Tuesday, September 12, 2006


Sep 1, 2006

ATTORNEY GENERAL Eliot Spitzer has subpoenaed thousands of tenant records of the Pinnacle Group LLC, one of the city's biggest owners of rent-regulated housing.
The subpoena, issued Tuesday, is part of a widening probe by Spitzer into allegations that Pinnacle has systematically charged tenants who moved into renovated apartments far higher rents than state housing law allows.
"We received a records request in the form of a subpoena," company attorney Kenneth Fisher said in a written statement. "We had previously volunteered to cooperate with [Spitzer's] inquiry and are confident that Pinnacle's record of investing in and improving properties will result in a favorable outcome after the attorney general's office concludes its review."
Company chief Joel Wiener has defended Pinnacle's actions as legal and aboveboard.
Two months ago, Manhattan District Attorney Robert Morgenthau, in a separate probe, subpoenaed records the company filed with the state Department of Housing and Community Renewal to win approval for rent increases for major capital improvements.
Both investigations followed a series of reports in the Daily News earlier this year on Pinnacle's practices.
That series revealed the company had filed 5,000 eviction proceedings in Housing Court since January 2004 - one for every four of its tenants. The company has doubled or tripled the rents for its vacated units after installing new kitchens and bathroom fixtures. In several cases reviewed by The News, Pinnacle's higher rents were based on fictitious improvements it had claimed to state regulators.
At the Winthrop Gardens, a 330-unit former Mitchell-Lama complex in the Bronx, for example, DHCR recently ordered 19 rent rollbacks on renovated apartments, and the agency is reviewing eight more complaints.
Some tenants won up to $8,000 in back rent, and in at least two cases, DHCR awarded tenants triple damages, which can be assessed whenever the agency deems an overcharge "willful."
Pinnacle has claimed "clerical errors" at Winthrop.
"Any large organization is going to have a certain error rate," Fisher told The News earlier this year.
The Spitzer subpoena has demanded rent records and invoices for all apartment and building-wide improvements at Winthrop and for other Pinnacle properties throughout the city, a source familiar with the investigation said yesterday.
A spokesman for Spitzer declined to comment. But one law enforcement source said the AG's office is working closely with DHCR staff on the probe.
Pinnacle's applications for rent increases based on building- wide improvements - commonly known as MCIs - have also become a focus of Morgenthau's investigation.
In late June, a few weeks after the DA issued his subpoena, Pinnacle withdrew two applications for MCI rent increases it filed with the state, DHCR officials said.
One application was for $46,000 the company said it spent on a new roof at 86-06 35th Ave. in Queens; the other was for $36,000 for a new roof and entrance doors at 91 Fort Washington Ave. in Washington Heights.
"It's unusual for a company to voluntarily withdraw an MCI application," DHCR spokesman Peter Moses said.
Asked about the sudden withdrawal of those MCI applications, a spokesman for Pinnacle cited "business reasons."

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