Israeli investors in a Baltimore rental management company have filed a federal class action suit charging fraud and racketeering, saying the brothers who control WAZ-Management and several related companies misled them about the price, condition and even the number of units in the buildings sold.
The same brothers allegedly overcharged for renovation work that was often not done, then kept rents for themselves, while failing to pay property taxes and bank mortgages or, in some cases, reselling the buildings to others.
“I call them the Bernie Madoffs of Baltimore,” says Jamil Zouaoui, the plaintiffs’ lawyer. “You’re talking about people’s life savings.”
“They go after these very vulnerable folks without pity,” he asserted, estimating that more than 100 victims were defrauded of “tens of millions.”
A Baltimore Tradition
The allegations in the lawsuit are just the latest in a city staggered by waves of real estate fraud.
In the 1960s, block-busters stampeded working-class white homeowners from neighborhoods in the west and northwest sections of the city.
By the 1990s, a “flipping scandal” gripped a huge swath of Baltimore’s east side as investors snapped up rowhouses for a few thousand dollars, painted and carpeted the interiors and sold the dilapidated homes to single mothers for $50,000 and up by misrepresenting their condition, resulting in foreclosures and, in one infamous case, a building collapse.
A task force was empaneled, but the practice continued in the 2000s as “real estate schools” (including President Donald Trump’s eponymous, fraudulent “University”) trolled for the desperate and naïve.
The allegations in this lawsuit are the latest in a city staggered by waves of real estate fraud.
In one case, a Houston-based slumlord named Scott Wizig bought up hundreds of deteriorating units via tax sales then, abusing tenants and evading code enforcement for more than a decade.
No Comment From WAZ
WAZ’s principals, brothers Isaac and Benjamin Ouazana, combined most or all of the classic tactics, the suit alleges:
Selling properties they didn’t own, telling investors their units weren’t rented even though they were, and taking the rents.
The plaintiffs also uncovered instances where “even after defendants’ fraud was discovered and the management agreement was terminated, the Ouazana defendants unlawfully continued to exercise control over properties they no longer managed, placing tenants in them, and collecting rents without the owner’s knowledge or permission,” the suit, filed in U.S. District Court in Maryland on Wednesday and first reported by Courthouse News Service, says.
Emails, phone calls and texts to WAZ’s listed contacts brought no response.
Bugs and Broken Promises
An online search reveals several websites enticing both investors and tenants to the company’s properties. Tenant reviews are mixed, but lean negative.
“WORST EXPERIENCE SO FAR,” reads one from last fall. “THE STOVE DONT WORK. THE REFRIGERATOR IS SMELLY, AND NASTY. THE LIGHTS ARE VERY DULL AND THE BASEMENT DOOR ISNT PUT ON PROPERLY! HOW CAN YOU LET TENANTS MOVE INTO A PLACE THAT IS NOT READY OH THE BATHROOM WAS NASTY I HAVE PICTURES TO PROVE IT! RUBEN LOOKED US IN THE FACE AND SAID IT WOULD VE COMPLETED BY THE FIRST NOW HE’S OUT THE COUNTRY. SO UNPROFESSIONAL!!”
“Too pricey for 1 bedroom on Belvedere,” another tenant wrote in June 2019:
“The apartment has 1 closet, no air conditioning, no peep hole and no doorbells which Waz Management told me they was gonna put in (still hasn’t put them on the front door). No garbage disposal, 700 square feet, applied flat paint throughout apt , Electric lines are connected to other areas in bldg., Roaches and mice also occupy the apartment. Management is so unprofessional furthermore, Ruben lies to the tenants and potential tenants a lot. Waz management is strictly about the money by making their properties higher than market price for apartment with no amenities.”
A 2018 Better Business Bureau review delved into the companies’ investor relations:
“WAZ charged for management services they did not provide and then caused damages. They also forged my deceased mother in law’s signature. In 2015 I bought two properties through Issac O****** and WAZ for my in laws. I later bought two more properties and my brother bought two also. We were charged monthly for management. There were many charges that were never justified. We asked for clarifications over and over with no explanation. One of the properties was supposedly rented and we were getting rent. We found it listed on line and called the #. It was Issac and he tried to fake his voice. On a Section 8 document he forged my mother in laws’s name 2 months after she died.”
A Waz Investments LLC representative responded:
“THIS CUSTOMER ****** AND ****** GREENMAN WAS BEEN REJECTED FROM OUR MANAGEMENT COMPANY 2 YEARS AGO BECAUSE OF ILLEGAL WIRING CHANGE MONEY AND UNPAID TAXES WE TRANSFER THE MANAGEMENTE TO BZ REALTY YAAKOV BENZAKEN 2 YEARS AND HE DID NOT REPAIR AND CHANGE MAILING ADDRESS BECAUSE OF HIS LACK OF EXPERIENCE NOW 2 YEARS AFTER IS COMPLAINING YOU CHEAT ALSO ON ****** ***** FOR HIS COMMISSION THAS WHY IT HAPPENED GOD MAKING THE TRUTH FOR ******* THAT YOU GET OVER THEM ALSO 5 PEOPLE COMPLAIN ABOUT YOUR BAD SERVICES ALSO IN ************ CHECK REVIEWS. PLEASE HANDLE YOUR HOUSES WITH YOUR PROPERTY MANAGEMENTS ALL THE BEST”.
Scores of Victims
In 2017, the Baltimore Sun published an investigation of the city’s rent court, concluding that both law and practice were tilted deeply in favor of landlords and against tenants.
The story opened with a WAZ tenant whose home’s electrical service was illegally poached from another building. The judge ordered WAZ to refund half the security deposit and ordered the tenant to vacate the unit within two weeks.
The plaintiffs in the federal case, Israel residents Gerard Layani and Yehuda Ragones, along with an array of holding companies, first sued WAZ in Baltimore City Circuit Court last year.
The defendants refused to divulge their business records, claiming they were stored online in a file the plaintiffs had locked them out of. “They said that they had no records,” Zouaoui says. “It doesn’t pass the laugh test.”
Still, the plaintiffs dropped the case last month after discovering the scope of the defendant’s business.
“We wanted to dismiss it voluntarily,” says Zouaoui. “In some cases you find the fraud was much bigger, much wider than you thought initially. There were literally scores of other victims.”
The federal suit alleges that the defendants enlisted others, including marketing agents in other countries and various title agencies and other real estate professionals in Baltimore to advance their alleged fraud.
The defendants sold to the plaintiffs a house they did not own, for a “package price” (including needed renovations) of $55,000, including $44,000 for the building as-is, according to the complaint.
The defendants bought the house a week after the purported sale to the plaintiffs, and after they emailed the forged “deed” to them.
They bought it for $13,650, according to the lawsuit, netting an instant profit of more than $41,000. They did not record the sale to the plaintiffs for more than a year, and on that recorded the price as $21,000 “to avoid a transfer tax.”
The Apartment That Wasn’t
The deals got bolder after that.
In one deal, the brothers pitched a West Baltimore apartment building with four two-bedroom units.
The plaintiffs promptly paid $170,000 in cash for it, only to learn much later that the defendants didn’t own the building until later, paid just $30,000 for it, and that it was actually a single-family home, not a multi-unit apartment building.
The brothers soaked the plaintiffs for more money after that, claiming it was for additional renovations, then presented them with four leases purporting to show rentals of the units totaling $3,275 per month, the lawsuit says.
“Defendants’ representation that the property had four units rented to four tenants also turned out to be false because, during their March 2018 site visit, the Layani plaintiffs discovered for the first time that this single-family building had been rented to one tenant only, a business operating an assisted living facility on the entire premises without plaintiffs’ knowledge or permission, and without proper insurance or business licenses.”
Of course, the assisted living center paid much more rent than the defendants let on, the complaint says – and the defendants pocketed that.