Inside the rise and fall of a multimillion-dollar Airbnb scheme
Multiple misleading identities, more than 100 host accounts and 18 corporations were created to run an illegal hotel business in Manhattan, according to a lawsuit filed by the city.
From the outside, there was nothing especially notable about the small white building on the corner of a cobblestone street in TriBeCa. But until recently, it was a crucial location in a sprawling empire.
Two of the three apartments in the building were popular with tourists looking to stay in one of Manhattan’s most desirable neighborhoods — at $600 a night each, they were a bargain for a large group.
But they were also illegal — part of an elaborate real estate scheme to make millions by circumventing state and local laws and Airbnb’s own rules.
The building, on Greenwich Street, was part of a larger enterprise that made more than $20 million in revenue by unlawfully renting 130 Manhattan apartments to almost 76,000 guests through Airbnb, city officials said.
The plot was geared toward getting around city regulations that are intended to keep blocks of apartments from being turned into makeshift hotels that avoid lodging taxes and oversight.
The crackdown on the empire last month was a milestone in the escalating battle between Airbnb and New York City — the company’s largest market in the country. Airbnb condemned the exploitation of its platform, but the scheme showed how the home-sharing site has given opportunists a new kind of hustle.
Airbnb has clashed with other cities. Los Angeles, Amsterdam, Parisand Vancouver, British Columbia, have all passed laws restricting Airbnb rentals. In July, Palma de Mallorca became the first city in Spain to ban Airbnb.
According to the suit, the ring used multiple misleading identities to dodge Airbnb’s rules, text tourists and book apartments to budget-minded travelers. Addresses were fudged to avoid scrutiny. A cadre of cleaners was apparently recruited through Facebook.
In all, more than 100 Airbnb host accounts and 18 corporations were created to run an illegal hotel business that stretched north from TriBeCa to SoHo, Gramercy, the Upper East Side and Harlem, according to a lawsuit brought by the city.
New York regulations are supposed to keep apartments from being pulled out of an already-tight rental market to cater to the tourist trade. They specify that it is illegal to rent an entire apartment in most buildings for fewer than 30 days unless the permanent tenant is present while the renter is there.
Posting a unit that should not be listed on Airbnb is a civil offense, not a criminal one, and the city typically issues violations that can result in fines of thousands of dollars; lawsuits are filed in the most egregious of cases. In this lawsuit, the city is seeking more than $20 million from the defendants.
At the center of the scheme was Max Beckman, 35, a former real estate broker, according to the lawsuit. Mr. Beckman, who moved to the United States 18 years ago from Israel, was one of five people accused. There has not been a verdict, and the case is continuing.
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