The lawsuit claimed that Westminster Management, an affiliate of Kushner Cos., engaged in “unfair or deceptive trade practices” at 17 residential communities located in Baltimore City, Baltimore County and Prince George’s County.
“The tenants were not wealthy people,” Frosh said at a news conference Friday. “Many struggled to pay rent, keep food on the table, take care of their kids, keep everybody healthy, and Westminster used its vastly superior economic power to take advantage of them.”
While Westminster continues to deny the allegations, the settlement will potentially pay restitution to tens of thousands of current and former tenants.
“Westminster is pleased to have settled this litigation with no admission of liability or wrongdoing,” Peter Febo, Kushner Cos.’ chief operating officer, said in a statement Friday. “We look forward to moving past this matter so that we can focus on our ever-expanding real estate portfolio.”
Frosh said Friday that the company often deceived prospective tenants by showing them model apartments that were freshly painted with new appliances. “But when the tenants packed up all their belongings and showed up on moving day, they were given keys to units that were rundown, units that were moldy, had plumbing leaks, had infestations of pests and malfunctioning HVAC units,” he said.
“Once they were in, they couldn’t afford to get out,” Frosh said. “Westminster took advantage of that.”
Frosh has said the scope of violations and the number of tenants affected in the case are the most severe his office has ever seen. During Friday’s news conference, he held up large photos of units with living conditions that he said “were often just miserable.”
Tiffany Dixon, a mother who lived in a Westminster property with her family for several years, described problems with leaks, mold and rodents. Her youngest son was diagnosed with allergy-induced asthma that she attributed to the mold.
Dixon said one night in 2013 after having issues with her stove, she grabbed a flashlight to take a closer look at some “fluffs” inside the oven. “I realized these fluffs were dead mice that were melted into our oven that I had fed our family with for four years,” she said.
“I expected to receive services that we paid for, to be able to provide, at the very least, for our kids a safe and health home,” Dixon said. “And as a mom, I feel like with Westminster, I failed.”
Several months before the lawsuit was filed, when Trump characterized the late Democratic Rep. Elijah E. Cummings’s Baltimore-based congressional district as a “rodent infested mess,” Baltimore County Executive Johnny Olszewski Jr. (D) called the insults ironic, pointing to the allegations of neglect and disrepair at Kushner’s properties.
The Kushner family has been the subject of fierce scrutiny and criticism in parts of Maryland, where it manages a wide portfolio of apartment complexes. In 2017, Baltimore County officials revealed that Kushner Cos. properties were cited for more than 200 code violations in a calendar year.
Kushner stepped down as chief executive of Kushner Cos. in 2017 when he became a senior White House adviser to Trump.
The settlement requires Westminster to return what the suit said were excessive application fees, small credit balances the company improperly retained and unpaid security deposit interest. It lays out a procedure under which current and former tenants can make claims to a special master, who can return rent to those who faced serious maintenance issues like leaks or bedbug infestations.
The agreement says nothing in it “shall be construed as an admission or concession that [Westminster] violated any law, rule, or regulation.”
Asked about that at the news conference, Frosh smiled. “You don’t pay $3,250,000 bucks if you’re not liable, the administrative law judge found that they were liable,” he said. “So they may not have formally signed a piece of paper saying, ‘We did it,’ but they did.”