Real Estate Speculator Sued In Buffalo Housing Scam
Attorney General Spitzer today announced that his office has obtained a restraining order against a real estate speculator who duped dozens of Buffalo residents into paying or agreeing to pay exorbitant prices for dilapidated homes.
NY Liberty Homes, LLC and its operator, Scott Wizig, are accused of purchasing nearly 300 properties in blighted areas in the City of Buffalo and then attempting to sell off the properties to unsuspecting consumers using deceit and fraud. They are further accused of renting properties that are not habitable because they have no heat, hot water, electricity or gas.
"Instead of a revitalizing blighted communities in the City of Buffalo as promised, this firm's actions have resulted in the further decline of these neighborhoods," Spitzer said. "In its zeal to turn a profit, NY Liberty Homes has abused the trust of the community and has forced tenants to live amid uninhabitable conditions."
In the fall of 2000, Wizig founded NY Liberty Homes and purchased at tax auctions hundreds of properties on the East Side, the Lower West Side and the Black Rock areas of the City of Buffalo. In total, Wizig paid approximately $102,000 for 280 properties, and has contracts to sell those properties for nearly $1.1 million, resulting in a 970 percent increase in value and a $996,000 profit. In addition, these contracts provide for lease payments worth over $230,000 plus more than $42,000 in purchase options. These massive mark-ups come after Wizig challenged the assessments on the properties and, in many instances, got the assessed value reduced by 70 to 85 percent.
In addition, Wizig's failure to perform many of the anticipated and promised repairs to the properties has resulted in repeated citations for housing code violations and has forced people to live in deplorable conditions including, at times, no heat or running toilets, leaking roofs, collapsed ceilings, and exposed electrical wires.
"It is intolerable that, as winter is upon us, a landlord would rent properties with no heat." Spitzer said.
Spitzer's investigation revealed that Wizig duped consumers into renting properties and then paying a hefty up-front fee to purchase the properties at exorbitant prices after 18 months.
Worse yet, the leases were riddled with provisions purporting to hold tenants responsible for all repairs that Wizig was required by law to make and forcing them to pay double the cost if Wizig performed the repair.
The complaint alleges that Wizig repeatedly violated a state law that requires sellers to provide Property Condition Disclosure Statements. According to the lawsuit, Wizig did not disclose to buyers that the homes had been cited for housing code violations and, in some instances, that the homes had been cited as lead paint hazards. In addition, according to the Attorney General's complaint, some of the mortgages Wizig granted failed to provide consumers with disclosures required by federal law.
The temporary restraining order issued by State Supreme Court Justice Peter J. Notaro requires Wizig to cure any condition where one of his rental units has no heat. It bars Wizig from: selling, distributing, transferring or disposing of any properties; destroying or disposing of any business records; or evicting tenants or foreclosing on any mortgages until a court can hear the case.
Spitzer's office is seeking, among other things, to:
- Permanently ban NY Liberty Homes and Wizig from using illegal leases;
- Require Wizig to reform all unconscionable leases;
- Rescind any purchase agreement at the consumers option;
- Force Wizig to pay $100,000 into a restitution fund for aggrieved tenants; and
- Require Wizig to post a $100,000 performance bond.
Individuals with complaints against NY Liberty Homes are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.
This case is being handled by Assistant Attorney General James Morrissey of the Buffalo Regional Office.