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Attorney General sues woman for fraudulently claiming ownership of Williamsburg housing cooperative

letitia james lawsuit
Attorney General Letitia James filed suit on Tuesday against a woman she said fraudulently took ownership of a housing cooperative in Williamsburg.
File photo by Todd Maisel

Attorney General Letitia James is suing a woman her office says has fraudulently taken over a low-income housing co-op in Williamsburg for her own financial gain.

In a 19-page lawsuit filed in Manhattan Supreme Court on Tuesday, James said Florida resident Jessica Vargas falsely claimed ownership of the 13 Scholes Street Housing Development Corporation for years and stole “hundreds of thousands of dollars” meant for the HDFC. 

“What was meant to be affordable housing for New Yorkers has now been manipulated into a Floridian’s personal piggy bank,” James said in a statement. “That is unacceptable. We are suing to take this building out of Vargas’ hands and ensure it remains available to low-income New Yorkers.”

James’ office asked the court to “permanently enjoin” Vargas from engaging in fraudulent practices, including collecting money on behalf of 13 Scholes Street HDFC or selling the building; and to force her to repay the more than $400,000 she has allegedly illegally collected on behalf of the HDFC. 

Brooklyn Paper was not immediately able to reach Vargas for comment. 

All in the family

Per court documents, the residents of the three-family residential building — including Vargas’ mother and father, Frances and Albert Rivera — incorporated the HDFC in 1996. The co-op was created “exclusively” to provide housing for low-income people, and each shareholder was given an equal number of shares – the Riveras held 250 each. 

In 2009, after the deaths of the other shareholders, the Riveras allegedly created fraudulent documents that claimed they had been elected as directors of the HDFC.

In the years leading up to his death in 2018, Albert “tried to sell [the building] to enrich himself personally] the suit claims, and agreed to lease the entire building to a private company, Scholes Residence LLC, for six years and $6,500 per month.  

But Albert did not have the authority to sign onto a lease agreement or sale on behalf of the HDFC, the suit says, and collected all the rent money himself. 

williamsburg housing cooperative
The building at 13 Scholes Street. Photo courtesy of Google Maps

After Albert’s death, Vargas allegedly successfully moved to become the administrator of his estate, but did not disclose any assets related to 13 Scholes Street HDFC, and started collecting the rent money, which she split among herself and her siblings. 

Vargas kept the arrangement up even when Florida courts closed Albert’s estate, according to the suit, and did not report any of the earnings from the building to the states of Florida or New York or the Internal Revenue Service. 

As of March 11, the AG said, 13 Scholes Street HDFC owed more than $41,000 in unpaid property taxes and more than $3,000 in unpaid water and wastewater fees to New York City.

The suit further alleged that Vargas created fraudulent documents that falsely showed her as owner of the HDFC in an effort to sell the building, though the sale never went through, and falsely testified about her position in two separate court cases. 

One of those cases sparked the Attorney General’s investigation, documents show. 

Scholes Street residents suspected fraud

In 2024, Scholes Residence LLC moved to evict several tenants from 13 Scholes Street HDFC. One of those tenants accused the company of fraudulently claiming ownership of the building, and showed documents that seemed to prove the sale and lease of the building had been illegal. 

“After learning of [those] facts, the OAG opened an investigation into the attempted theft of title to 13 Scholes Street and into whether the 2017 lease agreement was the result of fraud,” court documents state

The eviction case was paused when the investigation began, but later that year, Scholes Residence LLC filed a separate lawsuit in Brooklyn Supreme Court, claiming the company was the rightful owner of the property, that there had “been no alleged fraud regarding the deed or title to the Premises,” and urging the court to evict one of the tenants.

A judge later tossed that case, saying all of its complaints were already being addressed in the paused eviction case, and accused Scholes Residence LLC of “forum shopping in an attempt to evade the stay order from Housing Court.”