Investigator: Millions in housing fines go uncollected

CLEVELAND -- Thousands of homes in the City of Cleveland have certainly felt the brunt of the housing crunch within the past decade. There are obvious signs of neighborhood decay, including run-down, abandoned and condemned homes, resulting in plummeting property values, which in turns, makes them easy targets for crime. "There are a lot of empty lots around here," 45-year Bailey Avenue resident Mike Doolittle confessed. "I know some of the properties are tied up in court, and you have to wait for a long time to get them."

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Cleveland Housing Court officials say criminal enforcement can be one of the most cost-effective tools that local governments have to address building code and property maintenance violations. However the City of Cleveland is currently not permitted to levy unpaid building code and property maintenance fines on municipal property tax bills. Consequently, the criminal fines imposed by local courts do not serve as a deterrent to the illegal activity, because the individual, limited liability company (LLC) or corporation that owns the property, often cannot be found to collect the fine.

A Channel 3 exclusive investigation found the City of Cleveland unable to collect on millions in housing fines. Reports show 244 property owners; the majority being LLC's, owing roughly $192 million to the city since the practice of compiling the figure began in 2009. The monies stem from contempt sanctions imposed because the defendant entity repeatedly failed to appear after having been served with summons and sent multiple notices to appear in Court to answer charges brought by the City.

"They are thumbing their noses at the system," Housing Court Judge Ray Pianka, honestly said. "They can thumb their nose until the bark of the fine meets up with the bite of the fine which is the collection of the fine." Judge Pianka has overseen the Housing Division for 19 years and currently has two-thousand active cases of property owners failing to appear to address their charges.

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Convicted "house-flipper" Blaine Murphy, hid behind a company called Bryce Peters Financial, a corporation he used to run a million-dollar scheme from his Naples, FL home. Cuyahoga County Prosecutors said he bought hundreds of homes without stepping foot on their property, and sold them for a quick profit, without addressing code violations or paying city or county taxes.

"The sentence was very effective," Murphy told the Investigator Tom Meyer outside of the Justice Center. Murphy was given an early release from prison on the terms he lived in a rehabilitated home in Slavic Village. The Beyerle Avenue home sits across the street from an abandoned house, and has security cameras outside of it along with a 'no trespassing sign' posted in front.

"I can safely say it (prison sentence) opened my eyes up to a community that was blighted by the foreclosure crisis," Murphy said. "I've got great neighbors and we are ready for good things to happened in the neighborhood." Murphy was sentenced to three-thousand hours of community service and has $100,000 to pay back in court costs and fines.

The Clerk of Courts Office is in charge of collecting the fines, imposed by the Housing Court. In the Murphy case, Earl Turner's office had help from local and federal authorities. "It took a lot of law enforcement to identify him, they were able to track him by serial numbers on a few documents, "Turner said.. "We are seeing the closer we get, the faster they run, people hide behind corporations now and we just don't have the type technology to do it ourselves."

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Some LLC's make a mockery of the system. Channel 3 News found a property owner called, "Khan Tamin Ated' associated to a property at 8001 Franklin Blvd on Cleveland's west-side. The owners owe the city over $12,000 in taxes since 2010. The property features an empty lot with overgrown bushes, broken glass, and plenty of garbage.

In 2010 an abandoned home on West 83rd Street in Cleveland exploded, rocking the neighborhood. The home was owned by EZ Access Funding, a LLC which owns roughly 20 properties throughout the city. Court records show they owe more than $48-million in civil penalties. "We can't go out and arrest a corporation," Pianka said. "We are seeing corporations formed all over the country, so it makes the job of accountability all the more difficult."

This following list reflects the penalties imposed under the Court's contempt power against entity-owners who fail to appear in Court to answer charges. These numbers do not reflect guilt or innocence, and are unrelated to the criminal fines that may or may not be eventually assessed in these cases.

These penalties are strictly in place as a civil contempt sanction to compel the defendant to appear in court and respect the rule and process of the court system.

These numbers reflect the sanctions imposed and ordered to civil judgment for collection. They do not reflect any subsequent reduction or adjustment by Court order or collection, and they do not reflect the amounts actually collected.

DATA: Millions in uncollected housing fines


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