Attorney General Schwalb Files RICO Lawsuit to Dismantle Razjooyan Slumlord Empire

Attorney General Brian L. Schwalb today filed a first-of-its-kind civil lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO) to dismantle an extensive real estate fraud scheme led by slumlord Ali "Sam" Razjooyan, his brother Eimon "Ray" Razjooyan, and their mother Houri Razjooyan.

The Office of the Attorney General (OAG) alleges that the Razjooyans are operating a vast, illegal real-estate empire that controls dozens of apartment buildings in DC. Over the past decade, the Razjooyans have acquired over 70 primarily rent-controlled buildings - 90% of them in Wards 7 and 8. Through a Ponzi-like scheme, the Razjooyans deceive lenders with fake financial documents and false promises to renovate the buildings and then rent them to tenants who receive housing subsidies that are reliably paid by District government and that are above the rent-stabilized amounts. Instead of fixing up the properties, the Razjooyans use the loan proceeds to enrich themselves, pay off loans from previously purchased buildings, and buy new properties to perpetuate the scheme. The buildings then fall into disrepair, forcing hundreds of the District's most vulnerable tenants to live in horrific conditions, including rodent and insect infestations, gas leaks, electrical hazards, mountains of trash, mold, and flooding. At the same time, the Razjooyans are defrauding the District agencies that pay their tenants' housing subsidies-more than $16 million to date-by falsely claiming that the properties are safe and habitable, a required condition for receiving the rent subsidies. By allowing so many apartments to become uninhabitable, the Razjooyans are decreasing the housing supply in DC and worsening the District's affordable housing crisis.

With this lawsuit, OAG is seeking to permanently dismantle the Razjooyans' housing scheme, ban them from operating residential rental properties in the District, and secure restitution for harmed tenants and penalties and damages for the District.

"Today, we're dismantling the Razjooyan slumlord empire," said Attorney General Schwalb. "DC has a serious housing affordability problem, and slumlords like the Razjooyans make things worse by decreasing the available housing supply and forcing tenants to live in horrific conditions. Their business model, by design, preys on tenants for profit - cheating banks, private lenders, and the DC government along the way. Instead of addressing each building individually, we're attacking the very foundation of their illegal operation. As the District's independent Attorney General, I am committed to using the law to put an end to such fraud and exploitation and to protect affordable housing in the District."

"For years, my neighbors and I have been living with issues no one should have to deal with in their homes," said Earnest Wilkerson, President of the Minnesota Commons Tenant Association, "When I moved into Minnesota Commons, this was a well-maintained building, but after Sam Razjooyan bought it, things went downhill fast. Maintenance stopped, pest control treatments stopped, and trash accumulated everywhere. We had multiple floods and burst pipes that collapsed people's ceilings. Our heat kept going out and rodents ran rampant. Our landlord started doing all kinds of construction and took windows off of vacant apartments, leaving them completely open to the elements, and people came in and stole the copper pipes, causing even more problems for us. My neighbors and I are grateful that the Office of the Attorney General is filing this lawsuit to put a stop to all of this."

"The DC Department of Buildings' core mission is to make sure that District tenants have safe, habitable housing-and that means holding landlords accountable who fail to meet their legal obligations," said DC Department of Buildings Director Brian J. Hanlon. "In this most egregious example, DOB helped build the case by conducting thousands of inspections at more than 100 properties. This unprecedented action symbolizes how years of hard work by the District government pays off. I thank the DOB team for their unwavering dedication, and Attorney General Brian Schwalb and his team for being valued partners. Our hope is that this lawsuit will ultimately result in these properties being renovated by owners who care about their tenants' living conditions."

"Working with many residents from Razjooyan-affiliated properties around the District, Legal Aid has seen firsthand how this sprawling web of businesses has been built at the expense of tenants' safety, health, and most basic rights," said Megan Browder, Legal Director for Systemic Advocacy & Law Reform at Legal Aid DC. "It is a stain on DC's entire housing system, and residents deserve better. We commend Attorney General Schwalb and his office for pursuing justice for these tenants and accountability from one of the District's most dangerous slumlords."

In August 2024, Attorney General Schwalb filed two lawsuits against Sam Razjooyan for endangering tenants at two apartment complexes in Wards 7 and 8, and OAG has been involved in dozens of additional proceedings against the Razjooyans since then. During these investigations, OAG uncovered evidence of the sprawling, illegal Razjooyan housing empire, including a complex web of financial fraud made up of a web of LLCs, unlicensed property management and construction companies, and straw purchasers designed to conceal the true ownership of certain properties.

To implement their scheme, the Razjooyans:

• Lie to lenders to secure loans that are up to double the actual purchase price of distressed properties by falsely promising to redevelop the primarily rent-controlled buildings and then rent the refurbished units at higher rates, usually through subsidized rents.
  
• Make quick cosmetic fixes to the properties, typically through illegal, unpermitted, and dangerous construction, to make some units seem habitable, while ignoring severe problems that endanger tenants.
  
• Refinance the properties at grossly inflated values by again lying to lenders-falsely claiming they have made needed repairs and that the buildings are fully occupied and generating significant income.
  
• Defraud the District's housing subsidy programs by submitting documents falsely claiming that they will fix and that they have fixed the units to make them safe and habitable, and therefore, qualified to receive rental subsidies.
  
• Allow the buildings to fall into extreme disrepair.
  
• Illegally use the loans to line their pockets by charging bogus fees and skimming money directly into their personal bank accounts, paying back previous loans for other properties, and buying more apartment buildings.

In its lawsuit, OAG alleges that the Razjooyans have violated the District's Consumer Protection Procedures Act (CPPA), the District's False Claims Act (FCA), and the federal RICO Act by:

• Worsening DC's affordable housing crisis. The Razjooyans have allowed over 600 DC apartment units to become nearly uninhabitable, decreasing the District's supply of safe, affordable housing.
  
• Endangering hundreds of District tenants. The Razjooyans have racked up over 4,000 housing code violations, and investigators report that the conditions at these properties are among the worst they have ever seen in DC. A fire, likely caused by faulty wiring from illegal construction, tore through a Ward 5 apartment building, while other tenants across DC have lived without heat for an entire winter; endured noxious smells from days-old standing water; and were forced to undergo emergency evacuations to avoid a potentially deadly gas explosion or because their building was deemed at risk of total collapse.
  
• Defrauding District housing assistance programs of over $16 million. The Razjooyans entered into more than 500 fraudulent housing contracts with District programs intended to help the city's lowest-income residents, falsely claiming that their properties would be kept in safe condition and up to code, which is a prerequisite for obtaining subsidized rents.
  
• Operating a criminal enterprise in violation of the federal RICO statute. The Razjooyans have enriched themselves by systematically deceiving lenders and harming the District. Through an organized and ongoing pattern of criminal fraud-including bank fraud, mail fraud, wire fraud, and obstruction of justice-the Razjooyans have corruptly persuaded banks and other financiers to loan them tens of millions of dollars. The District has spent hundreds of thousands of dollars to investigate and remediate dangerous conditions and relocate tenants evacuated from the most severely neglected properties.

Under both the RICO Act and the FCA, the Razjooyans can be held liable for three times the amount they owe for their fraud (known as treble damages) as well as civil penalties payable to the District.

The lawsuit is available here.

This matter is being handled by Senior Trial Counsel Laura Beckerman, Assistant Attorneys General Matthew Meyer and Sean Powers, Investigators Cullen Hamilton and Willie Haynes, Paralegals Althea Geletka and Conny Tello, Staff Assistant Mina Kasama, and Senior Data Scientist Aziza Talajawala. It is supervised by Housing and Environmental Justice Section Chief Joanna Wasik.

What is RICO?

Originally enacted in 1970 to combat organized crime, the RICO Act allows both criminal and civil actions against individuals or entities engaged in a pattern of racketeering activity. Beyond organized crime, the civil RICO statute is often used in cases involving fraud schemes, corruption, and large-scale business misconduct.

OAG's Jurisdiction and Enforcement Authority

Because DC is not a state, the federal US Attorney's Office is responsible for prosecuting the vast majority of crimes committed in DC, including all felonies committed by adults.

OAG exercises civil enforcement authority to protect DC tenants under several District statutes, including: the Tenant Receivership Act, under which OAG can force landlords to fix health and safety issues at rental properties; the CPPA, which protects consumers from deceptive and unfair business practices; and the FCA, under which it is illegal to make false claims for payment to the District and to knowingly make false statements to conceal, avoid, or decrease an obligation to pay the District. OAG also has the authority to bring civil RICO claims.

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