OSE And The NYDOS Announce Settlement Ending Illegal Short-term Rental Operation

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Mayor's Office Of Special Enforcement And The New York Department Of State Announce $845,000 Settlement Ending Illegal Short-term Rental Operation Run By A Licensed Real Estate Broker

March 20, 2024

Suit Alleges That Real Estate Firm Mega Home, Inc. and Licensed Real Estate Broker Katherine Cartagena Illegally Converted Four Permanent Housing Units to Generate $2 Million in Payouts from Airbnb

NEW YORK – The New York City Mayor’s Office of Special Enforcement (OSE) Executive Director Christian J. Klossner and New York Secretary of State Robert J. Rodriguez today announced a global resolution of an $845,000 settlement that shuts down an illegal short-term rental operation at two Manhattan buildings. The investigation leading to the lawsuit brought by OSE was based on data obtained through the city’s Booking Service Data Reporting law before the city’s short-term rental registration law went into effect. The settlement acknowledges a separate investigation by the Department of State, Division of Licensing Services (DOS), which also completed its investigation of licensed brokerage and broker Mega Home and Katherine Cartagena. The settlements were negotiated by OSE and DOS as part of a collaborative and innovative enforcement effort by the City and State.

According to the OSE lawsuit, the defendants converted multiple permanent residential dwelling units at 311 East 51st Street and 207 West 75th Street in Manhattan to advertise and operate illegal short-term rentals. Between 2019 and 2022, records show that Airbnb disbursed more than $2 million to the defendants for more than 550 short-term rentals involving over 2,000 guests at the two buildings. In response to OSE’s enforcement, the defendants removed all illegal listings and will now settle for a citywide permanent injunction and $845,000 in restitution. Ms. Cartagena also agreed separately with DOS that she advertised illegal transient rentals in violation of the law and that should she do so again, her real estate license would be revoked.

“Safe, stable, and affordable housing is fundamental to a prosperous city, and with our short-term rental reporting and registration laws we are stopping illegal operators from impeding our housing goals,” said New York City Mayor Eric Adams. “Today’s settlement sends a clear message that we will not allow anyone to use our valuable housing stock for unlawful personal gain.”

“New York is in the middle of a housing shortage crisis which makes returning a long-term rental units to the housing market crucial,” said Secretary of State Robert J. Rodriguez. “The Department of State’s Division of Licensing Services will continue to collaborate with our city partners to ensure the laws are being followed and that violators are held accountable.”

“Ms. Cartagena and her corporate entities deceived and endangered guests while profiting from her short-term rentals, but she ultimately ceased the illegal activity and accepted responsibility after being contacted by the Office of Special Enforcement,” said Christian Klossner, Executive Director of the Mayor’s Office of Special Enforcement. “This settlement highlights the importance of robust reporting requirements for booking platforms and short-term rental registration in combatting illegal short-term rentals and the attendant loss of housing.”

“The Office of Special Enforcement is rigorously implementing measures to combat unethical and exploitative practices in the city’s housing market,” said Mayor’s Office of Criminal Justice Director Deanna Logan. “We commend Executive Director Klossner and the Department of State for their leadership in investigative efforts that enforce the long-standing laws on short-term rentals and promote housing equity for all New Yorkers.”

“This settlement highlights the City’s commitment to ensuring people are safe and our housing stock is protected,” said New York City Corporation Counsel Sylvia O. Hinds-Radix. “The use of short-term rental registration laws combined with the strategic legal and investigative efforts of the Law Department and the Mayor’s Office of Special Enforcement have brought another violator into compliance.”

New York City’s booking service data reporting law requires online short-term rental platforms to periodically provide OSE with information about transactions for certain listings. These reports include the physical address of the short-term rental as reported to the booking service by the host, the URL of the short-term rental listing, details pertaining to the scope of the short-term rental transaction, and information relating to the identity of the host, including contact information and associated bank accounts to which payouts were made.

New York City’s short-term rental registration law, which went into effect in January 2023, requires rental hosts in New York City to register with the city and prevents platforms like Airbnb from processing transactions unless the registration information matches a city database.

The NYC Law Department authorizes and reviews all lawsuits brought by OSE to enforce the city’s laws.

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About the Mayor's Office of Special Enforcement

The Mayor's Office of Special Enforcement (OSE), positioned within the Mayor's Office of Criminal Justice (MOCJ), plays a crucial role in ensuring the safety of city residents by overseeing various illegal and unregulated industries. The office is tasked with enforcing a diverse range of laws and regulations aimed at maintaining a safe and livable environment. The office conducts research on quality-of-life issues, with a focus on areas such as adult use locations, trademark counterfeiting, bazaars, and illegal conversions of apartment buildings into hotels. Additionally, OSE is responsible for the enforcement of laws and regulations on short-term residential rentals and the education of the public on these laws and subsequent enforcement. For more information, visit nyc.gov/ose.

About the New York State Department of State

The DOS regulates and licenses real estate brokerages, brokers, and salesperson throughout the State. Anyone who believes a real estate licensee may be acting in a prohibited manner or with untrustworthiness, is encouraged to contact DOS and submit a complaint form, available online at https://dos.ny.gov/preliminary-statement-complaint-0.

Media Contact

osepress@cityhall.nyc.gov