The promise of the deal was easy money. It would not take any hard labor or peddling of illicit goods, only a drive to a shallow basement office at 1821 Mahan Street in the Bronx for a real estate closing. All Milton Mendez had to do was follow simple orders: He would sign his name to a property title and a mortgage application, "flip" the property back to the seller, and collect a $5,000 fee.

He would trade his name for cash, and it would take only an hour. "It sounded perfect, simple: improve my credit, make some money," Mendez says. "But it backfired. It backfired on me big time."

City Limits Magazine


May 2004:
What's Hate Got to Do With it?

Now, four years later, he has a $212,500 mortgage at a rate of more than 11 percent--but no deed to the property. The 29-year old aspirant to the state police department has seen his credit rating ruined, and he now claims to owe the city over $26,000 for emergency repairs to 1116 Willoughby Street, a six-family building in Brooklyn. At taxpayer expense, the building is now getting CPR from the city's housing agency--it's in Third Party Transfer, the program that seeks to wrest the city's worst buildings from bad landlords and place them into the hands of community development groups.

Mendez is one of at least three dozen individuals who became involved in a scheme to purchase distressed buildings on behalf of a real estate speculator. They say they were lured by fast money to buy buildings with mortgages often far larger than their incomes would normally allow. In one case, a buyer--a "straw person," in real-estate speak--says he wasn't even present when a property was purchased under his name. Hector Reyes, a former detention and deportation officer in the Philadelphia office of the Immigration and Naturalization Service, claims to have been out of the country on government business, traveling in India, when an application for a $200,000-plus mortgage, as well as title to 464 Wilson Avenue, Brooklyn, were signed under his name during the summer of 2001.

While many real estate speculators have been known to shuffle titles and mortgages between holding companies to disguise ownership, real estate lawyers say the practice of using a collection of front buyers was an unusual and brazen method of buying property without much financial risk.

The speculator's name is Joseph Paradelo, though he insists, as any effective salesman might, that you call him, simply, "Joe." Since starting work at age 14 selling home improvement services door-to-door and, later, swimming pools, Paradelo claims to have owned, at one time or another, a total of 220 properties--mostly six-family walk-ups in depressed areas of Brooklyn, the Bronx and Staten Island.

A model landlord he's not. His buildings have racked up nearly 1,500 Class C housing code violations, the most hazardous kind. The Brooklyn anti-abandonment squad of the city's Department of Housing Preservation and Development estimates that emergency repairs to the properties have so far cost taxpayers more than $700,000, and the agency is taking legal action to recoup the money. "We chase him around the tree, and he escapes every time," says one lawyer for the city. "Some [owners] have one or two tricks up their sleeves. Joe holds the whole bag."

Paradelo enrages his tenants, who he says curse him as "Satan" as he goes door-to-door in blue jeans and a baseball cap collecting rent. It isn't just the raw sewage leaks and the hazardous lead-based paint that housing inspectors find crumbling off walls. Tenant organizers also accuse him of inflating property values in Bushwick--preserving urban blight in the name of profit. Paradelo and speculators like him "are like a vicious tornado that is skyrocketing housing costs for everyone across the city," charges Rick Echevarria, an organizer who is aiding tenants in some of Paradelo's buildings. Troubles with these properties are also costing the public: two more are also in Third-Party transfer, and an additional two have city-appointed administrators looking after them.