Mayor Adams slaps lawsuit on realtors over alleged illegal short-term rental scheme

Mayor Adams
Mayor Eric Adams and NYC Mayor’s Office of Special Enforcement (OSE) Executive Director Christian Klossner today announced a new lawsuit to shut down an alleged illegal short-term rental building in Turtle Bay. Tuesday, July 12, 2022.
Photo courtesy of Ed Reed/Mayoral Photography Office

Mayor Eric Adams and Mayor’s Office of Special Enforcement (OSE) Executive Director Christian Klossner announced Tuesday the city filed a lawsuit against a real estate agent and property manager they say are operating an illegal short-term rental building at 344 East 51st St. in Turtle Bay.

Standing in front of the building in question Tuesday afternoon, Adams said the defendants – real estate agent Arron Latimer, the building owner Apex East Management LLC and managing member Esther Yip – were running one of the city’s largest illegal short-term rental operations last year.

“Today we’re sending a message, this kind of lawlessness will not be tolerated in our city,” Adams said. “This building, as was indicated, was one of the largest short term rental operations in the city in 2021. And that was entirely illegal. And they ignored the laws and continued to operate without the importance of understanding the enforcement that was put in place.”

Adams and Klossner were joined by City Councilmembers Keith Powers (D–Manhattan) and Gale Brewer (D–Manhattan), Assemblymember Richard Gottfried (D–Manhattan), Hotel Trades Council President Rich Maroko and Tom Cayler – chair of the Coalition Against Illegal Hotels.

In the suit, the city is seeking a court order to immediately shut down the operation, Klossner said, and tens of thousands of dollars in fines.

“The city is seeking an order from the court to immediately restrain these defendants from continuing their illegal acts,” Klossner said. “And we’ll see penalties sufficient to recoup the ill gotten gains and make clear that violating the law can be an expensive proposition.”

Klossner said city law stipulates that short-term rental – rentals for 30 days or less – homes can only be rented for up to two guests and when the hosts are staying with the guests, but entire home rentals and those for more than two guests are illegal. And 344 East 51st St. falls into the latter category.

“The building behind me 344 East 51st Street is supposed to be a home for eight families and a doctor’s office,” Klossner said. “Instead, data obtained from Airbnb shows it has been the home of a major illegal short-term rental operation.”

According to Klossner, the suit alleges Latimer has made over $2 million from Airbnb for illegal short-term rentals, mostly from the Turtle Bay residence. Latimer used 28 distinct Airbnb host accounts, Klossen added, and operated 78 listings using fake addresses. 

He allegedly runs the whole scheme through 10 distinct limited liability companies (LLCs), Klossner said, each connected to their own bank accounts, for the purpose of covering his tracks financially.

In a statement to PoliticsNY, Airbnb Public Policy Regional Lead Nathan Rotman said the company kicked the defendents off the platform some months back and is working with the city to better identify fake accounts.

“Airbnb banned the Host in question months ago, and we commend Mayor Adams for taking swift action on illegal hotel operators who flout the rules,” Rotman said. “Airbnb currently shares information with the City, and looks forward to working with the City and State to build an effective and transparent regulatory framework to differentiate between the responsible hosts who should be protected under the law and operators of properties like this who have no place on our platform.”

In addition to the operation being illegal, Adams said the building has multiple violations for dangerous conditions and online reviews left by those who’ve stayed there described it as “astonishingly dirty.”

“This is not what we expect from New Yorkers in the quality of hotels and other legal rentals that we have in the city,” Adams said. “There are multiple violations, including hazardous conditions. This is something that puts individuals in jeopardy for their safety and public health.”

Illegal short-term rentals, the mayor said, also hurt the city’s hospitality sector and those working in the industry. Maroko said the presence of illegal short-term rentals is especially detrimental to the legal hospitality industry as it tries to recover from the significant losses it experienced during the pandemic.

“This illegal shadow industry also hamstrings the recovery of the legitimate hospitality industry, which is such a critical driver of our city’s economy, and which produces tens of thousands of good jobs to New Yorkers who desperately need it after two years of [a] catastrophically hard pandemic,” Maroko said.

Additionally, Adams said, reducing the number of illegal short-term rentals is one step towards solving the affordable housing crisis by increasing the stock of available rental units.

“We want to keep our visitors and community safe and make sure that New York is not deprived of the much needed living space,” Adams said. “The administration is determined to preserve affordable housing and cracking down on illegal short-term rentals is one we’re going to accomplish that.”

This story was updated with a statement from Airbnb on July 13 at 8:50a.m.