involving more than 75,000 guests who were not notified of the illegality of the rentals nor the lack of safety measures. Revenue from almost 3,000 short-term rental transactions were made payable to MPG’s headquarters, the city charges in court documents.

“These egregious violations are prime examples of just how serious the illegal hotel problem is in our city. I commend OSE for their stellar work and look forward to further strengthening our enforcement tools so that we may meet this challenge head on. This council will continue to combat the illegal hotel problem to increase public safety and protect our affordable housing stock,” said City Council Speaker Corey Johnson in a prepared statement.

OSE identified at least 138 listings on Airbnb advertising short-term rentals within five buildings, located at 200 East 116th St. in East Harlem, which has entirely been converted to short-term rentals; 123 East 54th St. in Midtown East; 207-215 East 27th St.; 230 East 30th St. and 2118 3rd Ave. in Kips Bay. The city states that SE estimates MPG had advertised and maintained short-term rentals in 30 other buildings in Manhattan since 2014.