The owner of a pair of rundown Washington apartment buildings that would be worth $6 million if converted to condominiums alleges that the leaders of a federally funded neighborhood organization supposedly assisting the tenants in their resistance to conversion offered to sell the tenants out in exchange for a payment of $100,000 and other inducements.
Nick Rangoussis, owner of the buildings in a 14th Street corridor neighborhood where high-priced condominiums are rapidly replacing rental apartments, has tape recordings of conversations to support his allegations.
Rangoussis alleges that three leaders of the organization, Change, Inc., sought from him at various stages in their talks the management of one of the buildings once it was converted; a 30 percent share of one of the buildings once it was converted and sold; another apartment building, worth $133,000, that he was considering buying; and the $100,000 payment, in cash.
In exchange, Rangoussis said, the Change officials said they would see to it that the tenants evacuated the buildings and that Rangoussis was granted a certificate of eligibility to convert from the District of Columbia government. They also allegedly said they would remove the tenants' Legal Aid Society attorney, Janet LaBella, from the case. Rangoussis said their discussions never reached the stage to make it clear how Change would achieve these results.
"They're saying if I'd give them something of value, they would give me something of value," Rangoussis said.
The president of Change, Robert L. King, and two of his subordinates denied the charges and noted that Rangoussis lost a bitter and protracted court battle last December in which he was ordered to refund about $35,000 in back rent to the tenants because of massive housing code violations in one of the buildings.
The tapes, which were made from late January to mid-February, reveal these key efforts to pressure Rangoussis:
King told Rangoussis that the organization's executive director, Archie D. Williams, wanted the payment to be $100,000 because Williams was risking his career in the deal. "It [the $100,000] has to be borrowed from somewhere," King said. "We have to have some contingency money."
King said that Change's deputy director, Phaion C. Hyche II would have to be given "something of value" if he were to be restrained from using his "power" to do something" to hurt Rangoussis' interests among the tenants.
King agreed with a suggestion by Rangoussis that the officials of Change would rather receive a building at 1333 Euclid St. that Rangoussis was considering buying than the $100,000 cash because "a new condo" would be more profitable than "a one-shot thing."
Walter Dennis, a colleague of Hyche, issued a veiled warning to Rangoussis that the officials of Change were planning to "pull out all the stops" in their battle with him over the Meridian Place buildings unless he met their demands.
The actions of these people as well as a cast of lawyers and real estate brokers is a striking illustration of the high stakes involved in the transformation of inner city housing -- a game in which poor tenants, usually blacks and Hispanics, at times are helpless pawns.
Located at 1436 and 1438 Meridian Pl. NW, a pleasant little street that runs between 14th and 16th streets NW and lined mostly by neat, single-family brick houses, the two buildings are something of an eyesore. All around, the neighborhood is taking on the sure signs of upgrading. Whites and upper-income blacks are beginning to buy into buildings where only a few years ago only poor blacks paid low rents for substandard apartments. When Rangoussis bought the buildings four years ago, he paid $210,000 for them. Today, according to broker R. David Hall, who has done business with Rangoussis and knows the properties, they would be worth $6 million as condominiums after renovation.
Change, Inc. -- the Cardozo Heights Association for Neighborhood Growth and Enrichment -- is located in the midst of this neighborhood, at 14th Street and Park Road NW. It is funded, in part, by the federal Community Services Administration by way of the United Planning Organization. Change currently gets $254,806, for various social services from the federal government.
It was in a series of meetings that began at the start of this year -- two of them in a Spanish restaurant on Columbia Road NW -- that King, Hyche and Williams allegedly proposed their deals to Rangoussis.
The tenants of the two buildings seem to have little awareness of the big-money game swirling around them. They do know, though, that actions taken on their behalf by Change and LaBella have had an effect. For the example, Rangoussis' applications for the essential certificates of eligibility were stalled in the housing department for eight months and ultimately rejected on the basis that the law had changed during the eight months.
According to interviews with Rangoussis and detailed tape recordings of the conversations, the leaders of Change intensified and altered their demands on Rangoussis for "something of value" as LaBella's legal contest with him took its toll on his nerves.
Here are some excerpts from the tape recordings:
Rangoussis: "I don't know how I can come up with $100,000 to clean it up [evacuate] the [building at 1436 Meridian Pl.] I don't know how I can come up with $100,000 . . ."
King: ". . . You know the deal is based on your getting what you asked for [the certificates of eligibility from the city housing department]. And if you don't get that, of course there is no deal . . . they have to deliver. . . ."
King then told Rangoussis that the Change officials knew they had a "powerful weapon" to use on him -- the power to get rid of the tenants and to deliver the certificate of eligibility -- and that Hyche and Williams wouldn't hesitate to exercise their power because they "don't have anything" and "they see a lot of money's going to be made somewhere."
King went on to tell Rangoussis: "It [the $100,000] has to be borrowed from somewhere . . . . We have to have some kind of a residual fund or revolving fund . . . or contingency fund."
Rangoussis: ". . . Yeah. But the only thing that upsets me, when Archie [Williams] says about $100,000 . . . ."
King: "Well, see, Archie . . . was asking for $100,000 . . . based on that there were several people involved . . . . That $100,000 wouldn't be any money in the event that this thing backfired and his whole career was ruined . . . . See, all Archie's gonna do is be a career guy . . . . So, when he sees a business opportunity, he's thinking about everything . . . . If this deal should backfire, that means that Archie's -- he makes a little over $20,000 a year -- that means that he is out of a job. You understand what I mean? . . . . It means that his family, his name, is ruined. You understand what I'm saying?"
Referring to Hyche, King termed him "a very highly emotional person" who "has the power to do something" detrimental to Rangoussis' interests. Therefore, "the other thing is I'm going to have to be working hard on now, is to try to keep them from getting inside of [1436 Meridian Pl.] and organizing against you." King went on: ". . . They would have to have -- Archie particularly and Phion -- something of value . . . if this deal should backfire . . . ."
Then, Rangousis noted that the 1333 Euclid St. building had much greater value than the $100,000 in cash because it could be converted to condominiums.
King: "A new condo, of course, of course that option is there. They're gonna take that route, probably . . . . That's why they would rather have [the Euclid St. building] if it can be worked out. Because the $100,000, you gotta keep in mind. Nick, that ain't nothing. That's a one-shot-thing."
King, when read exerpts of a taperecorded coversation between himself and Rangoussis, said "I'm not aware of any of that. Those are very serious allegations, dealing with a lot of money and people's careers. They're very serious and unfortunate."
Hyche said, "I'm not going to cross those people [the tenants]. I've got to much time involved in this. If I was interested in a bribe, I wouldn't sit around the table talking to Nick about it."
Speaking through his lawyer yesterday, Hyche said a deal had instead been proposed by Rangoussis, and that as a result of Hyche's refusal to become involved, Hyche has "prevented any collusion from developing."
Williams' response to the allegations was, "I deny it. The biggest thing that has me worried is people are crucified in things like this, whether or not it's accurate."
The tenants' Legal Aid attorney, Janet LaBella, who has tenaciously battle Rangoussis in his year-long effort to evict her clients and covert the buildings, said of the allegations, "I've never heard of any of it and I find it hard to believe." Rangoussis did not implicate LaBella in his allegations of deal offers.
In early February, when the alleged efforts of the Change leaders and Dennis to apply pressure of Rangoussis were not moving ahead, Hyche threatened him, Rangoussis said.
The alleged threat took place during a meeting at Applied Benefits Institute Inc., 1100 17th St. NW, a prepaid legal benefits firm , where Dennis and Hyche are colleagues. According to Rangoussis, Hyche leaned across a desk, staring hard into his eyes, called Rangoussis "a damned white" who "had insulted my intelligence" and warned, "You think you've seen trouble. You haven't seen nothing 'til you've seen trouble on 14th Street."
Rangoussis said shortly afterward in a conversation with King that he could no longer speak to Hyche, "because he's jumping me really bad."
Hyche's attorney said that Hyche had told him of an "altercation" between him and Rangoussis in which "my client took so much abuse to his integrity that he cursed the developer out."
During the interview with a Post reporter in which he denied Rangoussis' allegations, Hyche said, "I get so incensed I could go out and physically kick his a-- up and down 14 Street."
The last time Rangoussis said he discussed a possible deal was at a meeting in mid-February between himself and Dennis. The meeting ended without a resolution on the Euclid Street building proposal after Dennis allegedly warned him that Change planned to "pull out all the stops" at Meridian Place.
The events that climaxed in the alleged deal attempt were set in motion a year ago. On Feb. 20, 1980, Rangoussis began passing out "agreement and consent" forms to the low-income tenants of 1438 Meridian Pl., all but one of them black and several of them elderly and ailing. He said that he intended to convert their apartments to condominiums and told them to vacate. In return, Rangoussis told the tenants, he would give them $50 immediately. When they moved, he would pay them as additional $250. Two months later, he began the same process at 1436 Meridian Pl.
Enough tenants to meet the 51 percent requirement of the housing department signed the consents in both buildings. Five took the proffered money and moved out immediately.
But others felt that their landlord was bullying them and sensed, accurately, that he was not offering them everthing they could get. They contacted Change, Inc. Change advised the tenants not to move and "the battle," as Hyche put it in an interview recently, "was joined."
Change contacted LaBella at Legal Aid. Marica Segal, a paralegal staff member of Legal Aid, and Michael Dazey, an attorney with Neighborhood Legal Services, also became involved. In time, as LaBella related "the Meridians" and their tenants would become a consuming passion of three young, white people."
"I've come to love them," LaBella said of the tenants who've hung on in living conditions one of them termed "not fit for a dog," while she assures them their struggle will be renewed with the ownership of one of the buildings. "When you meet with them almost weekly, share their problems and concerns, it's only natural that this would happen . . . . No one should live in the conditions they live in."
LaBella said she devotes at least 20 hours a week to the case, at her Legal Aid salary rate of $9.85 an hour, although she recently began a private law partnership. She is adored by many of the tenants. She is a tiny woman, and they call her "little one" and "mighty mite."
Once the lawyers set to work, they moved swiftly, incorporating tenant councils for the two buildings, seeking hearings on Rangoussis' requests for conversion, and persuading 10 of the tenants to retract their consent.
Rangoussis, according to the tenants and their lawyers, moved quiclkly, too.
He stopped supplying heating oil, halted maintenance of the already rundown buildings, and stopped garbage collections.
A onetime merchant seaman and former house painter whose ability to speak and comprehend English is rough although he emigrated here from Greece 22 years ago, Rangoussis says he is confused by social legislation in his adopted country. "Why the great America lets the small businessman who worked hard all his life lie in the drain and the people who don't work and lay around their apartments all day can take away his building for nothing?" he asked.
From Dec. 8 to 19, Rangoussis and 12 tenants at 1438 Meriddian Pl. went through a trial in D.C. Superior Court -- he seeking rents they had not paid; they countering massive housing code violations. The jury found overwhelmingly in favor of the tenants, turning back to them virtually all of the rent they were supposed to have paid for about three years, $48,349.12. In fact the tenants had not paid nearly $14,000 in rent over this period and the final judgement they were awarded -- $34,395.16 -- reflected this.
This outcome was a serious blow to Rangoussis, 49, and his wife, Maria, 34. Added to their legal fees of some $45,000, they said, the judgement plunged them deeply into debt.
Rangoussis, according to his wife, gradually became more and more secreative, withholding from her information about large loans he was obtaining in the Greek-American community and about meetings he was having with the officers of Change.
These meetings began late last year after a friend of Rangoussis introduced him to King, who, in addition to being preisdent of Change, is an officer of the 14th Street Project Area Committee.
"When I'm heard he was with Change," Rangoussis said, "I'm told him, 'Hey, you guys are killing me.' Bob [King] said he would try to help me. Then, I'm thinking it was late December or early in January, Bob calls me and says, 'We're having a meeting. Come.' So, I go. There was Bob and Phaion and Archie and me."
Rangousis then began to describe what allegedly took place during a series of meetings and telephone conversations, a number of which he tape-recorded at his wife's urging:
At the first meeting, according to Rangoussis, after discussing the exchange of "something of value," the three proposed that Rangoussis give them a contract for the management of one of the converted Meridian Place buildings.
Maria Rangoussis, sitting in her sunny, floral-wallpapered kitchen in Silver Spring, recalled that her husband returned from that first meeting and, "for the first time in a while, Nick seemed happy. He makes this big mark," she said, pointing to a penciled "X" at Feb. 28 on a wall calendar. "He told me they wanted the management. I thought it was OK. There was nothing wrong with it. In return, they would get rid of the tenants and LaBella. Nick went to some more meetings and then his mood changed back."
"After a while," Rangoussis said as he and his wife chain-smoked cigarettes, "they figure there ain't no money in the management."
The next "something of value" the Change people allegedly wanted was the building at 1333 Euclid St. NW. Its price was $133,000. Were they seeking it as a gift? "Sure, a gift, free." Rangoussis said.
In time, according to Rangoussis, as the meetings continued, Walter Dennis began to participate, as a kind of consultant to the Change officials. Dennis allegedly urged that Rangoussis cut in King, Williams and Hyche for a 30 percent share in one of the buildings after condominium coversion.
When Rangoussis balked, he said, Dennis began to propose that he simply give the Change officials $100,000 in cash. Later, it evolved, it was to take the form of a "contingency fund" for 1333 Euclid St., which Rangoussis would buy and turn over to them for completion of mortgage payments and ownership.
Dennis could not be reached for comment despite repeated telephone calls to his office. On Friday his secretary said he was out of town but that she would give him a message.
The alleged proposal of a deal exacerbated a tense and bitter face-off between the landlord and his tenants. While most of the tenants, interviewed at their association meetings, with LaBella and Hyche present, said they would fight Rangoussis until they won the option to buy one of the buildings, those few who would be interviewed individually in their apartments were less committed.
"The lawyers want us to buy the building," said Shirley Ward. "I don't know why. I certainly don't want to buy." Ward, who lives with her 10-year-old son at 1436 Meridian Pl., said she is unemployed and seeking disability compensation as a result of spinal disc surgery she underwent six years ago.
Eva Johnson, who lives at 1438 Meridian Pl. and was interviewed as she lay beneath her bedcovers watching a television soap opera on a chilly day when her apartment had no heat, said: "I'd rather rent if Nick fixed the place up."
Asked about these comments, LaBella said that several of the tenants were "spaced out" and that only "half a dozen or so really comprehend what's going on."
But, LaBella added, "They have the big picture and they want to buy -- or at least have that option. We try not to lead them too much. So we tell them they can take their money and run, if that's what they want. But I don't like doing that because it's important politically in this city that they stay and fight -- and win."
LaBella beams when 75-year-old Eva Brooks speaks, wry and wise, spunky and tough-minded. "Nick is worse than any other landlord I've had in Washington in almost 55 years. He can't throw us out like old socks," said Brooks, who has lived in the same two-bedroom apartment in 1438 for 22 years and recently suffered two strokes and a heart ailment. "We're going to fight just as long as we can fight because we got nowhere else to go."
Rangoussis charges that LaBella is "manipulating" the tenants and that she is intent on "destroying" him. "This is no more a legal matter," he said. "It's a personal fight. She wants to destroy me."
LaBella said she believes that Rangoussis is continuing the struggle against the tenants because he is "vindictive." Noting his claims of indebtedness and that he still faces a trial against the tenants at 1436 Meridian Pl., she said, "There can't be any other logical explanation for his behavior."
LaBella also conceded that she is not sure how well Rangoussis understands English, particularly legal terminology, and therefore questions how well he comprehended some of the complexities of the multi-faceted struggle he's involved in. She noted, for example, that under her cross-examination during the trial, Rangoussis denied that he had done certain repairs on the building which he'd actually done -- a misstatement that clearly was against his own best interests.
LaBella and most of the tenants contend that Rangoussis did virtually nothing to maintain the buildings in the five years since he bought them. Rangoussis, in turn, said that, after his efforts were countered by vandals, he gave up and decided to convert the buildings into condominiums.
Rangoussis said that the condition is a cumulative effect in the 50-year-old buildings. The tenants lay the blame squarely on him. This view was supported by J. D. Grewell, a structural engineer LaBella hired to survey 1438 Meridian Pl.
Grewell, who was a star witness for the tenants in court, wrote that "recent accelerated deterioration is largely due to abuse and neglect which now adversely affects the safety and habitability for the remaining occupants." n
City housing inspectors found similar fault with Rangoussis, citing dampness in ceilings and walls; holes in ceilings and walls; falling plaster; peeling paint; defective electrical outlets and fixtures; badly fitting windows; broken windows; rotted window frames; kitchens infested with rats, roaches, bedbugs, lice, termites, fleas, flies; rotted floors; overuse of lead-based paint; defective and missing sinks, stoves, bathroom basins; inadequate heat (58 degrees); exit lights not lit from sunset to sunrise; defective ceiling lights in halls; blocked drains; accumulated trash behind and along-side buildings.
In Rangoussis' view, the buildings are functionally exhausted, beyond the bailing wire-and chewing gum-level of repairs that would be the only type he could afford to do under the financial constraints imposed by rent control laws, and suitable only for getting and complete rehabilitation as condominiums.
Rangoussis did not disagree that the buildings are in appalling condition, many of the apartments truly unfit for human habitation. For example, Minnie Clark, a shy, soft-spoken woman, lives in a devastated ground-floor apartment at 1438 Meridian Pl. So heavy have been the leaks from her bathroom ceiling that for a month Clark carried an open umbrella with her when she entered the room. Gaping holes in ceilings and water-logged plaster have caused her to heap her belongings into mounds strategically located in relatively dry and safe spots.
The joists beneath the floor in Clark's apartment have been rotted away be steam from the boiler in the basement. The floor boards sag so badly that they are supported only by heating pipes. Although Clark's apartment was the worst, visits to the two buidings showed that every occupied apartment has been severely neglected. CAPTION: Picture 1, ROBERT L. KING . . . "something of value"; Picture 2, NICK RANGOUSSIS . . . meetings in a Spanish cafe; Pictures 3 through 5, Archie D. Williams and Phaion C. Hyche, officials of Change, Inc., deny they offered to aid efforts by landlord Nick Rangoussis to evict tenants at two apartment buildings on Meridian Place NW in return for $100,000 and a share of the buildings. Change, Inc., is a neighborhood organization designed to help tenants such as Eva Brooks showing the collapsed ceiling of her bathroom in one of the Meridian Place buildings. Photos by Fred Sweets -- The Washington Post