Lead damages lawsuit settled

Ground rents owner who filed bankruptcy will pay $1.53 million

Sun Follow-up

July 05, 2008|By Fred Schulte | Fred Schulte,Sun reporter

Paul W. Nochumowitz, who has been one of Baltimore's biggest ground rent owners, has agreed to a $1.53 million settlement of a lawsuit that accused him of living lavishly from ground-rent income while claiming he was too poor to compensate former tenants harmed by exposure to lead paint.

The settlement ends a contentious court fight between Nochumowitz and bankruptcy trustee George Liebmann, who accused the ground rent owner in U.S. Bankruptcy Court in Baltimore of concealing his wealth to escape liability for lead paint injuries in rental housing he owned.

"Those concerned feel it is a satisfactory result," Liebmann said Thursday.

Liebmann said most of the money would be divided among more than a dozen families suing Nochumowitz and a business partner, alleging lead paint poisoning of their children during the 1990s. The money will be paid by Nochumowitz, the business partner, and members of their families.

Nochumowitz and his bankruptcy case were highlighted in a 2006 series on ground rent in The Sun. The investigation found that the Nochumowitz family filed hundreds of lawsuits to seize homes whose owners fell behind on rent payments for the land under the homes, often by only a few hundred dollars or less.

In dozens of cases, Nochumowitz family firms won court judgments allowing them to take possession of houses, which they often sold to rehabbers for quick profits during the real estate boom.

Nochumowitz filed for Chapter 7 bankruptcy in October 2005. He claimed in his petition that he earned just $14,000 a year as a bondsman at Big Boyz Bail Bonds on East 25th Street.

That assertion prompted Liebmann to sue Nochumowitz in July 2006, accusing him of a "complicated but fraudulent" asset concealment scheme that included transferring co-ownership of hundreds of ground rents to his wife. Liebmann asserted that Nochumowitz's income from real estate business ventures and ground rents was $50,000 per month.

According to Liebmann, the Nochumowitz family enjoyed a "lavish" lifestyle that included shopping sprees and frequent jaunts to Miami Beach, where Paul and his wife, Amie Sue, owned a $1 million high-rise condominium on Biscayne Bay.

The lawsuit accused Nochumowitz of funneling ground-rent income into his children's custodial accounts and withdrawing $130,000 from them to pay for marble floors and a custom-built entertainment center for the Florida condo. Nochumowitz's lawyers accused Liebmann of "attempted intimidation" of the family to "destroy their reputations."

Richard M. Kremen, a Baltimore attorney who represents Nochumowitz, called the settlement a "compromise." He said that Nochumowitz disputes Liebmann's claims. Nochumowitz no longer owns any of the properties involved in the lead paint cases, Kremen said.

The settlement, which is subject to approval by a federal judge, allows Nochumowitz to discharge his debts through bankruptcy without admitting any liability. It also requires him to restate his declaration of assets and liabilities in his bankruptcy petition.

More lawsuits

His creditors now include families in a dozen lead paint lawsuits, one of which won a $600,000 court judgment. In 2007, five additional suits were filed demanding a total of $19 million on behalf of 10 other people who allegedly suffered exposure to lead as infants that has afflicted them later in life.

In one suit filed on behalf of two children, Baltimore lawyer Bruce Powell contends that during the early 1990s a Nochumowitz property on Ashland Avenue was "in such deteriorated condition" that lead paint was "peeling, chipping and flaking from the walls, baseboards, window sills and other areas."

The suit claims that the two babies, who are now teenagers, "ingested and consumed" paint chips and dust and suffered "permanent brain damage resulting in developmental and behavioral injuries." The suit seeks $5 million in damages.

3,500 deeds

In the early 1980s, Nochumowitz bought and sold numerous rental dwellings, which makes him vulnerable to such suits.

Under the law, persons exposed to lead paint as infants can file suit years later should they encounter health problems. The bankruptcy settlement says that Nochumowitz sold the properties before 2000.

The family built large stocks of ground rents, too. Property records show that in as far back as the early 1970s Nochumowitz and his father, Fred, acquired blocks of ground rents at bargain prices from banks, small investors and even a few charities and owned at least 3,500 of the deeds.

The exact number, or how many the family now owns, isn't known because investors won't be required to list ground rents they own in a public registry until 2010.

Nochumowitz managed the ground rent business from the Big Boyz Bail Bonds office, according to the trustee. The bail bonds company is owned by his wife and his business partner's wife, records show.

Nochumowitz is one of dozens of ground rent owners suing the state to overturn reforms of the system enacted by the General Assembly last year in response to The Sun's investigation of the industry.

The legislature, among other things, halted the practice called "ejectment," in which a ground rent owner can seize a property over unpaid rent without returning any equity to the homeowner.

fred.schulte@baltsun.com

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