By Charlie Finnerty | [email protected]
Elected officials, union leaders, housing advocates and government watchdog groups held a rally Sept. 27 on “Billionaires’ Row” in Midtown Manhattan urging Governor Hochul to sign the LLC Transparency Act. The bill, passed by the state assembly and senate in June, would require limited liability companies to publicly disclose their ownership.
Bill co-authors, Greenpoint Assemblywoman Emily Gallagher and Manhattan State Senator Brad Hoylman-Sigal, were joined by United Brotherhood of Carpenters and Joiners of America Area Standards Manager Michael Piccirillo, Executive Director of Reinvent Albany John Kaehny and several other elected officials from across the city delivering speeches below 111 W 57th street, one of the luxury condominium buildings that have populated the area in recent years and the site of an ongoing labor dispute involving an LLC-owned construction company.
“Governor Hochul came into office promising a new era of transparency. This is her opportunity,” Gallagher said in her speech. “We need her to sign this bill, and shine a light on corruption.”
The bill has been championed by a broad coalition as a crucial tool to hold bad actors accountable, from landlords and employers to drug traffickers and money launderers, who are able to conceal their identities behind LLCs. The legislation would be the first of its kind nationwide. A federal law, the Corporate Transparency Act of 2019, requiring LLCs to disclose beneficial ownership to a closed government database goes into effect next year, but does not go as far as Gallagher and Hoylman-Sigal’s state bill which makes that information publicly available.
According to a recent study by Reinvent Albany, 37% of Manhattan’s real estate ownership is hidden behind LLC shell companies, allowing their ownership to remain unknown to tenants and workers.
“Anonymous LLCs are everywhere. They might be your landlord, your employer, your neighbor” Hoylman-Sigal said in his speech. “We’re sending a warning signal today to shady employers, wage thieves, foreign oligarchs and bad landlords, that their days of anonymity are numbered.”
Speaking in support of similar legislation on the federal level in March, US Secretary of the Treasury Janet Yellen said LLC secrecy makes the United States potentially the best place to hide and launder ill-gotten gains. In her speech at the rally, State Senator Liz Krueger, whose East Side Manhattan constituency includes Billionaires’ Row, spoke about the influence of LLC property ownership in her district.
“I know for a fact that a huge number of the individual apartments bought in the buildings built right here in my district are also purchased through secretive LLCs,” Krueger said in her speech.
LLCs allow luxury real estate to be a tool of money laundering, allowing dirty money that would otherwise be rejected at American banks to be held in multi-million dollar properties in the heart of Manhattan, according to Krueger.
“They use real estate and apartments in Manhattan as their banks for the money that can’t come into this country legally. They’re oligarchs, they’re terrorist funders, they’re people who have committed violations of our laws in other countries,” Kruger said in her speech. “This whole system is ridiculous and it’s damaging real people everyday in our city. Governor Hochul, we’re begging you to sign this bill.”
The same LLC disclosure loopholes that allow buyers to purchase property on Billionaires’ Row anonymously are also at the center of a 2018 labor dispute at 111 W 57th Street, in which former Manhattan District Attorney Cyrus R. Vance Jr. alleged Parkside Construction stole over $1.7 million in wages during the construction of the luxury apartment building and hid nearly $42 million in wages from insurance officials to avoid paying workers’ compensation premiums.
“Thousands of citizens walk by this building every day, 111 W 57th Street. When they look they just see another luxury tower over here on Billionaires’ Row, but to many of us people in the know, that’s actually a crime scene,” Piccirillo said. “Parkside cheated 520 employees out of hours worked on this development site and retaliated against workers with termination if they complained. The majority of these employees were undocumented immigrants, particularly vulnerable to threats.”
According to Piccirillo, Parkside Construction used LLC shell companies to conceal their liability. In 2021, Parkside Construction was ordered to pay $1.4 million in restitution to the state insurance fund as part of a plea deal but received no jail time and were not required to pay any restitution to workers.
“It’s like an onion, they’re in layers. It’s hard to peel the onion and get to all those layers they’re hiding behind in LLCs,” Piccirillo said. “All we want to know is who owns the LLC.”
The bill has been publicly supported by New York’s highest criminal justice officials, with Attorney General of New York Letitia James, Manhattan District Attorney Alvin Bragg and New York State Comptroller Tom DiNapoli upholding LLC disclosure as a necessary tool to pursue white collar crime, wage theft, landlord abuse and money laundering.
“Right now there exists a secretive system of LLCs that doesn’t require the individuals that benefit from LLCs to report themselves to the state. This allows wealthy bad actors from across the globe, foreign and domestic, to engage in hard-to-track money laundering, financial and tax fraud, and terrorism finance in the United States of America with little fear of detection,” Bragg wrote in a letter read by Hoylman-Sigal. “This behavior damages our shared concept of equal justice, destroys our city’s housing market and can threaten our national security.”
Gallagher said she is optimistic the governor will be responsive to the bill’s broad support from government officials in the state.
“I believe that hearing from these top enforcers in our state will finish the persuasion,” Gallagher said. “I think [Hochul] will see that this is vital to so many people.”