Baltimore area Kushner real estate must disclose investors

Who is investing in Jared Kushner's Baltimore real estate?

Judge says the Kushner Company Must Reveal Identities of Real Estate Partners ~ By Alec MacGillis

The ruling comes in a class-action lawsuit filed by tenants of Kushner-managed apartment complexes in the Baltimore area.

The lawsuit was filed in Baltimore Circuit Court Wednesday morning by two plaintiffs:  Tenae Smith, who lives in the Dutch Village apartments in Northeast Baltimore, and Howard Smith, (not related) who lives in the Carroll Park apartments in Middle River.

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A federal judge in Maryland ruled Friday that Jared Kushner’s family real estate company could not keep secret the identities of its partners in Baltimore-area apartment complexes that are the subject of a class-action lawsuit by tenants.

The class-action lawsuit was filed in September, following a May article co-published by ProPublica and The New York Times Magazine that described how Kushner Companies have used highly aggressive tactics in pursuing payments from tenants and former tenants of 15 large apartment complexes it owns and manages in the Baltimore area.

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The lawsuit, filed in the Circuit Court for Baltimore City, alleges that the Kushner Companies’ real estate management arm and related corporate entities have been improperly inflating payments owned by tenants by charging them late fees that are often baseless and in excess of state limits and court fees that are not actually approved by any court. The suit alleges that the late fees and court fees set in motion a vicious cycle in which rent payments are partly put toward the fees instead of the actual rent owed, thus deeming the tenant once again “late” on his or her rent payment, leading to yet more late fees and court fees. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges.

Kushner Companies and its co-defendants sought to have the case transferred from state court to federal court, which would spare it from having to face an all-Baltimore City jury. 

To have this transfer approved, the defendants needed to show that none of their ownership partners were residents of Maryland. The defendants requested that their submission of the list of partners be sealed from public view, citing the high degree of media interest in Jared Kushner, President Trump’s son-in-law and senior White House adviser.

“Given the tenor of the media’s reporting of this case, including politically-motivated innuendo no doubt intended to disparage the First Family, there is foreseeable risk of prejudice to the privacy rights and reputations of innocent private investors,” wrote Westminster Management, Kushner Companies’ real estate management arm, in a court filing in November.

This request to seal the partners’ identities was challenged several weeks later in a joint filing by ProPublica, the Baltimore Sun, the Washington Post, the Associated Press, and Baltimore TV station WMAR-TV. They argued that the press had a “presumptive right” to view court documents, and that the Kushner Companies had not identified the “compelling government interest” that is required to block public access.

In his ruling Friday, U.S. District Court Judge James K. Bredar stated that the high level of public interest in Kushner and his business associates if anything enhanced the case for maintaining access to the identities of the defendants in the case.

“The Defendants are no doubt correct that the presence of the Kushner (and therefore Trump) families in this case has raised its profile and attracted significant, though perhaps not ‘unprecedented,’ media attention,” Bedar wrote. “But increased public interest in a case does not, by itself, overcome the presumption of access. In fact, it would logically strengthen it, particularly when the interest is due to the presence of important public figures in the litigation. 

In such an instance, the public’s desire to evaluate the Court’s decision-making is likely augmented. And beyond this apparently inevitable media scrutiny, Defendants have largely relied on ‘vague superlatives’ and insinuations instead of demonstrating specific harms.”

Several recent news reports have given a hint of just how far-reaching the network of investors in the Maryland apartment complexes could be. The New York Times reported earlier this month that Kushner Companies last spring secured a $30 million equity investment in the Baltimore complexes and others of its holdings from Menora Mivtachim, one of Israel’s largest financial institutions, just as Jared Kushner was about to make his first official visit to Israel as President Trump’s designated broker of Israeli-Palestinian negotiations. More recently, a New Yorker article describedthe Kushner Companies’ aggressive pursuit of Chinese investors in its real estate ventures.

In his ruling, Bedar gave the defendants until Feb. 9 to provide the list of their ownership partners. The Kushner Companies could opt instead to return the case to the Circuit Court in Baltimore, if the firm decides the downsides of having to disclose the investment partners in the complexes outweigh the downsides of having the case heard by a Baltimore jury.

A request for comment from Kushner Companies’ spokesman was not immediately returned Friday afternoon. A lawyer for the plaintiff tenants, Andy Freeman, said he and his colleagues on the case had not yet gotten any indication of how Kushner Companies planned to proceed.

“We’re pleased with the ruling. We don’t think that parties to federal litigation should be able to conceal their identity,” Freeman said. He added: “This is just the first step in moving toward justice for the tenants.”