ATTORNEY GENERAL OF THE STATE OF NEW YORK, CONSUMER FRAUDS AND PROTECTION BUREAU In the Matter of ‘Assurance No, 17-054 Investigation by ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, of SMA Equities, LLC, 22 Spring SM, LLC, 22 Spring SMSIS, LLC, 102 Norfolk Street, LLC, 102 Norfolk Street SM, LLC, SM Stanton, LLC, SMSIS Rivington, LLC, SMBRO Rivington, LLC, Respondents. ASSURANCE OF DISCONTINUANC The Office of the Attomey General of the State of New York (*NYAG"} commenced an investigation pursuant to New York Executive Law § 63(12) and New York General Business Law § 349 into whether any person has engaged in repeated or persistent fraudulent, illegal or fs ive conduct in the ownership, operation or management of the following residential properties: (i) 22 Spring Street, New York, New York (“22 Spring Street”); (ii) 102 Norfolk Street, New York, New York (102 Norfolk Street”); (iti) 113 Stanton Street, New York, New York (“113 Stanton Street”); and (iv) 210 Rivington Street, New York, New York (“210 Rivington Street”) (collectively, the “Subject Properties”) This Assurance of Discontinuance (“Assurance”) contains the findings of NYAG'sinvestigation and the relief agreed to by NYAG and SMA Equities, LLC; 22 Spring Street SM, LLC; 22 Spring SMSIS, LLC; 102 Norfolk Street, LLC; 102 Norfolk Street SM, LLC; SM Stanton, LLC; SMBRO ington, LLC; and SMSIS Rivington, LLC (collectively, the ‘espondents”) and Sassan Mahfar, a/k/a Samy Mahfar, and Sina Mahfar. NYAG’s FINDINGS Overview of the Parties and Investigation 1, Respondents are New York limited liability corporations that share the same address at 185 Great Neck Road, Suite 250, Great Neck, New York 11021. SMA Equities, LLC is registered as the managing agent for 22 Spring Street, 102 Norfolk Street, and 113 Stanton Street, and was previously registered as the managing agent for 210 Rivington Street, Collectively, these limited liabitity corporations are the owners (or former owners, in the ease of 210 Rivington Street) of the subject properties. 2. All of the subject properties are located on the Lower East Side of Manhattan, and are occupict! in part by tenants protected by New York’s rent-regulation laws. Some of these tenants are Chinese and Spanish-speaking immigrants with limited English proficiency who have lived and raised families in these buildings for many years. 3. NYAG and other government officials received complaints from tenants and, community-based non-profit organizations about unsafe conditions nd harassment in these buildings. 4, Tenants alleged, among other things, that Respondents engaged in unsafe. demolition and construction that failed to comply with federal, state and local laws and regulations, thereby exposing tenants to lead and other indoor air pollution hazards; ignored rent- Page 2 of 23regulated tenants” requests for repairs; failed to correct violations of the Housing Maintenance Code in rent-regulated apartments; failed to provide required services to rent-regulated tenants; failed to provide renewal leases to rent-regulated tenants in a timely manmer, and engaged a tenant refocator to harass residents with repeated buyout offers, misleading information and threats to their quality of life. 5. Tenants alleged that Respondents’ campaign of illegal and deceptive practices \was intended to wear rent-reyulated tenants down and convince them to accept buyout offers and/or vacate their apartments. Numerous tenants in these buildings did, in fact, sign buyout agreements with Respondents; some of these agreements were negotiated by a tenant relocation specialist who was later penalized by NYAG for unlawful harassment, As rent-regulated apartments in the subject properties were vacated, Respondents would conduct further unsafe construction work in the vacant units, in order to raise the legally regulated rent for these apartments or deregulate them entirely Respondents’ Pattern of Unlawful and Unsafe Construction Practices ©. Inspections by the New York City Department of Health and Mental Hygicne (DOHMH) have found that Respondents’ demolition and construction work repeatedly failed to comply with federal, state and local requirements for protecting the health and safety of building occupants. 7. Despite the presence of lead in these buildings, Respondents repeatedly failed to comply with the federal Renovation, Repair, and Painting Rule (“RRP Rule”), 40 C.F.R. §§ 745.80 to 745.92, or the lead-safe work practice rules promulgated by the New York City Department of Housing Preservation and Development (“HPD”) pursuant to New York City Administrative Code § 27-2056.11. As a result, construetion work resulted in air quality levels Page 3 of 23,that did not comply with law and put residents’ health at risk. 8. Some of the subject properties have been occupied by small children and/or pregnant women during the period in question. The National Institutes of Health (“NIH”) warns that any level of lead exposure is unsafe for children or adults, but that lead is particularly dangerous for young children and fetuses. NIH cautions that even low levels of lead exposure in children can lead to “decreased academic achievement, decreased IQ, and decreases in specific cognitive measures,” as well as “increased incidence of attention-related behaviors and problem behaviors.” See National Institutes of Health, Fact Sheet on Lead, http:/vww.niehs.nih.gov/health/topics/agents/lead/ (last visited March 16, 2016). 9, Tenants repeatedly complained to the DOMH and other public officials about, unsafe construction practices in all four ofthe subject properties. DOHMH inspections found, on multiple occasions, lead-contaminated construction and debris throughout the buildings” ‘common areas, requiring repeated stop-work orders and immediate remediation measures. in November 2013, DOHMH responded to a tenant’s complaint that unsafe construction work at 22 Spring Street was exposing children ane ather residents to unsafe dust and construction debris. An inspector confirmed that workers were failing to contain construction dust or to clean up the building at the end of the day. in violation of federal Environmental Protection Agency (EPA) safety guidelines and other applicable laws and regulations. ‘The inspector took dust wipe samples on every floor of the building, from the entrance foyer to the fifth-floor public hallway. Each one of these samples tested positive for lead dust concentrations far above the limits set by the New York City Health Code, 10. Respondents subsequently failed to respond to multiple DOHMH notices asking {or confirmation that all lead dust had been cleared from the building. As a result, HPD Page 4 of 23inspectors were required to visit the building to conduct the required clearance testing. 11, In February 2014, DOHMH responded to complaints of unsafe work practices at 210 Rivington Street. This inspection also found construction dust and debris polluting the building’s common areas and hallways; eight out of 19 dust wipe samples tested positive for unsafe concentrations of lead. DOHMH ordered Respondents to cease work, clean the building and begin employing safe work practices 12. Despite these orders, an October 2014 inspection of 210 Rivington found impermissibly high levels of lead contamination and construction dust, again requiring DOHMH to order Respondeats to cease work and begin using lead-safe work practices, 13. In December 2014, after these repeated violations and Respondents’ failure once again to submit required clearance test results, DOHMH required Respondents SMA Equities to submit a work safety plan for approval before any additional construction work could resume at 210 Rivington Street. DOHMH also brought administrative actions against Respondents SMA Equities for failing to abide by the Department's lead safety requisements and for failing to protect tenants from exposure to construction dust. 14. DOHMH identified similar problems at 102 Norfolk Street. An April 2014 inspection found construction dust polluting the building’s stairs, with lead levels as high as 40,000 micrograms per square foot and 110,000 micrograms per square foot. Under the New York City Health Code, the limit for lead concentration on floors is 40 micrograms per square foot. 15, DOHMH’ inspector complained in his April 2014 report that Respondents attempted to interfere with the inspection of 102 Norfolk Street. The report stated that a security guard stationed at the building initially blocked this inspector from entering the building, Page 5 of 23requiring him to seek the assistance of the New York City Police Department to gain access. DOBMU’s inspector also reported that while he was conducting the lead tests, one of the Respondent's agents accosted him and accused him of trespassing. DOHMH's subsequent June 2014 inspection of 102 Norfolk Street again found lead dust contamination at concentrations up to 18 times acceptable levels. 16. Despite Respondents’ promises that they would correct these unlawful practices, they continued this pattern of unsafe construction work affer purchasing 113 Stanton Street in September 2014. 17, In January 20) Respondents provided a lead mitigation plan to the residents of 113 Stanton Stree after these tenants sought assurances that their health and safety would be protected in light of reports of hazardous construction in other buildings owned by Respondents. ‘The lead mitigation plan promised, among other things, that construction workers would use negative air pressure to prevent dust from escaping work spaces; wrap debris in 6-milimeter thick plastic bags before taking it out of work areas; and use HEPA vacuums to clean up dust. 18, Tenants at 113 Stanton Street complained that these protections were not followed ‘once work began. A February 2015 DOHMH inspection of 113 Stanton Street confirmed that these protections were not being implemented properly, because construction dust with high concentrations of lead could be found throughout the building, 19. In addition to the lead exposute risks documented by DOHMH’s numerous inspections, tenants complained that Respondents’ demolition and construction caused other significant health problems. For example, a high school student living at 210 Rivington Street reported suffering asthma attacks (resulting in emergency room visits) that his family believes were triggered by the lead-contaminated construction dust. A senior citizen living in the same Page 6 of 23infections. building alleges that the dust caused him to suffer painful ey. 20, New York City Department of Building (DOB) records also show that Respondents failed to seek permits properly for all of this construction work. Building owners seeking construction permits from the DOB must file a Plan/Work Application (commonly known as a “PWI” form) that describes the existing building conditions, the planned construction work and the rent registration status of the units in the building, At 22 Spring Street, 210 Rivington Street and 102 Norfolk Street, Respondents filed PW! forms with the DOB that ‘misrepresented the occupancy status of the buildings, by falsely asserting that the buildings" ‘occupants were not protected by rent control or rent stabilization. By filing erroneous and false permit applications and forms, Respondents may have violated New York Penal Law § 210.45. which prohibits the making of false written statements on any form, such as DOB permit forms, that contains a notice to the effect that false statements made therein are punishable. 21, DOB has also issued multiple violations and stop-work orders to Respondents for ‘engaging in work without the proper permits or for performing work outside the scope of sch permits in the subject properties. Respondents have violated NYC Administrative Code § 28- 105.1, which makes it unlawful to engage in many forms of construction, repair or building modifications “unless and until a written permit therefore shall have been issued” by the Department of Buildings. ‘Tenant Harassment and Violations of Rent Regulation Laws 22, In addition to Respondents’ unsafe construction practices, Respondents have engaged in other practices designed to induce rent-regulated tenants to vacate their apartments so ‘that Respondents could seek substantial rent increases on the vacated apartments, including, seeking to induce rent-regulated tenants to aocept buyouts of their leases. When tenants have not Page 7 of 23,accepted buyout offers voluntarily, Respondents have resorted to pressure tacties and harassment, This harassment has allegedly included the ereation of an unhealthy environment through the unsafe demotition and constructions practices described above. 23, Respondents have also hired a tenant relovator, Misidor LLC, to negotiate tenant ‘buyouts at 22 Spring Street and 210 Rivington Street. Between 2013 and 2014, Misidor’s principal Michel Pimienta billed Respondents for at least $50,000 in financial bonuses for convincing tenants in the subject properties to accept buyouts and sign agreements to vacate. 24. Tenants in the subject properties allege that Pimienta, as Respondents” agent and on their behalf, repeatedly engaged in unlawful tenant harassment prohibited by the Rent Stabilization Code (9 NYCRR § 2525.5) and New York City Administrative Code § 27- 2004(48). 25. Pimienta repeatedly harassed tenants through unwanted contact. He and others threatened that, if tenants did not accept buyout offers, then they would suffer through unsafe and disruptive construction in their building, Tenants who refused to give up their tenancy rights have, indeed, been forced 1 live through unsafe construction that has disrupted building services and exposed residents to lead contamination and other indoor air pollution. Respondent reports {terminating its relationship with Misidor and Pimienta in August 2014. 26. In October 2014, NYAG reached a settlement with Pimiienta and his company. Misidor LLC, for engaging in unlawful activity, including harassing tenants into accepting buyouts. The settlement included financial penalties against Misidor and a suspension of the company’s tenant relocation work, Page 8 of 2327. Tenants have complained of other unlawful conduct since Respondents purchased the subject properties. For example, New York's Rent Stabilization Law and Rent Stabilization Code require landlords to offer rent-regulated tenants a renewal lease on the same terms and ‘conditions as their prior lease, and at the Legully-permitted regulated rent, between 90 and 150 days before the expiration of the previous Tease term. Respondents have allegedly failed to provide some tenants with required renewal leases in a timely fashion. 28. Respondents have failed to correct pending Housing Maintenance Code violations ‘on the subject properties in a timely manner as required by law. Respondents repeatedly ignored repair needs in rent-regulated apartments after they purchased the buildings, with some tenants living in unsafe apartments subject to significant Housing Maintenance Code violations, even while Respondents invested hundreds of thousands of dollars to renovate vacant apartments in the same buildings. Tenants have also complained that Respondents have sought access to their apartments fo repairs or other purposes without providing adequate notice. Tenants in each building commenced an HP Proceeding in the Housing Part of the Civil Court of the City of New ‘York as set forth in paragraph 35 below which resulted in a negotiated settlement of tenants’ claims, including, but not limited to, a schedule for access and repairs. Work pursuant to that agreement is ongoing and a majority of the violations have been cleared, Page 9 of 2329, Tenants ave also complained of a loss of services during Respondents’ ownership and management of the subject properties. For instance, tenants at 102 Norfolk Street and 22 Spring Street lived without working intercom service for months, Tenants have complained of the loss of electricity, heat and hot water without notice due to Respondents? construction, as well as utility overcharges relating to construction work, Tenants have at times lacked on-site janitorial services in violation of N.Y, Multiple Dwellings Law § 83 and New York City Administrative Code § 27-2053. 30. In addition to failing to acknowledge the occupancy of rent-regulated tenants in their building permit applications, Respondents have failed to comply fully with the registration requirements of New York’s rent-tegulation laws. Respondents failed to register 22 Spring Street for 2012 and 2013 with the New York State Homes and Community Renewal, in violation of the Rent Stabilization Code, 9 NYCRR § 2509.2. Respondents also failed to file a timely annual registration statement for 22 Spring Street for 2014 with HPD, in violation of New York City Administrative Code § 27-2097 31, Rent-regulated tenants in the subject properties filed litigation against Respondents (among others) in New York City Housing Court to prevent these and other ‘unlawful activities from continuing, See Alarcon v. Mahar, Index No. HP 401/2015 (N.Y. County Civil Court, filed Feb. 19, 2015), Wai ». Mahfar, Index No, HP 900/2015 (N.Y. County Civil Court, filed Apr. 16, 2015); Fernandes v. Mahfar, Index. No. HP 961/2015 (N.Y. County Civil Cour, filed Apr. 16, 2015); Caltabiano v. Mahar, Index No. HP 902/2015 (N.Y. County Civil Court, filed Apr. 16, 2015), Petitioners alleged, among other things, that Respondents were harassing tenants in violation of the New York City Tenant Protestion Act (Local Law 7 of 2008, as coditied at N.Y.C. Admin, Code § 27-2004(a)(48)); failing to comply with federal, state and Page 10 of 23local requirements for tead-safe construction practices; and failing to perform necessary repairs in their apartments. On February 25, 2016, the parties to these lawsuits agreed to court-approved settlements. Among other settlement terms, Respondents pledged to make all necessary repairs in Petitioners” apartments in a timely manner and provided rent abatements as restitution for the Petitioners’ warranty of habitability claims, as well as agreeing not to apply to increase rents to reflect certain major capital improvements completed in the buildings. 32. By engaging in unsafe demolition and construction work that violated federal, state and local laws and regulations; harassing rent-regulated tenants in violation of the Rent Stabilization Code and the New York City Tenant Protection Act (Local Law 7 of 2008); failing to comtect violations of the Housing Maintenance Code in a timely manner; failing to comply fully with the Rent Stabilizs fon Law and Rent Stabilization Code: and failing to comply fully with the New York State Property Maintenance Code, Multiple Dwelling Law and Real Property Law, Respondents have engaged in deceptive aets and practices in violation of New York General Business Law § 349 and repeated and persistent fraudulent and illegal conduct in violation of Executive Law § 63(12), Page 11 of 23WHEREAS, the Respondents neither admit nor deny NYAG’s Findings (1)-(32) above; WHEREAS, NYAG is willing to accept the terms of this Assurance pursuant to Executive Law § 63(15) and to discontinue its investigation; and WHEREAS, each party believes that the obligations imposed by this Assurance are prudent and appropriate; IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES: PARTIES SUBJECT TO THIS ASSURANCE 33. This Assurance shall apply to Respondents SMA Equities, LLC, 22 Spring Street SM, LLC, 22 Spring SMSIS, LLC, 102 Norfolk Street. LLC, 102 Norfolk Street SM, LLC, SM Stanton, LLC, SMBRO Rivington, LLC, and SMSIS Rivington, LLC, and their principals, directors, officers, suc s50TS, assigns, employees, agents, contractors or any person under their direction or control, whether acting individually or in concert with others, or through any corporate or other entity or device through which one or more of them may now or hereafter act or conduct a business (“Controlled Persons"). 34, This Assurance shall apply i) to newly-constructed residential buildings except to the extent that it would impose legal or regulatory requirements facially inapplicable to newly- constructed buildings and ii) to any future acquisitions of residential properties, to the extent that the Respondents, individually or in combination, either acquire a majority interest or have day- to-day control of the management of same. 35. Notwithstanding paragraphs 33 and 34 above, this Assurance shall not apply to ‘any building presently or in the future owned by the Respondents upon the arms-length sale at fair market value of any such building to a third party with no affiliation with Respondents and Page 12 of 23which does not otherwise qualify as a Controlled Person. 36. PROSPECTIVE RELIEF Respondents shall fully comply with all applicable laws governing the legal rights ‘of tenants in properties owned by Respondents and intended to protect the health and safety of tenants, including, but not limited to, the: 37, a, Federal Renovation, Repair, and Painting Rule (“RRP Rule”), 40 CR. §§ 745.80 to 745.92; b, New York State Property Maintenance Code, 19 NYCRR Part 1226; c. New York State Multiple Dwelling Law, Title 3 (“Sanitation and Health Law”), d._ New York State Real Property Law, Article 7 (“Landlord and Tenant Law”); ¢. New York City Housing Maintenance Code, NYC Admin, Code §§ 2 2001. et seq; f. New York City Childhood Lead Poisoning Prevention Act (Local Law I of 2004), NYC Admin, Code §§ 27-2056.1, et sea; g. New York City Rent Stabilization Law, NYC Admin. Code §§ 26-501, et seq.; and bh, New York City Rent Stabilization Code, 9 NYCRR $§ 2520.1, et seq, Respondents shall ensure that all construction, demolition, repair and alteration work in all buildings owned by Respondents, Sassan Mahfar, or Sina Mahar is fully compliant ‘with applicable tenant protection plans, lead mitigation plans and any other federal, state and local requirements, including the EPA’s lead: 745 80, et seq.) and HPD’s lead-safe work practices (issued pursuant to NYC Admin. Code § 2" safe: work practices (as described at 40 C.F.R § Page 13 of 232056.11), to the extent applicable. 38. For the purpose of implementing these laws and regulations, Respondents shall conduct work in vacant apartments that will disturb lead-based paint or paint presumed to contain lead using the same protective measures required for work conducted in common areas, in order to ensure worker safety and to protect all residents from exposure to lead or construction dust. These lead-safe work practices include, but are not limited to: a. Employing construction firms and workers who have been certified by the EPA in lead-sate work practices; b. Posting notices in the building lobby to advise residents of lead-safe renovation requirements no less than 24 hours prior to commencing work; c. Testing for lead dust as required by law; 4. Sealing off work areas with plastic sheeting to protect building occupants from ‘exposure to construction dust or materials: ¢. Using HEPA air scrubbers and other ventilation protections as required by law; £. Keeping all construction debris and waste bagged and wet during work and disposing of all waste promptly, g Wet mopping and HEPA vacuuming work areas and surrounding areas; and h. Complying with any other saféty and health measures described in applicable laws and regulations, 39. Respondents shall not interrupt a tenant’s essential services such as heat, electricity, water, hot water and/or gas without first giving forty-eight (48) hours advance notice to the tenant(s), except where exigent or emergeney circumstances exist that require immediate repair or interruption of essential services and that prevent respondents from giving such notice, Page 14 of 23,In such cases, Respondents shall give as much advance notice as is reasonably practicable and, in any event, shall notify the affected tenant(s) within twenty-four (24) hours of the beginning of the repairs or interruption. This notification shall include: the reason for the repairs or interruption of essential service and the estimated time frame forthe repairs or interruption, 40. Respondents shall conduct all repairs, renovations, and construction in an efficient and workpersonlike manner, providing reasonable advance notice to affected tenants. \ge in repaits, renovations or construction work or interruption of Respondents shall not en essential services (such as heat, electricity, water, hot water and/or gas) in a manner that is intended, in whole or in part (including through the timing of orextent of the repairs or interruption or through repeated and unreasonable failure to perform repairs during the time scheduled), to harass, frustrate or pressure tenants to leave their regulated apartments, 41, Respondents shall not engage in any repair, renovation or construction work in any building without first obtaining all requited DOB permits, or engage in any repair, renovation or construction that requires a pemnit, but is outside the scope of the DOB permits actually obtained. 42, Respondents shall not file any materially incorrect or erroneous statements on any application, form or other paper submitted to the DOB or the New York State Division of, Housing and Community Renewal, including incorrectly stating the occupancy status or ren regulated status of any apartment. 43, Respondents shall not engage any contractors, sub-contractors, plumbers, clectricians, construction workers or employees for any repair, renovation, construction or service work who are not properly licensed and certified as required by law, 44, Respondents shall correct all violations of the Housing Maintenance Code upon Page 15 of 23receipt of notice of that violation, and within the time period required by law, subject to tenants providing access on a reasonable basis. 45. Respondents shall ensure that written communications are translated into all necessary languages for tenants with limited English proficiency, and that oral communications ‘with tenants with limited English proficiency are conducted in a manner that ensures that tenants fully understand all communications. 46. Respondents shall comply with any federal, state or local law that places limits on offers of money or other valuable consideration to induce any person lawfully entitled to ‘occupancy of a rent-stabilized or rent-controlled unit or to surrender or waive any rights in relation to such occupancy or similar offers (“Surrender Agreements”) offered or suggested to tenants, including New York City Local Laws 81, 82 and 83 of 2015, as codified at NYC Admin, Code §§ 27-2004(48)(F-1)-(F3). Respondents’ compliance shall include, but not be limited to, providing all tenant buyout offers in writing; accompanying buyout offers with a full disclosure of tenants” rights, including the right to refuse the buyout; refraining from offering any additional buyouts to tenants for 180 days if asked to do so in writing: and not using threats, intimidation, frequent and persistent communication or any false information or misrepresentations in the course of making a buyout offer. 47, Respondents shall not make an offer or suggestion of a Surrender Agreement to a tenant with limited English proficiency without the presence of a translator that speaks the tenant's primary language. 48. Respondents shall not sign a written Surrender Agreement with a tenant with limited English proficiency that has not been translated into the tenant's primary language. 49, Respondents shall not take any retaliatory action whatsoever against a Tenant Page 16 of 23who rejects or refuses a Surrender Agreement offer; 50. Respondents shall not engage in any harassment against tenants, as defined by federal, state and local law, including the Rent Stabilization Code (9 NYCRR § 5.5) and NYC Admin. Code § 27-2004(48), and including any act or omission that causes or is intended to cause any person lawfully entitled to oceupaney of a dwelling unit to vacate such dwelling unit or to surrender or waive any ri hts in relation to such occupaney. SI. Respondents shall provide appropriate janitorial services, including, where required, by providing a janitor or building superintendent who lives on-site or within the required distance, in compliance with N.Y. Multiple Dwellings Law § 83 and NYC Admin, Code § 27-2053. 52. Respondents shall ensure that the gas and electric meters servicing the common areas of the subject properties are not connected to any individual apartment meters and shall not reconnect any such meters to individual apartment meters in the future. 53. Respondents shall maintain the security deposit of each tenant in an interest- bearing account in a bank located in New York State, in accordance with New York General Obligations Law § 7-103 and New York Code, Rules and Regulations title 9, § 2525.4(a). To the extent any tenant fails or refuses to provide Respondents with a W-9 form, Respondents shall be in compliance herewith so long as such security deposit is held in a general, segregated security deposit account and not in tenant's individual name. 54. Respondents shall return the security deposit of a rent stabilized tenant who vacates a unit, regardless of whether any of them received that sum from the previous owner or landlord, as required under New York General Obligation Law § 7-107(2)(a). Page 17 of 2355. Respondents shall not hire Misidor LLC, Michel Pimienta or any company owned, operated or controlled by Pimienta, to perform any services related to the Subject Properties. Respondents shall also offer reasonable cooperation with any government entity engaging in any investigation of or litigation with Misidor LLC or Pi jenta related to any activities by Misidor LLC or Pimienta connected, in whole or in part, to the subject properties. 56. Respondents agree to hire within ninety (90) days of the effective date of this Assurance a property management company chosen from a list reasonably approved by NYAG to manage the Subject Properties (excluding 210 Rivington Street) under customary terms and conditions and in accordance with the terms of this Assurance at least until this Assurance expires. This property management company may not at any time be or become a Controlled Person (except to the extent that it qualifies as a Controlled Person solely because of its contract to manage the Subject Properties in compliance with the terms of this Assurance). While Respondents may terminate the contract with this company to manage any Subject Property upon reasonable grounds, they must report this termination promptly to NYAG and choose a replacement within ninety (90) days of the termination of the contract, in the same manner and under the same restrictions. MONETARY PENALTIES AND RESTITUTION FUND 57. Within 5 business days, Respondents will pay by wire transfer the sum of $175,000 to the New York City Department of Housing Preservation and Development (“HPD” for lead remediation and/or enforcement and $50,000 to the State of New York for penalties, fees and costs. 58. Any payments and all correspondence related to this Assurance must reference ‘Assurance #17-054. Page 18 of 23MISCELLANEOUS, 59. This Assurance shall expire as of three years from its effective date, unless, prior to that date, NYAG has made a determination, in its reasonable discretion, that Respondents have materially violated its terms. If the NYAG makes such a determination, this Assurance (including the provision allowing for its automatic extension) shall automatically be extended for an additional three years from the date on which it would otherwise have expired. Such automatic extensions may continue to occur until the Assurance expires with no further material violation ofits terms. The expiration of this Assurance in no way affects Respondents’ ongoing obligations to comply with all applicable laws and regulations. 60. NYAG has agreed to the terms of this Assurance based on, among other things, the representations made to NYAG by Respondents and their counsel and NYAG's own factual investigation as set forth in Findings (1)-(32) above, To the extent that any material representation is later found to be inaccurate or misleading, this Assurance is voidable by the NYAG in its sole discretion. 61. Ifthe Assurance is voided or breached, Respondents agree that any statute of limitations or other time-related defenses applicable to the subject of the Assurance and any claims arising from or relating thereto are tolled from and after the date of this Assurance. In the event the Assurance is voided or breached, Respondents expressly agree and acknowledge that this Assurance shall in no way bar or otherwise preclude NY AG from commencing, conducting or prosecuting any investigation, action or proceeding, however denominated, related to the Assurance, against Respondents or from using in any way any statements, documents or other materials produced or provided by Respondents prior to or after the date of this Assurance. 62. No representation, inducement, promise, understanding, condition, or warranty Page 19 of 23not set forth in this Assurance has been made to of r upon by Respondents in agreeing to this Assurance, 63. Respondents represent and warrant, through the signatures below, that the terms and conditions of this Assurance are duly approved, and execution of this Assurance is duly authorized. Respondents shall not take any action or make any statement denying, directly or indirectly, the propriety of this Assurance or expressing the view that this Assurance is without factual basis. Nothing in this paragraph affects Respondents’ (i) testimonial obligations or (i) right to take legal or factual positions in defense of litigation or other legal proceedings to which. NYAG is not a party. This Assurance is not intended, and should not be construed, as an admission of liability by Respondents. 64. ‘This Assurance may not be amended except by an instrument in writing signed on behalf of all the parties to this Assurance. 65. This Assurance shall be binding on and inure to the benefit of the parties to this Assurance and their respective successors and assigns as provided for in this Assurance, provided that no party, other than NYAG, may assign, delegate, or otherwise transfer any of its rights or obligations under this Assurance without the prior written consent of NYAG. 66. Inthe event that any one or more of the provisions contained in this Assurance shall for any reason be held to be invalid, illegal, or unenforceable in any respect, in the sole discretion of the NYAG such invalidity, illegality, or unenforceability shall not affect any other provision of this Assurance. 67. To the extent not already provided under this Assurance, Respondents shall, upon request by NYAG, provide all documentation and information necessary for NYAG to verify compliance with this Assurance Page 20 of 23,68. All notices, reports, requests, and other communications to any party pursuant to this Assurance shall be in writing and shall be directed by fax and overnight mail as follows: If to the Respondents to: Deborah Riegel Rosenberg & Estis, PC 733 Third Avenue New York, New York 10017 Ifto the NYAG, to: Sarah Trombley, Assistant Attomey General Office of the New York State Attomey General Consumer Frauds and Protection Bureat. 120 Broadway, 3rd Floor New York, NY 10271 69. Acceptance of this Assurance by NYAG shall not be deemed approval by NYAG. of any of the practices or procedures referenced herein, and Respondents shall make no representation to the contrary. 70. Pursuant to Executive Law § 63(15), evidence of a violation of this Assurance shall constitute prima facie proof of violation of the applicable law in any action or proceeding thereafter commenced by NYAG. 71, Ifa court of competent jurisdiction determines that any Respondent has breached this Assurance, Respondents shall pay to NYAG the cost, if any, of such determination and of enforcing this Assurance, including, without limitation, legal fees, expenses, and court costs. 72, The NYAG finds the relief and agreements contained in this Assurance appropriate and in the public interest. The NYAG is willing to accept this Assurance pursuant to Executive Law § 63(15), in lieu of commencing a statutory proceeding. This Assurance shall be govemed by the laws of the State of New York without regard to any conflict of laws principles. Page 21 of 2373. Nothing contained herein shall be construed as to deprive any person of any private right under the law. 74. This Assurance may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement. 75, Sassan Mahfar, a/k/a Samy Mahfar, is the President of SMA Equities, LLC, and co-owner or shareholder of all the Respondents herein, Sina Mabfar is also a co-owner or shareholder of some of the Respondents herein. (Samy and Sina Mahfar are collectively referred to as “Individuals.”) The Individuals have been represented by counsel in connection with this, AOD. They have read, understand, and agree to be bound by the terms of this AOD, including, without limitation, the provisions relating to paragraph 36. Any principals, directors, officers, successor assigns, employees, agents, contractors or any person under the Individuals’ direction or control, whether acting individually or in concert with others, or through any corporate or ‘other entity or device through which one or more of them may now or hereafter act or conduct a business, shall also qualify as a Controlled Person to whom the terms of the Assurance will apply, but only to the extent that they apply to any other Controlled Person, {SIGNATURE PAGE FOLLOWS] Page 22 of 23IN WITNESS WHEREOF, this Assurance is execited by the parties hereto on aon Page 23 of 23, ERIC T. SCHNEIDERMAN Attomey General of the State of New York 120 Broadway New York, NY 14271 Consumer Frauds and Protection Bureau By: —_— Sarah Trombley Assistant Atorney General ROSENBERG & ESTIS, 9. gy: cboaah bh Deborah Riegel, Esq ‘Counsel for Respondents, ute 7 22 SPRING SM, LLC 22 SPRING SMSIS LLC 102 NORFOLK STREET LLC 102 NORFOLK STREET SM LLC SM STANTON LLC SMSIS RIVINGTON LLC SMBRO RIVINGTON LLC SMA EQUITIES LLC ee —si Sessan Mat ivigualy and 3 or oF Respondents CE ee Sina Maia individually nd as oom oF Respondents