Attorney General Racine Secures $210,000 in Restitution for Residents of Apartments Where Illegal Hotel Was Operated

Agreement with Two Defendants Comes in Lawsuit Against Ginosi USA

WASHINGTON, D. C. – Attorney General Karl A. Racine announced today that his office has reached a settlement that will return approximately $210,000 to long-term residents of two rent-controlled apartment buildings where the management company had allowed a short-term-rental firm to operate apartments like hotel rooms. The agreement with Daro Management Services, LLC and Daro Realty, LLC comes in a larger lawsuit that the Office of the Attorney General (OAG) Office of Consumer Protection brought earlier this year against those entities, as well as Ginosi USA Corporation; its owner, Eric Ginosian; and the owners and managers of two other apartment complexes in the District.

The settlement resolves the suit’s claims involving the owners and operators of two rent-controlled buildings in Ward 2: The Phoenix, at 1421 Massachusetts Avenue NW; and The Rodney, at 1911 R Street NW. Ginosi has operated short-term rentals out of as many as 46 separate apartments in these buildings since at least August of 2015. In its complaint, OAG alleged that the two Daro entities partnered with Ginosi to operate these illegal short-term rentals.

Both properties involved in the settlement were subject to the District’s rent control laws. By offering the units as short-term rentals to tourists, Ginosi and the two Daro defendants were depleting the city’s inventory of rent-controlled housing.

“Rent-control laws are crucial to maintaining affordable housing in the District, and this settlement helps prevent those laws from being flouted,” said Attorney General Racine. “Preserving housing for low- and middle-income residents in the District is a priority for our office, and we will continue to pursue individuals and companies that seek to circumvent our laws.”

As part of the agreement, the Daro entities agreed to:

  • Take steps to terminate all leases with Ginosi;
  • Cease engaging in any further business or partnerships that sell illegal short-term rentals;
  • Pay total restitution of $210,000 in the form of a rent refund or credit to long-term tenants of $132 per month for each month that the tenant lived in the building while Ginosi units were operated; and
  • Pay the District penalties and costs of $100,054.

Attorney General Racine has alleged that operating apartment buildings like hotels is a violation of the District’s Rental Housing Act and the District’s licensing requirements for hotels. Ginosi also allegedly collects sales taxes from guests but fails to remit them to the District.

A copy of the Assurance of Voluntary Compliance that OAG reached with the Daro defendants is attached. A copy of the original lawsuit and associated documents is available here.

Preserving Affordable Housing and Helping Tenants
This settlement is one of several recent victories for tenants in the District resulting from OAG lawsuits and other actions to preserve affordable housing. As part of his commitment to ensuring District residents have access to quality affordable housing, Attorney General Racine will continue to bring actions to ensure safe and habitable housing conditions and to ensure that consumers get what they pay for with their rent checks.

Consumers who have complaints concerning Ginosi rentals or other short-term rentals may contact OAG’s Office of Consumer Protection at (202) 442-9892.

Tenants with landlord-tenant concerns can contact the Office of the Tenant Advocate at (202) 719-6560; if you believe your issue may be building-wide, please ask them to share your information with the Office of the Attorney General.

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