Developer Trio Pleads Guilty in 421a Fraud Cases

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Three developers indicted more than three years ago on criminal charges connected to the 421a tax abatement program pleaded guilty to lesser charges.

Mendel Gold, Joel Kohn and Alen Paknoush pleaded guilty to filing a false instrument, Crain’s reported, meaning knowingly giving an inaccurate document to the government. They were initially charged with grand larceny and tax fraud as well, along with three other developers.

Each of the Brooklyn players was accused by District Attorney Alvin Bragg of charging at least $1,000 more in rent for units built under 421a, which carried approved affordable housing rates.

Gold allegedly defrauded the program during the development of 1140 Bushwick Avenue and 140 Stanhope Street in Bushwick. He’ll need to add an affordable unit to one of the buildings and pay $275,000 in restitution.

Kohn allegedly defrauded 421a in the development of 70 Bushwick Avenue in Williamsburg. He’ll also need to add an affordable unit to the property and pay $514,000 in restitution.

Finally, Paknoush allegedly defrauded the program in the development of 682 Bushwick Avenue. He promised to add two affordable units to his housing portfolio, sparing himself of the restitution bill in the process.

“We will continue to zero in on bad actors who scam New Yorkers looking for accessible housing,” Bragg said in a statement.

In October 2022, Bragg announced indictments of the three developers who recently pleaded out, as well as Michael Ambrosino, Gheorghe Sita and Ioan Sita. The six developers allegedly collected $1.6 million in ill-gotten tax breaks.

Prosecutors said the landlords certified to city and state officials that they had set aside apartments as affordable, but rented them out at market prices. Ambrosino reportedly pleaded guilty to the same charge as the other three last year and was ordered to pay $76,000 in restitution; the cases against the other two developers remain active.

The 421a program, which ended for new projects in June 2022, granted substantial property tax abatements for New York City multifamily projects that met certain criteria, including affordability.

— Holden Walter-Warner