Inside the Rise and Fall of a Multimillion-Dollar Airbnb Scheme

New York regulations are supposed to keep apartments from being pulled out of an already-tight rental market to cater to the tourist trade. They specify that it is illegal to rent an entire apartment in most buildings for fewer than 30 days unless the permanent tenant is present while the renter is there.

Posting a unit that should not be listed on Airbnb is a civil offense, not a criminal one, and the city typically issues violations that can result in fines of thousands of dollars; lawsuits are filed in the most egregious of cases. In this lawsuit, the city is seeking more than $20 million from the defendants.

At the center of the scheme was Max Beckman, 35, a former real estate broker, according to the lawsuit. Mr. Beckman, who moved to the United States 18 years ago from Israel, was one of five people accused. There has not been a verdict, and the case is continuing.

Mr. Beckman agreed to be interviewed, making clear that he believed that he did nothing wrong.

“We’re not criminals,” he said at his lawyer’s office, while puffing from a Juul he kept in a black leather pouch fastened to a chain around his neck. He shrugged: “I don’t own a yacht or a big penthouse.”

What he did have was an ambitious, though risky, idea.

It was 2012 and Mr. Beckman, in his own telling, was struggling to make it as a real estate broker. He said he had a dismal credit score and $100 to his name when he used that money to pay the application fee for a one-bedroom on the Upper East Side.

He began renting it out, short term, to tourists through Airbnb and pocketed the difference after paying rent. It was a simple business model he would go on to replicate.

Josh Meltzer, the head of public policy for Airbnb in the Northeast, condemned the behavior and acknowledged the limitations of the company’s rules, which he said were intended as a short-term remedy.

“We’re talking about a very narrow set of actors that are working very creatively and very diligently,” he said. “That’s why we’ve supported what I would say is a very restrictive, comprehensive piece of legislation at the state level that would essentially require platform and government to work together to target this type of behavior.”

Airbnb has drawn opposition from the hotel industry. Recently, a federal judge blocked the implementation of a city law that would have required home-sharing services to disclose information about its listings, and the identities and addresses of hosts.

But the legal battle drags on, and Mayor Bill de Blasio announced this week that the city had issued a subpoena for information on 20,000 home-sharing listings in New York.

The mayor and other politicians have argued that Airbnb listings diminish the supply of apartments available to full-time renters, making the city’s affordable housing crisis even worse.

But Mr. Beckman said that he never rented out rent-stabilized units and that his listings did not take apartments away from low-income New Yorkers. The majority of the units were high-end apartments in expensive neighborhoods, he said.

Ultimately, Mr. Beckman believes the city’s tourism industry could benefit if lawmakers allow apartments to be offered on Airbnb and taxed like hotels.


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