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Last Sunday, the Inqy published a shocking expose about a New Jersey real estate family that exploits the poor by gobbling up large housing communities and running them into the ground.
The article illustrates many of the worst features of our housing market for those living on the margins. And as a digital subscriber to the Philadelphia Inquirer, I would like to share it with you.
EMPIRE OF NEGLECT
By Samantha Melamed and Ryan W. Briggs
When Timothy Sharpe moved into his studio apartment at Brith Sholom House, a senior complex in Philadelphia’s Wynnefield section, he believed that he’d finally found a peaceful, safe place to call home.
What followed were two harrowing years of discomfort, and even danger.
Water poured in from his heating unit, carving holes in the wall “big enough for a German shepherd to go through.” The ceiling fell in chunks — one time, onto his head. There were infestations of roaches and mice — and bedbugs that sucked out so much of his blood that Sharpe is now on iron supplements.
And twice, he was mugged — most recently as Sharpe, 61, sat in his walker outside the complex in May, waiting for a bus to the Philadelphia Housing Authority for paperwork he needed in order to move. Sharpe resisted, and ended up taking a punch to the jaw.
“I’m used to pain,” he said that morning, with a shrug, still dizzy from the blow.
Sharpe’s 400 square feet of misery is just one small corner of the crisis at Brith Sholom: Its owners have defaulted on a $36 million mortgage, racked up 275 code violations, siphoned off $1 million in residents’ utility payments, and enabled an influx of squatters who have terrorized the senior residents.
And Brith Sholom, it turns out, is only one part of a vast empire of neglect tied to a New Jersey real estate dynasty that has made a lucrative business of stripping the equity from affordable housing complexes — more than 100 of them, scattered across Pennsylvania and at least 20 other states.
The Puretz family — Yehuda “Lieb” Puretz, his sons Aron and Chaikel “Chaim” Puretz, and Aron’s son Chaim “Eli” Puretz — used a web of hundreds of corporate entities, and, in some cases, falsified documents to hide its involvement, as they became one of the nation’s largest affordable housing providers.
The same pattern can be found across many of their properties: They bought older buildings with substantial renovation needs. They saddled the buildings with enormous debt — in some cases, by deceiving lenders about the value of the property. Then, they defaulted on loans, stiffed utility companies, and slashed maintenance contracts — squeezing out profits while allowing properties to fall into decline.
That left thousands of elderly and disabled residents such as Sharpe stranded in deteriorating conditions as lenders foreclosed. Poor U.S. cities have paid millions to relocate tenants and cover utility payments to prevent mass shutoffs.
Over the past 15 years, the Puretz companies amassed more than 16,000 units of low-income housing in 21 states – and used them as collateral to take out well over half a billion dollars in loans.
They wrung the equity out of the properties and let them tumble into disrepair. At least 17 of their properties went into receivership over uninhabitable conditions or unpaid bills …
… at 14 properties, tenants were threatened with or endured utility shut-offs …
… and a dozen properties were shut down by local authorities or HUD due to fire, floods, mold, or other hazards, causing tenants to be displaced.
The family owned 2,000 units across a dozen Ohio complexes — and faced lawsuits from local authorities over virtually all of them. After a pipe burst and displaced hundreds of residents at an apartment building on Christmas, the city of Columbus closed it. As it sat vacant, it became the center of a humanitarian crisis, when the city discovered more than 800 trafficked Haitian immigrants living there.
In Indianapolis, six Puretz complexes, housing 1,100 families, were cited for hazardous conditions. The family ran up $1.7 million in unpaid water bills, which nearly led to a mass shutoff.
The Puretz companies took out nearly $50 million in low-interest government bond financing to buy up apartment complexes in Philadelphia and Pittsburgh. Its Pennsylvania portfolio is in disarray: Two Philadelphia complexes are in receivership. Fannie Mae foreclosed on a Chester development. A Reading building was condemned.
Reina Mehta and Jack Stucker, lawyers with Regional Housing Legal Services, said these predatory tactics are typical of investors trying to squeeze money out of the aging affordable housing stock that U.S. policymakers have failed to adequately support.
“Our housing is underfunded, and it leaves projects vulnerable to vulture bad actors,” Stucker said.
But the attorneys said they had never seen an investor group jeopardize such a massive housing portfolio in such a short time.
Thousands of the Puretzes’ tenants have faced extreme heat and freezing conditions, injury and even death. Puretz family members did not return calls and emails requesting comment.
In Utica, N.Y., a 9-year-old girl was severely injured when she fell down an elevator shaft in a six-story building in 2019; the elevator, subsequently left out of service, trapped residents for months.
In Columbus, Ga., a 61-year-old man died in a baking-hot apartment with broken air-conditioning in 2017; a jury came back with a $125 million wrongful death verdict against a Puretz company. (The family appealed and later settled.)
In St. Joseph, Mo., a 24-year-old mother of two died in a fire that investigators believed was caused by a faulty furnace, according to news reports in 2022; a wrongful-death suit is pending.
Philadelphia officials have been aware of unsafe conditions at Brith Sholom for years. In 2019, the city revoked Brith Sholom’s rental license and took the owners to court — but that case was settled.
Only late last year, as Brith Sholom’s lender sought to foreclose, did the city seek an emergency injunction to force repairs by placing the building into receivership.
Joe Grace, a spokesperson for Mayor Cherelle L. Parker, said the city has been actively engaged in seeking solutions, but did not offer specifics. “We care about every resident in housing being victimized by a bad landlord,” he said.
In October, the Philadelphia Housing Authority, citing a failed inspection, finally cut payments for tenants with housing vouchers there. (The tenants have access to emergency vouchers, but are on their own to find landlords that accept them. So far, 37 have relocated, while 29 remain.)
The majority of remaining tenants have no subsidy — and many, who rely on canes, walkers and wheelchairs, say finding housing they can afford is difficult. They’re stressed by the steady stream of warning notices they’ve been receiving. Some are from Philadelphia Gas Works, warning of an impending shutoff over an unpaid bill. The building has repeatedly been scheduled for sheriff’s sale, and is currently listed again for Aug. 6. Tenants have also received notices, signed “property management,” warning of an “inevitable building shutdown.”
For years, federal, state and local prosecutors and regulators have been chasing after the Puretz companies, which have been fined or sued by the U.S. Department of Housing and Urban Development (HUD), Fannie Mae, the attorneys general of Indiana, Massachusetts and Arkansas, and dozens of code-enforcement agencies.
Only recently have federal prosecutors had any success targeting a family member directly. In June, Aron Puretz pleaded guilty to one criminal charge, involving three properties: The charge of conspiracy to commit wire fraud related to a $54.7 million mortgage fraud scheme in which he falsified records to deceive lenders and hide his involvement from HUD.
Over the same time, government entities have propped up the Puretzes’ companies.
The IRS granted tax-exempt status to charities used by the Puretzes, with the stated mission of keeping housing affordable.
That enabled them to avoid taxes — including millions of dollars in Philadelphia property taxes — and access low-interest government bond financing.
And, they were able to purchase properties tied to thousands of HUD housing vouchers. An agency spokesperson said HUD reviews such transfers, taking into account the past performance of owners and property managers. But that “relies, in large part, on prospective participants accurately identifying their interests in properties.”
Over the years, HUD has taken legal action against Puretz companies, imposed millions of dollars in fines, and evacuated tenants from their most decrepit units. For instance, in 2016, it pulled residents out of a Texas complex called High Pointe that had 2,000 code violations, fires, collapsed ceilings, mold, and rampant crime.
Yet, that same year, a Puretz company was able to purchase the Pavilion, a 295-unit complex also in Philadelphia’s Wynnefield section, with a HUD contract.
That building — bought with a $29.5 million municipal bond — quickly deteriorated, HUD records show. The bond went into default.
The bond trustee, in a lawsuit, said the Puretzes made $800,000 in fraudulent bank transfers, while Aron Puretz claimed “hundreds of thousands” in cash from the laundry machines.
The Pavilion is also now in the hands of a receiver, which is working through an epic list of code violations in preparation for a sale.
A major outstanding repair is the replacement of the complex’s main power line, which failed four years ago. The owners replaced it with a “temporary” 15,000-volt line that looped through a parking garage and along a handrail, putting residents at risk of electric shock.
In his most recent report, in lieu of providing a target date to cure all violations, the receiver, Ian Lagowitz of Trigild Inc., suggested a strategy: “Pray.”
The Puretz family has been buying up properties, then allowing them to go into foreclosure, since at least the 1980s — and, by their own accounting, became extraordinarily wealthy in the process.
Lieb Puretz’s first big swing was poorly timed. In the mid-2000s, after decades in New Jersey subsidized housing, he rolled out plans for condo buildings, hotels and malls in Jersey City and Staten Island. A local paper called him “Staten Island’s Jewish Donald Trump.”
Then the Great Recession hit. He defaulted on $140 million in loans, and his projects plunged into foreclosure.
At least 10 of his companies filed for bankruptcy, which stays foreclosures. In 2012, after he was accused of abusing the system as a serial bankruptcy filer, Lieb Puretz wrote a contrite affidavit, saying he’d been “completely reeducated as to the importance of the process.”
Amid that turmoil, however, the Puretz family assets were shielded in a trust.
Even the family home in Brooklyn was, on paper, owned by a defunct religious nonprofit — which, Lieb said in a deposition, had for years allowed his family to live there rent-free.
In the deposition, over an unrepaid $4 million loan, Lieb testified that he didn’t even have a bank account.
He didn’t need one: His sons Aron and Chaikel had taken over the family business, and his financial dealings.
Under his guidance, they set about expanding it at a national scale.
They would get other people’s money to invest — first, private capital, and later mortgages and municipal bonds — to purchase housing complexes.
And, following their father’s playbook to keep his name off his accounts, the Puretz brothers kept a low profile, identifying others on their nonprofit filings and HUD contracts.
Their property managers and partners included local Lakewood, N.J., and Brooklyn connections: Oron Zarum, Boruch “Barry” Drillman, and David Helfgott. Drillman did not respond to The Inquirer’s messages. Zarum and Helfgott declined to answer questions.
They found that decades-old housing complexes in the Rust Belt and across the South could be bought in bulk, at a discount.
In a single deal, in 2013, companies linked to the Puretz company Apex Equity Group bought up 600 units across 10 Cincinnati complexes.
Within a few years, they were sued, variously, by unhappy private investors; the City of Cincinnati, over unsafe and unsanitary conditions; a residents’ association, over fire, floods and a roof collapse; and a mortgage lender, which sought to foreclose.
Undeterred, the Puretzes continued their buying spree — picking up properties as far south as Florida, and as far west as Oklahoma.
Apex Equity Group’s website now claims its assets span 200 properties and $5 billion — though the family’s affinity for off-the-books deals and single-use LLCs makes their holdings nearly impossible to trace.
And their nonprofits — which helped them dodge taxes and access municipal bond financing — listed phony board members and hid the Puretzes’ involvement.
Meredith Rosenbeck, an Ohio lawyer who said she barely knew the Puretzes, set up the nonprofits, JPC Charities and JPC Affordable Housing Foundation. She also recruited the board members — all of whom resigned in 2016, soon after joining. (Only one, Oron Zarum, their partner from Lakewood, has not disavowed JPC.)
One former board member said the Puretzes simply ignored his pleas to stop using his name.
“This is like a nightmare,” he said, speaking on condition that he not be identified. “I changed jobs, and I had to explain it. It’s this black mark that follows you around. Fraud is not something people take lightly.”
But, in city after city, the Puretzes were the ones with access to the bank accounts.
According to lawsuits, they often failed to pay maintenance staffers and property managers, leading workers to walk off the job.
Other times, they relied on their own management companies — PF Holdings, Aloft Management, and Integra Affordable Management.
But those companies also were sanctioned and sued by HUD and code-enforcement agencies for neglecting repairs. At a property in Illinois, according to a HUD filing, an Integra staffer said Aron Puretz “would kill [him] if he went over budget.”
As the Puretzes sought investment targets, there was ample opportunity in Pennsylvania — which, like many other states, has done little to shore up its deteriorating stock of affordable-housing complexes.
They could buy for cheap, take out large mortgages intended to cover renovation costs, and rely on HUD vouchers for short-term income.
As it happened, Lieb Puretz already had an investment in Braddock Hills, outside Pittsburgh. In 2005, he had paid $12.9 million for two 1960s-era HUD-subsidized complexes: Brinton Towers and Brinton Manor.
By 2015, those projects were part of his wave of bankruptcy filings.
Then, a buyer offered $17.25 million for the complexes. It was the Puretz-controlled nonprofit JPC Charities.
The bankruptcy judge questioned the apparent insider deal.
But Rosenbeck submitted an affirmation that the transaction was “without collusion, in good faith, and at arms’ length.”
Rosenbeck worked with the same underwriter — Cody Wilson, then of Stifel, Nicolaus & Co. — to get an $18.45 million Pennsylvania Housing Finance Agency bond for that project. The two also helped land the $29.5 million tax-exempt Pavilion bond.
Wilson did not return a reporter’s calls. Rosenbeck said in an interview that her role was minimal.
Within a few years, both bonds were in default.
The Brinton bond trustee alleged that the owners siphoned off a $149,000 insurance payout, commingled assets, and took out an improper insider loan — and, in July, filed for foreclosure.
The family’s other Pennsylvania holdings — 1,700 units at their peak — have been in chaos.
A Reading complex, Franklin Manor, was condemned in 2021, over sewage leaks, sinkholes and mold. Eighty low-income residents, already facing a water shutoff, were displaced with just a week’s notice. (It eventually reopened, and in 2023 the Puretzes sold it for double what they had paid in 2016.)
Meanwhile, Fannie Mae took a Puretz company to court over its default on a $13 million mortgage on a Chester complex called Hillside Manor.
While lawsuits played out, tenants such as Danielle Hammond, 38, and Ronald Mormon, 34, suffered quietly.
The couple moved to Hillside Manor in 2016. Their first night, fresh off their honeymoon, they slept great. The next day, they said they discovered a gas leak — and realized they were lucky to have woken up at all.
After that, floods, a mold infestation, and a plumbing problem left them without a shower for four months. They grew accustomed to avoiding a light switch that would short out the entire electrical system, navigating the lawn of knee-high weeds, and dealing with police seeking security camera footage from the latest violent incident.
In 2022, they finally saved enough to buy their own home. Only after moving out did they realize their mold-filled apartment had been making them sick.
“We truly believed we had allergies,” Mormon said. “But once we came here, our sleep is regular — no coughing at night, no sneezing, no sinus infections. Our health has significantly improved since we left.”
Fannie Mae finally foreclosed on Hillside Manor in May.
Then there’s Brith Sholom House, the 11-story senior tower that is now tangled in a morass of legal proceedings: bankruptcy, foreclosure, and city code enforcement litigation.
The Puretzes’ affinity for keeping their names off documents has led to deep confusion among residents about who their landlord might be.
The property history involves an off-the-books purchase and an unconventional mortgage, signed by a (now deceased) Brith Sholom resident in her 90s and issued by a bank run by a former Brith Sholom owner. The lender, Jose Camacho, declined to answer questions.
Stucker, of Regional Housing Legal Services, said these red flags call to mind maneuvers in which owners have used foreclosure to wipe out debt or HUD contracts, force out tenants, and clear the way for profitable redevelopment.
“The foreclosure process can be sort of a cleanse through fire,” Stucker said.
What is plain to the residents is that their once-beloved home is falling apart.
The building is now in the hands of a receiver, Stockton Real Estate Advisors. The company recently filed its own emergency petition in court, warning that Brith Sholom “is in such serious disarray that it poses an active threat” to health and safety.
The Public Interest Law Center of Philadelphia and a volunteer group, Renters Justice, have teamed up with tenant council members to try to organize the residents who remain.
At a meeting, tenant council member Marguerite Byrd urged her neighbors to step up. “We’re all involved in this. We have to learn to trust each other.”
They held protests. They attended court hearings. They spoke to City Council, advocating for resources.
But many elderly residents, dealing with complex medical conditions, don’t have energy to take on that collective effort.
“I don’t even sleep in my bedroom because it smells like mildew,” said John Harper, 61. But it’s not easy for him to find a new place because he’s an amputee who uses a wheelchair. He is on dialysis and unable to work — so his budget is tight. “They just want people to move out right now. But … where can I go?”
Neither Pennsylvania’s Attorney General nor the Philadelphia District Attorney has taken action against the Puretzes’ local operations.
But, if local officials did want to rein in the Puretzes, they might want to follow Indiana’s lead.
Indianapolis authorities took an interest in 2021 — after a 588-unit affordable-housing development called Lakeside Pointe at Nora kept catching fire. It was set ablaze eight times between September 2020 and November 2021, displacing dozens of residents.
Both local authorities and the state attorney general’s office began investigating.
In June 2021, the Indiana AG sued Aloft Management and a local Puretz charity, asking a judge to install a receiver to cure the squalid conditions at Lakeside Pointe. A judge dismissed the petition.
Then, in response to an unpaid bill, a local utility cut water to more than 800 apartments at two other Puretz complexes in Indianapolis. The city was forced to make an emergency payment of $850,000 to restore service.
The AG sued again. This time, the office sought to dissolve JPC, sued the charity and its board members by name, and coordinated with the city and the local utility to bring parallel legal actions.
The unprecedented legal initiative enabled the AG finally to dismantle the veneer of the phony JPC board.
Each board member (except Zarum) signed an affidavit denying involvement with JPC. And one provided a clue: his resignation letter, which he had emailed directly to the Puretzes.
“He notified individuals, in his email, that we had no idea were affiliated with the organization,” said Deputy Attorney General Chase Haller. “The impression that left us with was that those individuals were running the organization.”
By September 2022, the AG settled with JPC, which agreed to dissolve the charity, sell its Indiana assets, accept a seven-year ban on real estate activity in the state, and pay financial penalties.
But that didn’t end the investigation. County detectives went on to trace $1.6 million in renters’ missing utility payments to a bank account controlled by Chaikel Puretz.
This past March, they charged him with felony theft and corrupt business influence.
Soon afterward, HUD suspended Chaikel’s eligibility for government contracts, though the ban applies only to him and not to other Puretz affiliates. He’s appealing that decision.
Haller regards Indiana’s aggressive response as a model for how local and state law enforcement can take on bad actors.
But, he said, the Puretzes’ shaky real estate empire exposed “pervasive and deeper” flaws in nonprofit oversight — and the need for action at a federal level.
“There has to be a larger accounting,” Haller said.
That may, at last, be coming.
In December, Barry Drillman, pleaded guilty to colluding — with two unidentified Apex coconspirators described as father and son in the indictment — in fraud connected to their purchase of a Michigan complex, Troy Technology Park, for $42.7 million. They faked records, inflating the purchase price, to get a $70 million mortgage.
By then, he’d fallen out with the Puretzes, he testified in Columbus, Ohio, at an unrelated court hearing. “I’m fuming at them, and I hate them,” he said, blaming the Puretzes’ management companies for the decrepit conditions of his building, including catastrophic asbestos contamination.
In June, Aron Puretz also pleaded guilty to one conspiracy charge, related to the mortgage fraud and the scheme that included falsifying records connected to two of his housing projects. He admitted to using JPC to fraudulently get tax-exempt status. And, he acknowledged fabricating documents to hide his involvement and get approval from HUD, Freddie Mac, and a mortgage lender.
He faces up to five years in prison. He’s out on bail. One condition of his release before sentencing: He’s not allowed to take out any new debt.
Aron’s son Eli — Coconspirator 2 in Drillman’s indictment — has not been charged.
At least since Lieb Puretz’s Recession-era crash, the Puretzes have repeatedly overcome bankruptcy filings, lawsuits and foreclosures, and moved on to the next business venture.
Now, Eli Puretz, 27, is making his own way — while, in many ways, following family tradition.
His ventures include a New York real estate deal in which Eli was to share in the profits — but demanded “to keep his own name out of the LLC agreements.”
That’s according to a lawsuit filed by a former partner — who alleged that Puretz then embezzled $21.5 million from the company, and collected $5.95 million more by fraudulently selling shares of the venture.
Eli, in his own filings, denied any wrongdoing.
He has also, according to court filings, joined the surge of private equity taking over nursing homes — a trend that has had disastrous consequences. An analysis by University of Pennsylvania researchers found that, after such takeovers, costs go up and mortality rates spike by 10%.
Eli was part-owner of Bonamour Health Group, which owns six Western Pennsylvania skilled nursing facilities and defaulted on a $30.5 million loan, according to a lawsuit.
At one facility, Jefferson Hills, staff walked off the job over missed paychecks.
This past March, in response to the staffing crisis, the state Department of Health abruptly shut down the facility and relocated its 45 patients.
Staffers have also filed a lawsuit alleging that Bonamour had siphoned away their health-insurance payments, leaving them uninsured for months and unknowingly accruing tens of thousands in medical debt. Bonamour is now in bankruptcy, and the case against it has been stayed.
Then a federal judge turned control of Bonamour’s six facilities over to a receiver.
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