DEADBEATS OWE BILLIONS TO CITY From unpaid tickets to taxes, funds would close budget gap

The city is owed nearly $2.4 billion by deadbeat debtors, including real estate interests, slumlords, doctors, drivers, health insurers and highly profitable corporations, a Daily News investigation has found.\
The amount - more than twice the city's current budget deficit - represents unpaid corporate and property taxes, parking tickets, fines against restaurants and other businesses, and penalties owed by landlords for code violations.

The debt has accumulated in a historically clumsy, slow, inefficient and understaffed city collection system involving a labyrinth of city agencies, according to critics.

The debt has all been incurred since 1994 and some of it can be considered dead, or uncollectible, because the deadbeats cannot be found or have no assets.

For example, there is no telephone listing for Jaime Ruiz, the city's second-biggest scofflaw, who has accumulated 426 parking tickets and owes the city $53,272. His address of record is on Hunts Point Ave., the Bronx.

But many of the debtors, large and small, have managed to beat the system by changing the names of their companies or their addressees, hiding behind post office boxes, dissolving corporations or otherwise manipulating paperwork to avoid payment.

Others can be located but simply don't pay, seemingly immune from any city action.

For example, the city's biggest scofflaw, Charles Rhodes, with 499 tickets and $66,995 due, can easily be found at his Brooklyn address of record and he has a listed phone number, although it has an automated call-screening device. Rhodes did not answer the phone.

And millionaire parking garage magnate Abe Hirschfeld, who owes $1,275,614.52 in unincorporated business taxes, is back in his Fifth Ave. apartment after serving a two-year prison sentence for hiring a hit man to kill a former business partner.

Similarly, Cecil Baber, an advertising consultant who owes $289,729.55 in unincorporated business taxes, can be found at his Park Ave. address of record and has a listed phone number. He did not respond to telephone calls.

Many property-tax evaders, who collectively owe $743 million, are in plain sight but don't pay on time with the sure knowledge that generally the worst that can happen is that the city will slap a lien on their holdings.

They know the lien need not be satisfied until they sell or refinance their properties, according to city housing officials.

Other debtors tie up the city in court, contesting assessments and fines in a game where they know, through experience, that various city agency hearing officers and judges will accept a settlement far short of full payment.

Dumped on
In a Sept. 3 incident, Department of Sanitation cops caught James Wheeler dumping more than 50,000 pounds of concrete and asphalt millings from a Peterbilt tractor-trailer into a vacant lot at 58-30 57th St. in Queens. The summons carried a maximum penalty of $20,000.

But on Oct. 1, a fine of only $3,000 was levied by a hearing officer at the Environmental Control Board after Wheeler's employer, Iron Horse Trucking, argued there were extenuating circumstances.
"The owner of the lot asked us to put the millings there to make it look better, to make it a parking lot for trucks, to develop the land," said Tony Santilli, speaking for the trucking firm and Red Hook Crushers, which produced the millings.

"I didn't have a permit [to dump], that's true, but the whole thing is a bunch of [expletive] and I had the truck impounded and I lost five days' use of the truck. But, believe me, if the judge was in a bad mood, I could've been fined a lot more," he said. "The max was $20,000, but when you state your case, they're lenient. I wasn't dumping garbage," said Santilli, who added that he removed the millings from the lot, which cost him another $1,600.

Critics of the city's collection system, including Controller William Thompson, say that a lack of uniform computer software used by agencies to track deadbeats complicates efforts to recoup debts. And since three or more city agencies often are involved in collection, the system is inherently cumbersome.

Passing the buck
For example, inspectors from the Fire, Buildings and Housing Preservation and Development departments all issue building fire code violations to landlords.

In theory, the landlord then must appear before Environmental Control Board hearing officers, who determine the amount of the fine.

If the landlord does not pay the environmental board, that agency will send out a series of dunning letters but makes no further effort to collect the debt, although in some cases it seeks a judgment from Civil Court.

After a period of time, usually six months to a year, the environmental board turns over the fine or the court judgment to the Department of Finance for collection.
In turn, Finance issues more dunning letters. If it remains unpaid, the debt, with interest and penalties growing, is sometimes turned over to a private collection agency, or sometimes attached as a lien on the property. And that lien is sometimes sold by Finance to companies that specialize in lien collection.

The agency-to-agency handoff of debt generally leaves Finance holding the bag. In an audit released this year, Thompson charged that the Finance Department "failed to collect over $634 million in penalties on ECB cases during a period that covered the year ending June 2001."

The department "made no effort" to collect most of that debt, which was assigned to only five Finance staffers, the audit said.

The enforcer is in Finance Commissioner Martha Stark inherited that debt and nearly $2 billion more, and she agreed with many of Thompson's findings.

"It doesn't matter whose watch it was on," she said. "My job is to collect all monies owed the city and my job is to do it aggressively, especially considering the financial situation the city is in."
Stark said she is completing a reorganization and streamlining of the collection process. "I'm categorizing and prioritizing debt, fixing the computer glitches and setting targets for collection," she said.
She said collection rate targets are 75% for debts less than a year old, 50% for up to three years, 40% for up to five years and 5% for more than five years.

"We're up to an 85% collection rate on parking tickets for the year," she said, adding that her agency is actively selling tax liens for 91 cents on the dollar.

"In June, we got $120 million on a bunch of tax lien sales and we'll continue this process, and it's great because we get the money up-front," she said. Stark also is awaiting more data on delinquent business and personal income taxes.

"We are going to collect this money," she said.
Sidebar: BUSINESS TAX DELINQUENTS
In each case, the Daily News tried to contact or locate the delinquent concerns and individuals.
1. Lincoln West Associates. The chief officer, parking garage mogul and ex-jailbird Abe Hirschfeld owes nearly $1.3 million in unincorporated business tax on the land west of West End Ave. from 60th to 72nd Sts. later developed by Donald Trump. Hirschfeld denied he owes the money and claimed Trump is the chief officer of Lincoln West. Trump said the development, Trump West, doesn't owe any taxes. "It's got to be Lincoln West, Hirschfeld's company, that owes the money," he said. "This is crazy."
2. Murtha DeSola Finsilver Fiore, 477 Madison Ave., corporate communications company, owes $1.3 million in general corporation tax. Arthur C. Schupbach, attorney for the company, said the firm was dissolved several years ago and that "the principals have no obligation to pay."
3. Sybedon, 891 Amsterdam Ave., mortgage brokerage and investment banking firm, owes $653,262 in general corporation taxes. Bertram Lewis, chief executive, did not return telephone calls.
4. Medical Services for Women, 11 W. Prospect Ave., Mount Vernon, owes $628,647.38 in general corporation taxes. Dr. Meredith Sirmans, chief executive, questioned the debt, saying he hasn't practiced in the city in 15 years. "You know, many things can happen in the City of New York and you have no idea where they come from," he said.
5. Galin/Boniuk, 345 E. 37th St., ophthalmology practice headed by Miles Galin, a physician whose license was stripped because of Medicaid fraud. He also was convicted of money laundering. He owes $569,144 in general corporation and commercial rent taxes. Galin could not be located.
6. Jemanda New York, 47 W. 20th St., holding company owned by one-time nightclub czar Peter Gatien, owes $334,642 in general corporation tax and commercial rent tax. Convicted of cheating the city out of $1.3 million in taxes, Gatien is in prison. He has said he is broke.

Source: Finance Department
Graphic: Who owes the most money to the city
Parking ticket scofflaws $802.4 million
Commercial and residential property tax delinquents $743 million
Outstanding fines for violations of Sanitation, Fire, Buildings, and other codes and regulations $690 million
Insurer reimbursement for Fire Department ambulance services $113 million
Outstanding fines for restaurant health code violations $51.5 million
Personal income and sales tax delinquents $50 million
Outstanding fines for residential housing code violations $40 million
Outstanding fines against contractors, retailers and others for Department of Consumer Affairs violations $11 million
Total: $2.39 billion
Graphic: How debts are collected
Unpaid parking tickets go to Finance Department for collection.
Sanitation, fire, noise, building, construction and other code violation summonses go to Environmental Control Board. After a year or so of dunning letters, board turns uncollected debt over to Finance Department, which can get a property lien and sell those liens and other debts to private collection companies.
Fines for health code violations, mostly incurred by restaurants, determined by hearing officers. Nonpayment brings dunning letters and can result in license revocation.
Property taxes are collected by Finance Department, which issues liens on debtor properties, sometimes selling liens to collection firms.
Consumer Affairs Department collects the fines it imposes. Nonpayment can result in license revocation or retail closure.
Graphic: 10 property tax delinquents

In each case, the Daily News tried to contact or locate the delinquent concerns and individuals.
1. CSX Transportation - Richmond, Va., company owns railyards and tracks in the city. $10.1 million. CSX is "actively engaged in settling this matter," said spokesman Bob Sullivan, adding that the firm is contesting some of its property assessment.
2. Hilly Realty. 640 and 644 Riverside Drive, Manhattan. $9.7 million. No listing.
3. Tiffany Associates, 783 Eldert Lane, Brooklyn. $9.7 million. Officials could not be located.
4. Coppola Realty, 6097 Strickland Ave., Brooklyn. $5.4 million. "We are working out a settlement, the terms and conditions of payment," said Jerry Coppola, company president.
5. Coney Island Amusement, 2015 Boardwalk West, Brooklyn. $4.9 million. No listing, but records indicate company has entered into settlement agreement.
6. 265 Realty Associates, 265 Hawthorne St., Brooklyn. $3.9 million. Entered into settlement agreement.
7. United Rehabilitation, 2285 Davidson Ave., the Bronx. $2.8 million. No listing.
8. Builtland Partners, 335 Madison Ave., Manhattan. $2.5 million. No listing.
9. Sant S. Chatwal, 1772 Second Ave., Manhattan. Hotel and restaurant owner. $2.4 million. No listing.
10. Harrison-Tremont Realty, 1898 Harrison Ave., the Bronx. $2.3 million. No listing.
Source: City Finance Department
Sunday, December 24th 2000, 2:15AM
Source : Daily News

BY WILLIAM SHERMAN DAILY NEWS STAFF WRITER