The Manaforts Are Exactly Why People Are So Critical of Airbnb

EghtesadOnline: The indictment of Paul Manafort came with the interesting footnote that President Donald Trump’s former campaign chairman operated a high-priced Airbnb in downtown Manhattan.

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31 October 2017

But the Manafort property rental business, which was allegedly used to launder money, extended well beyond a single building, according to a year-old lawsuit: His daughter, Jessica Manafort, and her husband set up a company to sublet several other apartments nearby, in what appears to be the kind of black-market operation Airbnb has come under criticism for enabling.

Jessica Manafort and her husband, Jeffrey Yohai, earned about $30,000 a month from subletting at least four other Manhattan apartments, according to a November 2016 lawsuit by their landlord. They generated some of that income by listing multiple units on Airbnb and other short-term property rental websites, according to Bloomberg.

In New York City, it’s illegal to rent an apartment for less than 30 days unless the primary resident is present. The law has been largely flouted by Airbnb hosts, leading the company into a running conflict with state and local officials. Airbnb Inc. has argued that most short-term activity is innocent, with people renting their primary homes to make ends meet. Such debates rage in cities around the world, and New York has been among the most decisive in banning illegal hotels.

The Manaforts were the kind of hosts that have caused political trouble for Airbnb, according to the lawsuit from Goose Mountain NYC, the owner of a building on Broome Street. Goose Mountain rented several apartments to Jessica Manafort and Yohai. Instead of moving in, the couple subleased the units at a profit in violation of their leases, according to the complaint. Airbnb declined to comment.

Critics of Airbnb held up the charges against Manafort as evidence the site offers a new venue for old-fashioned real estate scams and suggested the problem is widespread. “The emerging details are another example of how commercial operators like Manafort use Airbnb to remove homes from the market in order to profit from illegal short-term rentals,” said Share Better, a trade group backed by hotel unions, city officials and corporate opponents of the home-rental company.

The indictment of Manafort, filed as part of a special investigation into potential ties between Trump’s campaign and Russia, details a complex process in which he purchased a Howard Street property for $2.8 million with money from entities based in Cyprus. “Manafort used the property from at least January 2015 through 2016 as an income-generating rental property, charging thousands of dollars a week on Airbnb,” according to the indictment.

Paul Manafort told lenders the apartment was a primary residence for his daughter, Jessica Manafort, the indictment said. This allowed him to borrow more with a lower interest rate on his mortgage, and he also received tax benefits, the U.S. alleged.

But around the same time, Jessica Manafort entered into four separate rentals in an apartment building at 498 Broome Street, according to last year’s suit. She and Yohai told the landlord that they were filmmakers and were renting the apartments to house their crew, Goose Mountain claimed. “The defendants knew at the time they entered the leases that they would not occupy the units and instead intended to illegally sublet the units for profit,” the complaint said.

Christopher Spuches, a lawyer for the landlord, said the firm is preparing its case to be heard by a jury. Steven Czik, an attorney for Jessica Manafort, didn’t respond to requests for comment.

Images attached to the complaint show at least one of the units was available for about $699 per night on Airbnb. Jessica Manafort sublet another unit for $844 per night on Oasis Collections, a high-end rental site, the suit alleged. Through a limited liability corporation she established with her husband, Jessica Manafort also entered into yearlong leases with subtenants in two apartments, charging significantly more than the leased rate. In one case, they received an upfront payment of $55,000, equivalent to five months rent, in addition to a $10,500 security deposit.

The budding Manafort real estate empire may soon be coming to an end. The government is seeking forfeiture of the properties in New York, a house in the Hamptons and one in Arlington, Virginia, owned by another daughter. Jessica Manafort’s business may have already come undone before the indictment. According to the complaint, she and her husband hadn’t paid their rent in more than a year.