Lawsuit alleges New Yorkers built an illegal Airbnb empire

The group allegedly spent years illegally renting out dozens of properties all across New York City and ultimately made millions of dollars

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A group of New Yorkers spent years building an illegal Airbnb rental business that deceived tens of thousands of unwitting guests, trafficked in dangerous spaces and ultimately raked in millions of dollars, according to a new lawsuit.

The suit, filed last week by New York City, charges a total of nine people and their businesses with conspiring to convert residential properties into illegal “de facto hotels” and misleading guests into booking “unlawful and unsafe accommodations.” The scheme went back to at least 2015, according to court documents, and involved buildings in Manhattan, Queens, Brooklyn and the Bronx.

A significant number of the alleged illegal rentals were located in the Astoria neighborhood of Queens.

More startling still, the group of New Yorkers running the illegal rental scheme is accused of misleading more than 59,000 guests and generating more than $5 million in revenue. The group allegedly advertised and took reservations on websites including Airbnb, HomeAway and Booking.com.

Wired, which first covered the lawsuit, described Elvis Tominovic as the ringleader in the case and reported that the illegal rental operation primarily relied on Airbnb. Tominovic and his accused co-conspirators — who include several of Tominovic’s family members — allegedly worked to evade both local regulators and the short-term rental company itself.

For example, guests were told that if they were ever asked about their stays in the rentals they should lie and say they were visiting a friend.

Court documents state that Tominovic received multiple warnings about his operations but still “never ceased his illegal short-term rental activities, instead he increased them.”

The documents also paint a grim picture of the rentals involved in the scheme, describing “serious safety hazards,” particularly with respect to fire codes.

Additionally, the documents quote guests who found various problems while staying in the properties. For example, one guest left a comment about an Astoria rental that said it smelled of sewage, had broken lighting and included a mold-covered bathroom, among other problems.

“HORRIBLE! SLEEP ON A BENCH IN CENTRAL PARK INSTEAD, YOU’LL HAVE A BETTER EXPERIENCE!” the guest wrote, according to the documents.

Wired further reported that inspectors found a gas leak in one of the rentals as well as guests who had been accidentally locked in their rooms.

The lawsuit comes amid a long-running feud between New York City and vacation rental giant Airbnb. The most recent major development in the conflict happened in May when Airbnb agreed to turn over data on 17,000 listings to city officials. The agreement came in response to a city subpoena in February for data on 20,000 listings.

Though the May agreement represented something of a detente, the city and Airbnb have clashed for years, thanks in part to a regulation that prohibits rentals for fewer than 30 days. Both the hotel industry and affordable housing advocates have also opposed Airbnb’s operations in the city.

The lawsuit against Tominovic and others alludes to some of those issues, arguing that “illegal short-term rentals damage neighborhood stability by reducing the supply of safe and affordable permanent housing units.”

New York City attorneys did not immediately respond to Inman’s request for comment, and court documents did not provide information about the alleged co-conspirators’ legal representatives.

The suit ultimately asks a court to ban the group of New Yorkers from continuing their illegal rental operations and to impose fines of hundreds of dollars for both intentional and inadvertent violations of the Consumer Protection Law. Those fines could add up to many millions of dollars if imposed for all of the thousands of bookings that took place as part of the alleged scam.

Additionally, the lawsuit asks a court to impose a $1 million fine for “compensatory damages,” and to collect all the money the group made from the illegal rental scheme.

Email Jim Dalrymple II

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