The Phantom Landlord | City Limits Magazine | March, April 2012 citylimits.org

7/31/2019 The Phantom Landlord | City Limits Magazine | March, April 2012 citylimits.org

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Urban news & InvestIgatIons

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36,

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Dozens of buildings. Thousands of code violations.One boy's death. Was no one responsible?

The Phantom Landlord

ALSO INSIDE: Fihi o Fd C | vi af Pi | bkly by th num


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www.citylimits.org 1

Vol. 36, No. 1March / April 2012

City Limits is published bi-monthly by

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York (CSS). For more than 160 years,

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low-income New Yorkers in their quest to

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IN THIS ISSUE

12 | The Lender100 buldns. 19,000 vlatns. Wh was n chare?

17 | Burning QuestionsFrst cae tenant cplants. Ten a bys death.

26 | Piercing the VeilTe lnks between a cluster crpratns and dzens

trubled prpertes

37 |A Question o ControlReulatrs and tenants push r answers.

44 | Licenses or Landlords?New thnkn n hw t enrce husn rules

CHAPTERS

SIDEBARS MORE

UP FRONT4 | Trees Without Money, Closing Schools and

a Fight over Food Trucks

5 | Lockdown at the Polls6 | City by Numbers: Brooklyn Express8 | Their Views, Your Voice

THE FEATUREThe PhANTOM LANDLORD10

20 |Why NotProsecute?Questns justce aer

atal res

30 | Targeting Tenant

OrganizersA lawsut rces crtcst back f

38 | The Subsidy ScamFake evctns and realtruble r landlrds

48 | Look BackLn Rde

Tree Trouble, page 4


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City Limits / Vol. 36 / No. 12 The Phantom Landlord

Bigig i Home

Las yea I we o a pay celebaig agreat journalist who was moving rom alogime pech o a ew ole. In a roomull o reporters, the man o the hourtried to explain the complex relationshipbetween a writer and his or her one truelovethe story.

It means everything to us or a momentin our lives, he said, and then it is gone.

Well, sometimes its a very long moment.For many journalists, there is that onestory that never really goes away. Usually

its one you never got to tell because a trailwent cold or you got red or somethingelse always needed attention rst.

It was that kind o a story that launchedthe reporting package that graces thisedition.

In 2002 a boy died in an apartment rein the Bronx. Te editor o the local com-munity newspaper Norwood News, JordanMoss, learned that tenants o the buildinghad long complained about housing-code

violations, which city housing inspectorsound to include widespread electricalhazards, leaking pipes and problems withthe gas system.

But it was unclear who was responsibleor the buildings upkeep. Te conusionpersisted even ater the deadly blaze.

Intrigued, Moss hunted or the answer, butran out o time to pursue the story. He did,however, save his notes or another day

Tat day came last all when om Robbins,the veteran investigative journalist (andormer City Limits editor), began teachinga course at the City University o New YorkGraduate School o Journalism. Robbinsand his students adopted Mosss storyand, with Mosss help and the assistance oCity Limits contributing editor JeanmarieEvelly, reported it. As part o a growing

partnership with CUNY, Cty Lts wasproud to accept the story or publication.

As with all truly great stories, many ques-tions remain unanswered about that reand the real estate interest linked to thattroubled building and dozens o others inthe Bronx. And much has changed sincethose days, both in the citys residentialreal estate market and in the tools thatocials use to regulate it. But we believewhat om, Jordan and the CUNY team

present should prompt a wider discussionabout whether our housing and buildingcodes have sharp enough teeth.

Sincerely,Jarrett MurphyEditor in chie

CiTy LiMiTs sTAffDirectorMark Anthony Tomas

Editor in ChieJarrett Murphy

Contributing Editors

Patrick Arden, Neil deMause,Jeanmarie Evelly, Marc Fader,Jake Mooney, Malik Singleton,

Helen Zelon

Advertising DirectorAllison ellis-Hinds

Community EngagementManagerNekoro Gomes

Creative Director

Anthony Smyrski

ProoreaderDanial Adkison

InternsRodrigo Carreno,aleen Desperdanian

BOARD

Mark Edmiston, chairAdam Blumenthal

Andy BreslauMichael ConnorDavid R. JonesAndy Reicher

Michele Webb

UP NexT

BEYOND JUSTICETe trials o New Yorksamily court

ComiNg iN mAY


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The Phantom Landlord City Limits / Vol. 34 / No. 54 The Death and Life of the Neighborhood Store4 City Limits / Vol. 36 / No. 1Up Front

UPfRONT

News and views fromacross New York

You know, if they were

oin to push prostitution,

that would brin in reenue

too. But will it improethe quality of life of our

citizens?CHArLOttE WELLInSof Coalition Against GamblingNew York on Gov. Cuomos plan

to expand legalized gaming in theEmpire State

Burer Kin s. Falafel Man

Who doesnt like the neighborhoodalael guy? People who run establishedrestaurants that compete with the mobileood stands on 86th Street in Bay Ridge,thats who. Brick-and-mortar merchants,who pay rent, taxes and insurance coststhat mobile ood vendors do not, resentthis unair competitive distinction, saysJosephine Beckmann, district managero Board 10.

David Weber, president o the NewYork City Food ruck Association,disputed the contention that mobileood vendors pay no rent. Teir rent,he explained, takes the orm o costs orrequired parking at a Department oHealth-approved commissary whichmobile ood operators in Bay Ridge

peg at $1,000 a month. Nor are oodtrucks exempt rom related costs, suchas disability insurance and workerscompensation, he added.

Te controversy isnt contained toBay Ridge, reports Aparna Narayanan.Several other Brooklyn neighborhoodsare seeing similar disputes.

from bkbureau.org

A MillionTrees to Prune

Te city has passed the halway mark in MayorBloombergs ambitious proposal to plant amillion trees. And plenty o neighborhoods arestill clamoring or more tree cover, even aera series o surprising storms in the past twoyears that have demonstrated the destructivepower o tree limbs to cars and houses. But orall it promises to do or health and greenhousegases and a better looking city, Millionrees isnot producing trees that prune themselves. Andthe cash-strapped Parks Department doesnt

have the personnel or equipment to prune eventhe existing stock o trees as much as it should,report Paul Buano and An Phung. Tepruning cycle has been stretched rom seven to10 years, and might be on the way to 15.

Private groups are stepping in to take overmaintenance, but its not clear that can make abig dent in the tree maintenance backlog.

The Math of SchoolClosins

What separates theschools the Bloombergadministration targeted orclosure this year rom othercity schools? Its more than

just test scores, reports theIndependent Budget Oce.

Only 1.1 percent o studentsenrolled in target-listed highschools are white versus 13percent citywide. Amongmiddle and elementaryschools slated to close, 86

percent o students are poor;the citywide average orthose grades is 78 percent.

Te IBO also ound thatthe high schools set to shutdown recently absorbeda higher proportion ostruggling students. In 2003,or instance, 47 percent othe incoming students atGrace Dodge CE placedin the lower third o their

eighth-grade class on stateEnglish tests. In 2010, thatshare went to 61 percent. AtInternational Arts BusinessSchool, the share o low-scorers rose rom one-thirdo the 2003 incoming classto one hal o the reshmenarriving in 2010.

The BRiefiNG ROOM: STORIES FROM CITYLIMTS.ORG

Photo: Taleen Dersdepanian


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www.citylimits.org 5www.citylimits.org 5

Lockdown at the Polls

In the run-up to the 2008 presidential

election, 46-year-old John Molinaa sel-described political processjunkiewent all out. He attendedrallies, put an Obama bumper stickeron his car and told all his neighbors toget out and vote.

Im one o those people that knockson doors, he says. Dont complain tome about your neighborhood, about thegarbage in your street, i you dont vote.

But when November 4 came around,Molina didnt go to the polls. He wasnt

allowed to. He was still on parole.In New York State, anyone convictedo a elony and sentenced to timebehind bars loses their right to votewhile theyre incarcerated, and or theduration o their parole. For years,civil and prisoner advocacy groupshave ought to restore this right, onthe argument that ex-oenders whoare civically engaged are less likelyto all back into crime, and make orbetter citizens.

I was disappointed. O course I

was elated that Obama won, but I wasdisappointed I couldnt be a part o theprocess, Molina says.

He got out o prison in 2007, aerserving eight years behind bars orarmed robbery. Aer release, heworked hard to reinvent himsel,he says. He got a job working or a

nonprot, went back to school or hisbachelors degree and started takingclasses or a masters degree in public

health at New York University. All thewhile, or the our years he was onparole, he couldnt cast a ballot.

People are still not allowed to voteeven though theyre living the in thecommunity, contributing to the com-munity, sending their kids to localschools, says Erika Wood, an associ-ate proessor at New York Law School.

Because a majority o those involvedin the criminal justice system arepeople o color, advocates say the stateselony disenranchisement law sties

the voice o minority communities inthe political arena, and is reminiscento voting laws during the Jim Crowera. According to the Brennan Centeror Justice, nearly 80 percent o theapproximately 100,000 people whohave lost their right to vote under NewYorks law are black or Hispanic.

And while the majority o thosebehind bars cant actively participatein the political process, prisoners stillcarry serious political clouteven ithey cant wield it. Te states prisonpopulation is the rope in a longtimetug-o-war between upstate anddownstate lawmakers over where pris-

oners should be counted as residentsin the re-drawing o legislative maps.

Because these maps are based onCensus population numbers, thedistricts set by the legislature this yearwill stay in place or the next decade.Late last year, state lawmakers strucka deal, in accordance with a state lawpassed in 2010, agreeingor the rst

timeto count prisoners as resi-dents o their home addresses or thepurpose o redistricting, as opposed to

counting them in the districts wheretheyre incarcerated, as had been thepractice or decades.

Civil rights and good-governmentgroups have heralded the recentchange as a landmark democraticboost to many New York Cityneighborhoods.

Te prison population is primarilymade up o people o color, rom low-income communities that have a lot oeconomic and social needs, says Steve

Carb, o the advocacy group Demos.I their voice is being limited byparts o their community not beingincluded, they have that much less politi-cal strength to get those needs met.

But while prisoners will be countedas residents closer to home under thenew deal, neither they nor parol-eeswill count as voters. And somewho work to help ex-inmates re-entersociety think thats a mistake.

I would make voting a part o anyprison release program, says Gabriel

orres-Rivera, director o re-entryservices at the Community ServiceSociety (which owns City Limits).You can ease their transition back bygiving them this right; you can openthem up.

Jeanmarie Evelly

If their oice is bein limited

by parts of their community not

bein included, they hae that

much less political strenth to

et those needs met.

John Molina, a ormer inmate, was heavily engaged in the 2008 electionexcept when

it came time to vote. Photo by Adi Talwar


7/52


CITY bY NuMbERSBROOKLyN exPRess

A new report rom the Center or the Studyo Brooklyn at Brooklyn College oers acomprehensive survey o statistical indi-cators on the citys biggest borough. Onetrend that jumped out at us was transit use:Despite rising ares and crowded trains,

more Brooklynites are riding public transitand ewer are driving to work these days.Tats true even in these outlying areas,where we measured how long it would takesomeone to come rom a randomly pickedaddress to our ofces in Gramercy:

Read more o our reporting on theCenters study at bkbureau.org

COMMUNITY BOARD 5Neighborhoods: City Line, CypressHills, East New York, Highland Park,

New Lots, Spring Creek, Starrett City

raveling to: City Limits rom LindenBoulevard & Drew Street

Public transportation:1 hour, 5 minutes(B14 bus to A train, to 5 train, to 6 train)

Driin: 30 minutes

COMMUNITY BOARD 15Neighborhoods: Gerritsen Beach,Homecrest, Madison, Manhattan Beach,

Sheepshead Bayraveling to: City Limits rom 137Mackenzie Street

Public transportation:1 hour, 3 minutes(B1 bus to B train, to 4 train, to 6 train)

Driin:32 minutes

COMMUNITY BOARD 13Neighborhoods: Brighton Beach,Bensonhurst, Coney Island, Seagateraveling to: City Limits rom ConeyIsland Aquarium

Public transportation:54 minutes(Q train to R train)

Driin:29 minutes

5

15

13

Pro

spect

Park

Took plic transit

2000 20002007/09 2007/09

Drove

54%

63%

38%29%

Took plic transit

2000 20002007/09 2007/09

Drove

46%49%

44%39%

2000 20002007/09 2007/09

Took plic transit Drove

36%

26%

52%60%

TRANSPORTATION USE IN COMMUNITY BOARD 5 TRANSPORTATION USE IN COMMUNITY BOARD 13 TRANSPORTATION USE IN COMMUNITY BOARD 15

Source: Center or the Study o Brooklyn;Census Bureau.


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FOR PUBLIC ENGAGEMENT

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education prepares students to lead change in an increasingly

complex and interconnected world.

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Wednesday, March 21, 7:00 p.m.

To RSVP, for event locations, or more, call 800.292.3040 or visit

www.newschool.edu/milano30

An Afrmative Action/Equal Opportunity Institution. Photo: Bob Handelman.


9/52


new U.S. realiy: A Pemae Class oUdeemployed?"Te paralysis in Washington has led mostAmericans to believe that neither party is seriousabout getting the nation back on track. Te U.S.once led the world in economic competitivenessdriven by innovation and a robust manuacturingbase. oday, we ail to provide a top-notcheducation to most American childrena crucialpart o restoring our economic viability as a nation.At the same time, we are o-shoring jobs andshutting down actories." David R. Jones

tee Sex MessageMices Few Wods"Designed to grab theattention o inner-cityyouths by reectingtheir realities, the

PSAs shed light on truths that some adults ndconcerning. In particular, some have criticized thewords that the teens use to discuss sex. Such criticseither dont realize how teens talk today, or dontunderstand the importance o using true-to-lielanguage to get through to young people."Catherine M. Abate

Livigso See Bale Fames DebaeO Ladmaks"Developers have been making millions or years

now buying, restoring and converting the verylandmark-quality buildings that Preservationistsprevented them rom tearing down years ago.Clearly, the real estate community is throwingits ormidable weight around to cajole the CityCouncil into second guessing the expertise o theLandmarks Commission."Roberta Brandes-Gratz

People have to reject violent criminals in theirmidst. I they want peace and security, theymust band together, set up neighborhood watch,sae streets and houses... Call the city whenneighbors dump mattresses on the sidewalk.

Stop ocusing on black problems, or brown problems. Tese arehuman problems. I you have a drug house on your block, youregoing to get gunre.Vinnie, commenting on Oaklad: Fedeal Ammo ruigSho o Wa o Cime

Te Moynihan Station project is acolossal boondoggle or the simpleact that moving Amtrak across thestreet into the Post Oce will NOincrease ridership capacity becauseno new tracks will be constructed.Its that simple...same tracks....nota single new track will be added

so technically its not even a new station, its a billion+ dollarwaiting hall[that] will never be completed!oldpro! commenting onnew Yok: Local tasis FuueDepeds o he Feds

I dont see how more immigration can help when there aremillions o indigenous Americans hurting or jobs no matterhow you choose to spin it. rust me, with more immigrants,the only people getting jobs will be immigrants because theyalways look out or their own. Where I live I see that the onlypeople working in local stores are immigrants and children

o immigrants. Tey do nothing to provide jobs or anyoneelse and its insulting to all the black olks whose parents andgrandparents help build the auto industry to be shut out inavor o oering help to immigrants.ee Gee, responding toDeoi: Beyod he Bailou,Immigaio Is Key Issue

TheiRVieWs

yOURVOiCe

SAMPLINgS FROM CITYCONvERSATIONS ON

CITYLIMITS.ORg

OPINIONS REgISTERED

AT CITYLIMITS.ORg


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11/52

THE feATURe

ThePhANTOMLANDLORD


12/52

Tis story was reported by students inthe urban investigative reporting class at

CUNYs Graduate School o Journalism.

Lisha ArinoRoxanna Asgarianamy CozierJuan Alberto De JesusPaul DeBenedettoBrendaliss GonzalezJudy LeMichael McCutcheonHannah MietAnnais MoralesLaura Ratli

Nicholas RizziDaniel RosenblumJacqueline Vergara

Te project was coordinated and co-writteby om Robbins and Jordan Moss.


13/52


The Lender100 buildings. 19,000 violations. Who was in charge?

CHAPTER ONe


14/52


Ten there was the devil landlord, who seemingly delightedin keeping his Harlem residents in wretched conditions,at least until he was carted o to jail. Tese days, there arevarious lists o worst landlords and properties. Teres onepublished by the citys public advocate, another compiled bythe citys housing department, as well as the original catalogo shame occasionally carried in Te Vllae Vce.

But while his name or properties connected to him havegraced all those lists, its hard to peg Frank Palazzolo, a

wealthy Westchester real estate operator, as a member o theworst-landlord club. Tats because, even though the scores obuildings he was associated with teemed with violations andcreaked in disrepair, actual legal ownership o most o theproperties was usually in the hands o others. Te questiono who was responsible was orever murky. Lawyers, hous-ing ocials and tenant organizers always had a tough, i notimpossible, time pinning down Palazzolos exact responsibility.

What is clear is this: At one point, more than 100 largeand, in many cases, severely troubled apartment houses inthe Bronx were registered to corporations at his Scarsdaleheadquarters, according to city lawyers. Te same buildingswere wrapped in huge mortgagesworth tens o millions

o dollarsthat Palazzolo managed to obtain rom majorlenders. Strangely, those same buildings remained in squaliddisarray long aer those loans had closed.

In 2002 one o them was the scene o a atal electrical re.Te blaze occurred 14 months aer a Housing Court judgeordered numerous housing violationsincluding electricalhazardsxed. An 8-year-old boy with a winning smile waskilled; his brother was severely scarred.

Other buildings witnessed ceilings that collapsed atop

ew York has long had a

bumpe cop o oo-ious ladlods. Yeasback, there was the onedubbed he Draculalandlord because hekept returning to haunt

enans of his Brooklyn andMahaa popeies eve ae

authorities thought they had laidhim o es.

This Westchester building was listed as the headquarters or a slew o corporations that owned troubled buildings in the Bronx. Photo

by Marc Fader.


15/52


Above: Frank Palazzolos $2.3 million Westchester home. Below: Lissette Mora, a tenant o the building owned by a Palazzolo-linked

corporation in 2002 when a fre killed a young resident. Photos by Marc Fader.


16/52


tenants, drug gangs that roamed at will through their hallways,rodents that crawled out o the night to terrorize sleepingresidents and potentially deadly lead paint that faked o thewalls and into the reach o inants.

What was also clear was that Palazzolo brooked no criticism:When a veteran Bronx community group tried to organizetenants in buildings overseen by his associates, a million-dollar lawsuit was led against them and an injunction was

obtained barring them rom the premises.Nor was he glad to discuss his business. Te ew times

Palazzolo was asked by reporters about his real estate prac-tices, he ducked. When a WNBC camera crew managed toget into his Scarsdale headquarters, the real estate investorwas captured on lm waving o questions and walking away.I own no buildings, he said when a reporter or a Bronxnewspaper managed to get him briey on the phone. Ten,like some aded movie star, he switched to the third person:Palazzolo is a lender.

I there were a tabloid tag or Frank Palazzolo it might bethis: Te Phantom Landlord.

Last all, a class o students studying investigative reportingat CUNYs Graduate School o Journalism undertook thetask o trying to piece together the oen ractured storiesthat have emerged over the years about Palazzolos real estateoperation.

Te investigation, and the story that emerged, is not onlyabout one landlords record. Its also about why banks lentvast ortunes to real estate managers with troubled records.Whats more, it aimed to understand why, despite the manylaws and rules aimed at protecting vulnerable tenants, itsstill possible or buildings lled with needy amilies to lapse

into disrepair while owners make huge prots.Partial answers to these questions emerged rom interviewswith tenants, community leaders, bankers, landlords, inves-tors and housing ocials and a review o court documentsand other public records.

For his part, Palazzolo declined repeated attempts to get hisview o things. One o those attempts was in early November,when a pair o reporters working on the project drove up toWestchester to see i they could get an interview. Teir rststop was at his headquarters on a commercial strip in thewealthy suburb o Scarsdale.

Tey pulled into the parking lot o the white, two-storyoce complex with the name Palazzolo Plaza emblazoned

across the ront. Westchester property records show thatPalazzolo purchased the building in 1999 or $1.6 million.Parked outside the oce was a gleaming silver Bentley, abrand o automobile long avored by tycoons and whosestarting price is about $180,000. A worker was crouchedbeside it, busily polishing the rims. Te vehicles New Yorklicense plate read DEALMKR. A records check showed itwas registered to Palazzolo.

On the second foor, in the oce o F&M Funding, one oPalazzolos many companies and listed as a lender on morethan a dozen Bronx properties, they asked to speak to Mr.Palazzolo. He was busy, they were told, but a Mr. obia wouldbe happy to speak with them. Stephen obia, a longtimeassociate o Palazzolos, emerged rom the back to peer atthem over his glasses as they explained their business. Itsbeen a while with the Bronx properties, said obia. Well

get back to you. obia later called back to say Palazzolodeclined an interview. Letters to Palazzolos home and ocedrew no response.

Palazzolo lives in an even tonier section o the countyleayBedord, 20 miles north o his ocesand the reporterswent to take a look. Several years ago, a busload o tenantsand Bronx community organizers protesting building condi-tions went up to demonstrate outside. Te tenants gawkedat the mansion, which sits behind a set o white pillars andgates, at the end o a wide driveway. Records show Palazzoloand his wie purchased the home in 1999, the same year ashis headquarters. Tey paid $1.25 million. Its value is nowlisted at $2.3 million.

Te reporters stood at the gate and looked down the drive.

Five men were at work on the late-all day cleaning the lawnwith lea blowers. It was a very big lawn, which was probablywhy it took ve men to handle it. But as the results o ourour-month long investigation into Palazzolos real estateempire suggest, the workorce on his ront lawn that daylooked a lot bigger than tenants we talked to saw dispatchedto x serious problems at scores o Palazzolo-linked apart-ment houses.

Our reporting aimed to

understand why, despite

the many laws and rules

aimed at protectingvulnerable tenants, its still

possible or buildings flled

with needy amilies to

lapse into disrepair while

owners make huge profts.


17/52


CHAPTER TWO

Paul Parker lost his eight-year-old

son Jashawn in a 2002 fre at abuilding whose mortgage was held

by a corporation linked to Frank

Palazzolo. Photo by Marc Fader.


18/52


Burning

Questions

BY JORDAN MOSS

But the re that took 8-year-old JashawnParker in the late evening o Aug. 6, 2002, on

a typically dense northwest-Bronx block somehow never gotmuch inkjust a couple brie stories in the Daly News and

a small item in the Pst.Its unclear why. Te re stemmed rom a hyperdocumented

virtual time bomb that tenants and advocates had workedto deuse or two years.

Te six-story building at 3569 DeKalb Avenue, just oJerome Avenue and next to Woodlawn Cemetery, wasa stunning case study o the citys fawed housing-code-enorcement system, with the scope o dangerous neglect

apparent to anyone with an Internet connection. At thetime o the re it had 387 code violations, with leaks, waterdamage, electrical problems, roaches and mice among them.At least two Housing Court judges cut the buildings landlordsslack rather than appoint an outside administrator, despiteminimal signs o repair progress.

Indeed, court documents point to years o ocial con-cern, but little successul action, over serious housing codeviolations at the building. Records suggested that througha succession o named owners in the years beore the re,one constant on mortgages and other property documents

surrounding 3569 DeKalb was the name Frank Palazzolo.

The fiReLast all, we went looking or Jashawns ather, Paul (whoselegal rst name is Headley) Parker. We ound him livingin East New York, Brooklyn, where he rents a room in hissisters house. He picks up occasional jobs in constructionbut struggles to pay his bills, including $55 a month or his

First came tenant complaints. Ten a boys death.

uilding blazes ha killkids usually burn asbrightly the next morningi he abloids.


19/52


cell phone. It took a ew o weeks o daily calls to reach himduring a time when his cell was in service. On Halloween,we met up with Parker at the Canarsie Piers in Brooklyn,where he was shing, something the 51-year-old nativeJamaican does regularly to unwind and cope with still rawmemories that have traveled with him to the opposite endo the city. We sat down with him on a bench, and he toldus about that terrible summer night and the unanswered

alarms leading up to it.For Parker, it started out like most others since 1995, when

his wie, Jackie, the popular owner o a hair salon aroundthe block, died o an asthma attack. In Parkers room in theamilys one-bedroom apartment on the rst oor, he puthis youngest son to sleep. He later carried a sleeping Jashawn(whom he calls Shawn) to the boys bed in the living roomand put him down there. Usually,Jashawn would wake up beoretoo long and climb back in withhis dad. Tat night he stayed put.

At around 11:30 p.m., a ire

broke out in the kitchen. It soontraveled through the apartment.On one side o the blaze, P.J. ranthrough the ames, out the doorand across the hall to neighborLissette Mora. Skin was hangingo his body. Mora, who says herson Marcus and Jashawn wereinseparable, tried to get in theapartment door but couldnt. Shecould hear Jashawn crying andyelling rom inside.

On the other side, at aroundthe same time, Parker recalls, hewas awakened when reghtersoutside on the re escape bangedat his window. Tey shouted athim to come out. Instead, he wentthe other way, through his bedroom door, yelling, Shawn,P.J.! Shawn, P.J.! Te orce o the re blew him backward.As he retreated, reghters broke through the window andgot him down to the street. Tere, he ran around shouting,asking everyone where his sons were.

Jashawn, a good student (his ather calls him immaculatein this regard), apparently remembered a lesson given to his

class by a reghter just a couple o months earlier. He wentinto the bathroom, his ather says, lled the tub with water,got in and put a wet cloth over his ace.

But smoke came under the closed door and overtook him.Parker, hospitalized with smoke inhalation, was not told

until a couple o days later that his son was dead. Te newssent him into cardiac arrest, and doctors had to resuscitatehim. Eventually he got to see P.J., at a hospital in Manhattan,

wrapped in bandages head to toe. He looked like a mummy,Parker says.

yeARs Of WARNiNGsLong beore the re, tenants at 3569 DeKalb had done theirbest to address myriad problems there. wo years earlier, agroup o them went to talk to Sally Dunord, head o WestBronx Housing, a local advocacy group run by the Bronx

Jewish Community Council, to see i there was any way toorce the landlord to address the extreme conditions.

I have to admit, my rst reaction was, they had to beexaggerating, because I couldnt gure out how a build-ing couldve gotten that bad in this neighborhood withoutanybody realizing it, says Dunord, whos been handlinghousing complaints or 17 years.

But she changed her mind aer avisit to the site. We ound conditionsthat were just horrendous. I hadntseen anything like that.

She says the apartment house had

sinking foors, crumbling walls, moldthroughout and a hole in the court-yard that a child could all throughinto the basement.

Parker was well aware o the manyproblems in the building. At onepoint, he had been the buildings superbut le that job to ocus on outsidework because it didnt pay enough.He said he was a porter, a less time-consuming job, at the time o the re.

Electrical outages throughout the

building were common, Parker says.Many outlets in his own apartmentdidnt work and didnt even have coverplates. Tere were holes in the walls.

And, Paul says, he smelled gasoen and complained about it to his

landlord and Con Ed. P.J. told attorneys questioning himin a deposition that he could hear the gas leaking rom thestove and remembered his ather reporting it to the superand the landlord.

Dunords work journals indicate she began speaking tothe citys Department o Housing Preservation and Develop-ment as early as August 2000 about securing the appointment

o an outside administrator o the propertyknown as a7Ain Housing Court. In a society built on property rights,its tough to persuade judges to take that step. Dunord sayshousing ocials, while concerned about the dangerous levelo decay, werent sure their program had sucient resourcesto handle the building. But the agency eventually decided ithad no choice but to take the case to a judge.

In Housing Court, however, at least two judges made rulings

A memorial to Jashawn kept by a current resident

in 3569 DeKalb. Photo by Jacqueline Vergara.


20/52


common in such cases, giving the owner more time tomake the repairs himsel. In June 2001, Judge SheldonHalprin wrote up a list o things that would be xedand set deadlines, and everyone concerned signed o.Among the litany o repairs to be addressed, there werecorrosion on gas headers and electrical hazardousoverloads50% electric in apartmentsexcessive

so wiring, rotted subfooring in several apartments,leaks in water and waste lines, and water damage inseveral apartments.

Ten, in November, another judge, Lizbeth Gon-zalez, took over rom Halprin (they rotate regularly)and drew up a new agreement or xing the manyviolations. In March 2002, which was the last courtdate beore the re, all C violations (the most serious)were ordered to be repaired in 30 days and the othersin 90. (Asked why a 7A administrator wasnt appointedsooner, Gonzalez told City Limits, I dont have a cluewithout the le, and even then, since it was nine years

ago, I might not remember.)Te agreements and orders were toothless. Terewere no ultimatums or penalties.

Te re department determined that the blaze at3569 DeKalb Avenue was an accidental electricalre, said Frank Dwyer, a department spokesman, inan email. Whether gas played a role is unclear. FDNYdocuments about the incident report that, a day aerthe re, P.J. told investigators there has been a gasleak at the stove. In the days aer the re, tenantstold the Nrwd News that they regularly smelledgas in the building.

A state inspector general probed the re as part o

a raud investigation (See Te Subsidy Scam, p. 38),blaming it on a jury-rigged electrical system, includ-ing overloaded and overheated use boxes, brittleelectrical wires and rusty electrical cables, and theuse o extension wires where armored cables shouldhave been installed.

Aer the re, inspectors rom the buildings depart-ment noted that someone had set up a an in the

basement to keep the wires rom overheating. Itsunclear i the ans were in operation beore the rebroke out. In any case, electrical hazards werent theonly dangers acing tenants o the building: Te Park-ers apartment had no smoke detectors, according toParker and the state inspector generals report, andother tenants tell Cty Lts their apartments didnt

have them at the time o the re either.

A BUiLDiNG WiThOUT OWNeRsBeore his sons death, Parker says, he raised theproblems at 3569 DeKalb with whoever would listen.But there was a changing and murky roster o peoplewith responsibility or the building where Jashawnlived and died.

A company called Quest Property Management Vpurchased the property in 1997; the address on thatdeed is 1075 Central Park Avenue, Palazzolos ocebeore he moved into his current Scarsdale headquar-

ters. Mortgage documents in 1997, 1998 and 2000bear Palazzolos signature as president o Quest V. ButEric Gladstein was also deemed president o QuestV, according to a court decision related to activitiesprior to 2002.

In February 2002, John Cirillo and Michael oikachbecame owners o 10 shares o stock in Quest V, accord-ing to inormation provided to the citys Departmento Housing Preservation and Development aer a2004 subpoena. But Quest V remained the owner o3569 DeKalb Avenue.

When the Nrwd News asked Palazzolo in 2003about the building at 3569 DeKalb and other troubled

properties believed to be linked to him, he deniedresponsibility or the condition o any o the real estate.

I own no buildings, he told the paper at one point,quickly switching to the third person. Palazzolo, hesaid, is a lender.

For his part, Parker says he doesnt remember dealingwith Palazzolo, at some point identied as the presi-dent o Quest V, or even Cirillo or oikach, who were

I have to admit my frst reaction was they had to be

exaggerating because I couldnt fgure out how a

building couldve gotten that bad in this neighborhood

without anybody realizing it.

continued on page 22


21/52


Why Not Prosecute?Questions about justice ater atal fres

Despite the well-documented state of neglect at 3569

DeKalb Avenue, no one has ever been held account-

able for the blaze that killed Jashawn Parker and badly

burned his teenage brother.A civil case has dragged on.

And it appears questions o criminal liability were never

seriously considered. According to a spokesman or Bronx

District Attorney Robert Johnson, the re was deemed an

electrical accident and was never reerred to the DAsoce or prosecution.

Landlords who violate housing and health codes can get

slapped with nes. They can even get brie stints behind

bars or civil contempt i they dont comply with mandated

repair orders, as was the case with landlord Sam Suzuki,

who spent 23 days in jail this summer or ailing to address

hundreds o violations at a building in the Bronx.

But rarely do property owners ace criminal charges,

no matter how brazen the neglect might be. Convicting

a landlord on the criminal level is a much harder task,

legal experts say.

Its just not a winning thing or a district attorney, says

Ralph Stein, a Pace University Law School proessor with

an expertise in criminal procedure.

Under the law, Stein says, ordinary negligenceor

a persons ailure to exercise a reasonable amount o

carealls under the realm o civil liability, not criminal.

To hold deendants criminally liable, an attorney has to

prove their actions demonstrated gross negligence or

recklessness.

Gross negligence is sometimes described as almost

wanton and willul, Stein says. Its just not something

district attorneys eel condent about. Simply because a

building is not maintained is not enough.

In at least ve cases involving the deaths o New York

City reghters, however, prosecutors have sought criminal

convictions against squatters, landlords, tenants, engineers

and contractors.

In 2001 a homeless man named Edwin Smith was sen-

tenced to 15 years ater pleading guilty to manslaughter

charges or accidentally starting a re in a building where

he was squatting in Jamaica, Queens. Smith had lit a

makeshit candle or warmth, and prosecutors argued

that his ailure to tell reghters who arrived on the scene

that the burning building was empty was a conscious

decisionand reckless enough to constitute murder. Lt.

John M. Clancy, 35, was killed when a foor collapsed

beneath him.

In another 2001 case, a laborer named Patrick E. Jeers

got a 15-year sentence or starting an accidental re ina Brooklyn garage where a reghter, Louis Valentino,

was killed. Jeers was convicted o second-degree elony

murder, or causing a death while committing another

crime (namely, using a power tool to illegally transer a

vehicle ID number rom one car to another) but he was

acquitted o a second murder charge that accused him

o depraved indier-

ence or operating

a grinding tool near

gasoline, the action

that started the blaze.

At the 2005 Black

Sunday re in the Bronx,

Lt. Curtis Meyran and

Fireghter John Bellew,

trapped in a building

that had been illegally

subdivided, jumped

to their deaths rom a

ourth-loor window;

our other frefghters

also jumped and were

gravely injured. Pros-

ecutors brought manslaughter and negligent-homicide

charges against two tenants who installed the illegal parti-

tions, but a jury acquitted them in 2009. Later that year, in

a separate case, a jury ound the buildings owner and a

ormer landlord guilty o criminally negligent homicide.

The mens convictions, however, were eventually overturned

by a judge who ruled there was not enough evidence to

prove the two deendants knew about the illegal partitions

inside the building.

Te more

newspaperheadlines anincident grabs,the morepressure thereis to prosecute.


22/52


In August 2006, Lt. Howard Carpluk and Firefghter

Michael Reilly died when a foor collapsed at a Walton

Avenue 99-cent store where they were battling a blaze.

Prosecutors went ater an engineer who had signed o

on inspection reports that erroneously indicated that steel

supports were in place in the building. The deendant died

beore the case concluded.

Most inamous was the 2007 re at the Deutsche Bankbuilding, where two reghters died in part because the

system or bringing frefghting water into the building

had been crippled by demolition workers who severed a

crucial pipe. The Manhattan DA prosecuted a corporation

and three supervisors; all were acquitted.

Lighting a candle or cutting a standpipe are more overt

acts than ignoring housing code violations. But the dangers

posed could be the same, even i prosecutors response

has been dierent, says Dina Levy, director o organizing

and policy at the Urban Homesteading Assistance Board.

There should be more criminal consequences, she says.

I think i it were something more standard, it would actu-

ally have an impact on the quality o the housing stock.

Had prosecutors attempted to seek indictments in the

DeKalb Avenue re, they would most likely have run into

similar issues as those that cropped up in the Black Sunday

and Deutsche Bank cases, Stein says.

You would have to prove beyond a reasonable doubt

that the wiring was the violation, that [the landlord]

had ample opportunity to x the wiring, he says. I the

landlord has a good deense lawyer, it can become an

expensive proposition.

Andrew Laskin, a trial attorney who specializes in repre-

senting people injured on properties that lack adequate

security systems, says the actors that drive prosecutors to

seek indictments are complex and oten political. He notes

that the Deutsche Bank case was a high-prole thing.

Indeed, the re at 3569 DeKalb Avenue and the conditions

that led to it were barely covered by the citywide media. A

search o the Nexis news archive ound 453 articles mention-

ing Meyran and more than 70 about Valentinos passing.

There were our articles about Jashawn Parkers demise.

Jeanmarie Evelly

Scene o a 2005 fre that claimed two frefghters lives, and led to

prosecution o tenants and owners. Photo by Marc Fader.


23/52


the companys shareholders at the time o the re. Heonly remembers telling Con Ed and the super aboutthe problems. Con Ed did respond to his complaintsshortly beore the re; workers unhooked his stove.Cirillo later testied in a civil lawsuit deposition thathe learned o the gas problem in Parkers apartmentbut never visited to check on the situation.

In hindsight, in addition to Housing Court, many

people and agencies might have done more to preventthe disaster at 3569 DeKalb: Te citys Department oHousing Preservation and Development could havebegun making major repairs itsel, billing the ownersor the work and placing a lien on the property.

Responding to a request or comment, HPD said itwas the landlord who let his building all into extremedisrepair, and then at each step sought to obstruct thecitys eorts to hold him accountable and to put themanagement o the building into responsible handsvia 7A.

(Proo o the citys commitment to ensure com-

pliance with the housing code, spokesman EricBederman said, is seen in the program it launched in

2007 to orce landlordsto make critical repairsand an initiative pilotedlast year that identies

vulnerable bui ldingsbeore they descend intodisrepair. But these newprograms suggest thatthe old approach to codeenorcementthe one

in place when Jashawn Parker diedwasnt sucient.)Te citys buildings department, which did notrespond to requests or comment, could also havebeen more aggressive. Lissette Mora told the NorwoodNews in 2002 that the day beore the re, she reportedsporadic power and fickering lights to HPD; an HPDspokeswoman in 2002 said the agency did reer thematter to the DOB. Mora said she even called theDOBs call center but got only an answering machine.

A ew weeks aer the blaze, an HPD attorney was stilldemanding many o the same repairs. Tree monthsaer Jashawns death, a judge in Housing Court nallyappointed a 7A administrator. He named the Fordham

Bedord Housing Corporation, a respected nonprotwith deep community roots.

When the 7A designation took eect and inspectorscame in ull throttle, the violation count hit almost 500.

Te tragedy got the system moving quickly. I achild hadnt died in that building, we might still bedoing it, or all I know, Dunord says about the pushor the 7A ruling.

enants say conditions in the building, now in thehands o a corporation calling itsel New York Aord-able Housing Associates, are somewhat improved.

But there are still problems; in February, the buildinghad 87 code violations. In November, tenants say, theywent without heat and hot water or the previous twodaysnot a rare occurrence, they say. Mold is visibleon some o the hallway ceilings, there are cracked

steps in the lobby, and the broken ront door allowsanyone to enter.

Everyone who lived at 3569 DeKalb back then stillremembers the re. Even a 16-year-old girl, who wasjust 7 at the time, says she remembers clearly that shehad just taken o her sneakers in her room beorebeing rushed outside when the re trucks arrived.

MeMORy The ONLy MARKeRAt the pier, Parker lamented Jashawns absence in hisdaily routines.

Tats what I miss, taking him to school, getting

him dressed in the morning, Parker said, adding, Iwish I had my son with me right now. Tis is stuthat he loved to do too. He loved to sh.

And then theres his older sons unrelenting suering.P.J., now 23, is still traumatized, according to his

ather and stepbrother, Fabian Morgan, whom helives with in his grandmothers house in the northeastBronx. Hes had emotional diculties since the re,relatives said.

Its been so many years, but you look at P.J. andyou still see the sadness in his ace, says Mora, whostill lives at 3569 DeKalb and sees him occasionally.

She says her own son, Jashawns pal Marcus, reusesto talk about that day.Parker gets to his sons gravesite when he can. We gave

him a ride one day, picking him up in Manhattan andheading up the Sprain Brook Parkway to Mount HopeCemetery in Hastings-on-Hudson. He knew the wayto the right section o the curvy, complicated layout.

But when we arrived, it took Parker a ew momentsto locate Jashawns grave as he headed slowly down therow. He eventually stopped and bowed his head. Andthen we saw why it was a bit o a challenge: Teres noheadstone or Jashawn Parker.

Nine years aer the burial, the grassy patch is not

marked or identiable in any way. Te only guidesare the tombstones on either side.

Meanwhile, Eric Gladstein, who relinquishedormal control o the building on DeKalb Avenueeight months beore the re aer pleading guilty tocriminal charges (See Te Subsidy Scam, page 38),lives in a large, gated home in the Westchester town oArmonk, six miles rom Palazzolos estate in Bedord.

continued from page 19

Original documents rom

our investigation

www.citylimits.org/magazine

THE LANDLORD FILES


24/52


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Property records show he purchased it in 1999 or $1.2

million. In November a pair o reporters approachedGladstein in his driveway. He oered little except tosay that he and Palazzolo were riends.

Parker did his best to get some justice in courtor what happened to his sons. He led suit againstGladstein, Cirillo, Quest Management V and ConEd. But aer nine years, theres been no resolution.Te case is technically active, but Parkers attorneyArnold DiJoseph hasnt been able to depose Gladstein,whose lawyer didnt attend a court date in February.And he hasnt named Palazzolo in the suit, acing thesame legal obstacles other attorneys have experiencedbringing cases or tenants in buildings linked to him.

Ive tried to pierce the corporate veil by suingthese guys individually, DiJoseph says. Te law rmjust represents the corporation and doesnt claim torepresent the individual people. Quest V also hadno liability insurance, DiJoseph says.

Parker says he doesnt dwell on the inequities

between his own lie and that o the ormer ownerso the building that was allowed to slip into a stateo atal disrepair.

Teres nothing theyre going to oer me thatsgoing to bring my son back, he says. Its not goingto ease my pain. I just want them to acknowledgethe neglect and the things that they do and try toget away with.

Jacquelne Verara, Nchlas Rzz and DanelRsenblu cntrbuted reprtn t ths artcle.Wlla Wchert cntrbuted valuable assstance

n the strys early days.

Paul Parker

displays a

tattoo o hisdeceased

son. Photo by

Jacqueline

Vergara.


26/52


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27/52


Piercing

the VeilTe links between a cluster of corporationsand dozens of troubled properties

For starters, Palazzolos business was thriving. He was owner,partner, investor or nancier in dozens o large apartmenthouses. He was clearly well situated in a market with an end-less supply o customers: Many o his holdings were locatedin the boroughs northwest section, the densest residentialarea outside Manhattan and a stronghold o working-classNew Yorkers, many o them immigrants, all in need o thecitys rarest commodity: aordable rental housing.

On a checklist o creditworthiness, Palazzolo scored high:In 10 years, he had gone rom owning a handul o propertieswith relatives to heading a major real estate operation withseveral dozen associates and partners. He had establisheda track record o having held earlier bank loans, includingtwo or more than $1 million. And it didnt hurt that he ranhis business out o his own modern oce complex severalmiles north o New York City.

he heigh o he ealesae bubble, bankslooking to make proft-able loans on residentialmultiamily properties

viewed Bronx realestate operator Frank

Palazzolo as a excelle ives-men candidae. He lookedgooda leas o pape.


28/52

CHAPTER ThRee

A signature page rom a 2000 mortgage

covering properties in the Bronx.


29/52


In the language o bankers, Palazzolo had the requisite threeCs: capital, capacity and collateral, and enough o each to handlesizable mortgages.

A ew years earlier, he would have been out o luck, along withmost other Bronx real estate owners. In the 1970s and early 80s,banks were loath to oer mortgages o any size as arson, ownerabandonment and city disinvestment took a huge toll on Bronxresidential neighborhoods.

But by the late 1990s, when Palazzolo rst went shopping orlarge investment unds, the market had done an about-ace. Hous-ing values were soaring, and lenders were welcoming mortgageapplications like his. Loan documents were quickly assembledand approved.

A seRies Of hUGe DeALsOne o his biggest was in 2000, when he negotiated a $35.8 millionnote rom Dime Savings Bank o New York or his Palazzolo RealtyCorporation. Te mortgage loan was spread over nearly three dozenproperties containing more than 1,100 apartments. Most o themortgage went to consolidate outstanding debt already carried on

the buildings. But bank ocials were impressed enough with theirclient to advance him an additional $9 million or unspecied needs.

wo years later, he presented another lender, Washington Mutual,which had taken over Dime Savings Bank, with a dierent roster o34 properties, containing more than 1,000 units. Like the earliergroup, each property was owned by a dierent corporate entity, eachone listed at Palazzolos Scarsdale oces. Te bank agreed to lendhim $32 million. Again, most o the note represented consolidateddebt, and again Palazzolo picked up additional cash on his trip tothe bank, in this case an added $8.5 million.

Mortgage documents or the loans were led with the BronxCounty clerk. Tey contained standard provisions protecting the

banks interest in the properties: All insurance would be in place; theywould be maintained in good condition; all necessary or desirablerepairs would be made; rents would be collected in compliancewith all laws; environmental rulesa reerence to strict laws con-cerning elimination o dangerous lead paintwould be obeyed.

With a series o soaring loops, Palazzolo signed his name aspresident o each o more than 60 separate corporations holdingtitle to the properties, agreeing to the terms and conditions. Mosto the buildings had been purchased in the late 90s by eitherPalazzolo or his many associates. His role, as he later explained incourtroom testimony, was to serve as a kind o arrangersome-one who located properties, lent money to the actual owners andarranged nancing.

Once the paperwork was complete on Palazzolos loan applications,the unds were released. Among the properties in the mortgageswas 3569 DeKalb Avenue, the building where Jashawn Parker died.

Years later, when asked on the witness stand where that mort-gage money went, Palazzolo insisted most o it had gone to payoutstanding loans, contractors, uel oil vendors and the like. But imuch o the money was spent to maintain the apartment houses,there was little to show or it.

Inside an apartment at

3569 DeKalb Avenue in the

summer o 2002. Photo by

Jordan Moss/Norwood News.


30/52


In-depth coverage o

housing policy

www.citylimits.org/housing

HOUSE CALLS

Records show that many o the properties pledged inPalazzolos mortgages were already in severe distress atthe time the loans were made. In 2004, just two years aerPalazzolo had signed o on multimillion-dollar nancingdeals, ocials at the Department o Housing Preservationand Development said that theyd ound more than 19,000housing code violations in some 100 properties identiedas part o Palazzolos real estate operation.

A ollow-up look late last year at many o those sameproperties ound dierent owners o some buildings and aew positive indications that new landlords were trying toturn things around. But the ndings were otherwise stark:Despite the millions o dollars paid out to his corporationsin mortgages, many o the properties involved in those dealshad only tumbled urther into decay.

Palazzolo himsel, along with almost all o the associateswhose names were listed as building owners, had managedto escape any sanctions. Tanks in part to tough New Yorkstate laws that protect individual investors rom corporateliability, no one was penalized or the disastrous shape in

which they le their properties. A couple o them retired tomansions similar to Palazzolos in leay glades in Westchester,just a ew miles north o where they had ound their ortunes.

Even some o the bankers said they later came to regrettheir dealings with the Bronx real estate tycoon. MichaelAllison, executive vice president or strategy and growth orWashington Mutual, testied in a deposition in 2007 that hisbank had decided not to make new deals with Palazzolo aerhe reused demands or repairs on the properties.

We communicated our desire to Mr. Palazzolo that theviolations be cured, stated Allison, and that this would bepart o what would be required or us to continue the rela-

tionship or to pursue additional relationship [sic]. Palazzolo,he testied, declined.He disagreed with the requirements we expected on the

property, Allison said. He elt comortable that his level omaintenance was appropriate or his tenants and suggestedhe wasnt going to do that.

Other bankers are blunter. Palazzolo is persona non grataaround here, says Vincent Giovinco o New York Commu-nity Bank, which did mortgage nancing with him in 2004,agreeing to lend $18.6 million to the Palazzolo InvestmentGroup against 20 apartment buildings in the Bronx. As longas Im here, I dont think hell get another loan, Giovinco says.

But thats looking through the rearview mirror. By the

time those regrets were voiced, the money was already longout the door and the damage was done.

MAjOR LOANs AMiD DRUGs, DisRePAiRTe experience o Cynthia Orta, in one o the heavily mort-gaged buildings linked to Palazzolo, illustrates the sharpdisconnect between the huge outlay o capital by lendersand everyday conditions or residents. Orta and her parents

moved into an apartment at 1053 Boynton Avenue in theBronxs Soundview section in 2002, the same year Palazzolonegotiated his $32 million note rom Washington Mutual.Te mortgage included Ortas building and two others, 1040and 1045 Boynton, on the same block.

Standard procedure or loan underwriting requires a detailedinspection and appraisal o properties to be mortgaged. Butin practice, bankers and housing ocials acknowledge, such

visits can be as cursory as a quick drive-by, conrming thatthe property exists and has the most rudimentary requiredelements, such as doors, roo and stairways.

A visit to the Boynton Avenue properties in 2002 wouldhave been an eye-opening experience or any appraiser orloan ocer. It would have included running the gauntlet odrug peddlerswho had longpreyed on theblock. Accord-ing to policea n d e d e r a l

prosecutors, thestretch betweenthe BrucknerExpressway andWatson Avenue, where Palazzolos properties were located,was one o the Bronxs busiest drug supermarkets. It was thetur o a violent drug gang that marketed hundreds o bagso heroin daily to a steady stream o customers. Drug saleswere at their peak, ocials said, during the same periodthe banks were making their investment with Palazzolo.Prosecutors said that during a two-year stretch rom 2001 to2003, drug prots on that block would hit $10,000 per day.

Gang members worked in shis, divided into managers andworkers, authorities said. Tey conducted business rom 7a.m. to midnight, oering packets o heroin stamped withbrand names o Diesel, Blue Devil, Budweiser and Warlock.

When a ederal judge sentenced the gangs ringleader to 30years in prison, he noted that the drugs and guns involvedin the trade had posed incalculable risks and damage topeople on the streets.

But i there was any calculation o those risks includedin Palazzolos lucrative mortgage deal, it wasnt reected inhis loan documents. By 2000, corporations based at Palaz-zolos headquarters were in control o the three buildingson Boynton. At that time, police reported scores o arrests,

many o them inside the buildings mortgaged by Palazzolo.enants report that a new management company took overin 2010, but no deed transerring title was led, and residentssay theyre still plagued by drug dealing. In November, Ortatold o continuing raids by police. First oor, second oor,ourth oor, she said. Its horrible here.

Living conditions werent much better. Orta, who still livesthere, estimates that in their years in the apartment, she and



31/52


In 2002 reports o deteriorating conditions at buildings

owned by landlords based at Palazzolo Plaza began l-

tering into the oces o the Northwest Bronx Community

and Clergy Coalition.

The coalition, ormed in 1974, helped Bronx neighbor-

hoods stem the tide o economic and physical devastation

in the 70s and early 80s. The downside o the revival it

helped spur, however, was that renewed private investment

in the Bronxs multiamily rental housing also brought a

new crop o rapacious landlords. And the crew operat-ing out o 800 Central Park Avenue in Scarsdale quickly

became Exhibit A.

They were bad buildings, says Chloe Tribich, an

organizer or the coalition at the time. The problems at a

50-unit apartment house at 1519 West Mosholu Parkway

were typical: Tenants were asking or help with caving

ceilings, cascading leaks, broken mailboxes and a severe

inestation o rodents.

Ater the August 2002 atal re at 3569 DeKalb Avenue,

organizers noted that both buildings were owned by

corporations housed at Palazzolo Plaza in Scarsdale.

According to Mary Dailey, then the coalitions executive

director, a search o property records turned up the huge

mortgages obtained by the Palazzolo Investment Group

and signed by Frank Palazzolo. Many o the properties

included in the mortgages were in similarly dismal shape.

The coalition helped orm what came to be called the

Palazzolo Tenant Committee. The group held protests out-

side Palazzolos palatial home in Westchester County as

well as in ront o a local branch o Washington Mutual in

an eort to get the bank to enorce good repair clauses

in its mortgages with Palazzolo.

Instead o an oer o negotiations, however, the rst

response the group received rom the landlords was a $1.5

million lawsuit led in late 2003 by several o the corporate

owners based at Palazzolo Plaza. The suit accused the

coalition, along with another Bronx housing group, the

Highbridge Community Lie Center, o trespassing and

spreading alse, misleading, libelous, actually incorrect

and deamatory inormation about the landlords. Among

the alse claims, the lawsuit stated, were fyers distributed

by the coalition claiming that Palazzolo was an owner o

the buildings. That was a misunderstanding, the suit held.

But the alleged misstatements, the landlords asserted,

had caused a renancing deal with Washington Mutual

to all through, costing them $450,000.

The landlords had moved quickly. A judge in Westches-

ter County, where the suit was initially led, had already

signed a restraining order barring the coalitions organiz-

ers rom entering Palazzolo-connected properties and

rom interering in any manner between the landlords

and their bank.

Dailey was stunned. The act that we could be con-

strained rom helping our neighbors when their ceilings

are alling in or accused o trespassing when we go and

Targeting Tenant OrganizersA lawsuit orces critics to back o

In 2003, a Bronx housing group protested one lenders connection

with Frank Palazzolo. Photo by Jordan Moss/Norwood News.


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her amily have spent $10,000 o their own money repairingthe bathroom, foors and walls. We have to pay someone tocome, she says, or my ather does the work, because hes acarpenter. Orta said in February that she was still waitingor building managers to take care o a gaping hole in herliving room ceiling that she had been complaining about tothe super and management since beore November.

Most basic maintenance at the Boynton Avenue buildingswas le up to the city. Housing department records show

that rom 2000 to 2004, while the buildings were being runby corporations based at Palazzolos Scarsdale headquarters,taxpayers shelled out more than $45,000 or emergencyrepairs. City-paid workers xed boilers, ordered uel, replacedoors and installed new windows. City workers even had toreplace a ront-vestibule door.

Te city was also repeatedly compelled to remove lead-paint hazards rom apartments with small children. In somecases, it was too late.

Andrew Matias was 7 years old when doctors determinedthat he had suered brain damage. A jury later ound it wasrom ingesting lead-paint chips faking rom the walls o

apartment 1D in 1045 Boynton Avenue, where he lived rom2000 to 2003. Lawyers hired by Matias mother to sue thelandlord later ound a copy o a city department o healthorder dated October 27, 2000, ordering building managersto abate the nuisance o lead paint in the apartment.

Five years later, Alan Konigsberg, the attorney handlingthe case or the mother, got the young woman who had beenserving as president o the buildings management corpo-rationbased in Palazzolos headquartersunder oath toanswer questions about the property. Nicole Pignone wasjust 21 years old when she headed the companies that ranthe Boynton Avenue buildings. She said she didnt recall thehealth department notice but was generally amiliar with

city rules relating to lead-paint hazards. Tat was becausepart o her job included ling required orms with the cityshousing department. We used to receive pamphlets thatexplained everything about lead paint, she said in a 2005deposition. But she couldnt recall whether any abatementwas ever carried out.

Actually, she couldnt tell the lawyer very much at all aboutthe buildings because, as she acknowledged, shed never

been inside any o the apartments. Shed visited the BoyntonAvenue properties a ew times, she said, and that was onlyto bring the superintendent his regular payin cash. Herown salary, she said, depended on how much monthly rentwas collected rom tenants.

Even though she was listed as the president o the company,Pignone described her role, like others who worked in thePalazzolo operation, as little more than an employee.

Pignone said she worked out o a one-room oce in

Palazzolos complex at 800 Central Park Avenue in Scarsdalealongside several other real estate corporations. She gotthe job through her ather, Nicholas Pignone, who also ranseveral other Palazzolo-tied rms. She had no backgroundin real estate, she said, other than having done secretarialwork or her dad. She acknowledged that she was presidentand one o two stockholders in a series o management rms,all o them called WDJ Realty with a succession o Romannumerals aer their names. For instance, WDJ Realty IVmanaged 1040 Boynton Avenue; WDJ Realty V managed1045 Boynton.

But she didnt recall whether she paid anything or her

shares and said she received nothing or them when shele the business in 2004 to become a drapery saleswoman.Asked whether shed had any conversation with anyone romthe company beore she came to be its president, she drewa blank. I dont remember, she said. Actual ownership othe properties was another mystery. Well, the corporationis the owner, she oered.

In 2008, Andrew Matias lead-paint case went to trial inthe Bronx, where a jury awarded him and his mother $8.5million in damages (later reduced to $2.3 million). Notthat it did them much good. Despite the mortgage contractrequirements, attorneys or the corporations said there wasno insurance policy in orce at the time o the injury. Nor

was there anything else o value. By the time Matias and hismother moved to collect, the WDJ corporations had shedthe Boynton Avenue properties and had no other assets.Konigsberg, the attorney, managed to seize a ew thousanddollars remaining in one bank account, but that was it. FrankPalazzolo, whose name appeared only on the mortgage docu-ments, was well beyond reach.

Even though she was listed as the president o the

company, she couldnt tell the lawyer very much at all

about the buildings because, as she acknowledged,

shed never been inside any o the apartments.

continued from page 29


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A RAT BiTe iN The DARKTe phantom landlord scenario repeated itsel at severalother buildings in the Palazzolo portolio where abysmalconditions were endured by residents in spite o the mas-sive property loans. One o them was a ve-story apartmenthouse about a mile rom Yankee Stadium in the BronxsMorrisania section. Te building, 465 East 167th Street, waspart o the same roster o properties approved or the $32

million loan by Washington Mutual in 2002. Tat year, cityhousing inspectors agged 318 violations at the building,according to court documents, even though it had only 23apartments on ve oors.

Te property was owned and managed by a companycalled Pipe Dreams Realty, also based at Palazzolos Scarsdaleheadquarters. As at the Boynton Avenue buildings, recordsshow the city was orced to handle the big jobs: City-paidcrews replaced collapsing bathroom ceilings and foor joists,cleared toilet stoppages, repaired kitchen foors and installednew treads on the re escape. Repair workers made morethan two dozen visits, at a cost o thousands o dollars, to test

and remove lead paint rom apartments where small childrenlived. In all, taxpayers paid almost $70,000 or emergencyrepairs at the building rom 2000 to 2008 while it was ownedby the company based at Palazzolos headquarters.

Even those expenditures didnt keep tenants sae. On April13, 2002, a rat scurried in at 2 a.m. and bit a woman namedMary Phoenix as she slept in her bed in apartment 12. Phoe-nix, 56, had lived there or 32 years, so she wasnt unamiliarwith the buildings problems. But the rodent attack held aspecial terror or another reason: She was blind.

It came over my head rom the head o the bed and bitmy nger, she said in a 2005 court-ordered deposition aer

she ound a lawyer who led suit. Phoenix said rats hadplagued her apartment or years, darting rom behind thekitchen sink. On another occasion, she testied, one bit herdaughter. Exterminators came once in a blue moon, she said,but would only toss a bag o poison in a corner and be gone.

In rustration, Phoenix testied, she wrote a letter to PipeDreams Realty complaining about the rodents. She said shegot no response. She also called the city or help. I was call-ing them, and sometimes they x things when the landlordwont do it, she said.

Attorneys representing Pipe Dreams Realty led their owncourt papers describing the injury as an alleged rat biteresulting in a supercial laceration. But as in the Boynton

Avenue lead-paint litigation, questions about who actuallyowned and ran the building produced only muddled answers.

At the time o the rat bite incident, a woman named PatriceSantangelo was listed as both chairman o Pipe Dreams andmanaging agent or the property. Like Nicole Pignone, San-tangelo had only the vaguest knowledge about the propertyor which she was responsible. How had she come to be theowner? I think that I was passing by the building, and I met

people in the lobby, she responded under oath in a deposi-tion. I so, it was one o her ew visits there.

She spent her workdays handling secretarial chores in

another oce at Palazzolos Scarsdale complex, visiting theBronx property a couple o times, she said. But she had nomemory o receiving violation notices rom the city and knewnothing about the massive mortgage that Palazzolo had takenout, one that included the property she ostensibly owned.

Asked i Palazzolo had been an ocer o Pipe Dreams,Santangelo said she had no idea. I dont know how any othe corporate setup was, she said. Palazzolo came to theoce rom time to time, she said, but she was hazy abouthis exact role: He was doing the nancing, part o the build-ing or something like that, she said.

Santangelo said she called it quits in 2003 because, amongother reasons, she wasnt making any money. Aer I paid

the bills, i there was anything le in the checking account,which there never was, I was supposed to be paid, she saidin her deposition. We kept losing money.

She said she spoke to Palazzolo about wanting out, and notlong aerward, a man named Marc Sarati walked into heroce. He said, Maybe I can take over what youre doing,shetestied. Te deal she struck, she said, was that Sarati wouldeventually pay her or her shares in the corporation i the

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35/52


building turned a prot. According to a deposition hegave, Sarati acknowledged that was the deal, addingthe price was to be $50,000. But both acknowledgedno money was ever paid.

Real estate management was also new to Sarati: Hisprior business was running a delicatessen. But inex-perience didnt much matter. Sarati, who describedhimsel as a riend o Palazzolos in his own deposition,acknowledged that he never even visited the buildingonce he became an ocer o Pipe Dreams in 2003.

Nor was he aware o the food o code violations issuedby city inspectors.Sarati told Phoenixs attorney that he served as

president o Pipe Dreams, while another riend, MarkBassani, was vice president. For a rookie landlord, hehad a lot o management responsibilities: Recordsshow Sarati and his wie Edith were at one timelisted as ocers o at least a dozen other corporationsowning buildings in the Bronx. But when asked inhis deposition, Sarati described his day-to-day roleonly as oce coordinator. And as or obtaining anycompensation or Phoenix, he told the lawyer theywere out o luck. In an adavit led in the court

case, Sarati stated thatdespite the language in the$32 million mortgage obligating all properties to beinsuredthere was no liability insurance on thebuilding known as 435 East 167th Street.

Phoenixs attorneys, Joseph and Andrew Fallek,took one more stab at tying Palazzoloand his deeppocketsdirectly to the property. In legalese, its a tacticcalled piercing the corporate veil, in which a judge isasked to hold an individual personally responsible

or corporate misdeeds on the grounds that he hadused the corporation to hide his own involvement.

Citing the big $32 million mortgage with Palazzolosname and signature all over it as evidence, Fallek madehis pitch in a 2007 motion: Pipe Dreams Realty, hestated, was a sham corporation. Te real owner, hesaid, was Palazzolo. And the East 167th Street build-ing had been kept highly mortgaged and uninsured,he claimed, as a means o preventing people just likePhoenix rom collecting damages against the corpo-

ration or building.Palazzolos attorney red back. Tis was simply aneort to harass, coerce and strong-arm his client,he stated in his motion papers. Palazzolo, he wrote,has no personal ownership or involvement in themaintenance o this building.

But the legal showdown never took place. Phoenixdied, and her lawyer moved on. Palazzolo declined todiscuss anything with reporters or this article.

As or Sarati, he now lives in a luxury high-riseon Manhattans West Side. He and his amily haveanother, very dierent claim to ame: Daughter LeaMichele is a star o the hit V showglee. He and his

wie have been cited on gossip websites alongside theiramous daughter, but he wasnt interested in discussinghis real estate experience. In November, outside hisresidence, Sarati paused to listen to a request romtwo reporters to discuss his dealings with Palazzolo.He shook his head. We ended on bad terms, he saidbeore walking away.

A bathroom in

3569 DeKalb,

seen ater a court

appointed an ad-

ministrator. Photo

courtesy Fordham

Bedord Housing

Corporation.


36/52


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PHOTO BY CLAYTON CONN


37/52

CHAPTER fOUR

1040 Boynton Avenue, a building

owned until recently by companies

linked to Frank Palazzolo, sported 210

housing code violations in February.

Photo by Marc Fader.


38/52


A Question

of ControlRegulators and tenants push for answers.When Palazzolo irst popped up on the radar o the

Department o Housing Preservation and Development inthe 1990s, he was just another small landlord, a hands-onowner trying to turn a prot with a handul o buildings.Hed had some problems with heat and hot water complaintsrom tenants, but he seemed cooperative and responded toorders to x things up.

It wasnt until late 2003, says Harold Shultz, the agencysormer top code enorcement troubleshooter, that thescope o Palazzolos inuence in scores o ailing residentialapartment houses became clearer. Te rst alert came rom

leaders o the Northwest Bronx Community and ClergyCoalition, an assembly o citizen activist groups ormed inthe 1970s during the years o owner abandonment and bankredlining. Organizers rom the coalition kept stumblingacross Palazzolos name as they talked to tenants tryingto cope with devastating conditions in their homes. Evenmore startling, aer they began organizing meetings in thebuildings, the ownera company named Palazzolo Holding

ew York Ciy hous-ing off icials werejus as puzzledandrustratedas the per-sonal-injury lawyersabou Palazzolos olei he popeies. Fo

the agency, it was an even biggerheadache, sice i had o fgueou how o address Palazzolossprawling and increasingly trou-bled eal esae opeaio.



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40/52


II Corporationled a lawsuit accusing them ointerering with the companys nancing.

o better understand what they were up against,the organizers turned to the city housing agency,where they met with Shultz and others. An old handat dealing with cray landlords, Shultz says hed neverseen a real estate operation like Palazzolos. On theone hand, there were the ownership and management

corporations, each listing dierent individuals as con-trolling ocers, almost all o them based at the sameheadquarters in Westchester County. On the other,ther

Documents

The Phantom Landlord | City Limits Magazine | March, April 2012 citylimits.org