A group managed to make $20 million in revenue through unlawfully renting 130 apartments in Manhattan to nearly 76,000 guests with Airbnb.

A group managed to make $20 million in revenue through unlawfully renting 130 apartments in Manhattan to nearly 76,000 guests with Airbnb.

There is a small white building on the corner of a cobblestone street in New York City’s Tribeca neighbourhood. It may not look special, but until just recently, that building played a key part in a large and lucrative hospitality empire.

This empire was made possible by Airbnb, where apartments in the building were listed with taglines such as “Beautiful Loft Prime Tribeca 4BR/2BA Sleep 10.”

These apartments were popular with tourists who wanted cheap lodging—at $600 a night, they were a bargain for a large group—in one of the most desirable neighbourhoods in America’s largest city.

The only problem was, as part of an elaborate real estate scheme to make millions via dodging the state laws, local ordinances and Airbnb’s own requirements, the listings were illegal.

Lucrative but unlawful

One enterprise managed to make more than $20 million by unlawfully renting 130 apartments in Manhattan to nearly 76,000 visitors, all through Airbnb, city officials have said.

The plot was geared toward getting around city regulations intended to keep blocks of apartments from being turned into unregulated makeshift hotels.

A report which first appeared in The New York Times offered real insights into how this was possible.

The main idea was to circumvent city ordinances specifically aimed at stopping this from happening with the help of lodging taxes and oversights.

The sneaky idea behind the scheme

According to a resultant lawsuit, the group behind this scheme used misleading identities to get around Airbnb rules.

They were also loose about details on addresses. All in all, they used 100 Airbnb accounts and created 18 corporations to rent out the properties, which were scattered from Tribeca and SoHo to Gramercy, the Upper East Side and Harlem.

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 only in the most egregious of cases. In this one, the city is seeking more than $20 million from the defendants.