Raphael Toledano, the serial New York City real estate investor who became seen as the epitome of predatory landlords in recent years, has been ordered to pay $3 million to his former tenants as part of a settlement negotiated by state Attorney General Letitia James.
The deal caps off a nearly four-year-long investigation by the state into Toledano, who was accused of driving out tenants with buyouts, intimidation tactics and construction harassment.
In some cases, the demolition of vacant units wound up releasing toxic dust into the air, exposing the remaining tenants, which included young children. In 2016, tests at three buildings uncovered concentrations of lead dust in the buildings' common areas that greatly exceeded the Environmental Protection Agency's hazard standards.
Under the terms of the settlement, an independent monitor will be assigned to supervise Toledano’s real estate business, and he will be required to hire an independent management company to manage his properties. Toledano is also prohibited from having any direct contact with his tenants.
A violation of the agreement could result in a lifetime ban from the real estate industry.
The cocky young investor burst onto the city’s competitive real estate scene around 2016. At 26, he owned as many as 28 buildings, mostly in the East Village, which he purchased for $140 million. According to the AG's complaint, Toledano borrowed heavily, taking out approximately $124 million in loans from Madison Realty Capital, a real estate private equity firm. He ultimately was unable to make his mortgage payments.
It is unclear how many of his properties, which are listed under LLCs, he still owns. In 2017, Madison Realty Capital began taking control of 15 of the East Village buildings.
Toledano could not be reached for comment.
This is not the first settlement Toledano has had to pay. In 2016, as part of a tenant harassment case filed in New York City’s Housing Court, Toledano agreed to pay more than $1 million to a group of tenants, some of whom secretly recorded conversations that showed him, building agents and the property manager using outlandish claims and bullying tactics to try to frighten them into moving.
On learning about the settlement, Jim Markowich, a former Toledano tenant who lives at 233 East Fifth Street, said he felt elated. "[It's] the sense that justice can be done," he told Gothamist.
Soon after the harassment began, tenants across Toledano's buildings formed a group called the Toledano Tenants Coaltion. Using a Google spreadsheet, they arranged to collect and share information about their individual encounters with the landlord and his representatives. At one point, the were 900 entries. "It's still being used on occasion," Markowich said.
As the press reported on Toledano, the tenants' stories were cited by housing activists as evidence that the city's real estate market had given way to over-leveraged speculators bent on destabilizing rent-stabilized units. Markowich was among the hundreds of tenants who testified at state hearings on rent regulations and traveled to Albany to lobby for changes. Last week, the state approved a landmark set of reforms that add tenant protections and roll back landlord-friendly laws.
"It was like going to graduate school for civics," Markowich said, about becoming a tenant organizer. Prior to Toledano, he said, "I never paid much attention to city and state government."
UPDATE: The story has been updated to note that Madison Realty Capital was a lender who took control of 15 of Toledano's buildings.