"Sophisticated business people" falling for $21,000 NYC sublet scam

By Lucy Cohen Blatter  | September 14, 2012 - 8:47AM

We’ve covered shady Craigslist scams (and how to avoid them) in the past. This week, Manhattan real estate attorney Jay Itkowitz of Itkowitz & Harwood PLLC reached out to us with news of two different clients--each "sophisticated business people"--bilked out of more than $20,000 each in similar sublet scams by a con artist using the same name and apparently operating out of apartments in different buildings.

"Same modus operandi, same name, different landlord, different subtenant, [advertising on the] same website,," Itkowitz told BrickUnderground. One incident occurred in a Kips Bay luxury rental building at 154 East 29th Street, where the victim was persuaded to hand over a $3,500 security deposit and an additional $17,500 for five months rent.

Itkowitz describes the scam in a blog post:

“Recently, two of our clients -- completely unrelated to each other and very sophisticated business people -- were searching for short-term luxury rentals online, and came into contact with a man who claimed he was offering his apartment for sublet because he had to go to England for six months. He showed them the unit and offered to rent it for six months, with the sub-rent ‘payable in advance.’

Such rent was required to be paid by bank check. He assured the potential subtenants that the sub-rent would include all utilities including cable TV. He showed his lease, which indicated that he had an insurance policy covering rent to the landlord, which he had tendered ahead of time because he is a foreign national.

Unfortunately, after the sub-rent was paid in advance the clients soon found out that the respective landlords did not consent to the sublets and that the sublessor was, in both cases, badly in arrears. In one case, the landlord had commenced a nonpayment proceeding and in the other case the landlord was about to file suit.  And the sublessor is nowhere to be found.”

We asked Itkowitz for some advice on avoiding these kinds of scams. He says it boils down to two types of preventative measures:

  • Make sure the sublet is signed off on by the landlord.
  • Don't pay advance rent. Paying the rent in advance always, always weakens a tenant's leverage. If the sub-landlord does not perform in any way, ie., fails to pay a utility bill he or she promised to pay, fails to arrange for a needed repair, etc., the sub-tenant can always withhold rent, which usually gets the attention of somebody. Paying rent in advance removes that option and puts the onus of suing to enforce the contract on the aggrieved party. Of course, if the sub-landlord is nowhere to be found, the sub-tenant can have a great lawsuit but no effective remedy.

In this case, the scam artist has vanished, so it sounds as if the subletters are out of luck.  

Not so for at least one of the landlords, which had required the renter to line up a guarantor for the lease--in this case, guarantor service Insurent Lease Guaranty

Insurent founder and COO Jeffrey Geller confirmed to BrickUnderground that he had, indeed, already been notified of the situation by onerelieved landlord.

"Among the thousands and thousands of lease guarantees we've made, this is the first time we've had a situation like this, and no matter what, the landlord is covered," says Geller.

Related posts:

Craigslist scam buster: Check before handing over the cash

Anatomy of a Craigslist scam

Insurent: Making NYC more accessible one rental at a time (sponsored)

Renting advice from the master

3 moving scams you should know about-- and 10 ways to avoid getting duped





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