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Category: Real Estate
A real estate company owned by President Donald Trump’s son-in-law and senior advisor Jared Kushner on Friday filed a court action to shield the identity of investors in that firm in connection with a pending lawsuit in Baltimore.
The move — a transfer of a lawsuit back to Baltimore Circuit Court out of federal court — could make it more likely that Kushner’s company will ultimately lose a pending lawsuit by tenants.
But the action also will keep out of the public eye the names of every person and entity that has invested in the company.
"I would say the Kushners would do anything to keep the identities of the investors secret," Andrew Freeman, a lawyer for two tenants suing Kushner’s real estate company, Westminster Management, told CNBC.
Freeman noted that there have been recent news reports about investments in Kushner’s companies by foreign interests.
In January, The New York Times reported that Kushner’s family real estate company received an investment of about $30 million from Menora Mivtachim, the large Israeli insurer, which was used to finance 10 Maryland apartment complexes controlled by the Kushner firm.
And two weeks ago, The New Yorker in an article detailed how the Kushner Cos. are seeking Chinese investors.
Kushner is married to Trump’s daughter Ivanka Trump.
In addition to Kushner, the other investors that have been identified as involved in ownership of the Baltimore properties in question are his parents, Charles and Seryl Kushner, and his brother Josh.
Freeman’s clients — Tenae Smith and Howard Smith — claim that Kushner’s company, among other things, illegally charged them late fees for rents on separate Baltimore apartments they live in.
The two plaintiffs filed suit in Baltimore Circuit Court last fall.
In response to the suit, Kushner’s company transferred the case to federal court for the District of Maryland.
As the basis for the request, the company claimed that all of the investors in the company lived out of Maryland.
Federal courts can handle cases that would otherwise be handled in local or state courts if they involve out-of-state parties.
However, under federal rules, those parties have to show proof that they live elsewhere.
Westminster Management had asked to keep that proof sealed out of public view, citing what it called unfair attention by journalists.
"Given the tenor of the media’s reporting of this case, including politically-motivated innuendo no doubt intended to disparage the First Family, there is foreseeable risk of prejudice to the privacy rights and reputations of innocent private investors," Kushner Cos.’ lawyers wrote in a filing, according to The Baltimore Sun.
But a judge last month rejected Westchester Management’s bid to shield the identities of the investors. That bid had been opposed by the tenants and a group of media companies.
"Under common law, there is a presumption that the public has access to all judicial records," wrote federal Judge James Bredar.
Bredar in his opinion noted: "The Defendants believe that because the Kushners, including the President of the United States’ son-in-law Jared Kushner, are members of Defendant LLCs, ‘the media has taken an unprecedented interest in this case’ and made ‘outrageous allegations, and assign[ed] guilt.’ Publicly releasing the citizenship of Defendant LLCs will, so the Defendants claim, only add fuel to this fire."
On Friday, two new lawyers for Kushner’s company notified Bredar that they are now representing the firm.
And the new lawyers said in court filings that they now want the case sent back to Baltimore Circuit Court, where it was first filed.
One of those lawyers, Michael Blumenfeld, declined to comment when contacted by CNBC.
Chris Taylor, a spokeswoman for the Kushner Cos., said only, "Our counsel on this matter has determined that the case should be remanded to state court."
CNBC has asked the White House for comment on the case.
If the case had gone to trial in federal court, Kushner’s company might have had a better chance at winning.
The jury pool for Maryland federal court has proportionately fewer tenants — as opposed to homeowners — than does the pool that provides jurors for cases tried in Baltimore Circuit Court.
There are "more tenants in a Baltimore City jury," noted Freeman, the plaintiffs’ lawyer.
In his own filing Friday, Freeman wrote, "After expending over three months – and requiring substantial time and resources from both Plaintiffs’ counsel and the Court – Defendants have now belatedly agreed that they should never have attempted to remove this case to federal court. Plaintiffs do not oppose Defendants’notice of withdrawal."
Freeman indicated in the filing that he wants to seek attorneys’ fees that occurred because of the delay from Kushner’s firm.
A federal judge in Maryland ruled Friday that Jared Kushner’s family real estate company could not keep secret the identities of its partners in Baltimore-area apartment complexes that are the subject of a class-action lawsuit by tenants.
The class-action lawsuit was filed in September, following a May article co-published by ProPublica and The New York Times Magazine that described how Kushner Companies have used highly aggressive tactics in pursuing payments from tenants and former tenants of 15 large apartment complexes it owns and manages in the Baltimore area.
The lawsuit, filed in the Circuit Court for Baltimore City, alleges that the Kushner Companies’ real estate management arm and related corporate entities have been improperly inflating payments owed by tenants by charging them late fees that are often baseless and in excess of state limits and court fees that are not actually approved by any court. The suit alleges that the late fees and court fees set in motion a vicious cycle in which rent payments are partly put toward the fees instead of the actual rent owed, thus deeming the tenant once again “late” on his or her rent payment, leading to yet more late fees and court fees. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges.
Kushner Companies and its co-defendants sought to have the case transferred from state court to federal court, which would spare it from having to face an all-Baltimore City jury. To have this transfer approved, the defendants needed to show that none of their ownership partners were residents of Maryland. The defendants requested that their submission of the list of partners be sealed from public view, citing the high degree of media interest in Jared Kushner, President Trump’s son-in-law and senior White House adviser.
“Given the tenor of the media’s reporting of this case, including politically-motivated innuendo no doubt intended to disparage the First Family, there is foreseeable risk of prejudice to the privacy rights and reputations of innocent private investors,” wrote Westminster Management, Kushner Companies’ real estate management arm, in a court filing in November.
This request to seal the partners’ identities was challenged several weeks later in a joint filing by ProPublica, the Baltimore Sun, the Washington Post, the Associated Press, and Baltimore TV station WMAR-TV. They argued that the press had a “presumptive right” to view court documents, and that the Kushner Companies had not identified the “compelling government interest” that is required to block public access.
In his ruling Friday, U.S. District Court Judge James K. Bredar stated that the high level of public interest in Kushner and his business associates if anything enhanced the case for maintaining access to the identities of the defendants in the case.
“The Defendants are no doubt correct that the presence of the Kushner (and therefore Trump) families in this case has raised its profile and attracted significant, though perhaps not ‘unprecedented,’ media attention,” Bedar wrote. “But increased public interest in a case does not, by itself, overcome the presumption of access. In fact, it would logically strengthen it, particularly when the interest is due to the presence of important public figures in the litigation. In such an instance, the public’s desire to evaluate the Court’s decision-making is likely augmented. And beyond this apparently inevitable media scrutiny, Defendants have largely relied on ‘vague superlatives’ and insinuations instead of demonstrating specific harms.”
Several recent news reports have given a hint of just how far-reaching the network of investors in the Maryland apartment complexes could be. The New York Times reported earlier this month that Kushner Companies last spring secured a $30 million equity investment in the Baltimore complexes and others of its holdings from Menora Mivtachim, one of Israel’s largest financial institutions, just as Jared Kushner was about to make his first official visit to Israel as President Trump’s designated broker of Israeli-Palestinian negotiations. More recently, a New Yorker article described the Kushner Companies’ aggressive pursuit of Chinese investors in its real estate ventures.
In his ruling, Bedar gave the defendants until Feb. 9 to provide the list of their ownership partners. The Kushner Companies could opt instead to return the case to the Circuit Court in Baltimore, if the firm decides the downsides of having to disclose the investment partners in the complexes outweigh the downsides of having the case heard by a Baltimore jury.
A request for comment from Kushner Companies’ spokesman was not immediately returned Friday afternoon. A lawyer for the plaintiff tenants, Andy Freeman, said he and his colleagues on the case had not yet gotten any indication of how Kushner Companies planned to proceed.
“We’re pleased with the ruling. We don’t think that parties to federal litigation should be able to conceal their identity,” Freeman said. He added: “This is just the first step in moving toward justice for the tenants.”
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When families don’t have stable housing, their risk of struggling with poor health outcomes and material hardships, such as food insecurity, increases, according to a new study from Children’s HealthWatch. Researchers surveyed over 22,000 families and found that one third of low-income renters were housing unstable, which was associated with negative impacts on their health.
To determine housing instability, researchers asked families if they had been behind on rent or moved more than twice in the past year, and if their child had experienced homelessness. All three circumstances were associated with increased odds of adverse health outcomes, such as poor caregiver health, poor child health, maternal depressive symptoms, and food and energy insecurity, when compared to families with stable housing.
"Two-thirds of the families who said they were housing insecure were behind on rent in the past year," said Megan Sandel, MD, MPH, principal investigator at Children’s HealthWatch and associate director of the GROW Clinic at Boston Medical Center (BMC). "This should be something doctors pay attention to when screening patients for housing instability, as it hasn’t been recognized as a factor in the past."
The study also explored how multiple unstable housing circumstances affected family health. They found as the number of adverse housing circumstances increased, the odds of child and caregiver health risks also increased. However, there was limited overlap between the three circumstances, with 86 percent of families only experiencing one circumstance.
"Asking questions specific to all three circumstances can help providers asses both individual and community health and housing needs, and identify families who are at risk of poor health associated with housing instability," added Sandel. "Since there is little overlap in the circumstances, it is vital to assess each circumstance to keep families from slipping through the cracks."
Families were surveyed in five urban medical centers in Baltimore, MD, Minneapolis, MN, Boston, MA, Little Rock, AR, and Philadelphia, PA. All of the families were renters and had public health insurance or were uninsured. The study is published online in Pediatrics.
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