Hidden in a Carroll Gardens shelter project, an owner with 'terror' on his resume
Documents on file with the city show that the building slated to house a 170-bed homeless shelter in Carroll Gardens was constructed—and may still be owned—by a convicted felon whose crimes involved abusing the poor for personal gain.
As I reported last week, the building is held in the name of a private corporation, Tunnel Condos LLC. Charles Wertman, an attorney whose name appears on the deed for the building at 165 West 9th Street, subsequently told The New York Times that he acted on behalf of Alan Lapes, a landlord for numerous homeless shelters around the city.
Lapes, long a target of tabloids and neighborhood politicians, has a record of operating substandard, dangerous and crime-ridden facilities. But it’s never been clear whether he owns these buildings himself, or is acting as a front man—and flack deflector—for other investors. (Such arrangements are typical in the real-estate business—it’s how Donald Trump, among others, has made a fortune for himself and his quieter partners.)
Lapes’ business dealings involve a complex web of shell companies, many of which trace back to a hotel business called Amsterdam Hospitality. Recent property and buildings department records identify Lapes as an employee or agent of Amsterdam Hospitality. Wertman, who has declined to speak to me, is the company’s general counsel.
Lapes’ name, however, appears nowhere in the extensive public record surrounding the West 9th Street building, which has sat unoccupied for nearly a decade, reportedly due to construction problems. Instead, two Buildings Department permits, from 2001 and 2004, list the owner as Stuart Podolsky—the chief executive of Amsterdam Hospitality. (Credit for first noticing this goes to my Twitter follower @moonrabbitz.)
Podolsky also appears to be closely involved with Housing Solutions USA, the nonprofit that approached the city’s Department of Homeless Services with the shelter proposal, which is not subject to public review or a vote. Few substantial details about the bid have been revealed, but similar deals have been struck for well-above-market rents, meaning that whoever owns the property stands to make millions of dollars.
The chief executive of Housing Solutions USA is Robert Hess, who served until 2010 as Mayor Michael Bloomberg’s D.H.S. commissioner. Hess has declined to speak to me, or to release copies of his nonprofit’s tax return, as is required by federal law. A registration statement on file with the New York Attorney General’s office, however, provides a roster of the charity’s board members—all of whom are business associates of Podolsky and Lapes.
Wertman, the Amsterdam Hospitality attorney, is the nonprofit’s treasurer. Daniel Murphy, identified as the organization’s vice president, has a long history of providing private security to Lapes’ shelters as a subcontractor.
The third outside board member, Carl Schwartz, is a prominent attorney, who currently heads the New York real-estate practice for the law firm Hunton and Williams. Prior to moving to Hunton earlier this year, Schwartz held a similar position at Herrick, Feinstein, which lists Amsterdam Hospitality as a client.
“I have represented Amsterdam Hospitality, and Stuart is a friend of mine,” Schwartz told me in a phone interview. “He introduced me to the organization,” he added, referring to Housing Solutions USA.
Schwartz said he was not aware that Podolsky was listed as the owner of the proposed shelter building. I mentioned that elected officials had raised questions about the board’s makeup, citing conflict-of-interest regulations that are meant to keep charities at an arm’s length from parties that stand to profit from deals with the city.
“I don’t blame the city,” Schwartz replied. “The truth is that you’re telling me something I didn’t know. I didn’t know that Podolsky owned that property until you just said that.”
In recent years, scandals involving politically connected nonprofits and public-service contracts have led to corruption indictments and tough new state regulations on executive compensation and oversight. The relationships between Podolsky and Housing Solutions USA, at the very least, deepens the mystery surrounding the city’s secretive process of awarding such shelter contracts.
In fact, Podolsky already appears to be benefiting from his relationship to Housing Solutions USA. He or his family members own several of the properties where Hess’ nonprofit operates shelters under contracts with the city, including several that have sparked controversies similar to the one in Brooklyn. He has kept his name out of the newspapers for the most part, however, ceding the public role to others.
Why would Podolsky want to conceal his involvement in the city’s shelter industry? Nearly 30 years ago, he pled guilty—along with his father and brother—to participating in a criminal conspiracy to empty several rent-controlled buildings they co-owned on the Upper West Side. At the time, the Podolsky family’s actions managed to shock a city inured to landlord-tenant tensions. On the front page of The New York Times, then-district attorney Robert Morgenthau described the scheme as “a routine of terror.”
Zenek Podolsky, Stuart’s now-deceased father, was an immigrant who worked as a butcher before getting into real estate. According to court records and contemporary news reports, during the early 1980s, he and his sons hired a criminal gang that specialized in driving rent-controlled tenants from their apartments, paying between $500 and $1,500 for each tenant they pushed out.
The conspiracy was chillingly systematic: after installing a loyal superintendent, gang leaders would proceed to move drug addicts, prostitutes and thugs into vacant apartments. The gang would break into rent-controlled units and ransack them, would start fires and floods, and “would generally do their utmost to make the building unlivable,” according to a court decision. Prosecutors claimed that a 72-year-old man was pushed down a flight of stairs, and an elderly woman died of pneumonia after the heat to her apartment was cut. Another tenant hanged himself.
Stuart Podolsky did not return phone messages left at his office and his home, a condominium in the Galleria building on 57th Street, just beneath the penthouse owned by the magician David Copperfield. In September, however, an attorney for Stuart and his brother Jay told The Charlotte Observer—which was investigating a lawsuit related to more recent property investments—that the brothers pled guilty to protect their father.
“They were literally babes in the wood. They had no involvement,” said the attorney, David Satnick, who added that Zenek Podolsky was an “older man” from “another time.”
At the time he pled guilty, Stuart Podolsky was around 30. Contemporary news reports expressed shock that he and his family members managed to avoid substantial jail time. As punishment, a judge ordered them to hand over three buildings on West 77th Street to the Coalition for the Homeless. Zenek Podolsky also assisted prosecutors in a bribery case against the head of the city’s Taxi and Limousine Commission, testifying that he participated in a corrupt scheme involving the sale of electronic taxi meters.
The criminal convictions did not end the Podolsky brothers’ careers in real estate. On the contrary, the scant public record suggests they have been active players in New York’s real-estate market, buying throughout Manhattan and other boroughs. Property records show they have opened several hotels in partnership with Joseph Chetrit, a secretive Moroccan-born property mogul.
According to its website, Amsterdam Hospitality now has six boutique hotels in Manhattan, as well as locations in Asbury Park and Charlotte. The latter place made unwanted headlines during this summer’s Democratic National Convention, when the California delegation complained of mold, cockroaches, and scalding water, and is currently the subject of litigious dispute among its investors.
Even as they have expanded as hoteliers, however, the Podolskys have also played at the bottom end of the real-estate market. Jay Podolsky’s wife, Sharon Olson, is listed as the chief executive of a company that operates a shelter—under Lapes’ management—called the Aladdin Hotel, near Times Square. In 2002, the magazine City Limits also connected the Podolsky family to another facility that Lapes opened in Harlem, the Ellington Hotel. (Housing Solutions USA’s website now lists the Aladdin and Ellington among its facilities.)
A federal lawsuit filed earlier this year, by three workers who allege they were paid less than minimum wage for their work at a homeless shelter in the Bronx, claims that Amsterdam Hospitality controls “a network of corporate parent, child, and sibling entities” that engage in the “operation of a number of low-income apartment buildings, DHS-funded homeless shelters, and luxury hotels.” In court papers, Amsterdam Hospitality has denied the lawsuit’s claims. (Click the image at left to view the full lawsuit.)