New York, NY – A Housing Court judge found that Stellar Management overcharged tenants based on fraudulently filed applications for individual apartment improvement (IAI) and  major capital improvement (MCI) rent increases. In addition, to being unable to provide receipts to verify the IAI construction, the judge found that Stellar Management paid an employee to do the work via a series of shell companies controlled by the employee. It is illegal under New York State law for a landlord to collect an MCI or IAI rent increase for capital work completed by an employee of the building as part of their job.

Based on the foregoing facts, Assemblymember Linda B. Rosenthal released the following statement:

“In light of Stellar Management’s brazen disregard of the laws governing IAIs and MCIs, and the fact that tenants stand to lose or have already lost thousands of dollars in potentially illegal rent increases, I call on the New York State Homes and Community Renewal to conduct immediately and expeditiously a comprehensive audit of all of Stellar Management’s IAI and MCI filings within the last 10 years to ensure that tenants in other Stellar buildings have not been unsuspecting victims of fraud.

For years, tenants, advocates and elected officials like me have argued for more transparency in MCI and IAI filings. The opaque and outmoded system allows landlords of rent-regulated buildings to increase rents by hundreds of dollars a month on little more than their word. This system is rife for abuse, as this case and so many others prove, and enables landlords to illegally enrich themselves on the backs of their hardworking rent-regulated tenants.

Luckily, Stellar Management’s wrongdoing was uncovered, but we cannot rely on the work of intrepid tenants ferreting out landlord wrongdoing as the sole means by which to protect tenants against unwarranted and illegal permanent rent increases. The MCI and IAI system is broken, and we have an opportunity this year to level the playing field. We must seize that opportunity to ensure that any replacement system does not welcome abuse and fraud.”