Authored by Mike Krieger via Liberty Blitzkrieg blog,
Cox stopped cooking for herself and her son, not wanting food near the sink. A judge allowed her reduced rent for one month. When she moved out soon afterward, Westminster Management sent her a $600 invoice for a new carpet and other repairs. Cox, who is now working as a battery-test engineer and about to buy her first home, was unaware who was behind the company that had put her through such an ordeal. When I told her of Kushner’s involvement, there was a silence as she took it in.
Very few of the complex residents I met, even ones who had been pursued at length in court by JK2 Westminster, had any idea that their rent and late fees were going to the family company of the president’s son-in-law. “That Jared Kushner?” Danny Jackson, a plumber in his 15th year living at Harbor Point Estates, exclaimed. “Oh, my God. And I thought he was the good one.”
At the Carroll Park complex, I met Mike McHargue, a private investigator, and his girlfriend, Patricia Howell. “They’re nothing but slumlords,” Howell told me of Westminster Management. “They take everyone’s money.” When I asked if they knew who was behind the company, they said they did not. “Oh, really?” Howell said when I mentioned Kushner’s name. “Oh, really. And I’m a Trump supporter.”
From The New York Times Magazine article: Jared Kushner’s Other Real Estate Empire
Yesterday, The New York Times Magazine published a deeply disturbing story about a Kushner family real estate subsidiary with a consistent pattern of aggressive and questionable collection practices aimed at lower income people who can’t defend themselves properly.
Excerpts from the piece are below, but it should really be read in full.
Warren sent a letter reporting the problem to the complex’s property manager, a company called Sawyer Realty Holdings. When there was no response, she decided to move out. In January 2010, she submitted the requisite form giving two months’ notice that she was transferring her Section 8 voucher — the federal low-income subsidy that helped her pay the rent — elsewhere. The complex’s on-site manager signed the form a week later, checking the line that read “The tenant gave notice in accordance with the lease.”
So Warren was startled in January 2013, three years later, when she received a summons from a private process server informing her that she was being sued for $3,014.08 by the owner of Cove Village. The lawsuit, filed in Maryland District Court, was doubly bewildering. It claimed she owed the money for having left in advance of her lease’s expiration, though she had received written permission to leave. And the company suing her was not Sawyer, but one whose name she didn’t recognize: JK2 Westminster L.L.C.
Warren was raising three children alone while taking classes for a bachelor’s degree in health care administration, and she disregarded the summons at first. But JK2 Westminster’s lawyers persisted; two more summonses followed. In April 2014, she appeared without a lawyer at a district-court hearing. She told the judge about the approval for her move, but she did not have a copy of the form the manager had signed. The judge ruled against Warren, awarding JK2 Westminster the full sum it was seeking, plus court costs, attorney’s fees and interest that brought the judgment to nearly $5,000. There was no way Warren, who was working as a home health aide, was going to be able to pay such a sum. “I was so desperate,” she said.
If the case was confounding to Warren, it was not unique. Hundreds like it have been filed over the last five years by JK2 Westminster and affiliated businesses in the state of Maryland alone, where the company owns some 8,000 apartments and townhouses. Nor was JK2 Westminster quite as anonymous as its opaque name suggested. It was a subsidiary of a large New York real estate firm called Kushner Companies, which was led by a young man whose initials happened to be J.K.: Jared Kushner.
In August 2012, a Kushner-led investment group bought 5,500 multifamily units in the Baltimore area with $371 million in financing from Freddie Mac, the government-backed mortgage lender — another considerable bargain. Two years later, Kushner Companies picked up three more complexes in the Baltimore area for $37.9 million. Today, Westminster Management, Kushner Companies’ property-management arm, lists 34 complexes under its control in Maryland, Ohio and New Jersey, with a total of close to 20,000 units.
Kushner’s largest concentration of multifamily units is in the Baltimore area, where the company controls 15 complexes in all — which, if you assume three residents per unit, could be home to more than 20,000 people. All but two of the complexes are in suburban Baltimore County, but they are only “suburban” in the most literal sense. They sit along arterial shopping strips or highways, yet they are easy to miss — the Highland Village complex, for example, is beside the Baltimore-Washington Parkway, but the tall sound barriers dividing it from the six-lane highway render its more than 1,000 units invisible to the thousands traveling that route every day.
At the time of the 2012 Baltimore purchase, Kushner raved about the promise of the low-end multifamily market. “It’s proven over the last few years to be the most resilient asset class, and at the end of the day, it’s a very stable asset class,” he told Multifamily Executive. He said things were proceeding well in the Midwestern complexes he purchased a year earlier. “It was a lot of construction and a lot of evictions,” he said. “But the communities now look great, and the outcome has been phenomenal.”
Awesome!
Meanwhile, back to Warren…
Kamiia Warren still had not paid the $4,984.37 judgment against her by late 2014. Three days before Christmas that year, JK2 Westminster filed a request to garnish her wages from her in-home elder-care job. Five days earlier, Warren had gone to court to fill out a handwritten motion saying she had proof that she was given permission to leave Cove Village in 2010 — she had finally managed to get a copy from the housing department. “Please give me the opportunity to plead my case,” she wrote. But she did not attach a copy of the form to her motion, not realizing it was necessary, so a judge denied it on Jan. 9, on the grounds that there was “no evidence submitted.”
The garnishing started that month. Warren was in the midst of leaving her job, but JK2 Westminster garnished her bank account too. After her account was zeroed out, a loss of about $900, she borrowed money from her mother to buy food for her children and pay her bills. That February — five years after she left Cove Village — Warren returned to court, this time with the housing form in hand, asking the judge to halt garnishment. “I am a single mom of three and my bank account was wiped clean by the plaintiff,” she pleaded in another handwritten request. “I cannot take care of my kids when they snatch all of my money out of my account. I do not feel I owe this money. Please have mercy on my family and I.” She told me that when she called the law office representing JK2 Westminster that same day from the courthouse to discuss the case, one of the lawyers told her: “This is not going to go away. You will pay us.”
The judge denied Warren’s request without explanation. And JK2 Westminster kept pressing for the rest of the money, sending out one process server after another to present Warren with legal papers. Finally, in January 2016, the court sent notice of a $4,615 lien against Warren — a legal claim against her for the remaining judgment. Warren began to cry as she recounted the episode to me. She said the lien has greatly complicated her hopes of taking out a loan to start her own small assisted-living center. She had gone a couple of years without a bank account, for fear of further garnishing. “It was just pure greed,” she said. “It was unnecessary.” I asked why she hadn’t pushed harder against the judgment once she had the necessary evidence in hand. “They know how to work this stuff,” she replied. “They know what to do, and here I am, I don’t know anything about the law. I would have to hire a lawyer or something, and I really can’t afford that. I really don’t know my rights. I don’t know all the court lingo. I knew that up against them I would lose.”
A search for “JK2 Westminster” in the database of Maryland’s District Court system brings back 548 cases in which it is the plaintiff — and that does not include hundreds of other cases that have been filed in the name of the company’s individual complexes.
In the cases that Tapper has brought to court on behalf of JK2 Westminster and individual Kushner-controlled companies, there is a clear pattern of Kushner Companies’ pursuing tenants over virtually any unpaid rent or broken lease — even in the numerous cases where the facts appear to be on the tenants’ side. Not only does the company file cases against them, it pursues the cases for as long as it takes to collect from the overmatched defendants — often several years. The court docket of JK2 Westminster’s case against Warren, for instance, spans more than three years and 112 actions — for a sum that amounts to maybe two days’ worth of billings for the average corporate-law-firm associate, from a woman who never even rented from JK2 Westminster. The pursuit is all the more remarkable given how transient the company’s prey tends to be. Hounding former tenants for money means paying to send out process servers who often report back that they were unable to locate the target. This does not deter Kushner Companies’ lawyers. They send the servers back out again a few months later.
In March 2009, Joan Beverly, a probation agent, signed the lease for her daughter, Lennettea, for a unit at Dutch Village, a complex on the northern edge of Baltimore. Lennettea moved out a year later, several months before her lease was up. Kushner Companies bought Dutch Village more than two years later. In December 2012, JK2 Westminster filed suit in Baltimore County District Court against Beverly, seeking $3,810.16 — several months of rent it said it was owed, plus about $1,000 in repair costs, including $10 for “failure to return laundry room card.”
That February, Lennettea filed a written court notice explaining that her mother, who was dying of pancreatic cancer, was “in terminal hospice care and is not eligible to work.” She added by way of supporting evidence a letter from the hospice provider to Joan Beverly’s bank, explaining her and her husband’s late mortgage payments on their home: “There has been added financial stress because Mrs. Beverly is very ill at this time.” But JK2 Westminster persisted in seeking a hearing on the suit. In March, a district court judge found in favor of the company — a total judgment against Joan of more than $5,500.
Joan died two weeks later. Her husband, Tyrone Beverly, a retired longshoreman, requested that the judgment against his deceased wife be removed but was denied. The case remains open in the court database. Tyrone, who was married to Joan for 32 years, told me that he had assumed the judgment had been dismissed and was unaware that it was still listed as awaiting payment. “They just didn’t treat us fair,” he said.
Over all, about nine out of every 10 cases brought by JK2 Westminster that I surveyed resulted in judgments against the defendants, who often did not appear in person for the hearings — and if they did, almost never had legal representation. How could it possibly be worth Kushner Companies’ while to pursue hundreds of people so aggressively over a few thousand dollars here and there? After all, the pursuit itself cost money. And it wasn’t happening just in Baltimore — Doug Wilkins, a lawyer in Toledo who has represented some of the complexes bought there by Kushner, told me the company is seeking far more monetary judgments than did previous owners.
Matthew Hertz, whose Bethesda, Md., firm represents landlords and tenants in similar cases, explained to me that there is a logic behind such aggressive tactics. The costs of the pursuit are not as high as you might imagine, he said — people are not that hard to find in the age of cellphones and easily accessible databases. “If I give my process server a name and phone number, it’s generally enough to trace you,” he said. “If I have a date of birth and Social Security number, it’s even easier.” The legal costs can be billed to the defendant as attorney’s fees, if the terms of the lease allow. And garnishing wages is relatively easy to do by court order, assuming the defendant has wages to garnish.
The Highland Village complex, along the Baltimore-Washington Parkway, is one of Kushner Companies’ largest, a vast maze of lanes and courts lined with rows of short brick-and-siding-fronted homes. Like the other Kushner complexes I visited in Baltimore’s southern and eastern suburbs, it is situated in what was once a predominantly white working-class community, within reasonable commuting distance of the harbor and industrial plants, now defunct, like Bethlehem Steel. In recent decades, many black transplants from the city and Hispanic immigrants have arrived as well, and Highland Village is an unusually integrated place.
The complex, like the others I saw, seemed designed to preclude neighborliness — most of the townhouses lack even the barest stoop to sit out on, and at least one complex has signs forbidding ball-playing (“violators will be prosecuted”). At another complex, kids had drawn a rectangle on the side of a storage shed in lieu of a hoop for their basketball game. The only meeting points at many of the complexes are the metal mailbox stands, the Dumpsters and the laundry room. And the only thing that united many of the residents I spoke to, it seemed, was resentment of their landlord.
They complained about Westminster Management’s aggressive rent-collection practices, which many told me exceeded what they had experienced under the previous owners. Rent is marked officially late, they said, if it arrives after 4:30 p.m. on the fifth day of the month. But Westminster recently made paying the rent much more of a challenge. Last fall, it sent notice to residents saying that they could no longer pay by money order (on which many residents, who lack checking accounts, had relied) at the complex’s rental office and would instead need to go to a Walmart or Ace Cash Express and use an assigned “WIPS card” — a plastic card linked to the resident’s account — to pay their rent there. That method carries a $3.50 fee for every payment, and getting to the Walmart or Ace is difficult for the many residents without cars.
The worst troubles may have been those described in a 2013 court case involving Jasmine Cox’s unit at Cove Village. They began with the bedroom ceiling, which started leaking one day. Then maggots started coming out of the living-room carpet. Then raw sewage started flowing out of the kitchen sink. “It sounded like someone turned a pool upside down,” Cox told me. “I heard the water hitting the floor and I panicked. I got out of bed and the sink is black and gray, it’s pooling out of the sink and the house smells terrible.”
Cox stopped cooking for herself and her son, not wanting food near the sink. A judge allowed her reduced rent for one month. When she moved out soon afterward, Westminster Management sent her a $600 invoice for a new carpet and other repairs. Cox, who is now working as a battery-test engineer and about to buy her first home, was unaware who was behind the company that had put her through such an ordeal. When I told her of Kushner’s involvement, there was a silence as she took it in.
Very few of the complex residents I met, even ones who had been pursued at length in court by JK2 Westminster, had any idea that their rent and late fees were going to the family company of the president’s son-in-law. “That Jared Kushner?” Danny Jackson, a plumber in his 15th year living at Harbor Point Estates, exclaimed. “Oh, my God. And I thought he was the good one.”
At the Carroll Park complex, I met Mike McHargue, a private investigator, and his girlfriend, Patricia Howell. “They’re nothing but slumlords,” Howell told me of Westminster Management. “They take everyone’s money.” When I asked if they knew who was behind the company, they said they did not. “Oh, really?” Howell said when I mentioned Kushner’s name. “Oh, really. And I’m a Trump supporter.”
Jared Kushner stepped down as chief executive of Kushner Companies in January. But he remains a stakeholder in the company — his share of company-related trusts is estimated to be worth at least $600 million — and the company says it has no intention of selling off its multifamily holdings. (JK2 Westminster was formally dissolved in December, but Kushner Companies still owns the complexes through other entities; lawsuits against tenants are now typically filed in the names of the complexes themselves.) Because Kushner retains his interest in the complexes, the White House told The Baltimore Sun in February that he would recuse himself from any policy decisions about Section 8 funding, as many of his tenants rely on it for their rent. But even as Kushner now busies himself with his ever-expanding White House portfolio, his company is carrying on its vigorous efforts in court.
On a related note, here’s an article I published earlier this month: Kushner Companies Seen Hawking Shady U.S. Visa Buying Residency Program to Wealthy Chinese