FILED: NEW YORK COUNTY CLERK 09/23/ :26 PM

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1 FILED: NEW YORK COUNTY CLERK 09/23/ :26 PM INDEX NO /2016 NYSCEF DOC. NO. 33 RECEIVED NYSCEF: 09/23/2016 EXHIBIT 1

2 FILED: NEW YORK COUNTY CLERK 07/12/ :30 PM INDEX NO /2016 NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 07/12/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK AUDUBON TENANTS ASSOCIATION, MIRIAM ORTIZ, CARMEN BRAVO, DEBORA DEL ROSARIO, INES MARTINEZ, EVA GOMEZ, LESLIEANN CONCE, CARLA GONZALEZ, QUITERIA GUZMAN, ELBA PALAGUACHI, ADONIA JIMENEZ, IRIS RODRIGUEZ, ZOILA GRULLON, ALAN WEISSMAN, ROSA CABREJA, FERNANDO GARCIA, ERIDANIA ORTIZ, MARISOL POLANCO, ELADIA ROSARIO, PAULA RAMIREZ, RAFAEL HIDALGO, GUILLERMO POLANCO, DELTON ARIAS, MARIA MARTINEZ, JACINTO CAMARILLO, YRENE ABREAU, CARMEN TAVERAS, MARIA de la ROSA, JOSE ANIBAL, MARCIA ROSA, and ERIKA SOTO, Plaintiffs, Index No /2016 ST 1 AMENDED COMPLAINT -against AUDUBON REALTY, LLC, HAYCO CORPORATION, IRIS NIEVES, DANIEL GONZALEZ, FRED HAY, and ALEX HAY, Defendants. Plaintiffs Audubon Tenants Association, Miriam Ortiz, Carmen Bravo, Debora del Rosario, Ines Martinez, Eva Gomez, Leslieann Conce, Carla Gonzalez, Quiteria Guzman, Elba Palaguachi, Adonia Jimenez, Iris Rodriguez, Zoila Grullon, Alan Weissman, Rosa Cabreja, Fernando Garcia, Eridania Ortiz, Marisol Polanco, Eladia Rosario, Paula Ramirez, Rafael Hidalgo, Guillermo Polanco, Delton Arias, Maria Martinez, Jacinto Camarillo, Yrene Abreau, Carmen Taveras, Maria de la Rosa, Jose Anibal, Marcia Rosa, and Erika Soto, as and for their first amended Complaint, allege as follows: 1 1 of 167

3 INTRODUCTORY STATEMENT 1. This case concerns non-compliance with and violations of the Rent Stabilization Law ( RSL ), codified at New York City Administrative Code ( Admin. Code ) et seq., the Rent Stabilization Code ("RSC"), codified at 9 New York Code of Rules and Regulations ("NYCRR") et seq., the Deceptive Acts and Practices Act, General Business Law ( GBL ) 349, and the federal Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. 4852d, by Defendants, who are the owners and managers of the multiple dwelling (the Building ) located at Block 2161 Lot 40 in the borough of Manhattan, with a street address of Audubon Avenue, New York, NY 10040, including the filing of false and fraudulent rent registrations by Defendants with the New York State Division of Housing and Community Renewal, issuance of misleading and fraudulent leases and lease renewals; and the collection of rent overcharges. 2. Plaintiffs, consisting of rent-stabilized tenants residing in the Building and their tenants association, seek declaratory and equitable relief, monetary judgment for damages and penalties, and attorney fees. PARTIES, JURISDICTION AND VENUE A) Plaintiffs 3. Plaintiff Audubon Tenants Association (the Tenants Association ) is a voluntary unincorporated membership 2 2 of 167

4 organization of the majority of rent-stabilized tenants residing in the Building, including all the individual plaintiffs herein. Plaintiff Tenants Association exists for the purpose of advocating for the preservation of safe, habitable, properly maintained and affordable housing in the Building. Defendants ongoing violations of City State, and Federal law alleged herein frustrate the purposes of plaintiff Tenants Association. 4. Plaintiff Miriam Ortiz ("M. Ortiz") is a tenant at apartment E at the Building and resides therein. 5. Plaintiff Carmen Bravo ( Bravo ) is a tenant at apartment 1A at the Building and resides therein. 6. Plaintiff Debora del Rosario ( del Rosario ) is a tenant at apartment 1B at the Building and resides therein. 7. Plaintiff Ines Martinez ( I. Martinez ) is a tenant at apartment 1C at the Building and resides therein. 8. Plaintiff Eva Gomez ( Gomez ) is a tenant at apartment 1D at the Building and resides therein. 9. Plaintiff Leslieann Conce ( Conce ), formerly known as Leslieann de la Cruz, is a tenant at apartment 1E at the Building and resides therein. 10. Plaintiff Carla Gonzalez ( Gonzalez ) is a tenant at apartment 2B at the Building and resides therein. 11. Plaintiff Quiteria Guzman ( Guzman ) is a tenant at apartment 2E at the Building and resides therein. 3 3 of 167

5 12. Plaintiff Elba Palaguachi ( Palaguachi ) is a tenant at apartment 3C at the Building and resides therein. 13. Plaintiff Adonia Jimenez ( Jimenez ) is a tenant at apartment 4B at the Building and resides therein. 14. Plaintiff Iris Rodriguez ( Rodriguez ) is a tenant at apartment 4D at the Building and resides therein. 15. Plaintiff Zoila Grullon ( Grullon ) is a tenant at apartment 5C at the Building and resides therein. 16. Plaintiff Alan Weissman ( Weissman ) is a tenant at apartment 7E at the Building and resides therein. 17. Plaintiff Rosa Cabreja ( Cabreja ), formerly known as Rosa Brito, is a tenant at apartment 8B at the Building and resides therein. 18. Plaintiff Fernando Garcia ( Garcia ) is a tenant at apartment 8C at the Building and resides therein. 19. Plaintiff Eridania Ortiz ( E. Ortiz ) is a tenant at apartment 9D at the Building and resides therein. 20. Plaintiff Marisol Polanco ( M. Polanco ) is a tenant at apartment 10E at the Building and resides therein. 21. Plaintiff Eladia Rosario ( Rosario ) is a tenant at apartment 11C at the Building and resides therein. 22. Plaintiff Paula Ramirez ( Ramirez ) is a tenant at apartment 12A at the Building and resides therein. 23. Plaintiff Rafael Hidalgo ( Hidalgo ) is a tenant at 4 4 of 167

6 apartment 12B at the Building and resides therein. 24. Plaintiff Guillermo Polanco ( G. Polanco ) is a tenant at apartment 14A at the Building and resides therein. 25. Plaintiff Delton Arias ( Arias ) is a tenant at apartment 14B at the Building and resides therein. 26. Plaintiff Maria Martinez ( M. Martinez ) is a tenant at apartment 14C at the Building and resides therein. 27. Plaintiff Jacinto Camarillo ( Camarillo ) is a tenant at apartment 14D at the Building and resides therein. 28. Plaintiff Yrene Abreu ( Abreu ) is a tenant at apartment 15A at the Building and resides therein. 29. Plaintiff Carmen Taveras ( Taveras ) is a tenant at apartment 15D at the Building and resides therein. 30. Plaintiff Maria de la Rosa( de la Rosa ) is a tenant at apartment 16A at the Building and resides therein. 31. Plaintiff Jose Anibal ( Anibal ) is a tenant at apartment 17B at the Building and resides therein. 32. Plaintiff Marcia Rosa ( Rosa ) is a tenant at apartment 18B at the Building and resides therein. 33. Plaintiff Erika Soto ( Soto ) is a tenant at apartment 18C at the Building and resides therein. B) Defendants 34. Defendant Audubon Realty, LLC, ( Audubon Realty ) is a New York Corporation and is an owner of the Building. 5 5 of 167

7 Defendant Audubon Realty is registered with the New York Department of State with an address for service of process given as PO BOX 1755 NEW YORK, NEW YORK, Defendant Audubon Realty is registered on the Multiple Dwelling Registration ( MDR ) for the building, filed with the New York City Department of Housing Preservation and Development ( HPD ) pursuant to Multiple Dwelling Law ( MDL ) 325, as the Owner with an address given as 377 Fifth Avenue, 3d Floor, New York, NY Upon information and belief, defendant HayCo Corporation ( Hayco ) manages the Building for defendant Audubon Realty. Defendant Hayco is registered with the New York Department of State with an address for service of process given as the same as for defendant Audubon Realty: PO BOX 1755 NEW YORK, NEW YORK, 10156, and with an address for its Principal Executive Office given as 377 Fifth Avenue, 3d Floor, New York, NY 10016, which is the same street address listed for defendant Audubon Realty on the MDR for the Building filed with HPD. 36. Defendant Iris Nieves is registered on the MDR for the Building, filed with HPD pursuant to MDL 325, as the Head Officer of defendant Audubon Realty and as the Managing Agent of the Building. 37. Defendant Daniel Gonzalez is registered on the MDR for the Building, filed with HPD pursuant to MDL 325, as an Officer of defendant Audubon Realty. 6 6 of 167

8 38. Upon information and belief, defendant Fred Hay is a member of defendant Audubon Realty, has held himself out as the managing agent of Audubon Realty, and also is the Vice President of defendant Hayco. 39. Defendant Alex Hay is listed on the database of the New York Department of State, Division of Corporations, as the Chief Executive Officer of defendant Hayco, with an address of PO Box 1755, New York, NY 10156" (the same address as defendants Audubon Realty and Hayco), and also has held himself out as a member of Defendant Audubon Realty. 40. Upon information and belief, Defendants have acted in concert regarding the acts complained of herein, aided and abetted in the acts complained of herein, and Defendants Alex Hay, Fred Hay, Iris Nieves, and Daniel Gonzalez have exercised complete domination of Defendants Audubon Realty and Hayco with respect to the acts complained of herein. C) Jurisdiction and Venue 41. Jurisdiction in this Court is proper because this is an action for a sum of money in excess of $25, Venue is proper, pursuant to CPLR 503, because all of the individual Plaintiffs reside in the Building, which is located in New York County. 7 7 of 167

9 STATEMENT OF FACTS I. THE BUILDING 43. At all relevant times herein, the Building was and is a six-story apartment building consisting of approximately 92 apartments, and was constructed before The Building is generally subject to the Rent Stabilization Law, pursuant to RSL The Building has not been owned as a cooperative or a condominium at any time relevant to this action. 45. From January 26, 1995, to September 23, 2009, the Building was owned by Audubon Gardens Realty Corp., pursuant to a Bargain and Sale Deed dated January 26, 1995, and recorded with the Office of the City Register on February 9, On or about September 23, 2009, defendant Audubon Realty became the owner of the Building, pursuant to a Bargain and Sale Deed dated September 23, 2009, and recorded with the Office of the City Register on October 2, Pursuant to RSC (f)(2), Audubon Realty is liable for all overcharges and overcharge penalties based upon overcharges collected by any predecessor owner. 8 8 of 167

10 II. VIOLATIONS OF THE RENT STABILIZATION LAW AND RENT STABILIZATION CODE A. APPLICABLE LAWS 48. The RSL, at , provides, in relevant part: d. (1) Each owner subject to the rent stabilization law shall furnish to each tenant signing a new or renewal lease, a rider describing the rights and duties of owners and tenants as provided for under the rent stabilization law of nineteen hundred sixty-nine. Such publication shall conform to the intent of section of the general obligations law and shall be attached as an addendum to the lease. Upon the face of each lease, in bold print, shall appear the following: "Attached to this lease are the pertinent rules and regulations governing tenants and landlords' rights under the rent stabilization law of nineteen hundred sixty-nine". (2) The rider shall be in a form promulgated by the commissioner in larger type than the lease and shall be utilized as provided in paragraph one of this subdivision. 49. The RSC , provides, in relevant part: (a) Vacancy lease or rental. (1) For housing accommodations other than hotels, upon the renting of a vacant housing accommodation, the owner shall provide to the tenant a copy of the fully executed lease for a one- or two-year term, at the tenant's option.... The rent provided therein may not exceed the last legal regulated rent in addition to all increases authorized by this Code... (b) Renewal lease. (1) For housing accommodations other than hotels, upon such notice as is required by section of this Title, the tenant shall have the right of selecting at his or her option a renewal of his or her lease for a one- or two-year term... (c) Lease rider and notice of rights. (1) For housing accommodations subject to this Code, an owner shall furnish to each tenant signing a vacancy or renewal lease a 9 9 of 167

11 rider in a form promulgated or approved by the DHCR, in larger type than the lease, describing the rights and duties of owners and tenants as provided for under the RSL, including a detailed description in a format as prescribed by DHCR of how the rent was adjusted from the prior legal rent... Copies of the form as promulgated by DHCR shall also be available in all languages that may be required pursuant to DHCR's language access plan. The rider shall be attached as an addendum to the lease. Upon the face of each rider, in bold print, in English and any other language as required by the DHCR language access plan, shall appear the following: "ATTACHED RIDER SETS FORTH RIGHTS AND OBLIGATIONS OF TENANTS AND LANDLORDS UNDER THE RENT STABILIZATION LAW." ("LOS DERECHOS Y RESPONSABILIDADES DE INQUILINOS Y CASEROS ESTAN DISPONIBLE EN ESPANOL") (i) For vacancy leases, such rider shall in addition also include a notice of the prior legal regulated rent, if any, which was in effect immediately prior to the vacancy, an explanation, and in a format prescribed by DHCR, how the rental amount provided for in the vacancy lease has been computed above the amount shown in the most recent annual registration statement, as well as the prior lease, and a statement that any increase above the amount set forth in such registration statement is in accordance with the adjustments permitted by the Rent Guidelines Board and this Code. (ii) Such rider shall also set forth that the tenant may, within sixty days of the execution of the lease, require the owner to provide the documentation directly to the tenant supporting the detailed description regarding the adjustment of the prior legal rent pursuant to paragraph (i) of this subdivision. The owner shall provide such documentation within thirty days of that request. (iv) For renewal leases, such rider shall be attached to the form sent to the tenant pursuant to section of this Title. 50. The RSL, at (b)(5-a), and RSC, at , of 167

12 provide that the Legal Regulated Rent ( LRR ) for a vacancy lease in a rent stabilized apartment shall be no more than 20% of the previously legal regulated rent (or, if the lease is for one year, 20% percent minus the difference between the current rent guidelines increases permitted for one and two year lease renewals, as set by the New York City Rent Guidelines Boat ( RGB ); however, if there has been no vacancy for at least eight years prior to the vacancy lease, an owner can also increase the rent by an additional 0.6% multiplied by the number of years since the last vacancy increase (the so-called "longevity increase"). An owner may not take more than one vacancy increase in a calendar year. An owner may also obtain an additional increase at vacancy without the consent of a tenant under RSC (a), but only for an increase in services or installation of new equipment or improvements, according to formulae set forth in the RSL and RSC (in general, 1/40 of the qualifying costs, and after September 24, 2011, 1/60th of the qualifying costs in buildings with greater than 35 units). However, such increase in services, new equipment, or improvements (known as an "Individual Apartment Increase, or "IAI") must be disclosed as part of the Rent Stabilization Lease Rider annexed to the initial vacancy lease as required by RSC (c)(1). IAIs in occupied appartments require written consent of the tenant. 51. The RSL, at , provides, in relevant part: a. Each housing accommodation which is subject to this law shall be registered by the of 167

13 owner thereof with the state division of housing and community renewal... upon forms prescribed by the commissioner. The data to be provided on such forms shall include the following: (1) the name and address of the building or group of buildings or development in which such housing accommodation is located and the owner and the tenant thereof...(3) the number of housing accommodations in such building or group of buildings or development subject to this code and the number of such housing accommodations subject to the local emergency housing rent control act; (4) the rent charged on the registration date e. The failure to file a proper and timely initial or annual rent registration statement shall, until such time as such registration is filed, bar an owner from applying for or collecting any rent in excess of the legal regulated rent in effect on the date of the last preceding registration statement... f. An annual statement shall be filed containing the current rent for each unit and such other information contained in subdivision a of this section as shall be required by the division. The owner shall provide each tenant then in occupancy with a copy of that portion of such annual statement as pertains to the tenant's unit. 52. The RSC permits an owner to charge less than the LRR, however, that lower rent known as a Preferential Rent ( PR ) must be registered as well, and the correct LRR must be set forth in the lease or lease renewal pursuant to which the preferential rent is charged. RSC RSL ( Exclusion of high rent accommodations ) provides that when a rent stabilized apartment with a rent above a certain amount (until June 24, 2011, that of 167

14 figure was $2,000, from then until June 15, 2015, that figure was $2,500, and since then that figure has been $2,700 plus an adjustment each year that corresponds to the RGB renewal increase for 1 year renewals) becomes vacant, the apartment will become exempt from rent stabilization. However, under RSL 504.2(b), the owner must give written certification to the first tenant of that apartment after such apartment becomes exempt under this provision. Such notice must contain the last LRR, the reason that such apartment is not subject to the RSL, a calculation of how either the rental amount charged has been derived so as to reach the high rent exclusion level, a statement that the last LRR may be verified by the tenant by contacting the New York State Division of Housing and Community Renewal ( DHCR ) and the address and telephone number of DHCR. Such notice must be sent by certified mail within 30 days after the tenancy commences or after signing of the lease, whichever occurs first or must be delivered to the tenant at the lease signing. In addition, the owner must send and certify to the tenant a copy of the registration statement filed with DHCR indicating that such housing accommodation became exempt, which form must include the last LRR, and must be sent to the tenant within 30 after the tenancy commences or the filing of such registration, whichever occurs later. 54. RSC provides, in relevant part: It shall be unlawful... for any person to demand or receive, any rent for any housing of 167

15 accommodation in excess of the legal regulated rent... in violation of any regulation, order or requirement under the RSL or this Code, or to offer, solicit, attempt or agree to do any of the foregoing. 55. RSL (a) and RSC provide that an owner who collects rent overcharges is liable for an award of the overcharges with interest accruing from the first date of the overcharges at the rate of interest payable on a judgment pursuant to CPLR 5004, and is liable for treble damages unless the owner can prove that the overcharge was not willful. B) VIOLATIONS OF THE RENT STABILIZATION LAW CONCERNING INITIAL LEASES AND LEASE RENEWALS COMMON TO MULTIPLE PLAINTIFFS 56. Upon information and belief, the apartments of all the individual plaintiffs are subject to the Rent Stabilization Law. 57. Plaintiffs Bravo, del Rosario, Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Ramirez, Arias, Camarillo, Taveras, and de la Rosa entered into their initial leases for their respective apartments in the Building with defendant Audubon Realty. 58. Upon information and belief, the initial leases offered and entered into by defendant Audubon Realty with each of plaintiffs Bravo, del Rosario, Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Ramirez, Arias, Camarillo, Taveras, and de la Rosa failed to indicate, upon the face of such leases, in bold print, the of 167

16 statement required by RSL , that: "Attached to this lease are the pertinent rules and regulations governing tenants and landlords' rights under the rent stabilization law of nineteen hundred sixty-nine." 59. Upon information and belief, the initial leases offered and entered into by Defendant Audubon Realty with many of the plaintiffs, including plaintiffs Gonzalez, Palaguachi, Jimenez, Rodriguez, Weissman, Garcia, E. Ortiz, Arias, and Camarillo, stated at the top of the first page that the apartments were not subject to rent stabilization." 60. Upon information and belief, Defendants never gave plaintiffs Bravo, del Rosario, Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Ramirez, Arias, Camarillo, Taveras, and de la Rosa the proper RSC (c) lease rider ( Rent Stabilization Rider ) with their initial leases, and plaintiff Soto never received a complete Rent Stabilization Rider with her initial lease. 61. Upon information and belief, Defendants never informed plaintiffs Bravo, del Rosario, Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Ramirez, Arias, Camarillo, Taveras, and de la Rosa of the LRR that was in effect immediately prior to the vacancy for their respective apartments. 62. Upon information and belief, defendants never informed of 167

17 plaintiffs Bravo, del Rosario, Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Ramirez, Arias, Camarillo, Taveras, and de la Rosa the basis upon which said plaintiffs initial LRRs were computed, including any details of purported improvements, if any. 63. Upon information and belief, in the initial leases made by defendant Audubon Realty with many of the plaintiffs, including plaintiffs Gonzalez, Guzman, Palaguachi, Jimenez, Rodriguez, Ortiz, M. Polanco, Camarillo, and de la Rosa, defendants inserted a rider wherein said plaintiffs in order to be permitted to enter into a lease for their respective apartments were required to certify that the apartment has been completely renovated in a good workmanlike manner and that these plaintiffs acknowledge that the apartment has been fully renovated. This includes, but not limited to: all the walls, windows, doors, locks, floors (wood flooring, tiles, etc.), plumbing, electric, kitchen (appliances, cabinets, flooring, fixtures, etc.) bathroom (sink, bathtub, tiles, fixtures, cabinets etc.) and all the fixtures of the apartment. Upon information and belief, the apartments of these individual plaintiffs were not renovated prior to their occupancy. Upon information and belief, Defendants did not obtain any permits from the New York City Department of Buildings for renovations of the apartments of the individual plaintiffs prior to their occupancy. 64. Upon information and belief, Defendants have failed to attach Rent Stabilization Riders with the lease renewals provided of 167

18 to all of the individual plaintiffs. 65. While RSC (a) requires that lease renewal offers be made on a form prescribed or a facsimile of such form approved by the DHCR and delivered not more than 150 days and not less than 90 days prior to the end of the tenant's lease term, on information and belief, Defendants frequently have sent lease renewals offers dated far earlier than 150 days before Plaintiffs lease terms would have ended, and such lease renewal offers by Defendants have generally failed to reproduce the reverse side of the standard DHCR lease renewal form (RPT-8) that contains Instructions to Owner (including the above rules on the timing of proper renewal offers) and Instructions to Tenant which would otherwise provide important information concerning the RSL and a tenant s remedies, including the right to ask the owner or DHCR for an explanation of the rental adjustments. 66. In the instances of most of the plaintiffs, including plaintiffs M. Ortiz, del Rosario, Gomez, Conce, Guzman, Palaguachi, Grullon, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Rosario, Ramirez, Hidalgo, G. Polanco, Arias, Martinez, Camarillo, Abreu, Taveras, de la Rosa, Anibal, and Rosa, defendants have consistently caused registrations to be filed with DHCR with higher LRRs and/or higher PRs (or omitted the Prs) than indicated on the plaintiffs leases, in numerous instances vastly higher, as indicated in the following table based upon the most recent DHCR registrations filed of 167

19 by Defendants on July 31, 2015: Apt PR on lease LRR on lease PR on registration LRR on registration E none $ $ $1, B none $1, $1, $3, D none $ $ $ E none $ $ $ E $1, $2, $2, $2, C $1, $1, $1, $2, C none $ $ $ E $1, $3, $3, $3, B $1, $3, $3, $3, C $1, $2, none $2, D $1, $2, none $2, E $1, $3, none $3, C none $ $ $ A none $1, $1, $1, B none $ $ $ A none $ none $ B $1, $2, $2, $3, C none $ $ $1, D $1, $2, none $2, A $ $ none $ D $1, $1, $1, $3, A $1, $3, $3, $3, B none $ none $1, B none $ $ $ Indeed, in many instances, such as plaintiffs M. Ortiz, del of 167

20 Rosario, Gomez, Conce, Guzman, Palaguachi, Grullon, Weissman, Cabreja, Rosario, Arias, Martinez, Taveras, and Rosa, where Defendants indicated a given figure on the lease as the claimed LRR, Defendants instead registered that same figure with DHCR as the claimed PR, and registered with DHCR as the purported LRR a higher figure that nowhere appeared on said plaintiff s lease. Said practices by Defendants commenced almost as soon as the building was acquired in 2009 and have continued to date. 67. In many instances, including the leases with plaintiffs Guzman, Palaguachi, Grullon, Weissman, Cabreja, Garcia, E. Ortiz, M. Polanco, Rosario, Arias, Camarillo, Taveras, and de la Rosa, defendants unlawfully indicated on plaintiffs leases that the preferential rents would apply only on condition that the plaintiff timely paid such preferential rent, and that if said plaintiff failed to do so the plaintiff would have to pay the full legal regulated rent, even though a rent stabilized lease may not lawfully provide for an escalation in the preferential rent before the expiration of the lease term. C. VIOLATIONS OF THE RENT STABILIZATION LAW AND CODE CONCERNING ILLEGAL INCREASES IN LEGAL REGULATED RENTS AND RENT OVERCHARGES ARISING FROM CLAIMED VACANCIES AND VACANCY LEASES SPECIFIC TO INDIVIDUAL PLAINTIFFS Plaintiff Arias, Apartment 14B 68. According to the rent registration history maintained by the DHCR from information supplied by Defendants and their predecessors, as of April 1, 2002, the LRR for apartment 14B, now of 167

21 occupied by plaintiff Arias, was $537.31, pursuant to a 2 year rent stabilized renewal lease that began on February 1, 2001, with a tenant named Narciso Moreno, who according to the rent registration history resided in the apartment commencing February 1, According to the rent registration history maintained by DHCR from information supplied by Defendants and their predecessors, as of April 1, 2003, the LRR for apartment 14B had been increased to $795.00, pursuant to a 1 year rent stabilized vacancy lease that began on July 1, 2002, with a tenant named Glennys Santana, who according to the rent registration history ultimately resided in apartment 14B no more than 20 months. At the time of the purported lease for the Glennys Santana tenancy in apartment 14B in 2002, the permissible vacancy increase for a 1 year lease would have been 18%, resulting in an initial LRR of $ In order to have lawfully increased the LRR to $ a 50% increase there would need to have been more than $6,400 in improvements, new equipment or services that qualified under RSC (a). Upon information and belief, no such improvements, new equipment, or services were provided in apartment 14B; the rent registration only indicated the basis for the increase as VAC/Lease. 70. According to the rent registration history maintained by DHCR from information supplied by Defendants and their of 167

22 predecessors, as of April 1, 2004, the claimed LRR for apartment 14B was $ for a purported 1 year lease that purportedly began on March 1, 2004, with a tenant named Jacqueline Santana; thereafter, the annual registrations indicated a series of 1 year renewals with Jacqueline Santana such that as of April 1, 2005, the claimed LRR was $853.88; as of April 1, 2006, the claimed LRR was $877.36; as of April 1, 2007, the claimed LRR was $914.65; as of April 1, 2008, the claimed LRR was $942.09; and as of April 1, 2009, the claimed LRR was $ All of these increases were consistent with the RGB permitted increases at those times. 71. According to the rent registration history maintained by DHCR, on July 30, 2010, Defendants registered apartment 14B with DHCR with a claimed LRR of $1, for a purported 1 year vacancy lease that purportedly began on March 1, 2010, with a tenant named Hector Guzman Taveras. 72. At the time that the purported Hector Guzman Taveras tenancy in apartment 14B began in 2010, the permissible vacancy increase for a 1 year lease would have been 17%, resulting in an initial LRR of $1, In order to have lawfully increased the LRR to $1, an increase of some 58.8% there would need to have been more than $16,400 in further, additional improvements, new equipment or services that qualified under RSC (a). Upon information and belief, no such improvements, new equipment, or services were provided in apartment 14B. The rent registration of 167

23 filed by Defendants only indicated the basis for the increase as Leas/RNL. 73. According to the rent registration history maintained by DHCR, on July 28, 2011, Defendants registered apartment 14B with DHCR with a claimed LRR of $1, for a purported 2 year lease that purportedly began on March 1, 2010, with the tenant indicated as Hector Guzman Taveras. If, arguendo, this registration was meant to indicate that the prior registration was incorrect, and that the initial lease of Hector Guzman Taveras was actually for a 2 year term, this would mean that given the permissible 20% vacancy increase over the prior tenancy the initial lease with Hector Guzman Taveras ordinarily would have resulted in a LRR of $1,181.38, and that there would have had to have been more than $16,600 in further, additional improvements, new equipment or services (on top of the hypothetical improvements prior to the purported Glennys Santana tenancy) that qualified under RSC (a) in order to have lawfully increased the LRR to $1, Upon information and belief, no such improvements, new equipment, or services were provided in apartment 14B. The rent registration filed by Defendants only indicated the basis for the increase as Leas/RNL. 74. Subsequently, Defendants entered into a vacancy lease with Augustin Paez Hernandez dated September 22, 2011, for a 1 year term commencing September 1, 2011, for apartment 14B. The actual of 167

24 lease given by Defendants to Augustin Paez Hernandez stated that the LRR was $2,094.68, but provided a rider pertaining to a PR of $1,100.00, which stated in relevant part: 1. The tenant acknowledged and agrees that the subject apartment is subject to the Rent Stabilization Law of 1969, as amended, and has been duly registered with the New York State Division of Housing & Community Renewal (DHCR). 2. The tenant acknowledges and agrees that the correct and legal rent for the subject apartment is $2, a month for a one (1) year term, as set forth in the Lease Form. 3. However, in consideration of the current economic conditions, the landlord agrees to provide the tenant a temporary conditional preferential rent of $1, month for a one(1) year term., strictly on condition that the tenant timely pays said preferential rent, on or th before the fifth (5 ) of each month. The lease with did not include the required Rent Stabilization rider; instead it included the certification form discussed in 63 above. 75. According to the rent registration history maintained by DHCR, on July 31, 2012, Defendants registered the September 22, 2011, lease agreement with Augustin Paez Hernandez for apartment 14B with a claimed LRR of $2, and a PR of $2,094.68, contrary to the amounts set forth in the lease documents. 76. At the time that the Augustin Paez Hernandez tenancy in apartment 14B began in 2011 just 14 months after the alleged tenancy of Hector Guzman Taveras began the permissible vacancy increase for a 1 year lease would have been 16.5%, resulting in an initial LRR of $1, In order to have lawfully increased the LRR to $2, an increase of some 52% there would need to of 167

25 have been more than $22,600 in still further, additional improvements, new equipment or services (on top of the hypothetical improvements prior to the purported Glennys Santana and Hector Guzman Taveras tenancies) that qualified under RSC (a). Upon information and belief, no such improvements, new equipment, or services were provided in apartment 14B. The rent registration filed by Defendants only indicated the basis for the increase as VAC/Leas. 77. The July 31, 2012, registration discussed in 75 above appears to be the last one Defendants filed indicating that Augustin Paez Hernandez was the tenant, and the last lease registered with Augustin Paez Hernandez. However, in December 2013, Defendant Audubon Realty commenced an action in Civil Court, New York County, captioned Audubon Realty LLC v. Augustin Paez Hernandez, Index # CV 994/14, and the Complaint therein stated that Augustin Paez Hernandez was liable for unpaid use and occupancy for apartment 14B at a monthly rate of $2, for the months of November 2012 through and including April The Hernandez complaint thus apparently indicated that the Augustin Paez Hernandez lease had been renewed by Defendants for another term that commenced on September 1, 2012, with an increase of 2% for a 1 year renewal. 78. Notwithstanding the representations made by Defendant Audubon Realty to the Civil Court in the Hernandez complaint, four of 167

26 months later, on August 1, 2014, Defendants registered apartment 14B with DHCR with a claimed LRR of $2, and a PR of $2, for a purported 1 year vacancy lease that purportedly had commenced on May 1, 2012, with a tenant named Rafael Tavarez i.e., a year before Augustin Paez Hernandez vacated that same apartment 14B according to the complaint filed in Audubon Realty LLC v. Augustin Paez Hernandez, Index # CV 994/14. Thus, if the allegations made in the Civil Court by Audubon Realty in the Hernandez complaint are true, then the tenancy of Rafael Tavarez could not exist and the registration of that tenancy was false (and conversely, if the allegations in the Hernandez complaint were false, then Augustin Paez Hernandez lived in the apartment no more than 8 months). 79. Subsequently, plaintiff Arias entered into a 1 year vacancy lease for apartment 14B commencing on August 1, 2013 only 15 months after the purported tenancy of Rafael Tavarez for apartment 14B had commenced (and actually just three months after the occupancy by Augustin Paez Hernandez ended, according to the Hernandez complaint). In the August 1, 2013, lease with plaintiff Arias, Defendants asserted that the LRR for apartment 14B was $2,865.94, but annexed a rider indicating that a preferential rent of $1, would be charged on condition that rent was paid timely. The front page of the lease stated across the top that it was for an apartment not subject to rent stabilization, and of 167

27 annexed a rider that stated that it was for apartment not subject to rent stabilization law and further provided that: 3) Exemption from Rent Regulation: Notwithstanding anything contained herein to the contrary, Tenant acknowledges that neither this apartment, lease agreement nor any of the terms and conditions hereof, including without limitation the amount of rent and other charges and the term hereof is subject to any law, rule, regulation or ordinance or any other prohibitions of any nature or kinds, including without limitation any and all laws, rules, regulations or ordinances commonly known by and referred to as rent control, rent stabilization, or emergency tenant protection act. No action taken by the owner or tenant (i.e., inadvertently executing a rent stabilized lease renewal) shall change the status of the apartment. This agreement shall remain in full force and effect throughout the duration of this lease, future leases and any subsequent tenant. 4) Lease Renewal: Tenant does not have any lease renewal rights in as much as the premise being rented is not subject to Rent Control or Rent Stabilization laws. However, at no time was plaintiff Arias provided with the required notice pursuant to the RSL (b) that the apartment was being exempted from rent stabilization due to high rent vacancy deregulation, and in another rider to the lease Defendants prepared, pertaining to preferential rent, Defendants stated: 1. The tenant acknowledged and agrees that the subject apartment is subject to the Rent Stabilization Law of 1969, as amended, and has been duly registered with the New York State Division of Housing & Community Renewal (DHCR). 2. The tenant acknowledges and agrees that the correct and legal rent for the subject apartment is $2, a month for a one (1) year term, as set forth in the Lease Form. 3. However, in consideration of the current economic conditions, the landlord agrees to provide the tenant a temporary conditional preferential rent of $1, month for a one(1) year term., strictly on condition that the tenant timely pays said preferential rent, on or th before the fifth (5 ) of each month of 167

28 80. According to the rent registration history maintained by DHCR, Defendants first registration of plaintiff Arias s tenancy in apartment 14B on October 30, 2014 just 3 months after the August 1, 2014, registration of the fictitious Rafael Tavarez tenancy indicated that the LRR was $3,338.82, with a PR of $2,136.57, contrary to the amounts stated in the actual lease documents. 81. Given the allegations made by Defendant Audubon Realty in its complaint in Audubon Realty LLC v. Augustin Paez Hernandez, Index # CV994/14, which render the purported tenancy of Rafael Tavarez a fiction, in order to have lawfully increasd in the LRR from the $2, stated on the actual lease with Augustin Paez Hernandez to the $3, as registered by Defendants for the initial lease of Plaintiff Arias, there would have had to have actually been more than $52,000 in additional improvements, new equipment or services (on top of the hypothetical improvements prior to the purported Glenny Rosario, Hector Guzman Taveras, and Augustin Paez Hernandez tenancies) that qualified under RSC (a) to justify the 59% increase in the LRR. Upon information and belief, no such improvements, new equipment, or services were provided in apartment 14B. The rent registration filed by Defendants only indicated the basis for the increase as Vac/Leas. 82. Subsequently, Defendants gave plaintiff Arias a lease of 167

29 renewal for apartment 14B using a standard DHCR rent stabilized lease form for a 1 year term commencing on August 1, 2014, which stated that the existing LRR was $2,136.57, and the new LRR would be $2,222.03, an increase of 4%, which was the RGB rate in effect as of that date. Defendants annexed a rider for a preferential rent of $1,200.00, which stated: 1. The tenant acknowledges and agrees that the subject apartment is subject to the Rent Stabilization Law of 1969, as amended, and has been duly registered with the New York State Division of Housing & Community Renewal (DHCR). 2. The tenant acknowledges and agrees that the correct and legal rent for the subject apartment is $2, a month for a one (1) year term (8/01/2014-7/31/2015) and $2, per month for a two (2) year term (8/01/2014-7/31/2016), as set forth in the Lease Renewal Form. 3. However, in consideration of the current economic conditions, the landlord agrees to provide the tenant a temporary conditional preferential rent of $1, month for a one(1) year term or $1, per month two (2) year term, strictly on condition that the tenant timely pays said preferential rent, on or before the th tenth (10 ) of each month. 83. According to the rent registration history maintained by DHCR, on July 31, 2015, in the registration Defendants filed for the first renewal of plaintiff Arias s lease in apartment 14B, Defendants claimed the lease provided a LRR of $3, and a PR of $2,222.03, contrary to the amounts stated in the actual lease documents. 84. Subsequently, Defendants gave plaintiff Arias a second lease renewal for apartment 14B using a standard DHCR rent stabilized lease form for a 1 year term commencing on August 1, 2015, which stated that the existing LRR was $2,222.03, and the new of 167

30 LRR would be $2,244.25, an increase of 1%, which was the RGB rate in effect as of that date. Defendants annexed a rider for a preferential rent of $1,245.00, which stated: 1. The tenant acknowledges and agrees that the subject apartment is subject to the Rent Stabilization Law of 1969, as amended, and has been duly registered with the New York State Division of Housing & Community Renewal (DHCR). 2. The tenant acknowledges and agrees that the correct and legal rent for the subject apartment is $2, a month for a one (1) year term (8/01/2015-7/31/2016) and $2, per month for a two (2) year term (8/01/2015-7/31/2017), as set forth in the Lease Renewal Form. 3. However, in consideration of the current economic conditions, the landlord agrees to provide the tenant a temporary conditional preferential rent of $1, month for a one(1) year term or $1, per month two (2) year term, strictly on condition that the tenant timely pays said preferential rent, on or before the th tenth (10 ) of each month. 85. Even assuming arguendo that there actually were at least 5 different tenancies during 3½ years leading up to and including plaintiff Arias s tenancy, Defendants knew that the claimed LRRs in the purported leases with Hector Guzman Taveras, Augustin Paez Hernandez, and Rafael Tavarez and in the initial and renewal leases with plaintiff Arias for Apartment 14B were fraudulent and illegal. 86. Defendants misrepresented to plaintiff Arias that the amounts stated in plaintiff Arias s initial and renewal leases for Apartment 14B were the correct legal regulated rents. 87. Defendants misrepresented to DHCR that the LRRs and PRs that Defendants registered for Apartment 14B were the correct lawful amounts, and misrepresented to DHCR the terms of the of 167

31 tenancies in Apartment 14B. Plaintiff de la Rosa, Apartment 16A 88. According to the rent registration history maintained by the DHCR from information supplied by Defendants and their predecessors, as of April 1, 2002, the LRR for apartment 16A, now occupied by plaintiff de la Rosa, was $510.00, pursuant to a 2 year rent stabilized renewal lease with a tenant named Ronny Rodriguez, who according to the rent registration history resided in the apartment no more than 4 years. 89. According to the rent registration history maintained by DHCR from information supplied by Defendants and their predecessors, as of April 1, 2003, the LRR for apartment 16A had been increased to $610.00, pursuant to a 2 year rent stabilized vacancy lease that began on October 1, 2002, with a tenant named Melania Soto, who according to the rent registration history ultimately resided in apartment 16A no more than 23 months. 90. According to the rent registration history maintained by DHCR from information supplied by Defendants and their predecessors, as of April 1, 2005, the claimed LRR for apartment 16A had been increased to $ for a purported 1 year vacancy lease that purportedly began on September 1, 2005, with a tenant named Maria Cruz. At the time that the purported Maria Cruz tenancy in apartment 16A began in 2004, the permissible vacancy increase for a 1 year lease would have been 17%, resulting in an initial LRR of 167

32 of $1, In order to have lawfully increased the LRR to $1, an increase of 31.2% there would need to have been more than $3,400 in improvements, new equipment or services that qualified under RSC (a). Upon information and belief, no such improvements, new equipment, or services were provided in the subject apartment. The rent registration only indicated the basis for the increase as Vac/Leas. The following year s rent registration for apartment 16A asserted that Maria Cruz s lease had been renewed for a 2 year term at $ According to the rent registration history maintained by DHCR from information supplied by Defendants and their predecessors, as of April 1, 2008, the claimed LRR for apartment 16A had been increased to $1, for a purported 1 year initial lease that purportedly began on March 15, 2008, with a tenant named Maria Polanco, who according to the rent registration history ultimately resided in apartment 16A no more than 21 months. At the time that the purported Maria Polanco tenancy in apartment 16A began in 2008, the permissible vacancy increase for a 1 year lease would have been 17.25%, resulting in an initial LRR of $ In order to have lawfully increased the LRR to $1, an increase of 23.2% there would need to have been more than $2,400 in additional improvements, new equipment or services (on top of the hypothetical improvements prior to the purported Maria Cruz tenancy) that qualified under RSC (a). Upon information of 167

33 and belief, no such improvements, new equipment, or services were provided in the subject apartment. The rent registration only indicated the basis for the increase as Leas/RNL. The following year s rent registration for apartment 16A stated that Maria Polanco s lease had been renewed for a 1 year term at $1, Subsequently, Defendants entered into a vacancy lease with Marlene Santos de Martin for a 1 year term in apartment 16A that commenced on January 1, The lease prepared by Defendants stated, at the top of the first page, that it was for an apartment not subject to rent stabilization and did not include the required Rent Stabilization Rider, but indicated that the LRR was $1,350.00, with a PR of $1, According to the rent registration history maintained by DHCR from information supplied by Defendants, on July 30, 2010, Defendants registered the January 1, 2010, vacancy lease with Marlene Santos de Martin for apartment 16A at a claimed LRR of $1, and a PR of $1,350, contrary to the amounts stated in the actual lease documents. 94. At the time that Marlene Santos de Martin s tenancy in apartment 16A began in 2010, the permissible vacancy increase for a 1 year lease was 17%, resulting in an initial LRR of $1, In order to have lawfully increased the LRR to $1, an increase of 43.5% there would need to have been more than $11,600 in still further, additional improvements, new equipment or of 167

34 services (on top of the hypothetical improvements prior to the purported Maria Cruz and Maria Polanco tenancies) that qualified under RSC (a). Upon information and belief, no such improvements, new equipment, or services were provided in the subject apartment. The rent registration filed by Defendants only indicated the basis for the increase as VAC/Leas. 95. On October 8, 2010, Defendant Audubon Realty commenced a non-payment petition in Housing Court, captioned Audubon Realty LLC v, Marlene Santos de Martin, Index # LT 85719/10, wherein it was alleged that there was a written lease between the parties for $1,484.69, and that Marlene Santos de Martin owed rent at $1, a month through October A warrant of eviction in that proceeding was issued on January 31, 2011, and on information and belief Defendants did not regain possession of Apartment 16A until sometime later in The July 30, 2010, registration discussed in 93 above appears to be the only one Defendants filed indicating that Marlene Santos de Martin was the tenant, and the only lease registered with Marlene Santos de Martin. However, on April 9, 2013, a proceeding was commenced against Marlene Santos de Martin in 2013, initially and erroneously captioned Bailey Gardens Realty Corp. v. Santos, Index # CV 8197/13 (Civ. Ct, N.Y. Co.), in which the complaint asserted a claim against Marlene Santos de Martin for further rent arrears in Apartment 16A through March 31, 2011, at the agreed of 167

35 monthly sum of $1, " In June of 2013, an amended summons and complaint was served to amend the caption to read Audubon Realty Corp. v. Marlene Santos de Martin. In response to an inquiry as to the basis for this claim, Audubon Realty produced a document from Defendant Hayco asserting that Marlene Santos de Martin s initial lease had been deemed renewed for an additional 1 year term commencing January 1, 2011, at a rent of $1, per month. 97. Notwithstanding the representations made by Defendant Audubon Realty to the Housing Court in the Santos de Martin, petition under Index # LT 85719/10 and to the Civil Court in the Santos de Martin complaint under Index # CV 8197/13, on July 28, 2011, Defendants registered apartment 16A with DHCR with a claimed LRR of $2, and a PR of $1, for a purported 1 year vacancy lease that purportedly had commenced on July 1, 2010, with a purported tenant named Amanda Nunez i.e., nearly a year before Marlene Santos de Martin vacated that same apartment 16A according to the complaint in the Santos de Martin proceeding under Index # CV 8197/13, and 6 months before the lease with Marlene Santos de Martin was deemed renewed for another year by Defendants. Thus, if the allegations made by Defendant Audubon Realty in the two Santos de Martin proceedings in Civil Court and Housing Court proceedings were true, then the tenancy of Amanda Nunez could not exist; conversely, if the allegations in the Santos de Martin proceedings were false, then Marlene Santos de Martin lived in the of 167