About a month ago, fellow Homescape blogger Frank Schulte-Ladbeck, wrote a great post alerting our readers about real estate and apartment scams on Craigslist.org, the popular classified advertising Web site. While the Internet can be an easy breeding ground for scammers, law officials across the country have started to aggressively seek out these online criminals.
Busted
New York Attorney General Andrew M. Cuomo announced last Thursday that an undercover investigation found a New York City company acting as an apartment broker used bait-and-switch schemes on Craigslist to bilk 4,000 New Yorkers out of nearly $1 million dollars. The investigation led the attorney general's office to bring criminal charges against Innovative Apartments and Screening Services Inc. for scheming to defraud customers and operating without a license.
Igor "Bobby" Portnov, Boris "Brian" Portnov, Nader Jaber, all of Teaneck, NJ, and Brooke Corio of Staten Island were charged with felony fraud for a scheme that enticed people in search of rentals to pay hundreds in bogus search fees.
Cuomo revealed that his office's undercover investigation found Innovative Apartments charged customers $200 for credit reports and background checks that were never conducted, and advertised "exclusive" listings on Craigslist.org that were actually apartments that did not exist.
The scam
The investigation discovered that from December 18, 2005, to May 21, 2008, Innovative Apartments advertised no-fee rental apartments in various New York City neighborhoods on Craigslist. When apartment hunters called to inquire about those apartments, they were told by Innovative Apartments that they needed to pay a fee of approximately $200 for Innovative's services.
The fee was to be allegedly used for credit reports and background checks, as well as access to no-fee apartment listings via e-mail and Innovative's online database. Customers were told that Innovative had many exclusive listings that matched the customers' criteria. In fact, Innovative rarely ran credit reports or completed background checks, instead pocketing the $200 fee.
Investigators also alleged that Innovative failed to update their Web site and only e-mailed customers a handful of listings, none of which were exclusive. Moreover, the listings were often recycled from other Craigslist.org advertisements, described non-existent or unavailable apartments or advertised apartments that required the payment of fees.
Throughout this scheme, the defendants allegedly obtained over $900,000 from more than 4,000 customers. When customers tried to obtain a refund, Innovative's employees routinely ignored their requests, provided only a partial refund, or issued bad checks that did not clear.
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