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Maryland AG sues Kushner apartment company, alleging thousands of violations while renting rodent-infested units

Baltimore Sun logoBaltimore Sun 10/23/2019 By Kevin Rector, The Baltimore Sun

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BALTIMORE — Maryland Attorney General Brian Frosh has sued an apartment management company owned by senior White House adviser and presidential son-in-law Jared Kushner, alleging it routinely used “unfair or deceptive” rental practices while running rodent-infested apartments in Baltimore and the surrounding region.

Attorneys in the Consumer Protection Division of Frosh’s office argued in a statement of charges filed Wednesday that Westminster Management and 25 other companies whose properties it managed have “victimized consumers, many of whom are financially vulnerable, at all stages of offering and leasing” their rental units in Maryland. The companies committed “hundreds of thousands of violations” of consumer protection laws along the way, the statement said.

Representatives for the Kushner-linked companies did not immediately have comment Wednesday. They have previously defended the companies’ practices as falling within industry standards and have dismissed critiques from Frosh as politically motivated.

“We refuse to be extorted by an ambitious Attorney General who clearly cares more about scoring political points than fighting real crime and improving the lives of the people of Maryland,” Kushner Cos. CEO Laurent Morali said last month, after the company announced it had rejected a settlement offer from Frosh’s office after two years of negotiating.

In an interview about Wednesday’s filing, Frosh called such claims “ridiculous.” He said the charges outline “an extraordinary panoply of violations of the rights of tenants.”

“They were cheating tenants before, during and after their tenancy, and when I tell you there were hundreds of thousands of violations of the Consumer Protection Act, it just begins to convey the seriousness of the charges,” Frosh said. “They caused serious harm and suffering to the people who lived in their units.”

The filing is the latest volley in a politically charged, years-long legal battle between Frosh, the state’s top law enforcement official and a Democrat, and Kushner, who is married to Republican President Donald Trump’s daughter Ivanka and heir to his family’s real estate firm, Kushner Cos.

a man wearing a suit and tie: Senior advisor Jared Kushner listens to President Donald Trump during a Cabinet meeting in the Cabinet Room of the White House, on July 16, 2019, in Washington, D.C. © Oliver Contreras/Sipa USA/TNS Senior advisor Jared Kushner listens to President Donald Trump during a Cabinet meeting in the Cabinet Room of the White House, on July 16, 2019, in Washington, D.C. Kushner stepped down as the firm’s CEO when he became a senior adviser to his father-in-law in 2017 but did not divest from some of its properties — including Westminster Management, the company at the center of Frosh’s complaint.

The firm first acknowledged it was under investigation by Frosh’s office after articles in The Baltimore Sun and ProPublica in 2017 detailed complaints from tenants and other housing advocates alleging Westminster was violating consumer protection rules for renters. The treatment of Baltimore-area tenants by the Kushner company, and particularly the degree to which they have struggled with rodents in their homes, garnered renewed attention in July after Trump called Baltimore a “rat and rodent infested mess.”

The filing is unlike traditional lawsuits in state or federal court. Under Maryland regulatory statutes, the state filed the charges within the Consumer Protection Division of the Attorney General’s Office, to then be put before an administrative law judge in the Office of Administrative Hearings in Hunt Valley. The administrative judge will determine facts and make legal conclusions in the case before kicking it back to the Consumer Protection Division, where personnel walled off from the initial investigation will adjudicate the findings and assess damages, if any, for victims.

Any decision could then be appealed in state court.

Frosh estimated the damages could swell to the hundreds of millions of dollars given the volume of alleged violations, but the filing does not specify an amount sought.

“We’re not arguing yet what the penalty might be, but we will at the end, and obviously the number of violations will play a big role,” Frosh said.

Frosh’s statement of charges claims that the Kushner-linked companies often operated without proper licenses and charged tenants illegal and other “sham” fees while renting out “distressed, shoddily maintained” apartments and townhomes under “conditions that can adversely impact consumers’ health and well being.”

Many tenants, the statement says, “have had to endure living in units that are infested by rodents and vermin, plagued with water leaks that have caused mold and other issues, and, at times, lacking in basic utilities.”

Some “have experienced rodent infestations so severe that they have rodents living and dying in walls and kitchen appliances; damaging carpeting; chewing holes in drywall and screen doors; and leaving droppings on floors, counter tops, and furniture,” the statement alleges.

The companies named in the lawsuit represent 17 apartment complexes in Maryland controlled by the Kushner Cos. and managed by Westminster, its affiliate. The complexes collectively have about 9,000 units in Baltimore, Baltimore County and Prince George’s County. Many are listed in Frosh’s complaint as being associated with JK2 Westminster LLC, of which both Jared Kushner and his brother Josh have been identified as members in past court filings.

Tenants from some of those same complexes have previously alleged the company improperly used rent payments to pay down overdue fees for other services, prompting more late fees and threats of eviction. An investigation by The Sun also found entities affiliated with the firm’s apartment complexes sought the arrest of more than 100 former tenants for failing to appear in court over allegations of unpaid debts.

In addition to restitution for tenants, Frosh’s office is seeking an injunction preventing the companies from charging illegal fees, requiring them to upgrade conditions and forcing them to acquire the needed licenses.

In addition to rodent infestations, the charges allege sewage backups, appliances in disrepair, and a failure by management to respond to myriad complaints from residents. On top of the physical degradation of the properties, the statement alleges a slate of unfair practices in which management inappropriately collected application fees, misapplied late fees, improperly took security deposits and collected on debt without a license to do so.

Frosh said the case was not inspired by or related to any case his office has pursued against the Trump administration, nor by Kushner’s association with the president or his administration.

“It has nothing to do with the administration. This is purely a Maryland issue: a Maryland management company and landlords that we feel have repeatedly and consistently violated our Consumer Protection Act,” Frosh said. “It doesn’t make any difference who owns it.”

Frosh said his office has been involved in “lots of similar cases where a landlord will charge fees that are inappropriate or withhold security deposits in a way that is inappropriate,” but none of “this magnitude.”

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©2019 The Baltimore Sun

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