NY court shuts down HDFC co-op fraud scheme

A Florida resident unlawfully hijacked a low-income housing cooperative in Williamsburg, according to a Tuesday ruling.

New York County Supreme Court Justice Verna L. Saunders barred Jessica Vargas from managing or attempting to sell the Housing Development Fund Corporation co-op at 13 Scholes Street.

New York Attorney General Letitia James filed a lawsuit against Vargas for falsely claiming control over the property in March last year. The investigation started when the Attorney General’s office was notified of an eviction case against the building’s occupants. Upon investigation, the office discovered that the building was under contract to be purchased by a for-profit company that wanted to turn it into market-rate housing.

Established in 1996 as low-income housing, the property was originally owned by three now-deceased shareholders, including Vargas’s father, Albert Rivera. After her father’s death in 2018, Vargas forged corporate documents to falsely present herself as the sole shareholder, president and managing agent of the HDFC, according to court documents.

It was discovered that Vargas illegally moved more than $442,000 in tenant rental income into personal bank accounts between 2018 and 2021. She also attempted to sell the building despite having no legal ownership or authority, the ruling says.

Vargas claimed her late father’s estate, where she was once the administrator, rightfully inherited the HDFC shares. However, she failed to provide any valid legal evidence that the shares of the other original deceased owners were ever transferred to her, Justice Saunders ruled.

The court’s order stripped Vargas of all authority over the property and its operations. Justice Saunders also ordered Vargas to surrender all illegal profits and unjust enrichment. Now, a special referee will determine the precise final monetary penalty.

An attorney for Vargas could not provide a comment by press time.

HDFC co-ops have been long known for the lack of oversight. Last year, a former board president at HDFC’s 789 MacDonough Street, who embezzled over $120,000 and lost her shares, was shielded from eviction by city agencies, forcing the co-op to continue housing her. Meanwhile, at an East Harlem HDFC, insiders exploited the lack of city monitoring to drain $800,000 from the building’s accounts.

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