Ocean Management’s unusual property transfers may be defrauding tenan

Ocean Management's unusual property transfers may be defrauding tenants

Coupled with Ocean’s history of housing code violations and tenant complaints, public records suggest that the mega-landlord may be conducting fraudulent property transfers to avoid liability to tenants.

Published on April 2, 2024

In its 15 years of operation, Ocean Management — a property management and real estate company in New Haven — has failed to respond to tenant complaints, been sued in multiple criminal court cases and violated city housing codes over 2,450 times. Despite this, the mega-landlord has continued business operations in New Haven with relative normalcy, managing approximately 1,000 units throughout the city.

Unusual property ownership transfers among Ocean’s affiliated subsidiaries — of which there are at least 62 — indicate that the company might be using these transfers to avoid paying future debts incurred in housing court. These business practices, coupled with Ocean’s history of being sued in housing court, may violate Connecticut’s Uniform Fraudulent Transfer Act, or UFTA.

On several occasions, Ocean has transferred property ownership to another entity it controls around the time a lawsuit was filed against the LLC, according to documents reviewed by the News. Under the UFTA, the timing of these transfers could indicate fraudulent intent.

A long history of inaction

Despite city efforts to support tenants’ rights, the company has remained unresponsive to major concerns expressed by tenants and city officials alike.

New Haven Mayor Justin Elicker said that the city regularly receives complaints from Ocean tenants about housing code violations for reasons including rodent infestations, malfunctioning smoke detectors and failure to collect trash on a property.

“Ocean Management has repeatedly been a party that has not addressed the issues in that the city’s had to resort to taking them to court,” Elicker told the News.

Elicker said that he met with Shmulik Aizenberg, the head of Ocean Management, recently to express concerns regarding the management of their properties. He noted that “at the time, [Ocean] agreed to do better,” but the city has since “only seen very incremental change.”

Ocean Management did not respond to in-person requests for comment, nor to multiple requests for comment by email and phone.

The News spoke to six tenants who described Ocean as unresponsive to tenant complaints. 

Connie Dobbs lived in her Fair Haven home for 36 years before one of Ocean’s subsidiaries, Ocean 60 LLC, purchased her free-standing apartment in May 2016. According to Dobbs, it took Ocean five months to inform her of the change in ownership. Dobbs said that she did not know who to pay her rent to during this period, and when Ocean Management finally got in touch, she said she was asked to pay six months in back rent.

Since 2016, Dobbs — like many of Ocean’s tenants — experienced several issues on her property, including a broken door and severe water damage. Additionally, she said that she later found that she had been paying the electric bill of the neighboring property during the first two years of Ocean’s ownership.

“[Ocean] never reimbursed me a dime,” she said.

Trash accumulated in the yard of an Ocean-owned property (Courtesy of Connie Dobbs)

More recently, Ocean has still not met with members of the Lenox Street Tenants Union that formed in November, despite the union’s push to engage in collective bargaining. 

Four of the five tenants unions that have formed in New Haven have been at Ocean properties, where they have raised complaints of poor living conditions and miscommunication.

Mark Washington, a leader of the city’s Blake Street Tenants Union, claimed that Ocean rarely responds to tenant complaints except for matters concerning rent.

“[Ocean will] only respond when [tenants] say something about money. Other than that, they don’t respond — pretty much at all,” Washington said.

The pattern of unresponsiveness, along with thousands of housing code violations, has had legal consequences for the company. Ocean Management has been sued in multiple criminal court cases, with four of them taking place in a span of less than one year.

“Ocean Management has repeatedly been a party that has not addressed the issues in that the city’s had to resort to taking them to court,”

—New Haven Mayor Justin Elicker

Ocean’s subsidiary structure

The structure of the mega-landlord may provide more insight into its efforts to minimize liability for these housing code violations, which often lead to fines in housing court.

A search of publicly available Connecticut Business Records shows that Ocean is divided into dozens of subsidiaries affiliated with the primary holding company, Ocean LLC. As a limited liability company, Ocean Management protects the personal assets of members from lawsuits filed against the company. Additionally, Ocean’s multiple subsidiary companies allow the business to contain risks within those entities. This helps protect the parent company and its other assets from potential losses or legal issues related to a specific subsidiary.

According to Michael Powers, a Stamford-based attorney, this structure is common not just among real estate companies, but “all companies” looking to maximize liability protection.

While forming subsidiaries has several risk-related advantages, maintaining a series of different holding companies has also muddled the company’s transactions. This has worked to Ocean’s benefit in past years, especially when attempting to limit external oversight. 

As one example, the Livable City Initiative — or LCI — enforces the city’s housing codes by conducting inspections and ensuring that renter’s licenses are up to date. An article published in the New Haven Independent in August noted that when LCI conducted an inspection of Ocean’s rental licenses, they were unable to locate all the company’s properties through existing city records, in part due to Ocean’s multiple subsidiaries. The confusion resulted in a 2022 ordinance change that required all LLCs registered in New Haven to list the address and name of a ​“natural person,” in order to connect LLCs controlled by the same owner. 

Billboard of The Livable City Initiative on Whalley Ave. (Natasha Khazzam, Contributing Photographer)

Unusual transfers of property ownership

Most of Ocean’s properties are characterized by a highly unusual trend of changing ownership, wherein specific properties change ownership from one subsidiary to the next within a short span of time. In some instances, properties have been transferred three or four separate times to different subsidiaries belonging to Ocean.

One such example, obtained through publicly available property records, outlines the ownership history at one of Ocean’s properties, a two-unit townhouse located at 171 Cedar Hill Ave. in Cedar Hill.

Property records show ownership history at 171 Cedar Hill Ave. (Natasha Khazzam)

Listed among owners are a succession of three subsidiaries affiliated with Ocean — Super Zen LLC, Naiman Michal Shlomit LLC and Nahal Kibbutzim LLC — all of which are filed under the ownership of Ocean Management LLC, according to state business records.

In January 2015, Super Zen LLC purchased the property from its prior owner. A little over a month later, the property was sold to Naiman Michal Shlomit LLC before being transferred to Nahal Kibbutzim LLC on August 31, 2022.

These successive transfers of ownership are a common pattern for Ocean. Between June 2023 and January 2024, Ocean and its subsidiaries sold 71 properties. Sixty-four of these properties had been transferred through at least two different subsidiaries affiliated with Ocean prior to sale. 


Property transfers raise legal questions 

One reason for using subsidiaries is to limit a company’s liability. If an LLC wants to further diminish the risk associated with a particular property, it might transfer ownership to different subsidiaries to ensure that one subsidiary’s legal challenges do not affect the others. In the event of a court case against one of the subsidiaries, this business structure protects the assets of the parent company as well as its other subsidiary companies. 

On their own, property transfers can be a standard business practice. However, such transfers can be deemed fraudulent if a company makes them with the intent to avoid paying debts. 

Under Section 52-552e of Connecticut’s Uniform Fraudulent Transfer Act, transfers are fraudulent if they are made with “actual intent to hinder, delay or defraud any creditor of the debtor” and debtors “engage in a business or a transaction” that renders their remaining assets “unreasonably small in relation to the business or transaction.”

In other words, if transfers are made with intent to defraud creditors, and debtors also sell off a large proportion of their assets by engaging in these transfers, these business practices are considered fraudulent. 

According to the act, a creditor is any person with a right to payment from the debtor. This includes “judgment” payments that are determined by the outcome of a court case, which could apply to tenants in housing court.

In the case of property transfers between Ocean’s subsidiaries, large assets were transferred from one business entity to another. Additionally, if these property transfers were made as a purchase of assets, the new subsidiary would not assume pre-existing liability associated with the property. This would mean that if a tenant sued its landlord for a housing code violation, the original subsidiary would still be liable. 

Ultimately, this strategy creates a loophole that protects the assets of an LLC and may help a company avoid paying its debts, including fines incurred in housing court.

“Between June 2023 and January 2024, Ocean and its subsidiaries sold 71 properties. Sixty-four of these properties had been transferred through at least two different subsidiaries affiliated with Ocean prior to sale.”

For example, if Super Zen LLC had transferred a property to Naiman Michal Shlomit LLC as a purchase of assets, then Naiman Michal Shlomit LLC would not assume the liability associated with the property. This would mean that if a tenant living at the property sued its landlord for a housing code violation, the original subsidiary — Super Zen LLC — would be liable for these complaints. However, because the subsidiary has since transferred its assets, the tenant may not be able to recover money from the case.

Gary Kaufman, a corporate attorney based in New York, explained that if a tenant were to sue a subsidiary company for a housing code violation, they would not be able to reach assets of the parent company or the other subsidiaries that the parent owns.

“You can go downstream but you can’t go upstream, so to speak … if you sue the parent, you can attack the subs[idiaries]. But if you sue the subs[idiaries], you can’t attack the parent,” Kaufman said.

If such an intent were sufficiently proven, this could suggest that Ocean was conducting transfers to avoid paying fines in court cases where it was sued for housing code violations.

“You can go downstream but you can’t go upstream, so to speak … if you sue the parent, you can attack the subs[idiaries]. But if you sue the subs[idiaries], you can’t attack the parent,”

—Gary Kaufman

Ocean’s history in court

While transfers can be deemed fraudulent if they are deliberately made with the intent to avoid legal repercussions, intent is notoriously difficult to prove in court, and would likely require evidence from Ocean’s internal communications that the News could not access.

However, the UFTA outlines factors that may be considered in determining intent, including whether the debtor had been sued before the transfer was made.

There have been several instances where Ocean transferred property ownership to another entity it controls right before a lawsuit was filed against the LLC. 

In recent court cases filed against Ocean, most of the involved properties have undergone ownership transfers between at least two Ocean-owned subsidiary companies. In one case that involved three properties, two had undergone transfers within a year of the court case reaching a judgment.

A case that concluded on May 3, 2022, charged Ocean $3,750 worth of fines after the company pleaded guilty to 15 different housing code violations related to neglect of the properties. Of the three Ocean-owned properties involved in the case — located at 133 Plymouth St., 267 James St. and 167 Scranton St. — each of the three properties were transferred between four different Ocean subsidiaries between 2015 and 2023.

Two of these properties were transferred within one year of the court case concluding, with ownership at the Scranton Street property last being transferred on Dec. 20, 2021. Ownership of the James Street property was transferred on March 16, 2022 — less than two months before the court case ended. The property at James Street was then transferred to a fourth subsidiary on June 6, 2023.

This trend is relatively consistent among other properties involved in major cases against Ocean. In an August 2022 case concerning two properties that culminated in $2,500 worth of court-ordered fines, a property at 191 Ferry St. underwent four transfers across different subsidiaries and the property at 87 Willis St. underwent three. The last of these transfers at both properties took place on Jan. 28, 2020, less than two years before the court case reached a judgment.

Similar patterns occurred at the four properties involved in a June 2023 case. All of the properties underwent multiple property transfers between Ocean subsidiaries, and three of these transfers took place within three years of the court cases ending.

This pattern could indicate that the transfers were made in expectation of an impending lawsuit, suggesting that Ocean might have made these transfers with the intention of avoiding legal repercussions for their violations of the housing code.

There are alternative explanations for Ocean’s property transfers, such as potential tax benefits. Property transfers between affiliated corporations are exempt from paying real estate conveyance taxes, according to Code 11 in a Connecticut list of exemptions

Alternatively, these transfers could be a product of the company’s internal disorganization.

Carol Lopez Horsford, the founder of Farnam Realty Group, said that Ocean Management has experienced organizational challenges in the past. Ocean hired Farnam to conduct its residential leasing in 2019, a partnership that provided Farnam with insight into Ocean’s behind-the-scenes operations until April 2022, when Farnam ended its work with Ocean on the grounds that their company values were no longer aligned. 

“[Ocean is a] small business that probably grew too fast and wasn’t organized enough,” Lopez Horsford said.

Nevertheless, Ocean’s property ownership transfers align with patterns that could indicate intent to circumvent paying debts incurred in court. While Ocean’s property ownership transfers do not indicate illegality on their own, these findings suggest that Ocean’s long history of housing code violations might be accompanied by fraudulent intent to minimize the company’s own liability. 

Ocean’s offices are located on the second floor of 101 Whitney Ave.

Natasha Khazzam covers housing and homelessness for the News. Contact her at natasha.khazzam@yale.edu .


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