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A.G. Schneiderman Announces Settlement With Cortland Landlord For Allegedly Refusing To Return Over $43,000 In Security Deposits

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
December 14, 2017

Attorney General’s Press Office / 212-416-8060
nyag.pressoffice@ag.ny.gov
Twitter: @AGSchneiderman
 

A.G. SCHNEIDERMAN ANNOUNCES SETTLEMENT WITH CORTLAND LANDLORD FOR ALLEGEDLY REFUSING TO RETURN OVER $43,000 IN SECURITY DEPOSITS 

Landlord Jeff D. Grodinsky And Affiliated Companies Allegedly Failed To Refund Security Deposits To Nearly 100 Students 

Landlord And Affiliated Entities Will Refund Security Deposits To Students, Reform Business Practices And Pay $26,000 In Costs And Penalties, If Settlement is Approved by Court

CORTLAND – Attorney General Eric T. Schneiderman today announced a settlement with Cortland County landlord Jeff D. Grodinsky and several corporate entities that owned and rented at least 36 properties, primarily to students attending the State University of New York at Cortland. As alleged in a petition filed today, Grodinsky—doing business as Vida Social Living, and in affiliation with Cortland Habitats, Inc., College Hill Realty, LLC, Campus Habitats, LLC, Committed 2 Cortland LLC, 77-79 Main Street, LLC, and Walk 2 Class, LLC—failed to return rent security deposits to at least 96 students. In papers filed with the Onondaga County Supreme Court, Grodinsky agreed to settle the matter. This agreement, which requires court approval, would settle an investigation into whether Grodinsky improperly transferred tenants’ deposits to his personal bank accounts and failed to return the deposits to tenants after their leases ended. If approved, Grodinsky and the associated parties will be ordered to refund over $43,000 to former tenants, pay $26,000 in costs and penalties, and reform their practices for handling tenants’ security deposits to comply with New York State law.

“As we allege, this landlord took advantage of college students by treating their security deposits like personal funds and failing to provide refunds,” said Attorney General Schneiderman. “The law protects tenants’ right to their hard-earned money and my office will fight to ensure these renters get the restitution they deserve.”

The Attorney General’s office launched the investigation into Grodinsky after receiving dozens of complaints from Cortland University students who did not receive a security deposit refund. So far, 96 students have filed related complaints with the Attorney General’s office. The investigation revealed that, since at least 2014, Grodinsky failed to maintain rent security deposits in separate interest-bearing accounts as required by New York State law, and appears to have intermixed deposits with his personal funds. In addition, Grodinsky and the affiliated companies failed to return at least $43,770 in deposits to the 96 students.

In 2015, the bank foreclosed on most of Grodinsky’s properties after he defaulted on his mortgage payments. However, by the time the foreclosure proceedings had begun, many student tenants had already signed leases and paid security deposits for the 2015-2016 school year. Grodinksy and the affiliated parties did not turn over any of the security deposits to the foreclosing entity, Visions Federal Credit Union, as required by New York State Law. Grodinsky and Walk 2 Class, LLC d/b/a Vida Social Living, currently own, lease, or manage at least three residential properties in the City of Cortland.

Since then, Grodinsky, Cortland Habitats, Inc., Campus Habitats, LLC, College Hill Realty, LLC, and Committed 2 Cortland, LLC, filed for Chapter 11 Bankruptcy protection in the United State Bankruptcy Court for the Eastern District of New York, where Grodinsky resides. The bankruptcy matters are still pending. If the security deposit refunds are not paid through the bankruptcy proceeding, the settlement agreement—which has been approved by the bankruptcy court—provides that any restitution owed by Grodinsky will not be discharged in bankruptcy, and that he will remain liable for the refunds. 

If approved by the court, the settlement agreement would require Grodinsky to fully comply with Article 7 of the General Obligations Law, pay $26,000 in civil penalties and costs, and provide security deposit refunds totaling $43,770 to 96 students. Consumers who have not already filed a complaint with the Attorney General’s office and believe Jeff Grodinsky may have defrauded them may also be eligible for restitution within the next 90 days. Impacted consumers can file a complaint online or by calling the consumer helpline at 1-800-771-7755.

This case was handled by Assistant Attorney General Judith C. Malkin of the Syracuse Regional Office, with the assistance of Assistant Attorneys General Norman P. Fivel and Louis Testa, of the Civil Recoveries Bureau – Bankruptcy Litigation Unit, and Consumer Frauds Representative Jean Ryan. The Syracuse Regional Office is led by Assistant Attorney General In-Charge Ed Thompson. The Syracuse Regional Office is part of the Division of Regional Offices led by Executive Deputy Attorney General for Regional Affairs Marty Mack.