Landlords Bribe City Collectors for Tax Breaks

by William Rowen

The New York City Department of Investigation and the FBI announced on November 22 that at least 200 landlords had their taxes reduced or entirely removed from the city's books by city tax collectors who accepted bribes. Initially, 29 people, including three tax collectors, were arrested.

In a scheme that involved the fraudulent computer shuffling of credits and debits from one property-tax account to another, three Brooklyn tax-collecting employees, including the high-placed former chief collector, took cash, cars, and other favors from landlords -- in some cases worth tens of thousands of dollars -- to wipe out taxes worth hundreds of thousands of dollars. The total cost to the city in lost taxes and interest was reported to be $20 million.

As many as 1,500 buildings were thought to be involved, mostly in Brooklyn and Manhattan. DOI spokesperson Kevin Ryan said that the scheme "exceeds some of the worst excesses of Boss Tweed." Landlords who took advantage of it were alerted to the opportunity by word of mouth from other real-estate professionals in Brooklyn and Manhattan.

The announcement of the initial 29 arrests did not give the names of any landlords. The investigatory agencies expect that at least 200 landlords and other city tax workers will be arrested, and urged them to turn themselves in. The New York Times reported that after the announcement, dozens of landlords called the investigators and offered a variety of excuses for their involvement in the scheme. One landlord blamed one of his tenants, who he said was behind in the rent and had agreed to pay the tax bill but failed to follow through. The Times quoted an anonymous law enforcement official as saying that the landlords were "coming up with all variations of 'my dog ate my homework' excuses."

The Brooklyn chief tax collector who was at the center of the scheme was either the owner or manager of seven or eight apartment houses. After being arrested several months ago, he cooperated with investigators and wore a wire.