Washington– washington dc, Attorney General Brian Schwalb filed a lawsuit on Thursday using an expanded racketeering statute — originally created to prosecute organized crime — to put a landlord accused of providing unsuitable living conditions for his tenants out of business.
Speaking at a press conference, Schwalb announced that his office was using the Racketeer Influenced and Corrupt Organizations Act, or RICO, to dismantle the real estate operations of Ali “Sam” Razjoyan, his brother Eamonn “Ray” Razjoyan, and their mother Hori Razjoyan. Schwalb said this is the first time D.C. has used the law in a housing issue.
The law is designed for complex investigations involving legitimate entities, such as limited liability companies or corporations, that are used to conceal criminal activities. It is particularly useful in tracing through multiple companies and other legal entities to the source of alleged illegal activity. Its use in Washington highlights one way cities can combat fraud and other measures that deplete already meager reserves. Affordable housing throughout the country.
“For every 100 very low-income renters in Columbia County, there are only 32 available, affordable homes,” Schwalb said. He said the Razjoyans benefited from the system through “a sprawling illegal enterprise, a complex network of limited liability companies, unlicensed property and construction management companies, and informal buyers.” All of these actions are designed to hide the true ownership and condition of the property to defraud lenders and take advantage of the area’s affordable housing subsidy programs.
The family owns 70 properties that are primarily rent controlled, the suit said. The lawsuit accuses them of deceiving lenders with false promises to renovate the buildings and then renting them to tenants receiving housing subsidies paid by the D.C. government. The buildings were left in disrepair, leaving hundreds of residents living in terrible conditions, the suit said.
“I strongly disagree with the prosecutor’s allegations. These allegations have not been proven, yet they are presented to the public as if they have already been proven. This is not how our legal system is supposed to work. This case should be decided in the courtroom based on the evidence, not through dramatic headlines,” Ali Razjoyans said in a text message.
Schwalb suggested it was about protecting residents when it imposes significant costs on landlords and the housing system without providing meaningful solutions, he added. “I will address these allegations in court, where they belong. When the full record is prepared and the evidence is tested, I am confident it will be proven that the accusations do not reflect the facts.”
The lawsuit filed Thursday is a continuation of action Schwalb’s office took in 2024 when it filed lawsuits on behalf of residents of two properties. The ongoing investigation has uncovered a complex array of limited liability companies, unlicensed property and construction management companies, and informal buyers designed to hide the true ownership of certain properties, Schwalb said.
Schwalb said the racketeering statute allows his office to go beyond individual properties and target “the foundation of the Razgoyan’s vast operation, the web of fraud and deception that is at the core of their business modus.”
Palmer Heenan, a housing expert and longtime civil rights attorney, called the use of RICO in housing litigation “new and important” because determining the identity of the actual owner of a property can be complex when it involves multiple layers of corporate ownership.
“One advantage is that it allows you to go back to these networks, which makes it easier for you to go after all the companies involved,” he said. “It will also make it easier for tenants to get justice for the often appalling conditions they are subjected to.”
In one of the allegations that surfaced in the lawsuit, Razjoyan, while trying to obtain a refinancing loan, claimed to have built 10 new units on one property and showed pictures of the new doors and apartment numbers to lenders. The lawsuit alleges that the doors opened onto “concrete walls, apparently to deceive appraisers and obtain a higher valuation for the property.”
Conditions for tenants in the actual apartments were dire, with some living in properties infested with rodents and cockroaches while others suffered from foul odors from basements filled with stagnant water that pooled for days, and some lived without heat during the entire winter, the lawsuit alleges.
Some of those apartments have become uninhabitable, exacerbating the city’s affordable housing crisis, Schwalb said at the press conference.
The lawsuit seeks to compensate the affected tenants and “prevent the defendants from doing business in the area.”