WASHINGTON – David Paitsel, 42, a former FBI agent, and Brian Bailey, 53, a D.C. real estate developer were sentenced today on bribery and conspiracy charges for their role in schemes involving confidential information held by the D.C. Department of Housing and Community Development
United States Attorney’s office
There are plenty of housing laws you can break. But these grifters were busted only for bribing a city official for information. Otherwise, they used the housing law – the most innocent-sounding of all housing laws – correctly.
Washington DC has a strong Tenant Opportunity to Purchase Act (TOPA). When a landlord sells, tenants have the right to match any offer, conceivably buying their own building. That never happens. But TOPA also allows tenants to sell their rights to literally anyone else. The law treats the new owner of the TOPA rights with the same exaggerated deference as a tenant.
The TOPA grift goes like this: A TOPA shark, like Paitsel and Bailey, approaches tenants whose building is on the market. The “approach”, as I’ve witnessed it, can be a hand-scrawled note placed in the tenants doors or mailboxes. The tenants rarely know the mechanics of buying a house, let alone utilizing an obscure city-specific TOPA scheme that would have to involve collective action among many tenants.
So the sharks offer the tenants a few hundred dollars for their rights. If the offer is accepted, the shark informs the landlord.
Now suppose a prospective buyer comes along and offers $1,200,000 for a D.C. sixplex. The landlord must inform the shark, who now has the right to match any bona fide offer on the property. But the shark has no interest in buying – he just demands ten or twenty thousand dollars to surrender the rights.
If the landlord resists extortion, the shark finds ways to delay the sale until the buyer walks away. If he finds a misspelled address or other technicality in the landlord’s legally required communications, he can add time to the clock. The shark can force the landlord to wait up to 240 days for financing to be approved. Of course, if the landlord does wait all that time, the shark can just decline to purchase…at which point the entire charade begins anew.
More often, the landlord will submit to extortion – if not before the first prospective buyer walks away in frustration, then before the second does the same.
(Patsel and Bailey didn’t get in trouble for extorting landlords. That’s within the letter of the law. Instead, they were busted for trying to make their shakedown operation more efficient, buying the names and addresses of TOPA-notified tenants. The info presumably gave them an edge on their competitors who drive around with sticky notes seeking for-sale signs on small buildings.)
