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Businessman collects rents on condemned, unavailable units

By Claire Bessette

Publication: The Day

Published May 05. 2012 8:53PM   Updated May 07. 2012 3:10PM
Tim Cook/The Day
Norwich Building Inspector Greg Arpin reattaches "UNSAFE" signs to the doors as he checks up on 75 Fourth St. in Norwich. The property is owned by investor Zane Megos.

Multifamily homes at 25 Rogers Ave. and 75 Fourth St. are among the dozens of properties in Norwich that stand condemned and empty. The Rogers Avenue home was flooded when pipes burst. The Fourth Street property has no running water and structural issues.

Even though the buildings are uninhabitable, the owner, Zane Megos, has taken rental deposits from would-be tenants over the last three years, an investigation by The Day has found.

Nine people, since 2009, have claimed they paid Megos nearly $25,000 in cash deposits and rent for apartments they never were able to live in, either because the units were in condemned buildings or were not owned by Megos or his partner and therefore unavailable.

Some of them worked minimum-wage jobs or were disabled. Some had to borrow from their parents and friends to come up with the down payments, or find roommates to share the costs.

Megos has used ads on Craigs list and in newspapers, as well as roadside signs, to attract tenants. Some never see the units other than pictures posted online. Megos often has taken the cash deposits in meetings in the parking lot of a West Side doughnut shop.

The Day's investigation included numerous interviews with past tenants, would-be tenants and city and state officials. It included a review of several Connecticut Small Claims Court cases and one complaint to the state attorney general's office.

In an interview last week at the New London office of his attorney, Harry Traystman, Megos said the prospective tenants were aware that the apartments were not going to be available immediately because of needed renovations. In some cases, he said, the renovations were delayed by problems with contractors, and the prospective tenants then changed their minds about renting the apartments.

Megos said "it's a normal practice" in real estate to ask for down payments before apartments are ready to be occupied. He said that allows him to offer specific amenities, such as carpet or paint color choices.

"We've decided we're not doing that anymore," Megos said. "We gave people their money back. ... It's just simpler."

The people interviewed by the Day said they either have not been reimbursed or have received only partial payments and now are seeking the rest of their deposits.

Unable to get their deposits back, the prospective tenants turned to city agencies, the Better Business Bureau and the attorney general's office, only to be referred to city police or Small Claims Court. Norwich police would not tell The Day whether they are investigating, and none of the complainants who have won court judgments have been reimbursed.

Megos said he and his business partner, Bishop Taylor, decided in March they no longer will advertise for apartments that are not immediately available.

"No one ever gets their money back," said Millard Norton one March afternoon as he removed his belongings from an apartment in the building at 75 Fourth St. The Greeneville building was condemned in September, one week after Norton began living there, but city inspectors said it was "unoccupyable"- without running water - when he moved in.

Megos said he is still challenging some of the court filings. He has more than $15,000 in judgments against him.

"Zane will obviously comply with any court order to make payments," Traystman said. "In my opinion, his integrity is above reproach."

Megos said last week that a Craigslist ad on March 16 touting a "gorgeous apartment" at 25 Rogers Ave., which has been condemned since Jan. 2, 2009, was the last ad placed for that house.

He plans to renovate 75 Fourth St. - with a new $70,000 mortgage and renovation permits secured - and then turn his attention to 25 Rogers Ave. to complete that work before taking new deposits.

Low rent, nice view

Soncherie Silvan and Phillip Dudley were living in separate apartments at the Lincoln Park complex for seniors and disabled people in Preston. Both have kidney disease that requires frequent hospital trips.

In the summer 2011, Silvan agreed to take in her 17-year-old niece from Louisiana. Children are not allowed in the senior housing, so Silvan needed to move out. She found listings for Norwich apartments by Megos on Craigslist. To help her out, Dudley agreed to join them and share an apartment and expenses.

Megos took them to 25 Rogers Ave. The apartment seemed to be undergoing renovations, so Silvan and Dudley each put down a $1,000 deposit in October 2011.

"I'm telling you, it was the most beautiful scenery you've ever seen," Silvan said. The house overlooks the Thames River south of Norwich Harbor, with a direct view of the Mohegan Sun Casino fireworks during the summer.

"He has the most reasonable rents in town, so you jump on it," Silvan said.

But there was a problem: The building, condemned in 2009 while it was owned by Wells Fargo Bank, had broken pipes that had flooded it. Megos' company, DECO Drive LLC, purchased it that September.

In fall 2011, with the apartment they wanted at 25 Rogers Ave. not yet available, Megos offered to store Silvan's and Dudley's belongings in a vacant downtown Norwich building owned by Taylor, his partner. Silvan and Dudley said they couldn't wait and asked for their money back and found an apartment on Maple Street.

Megos said Silvan and Dudley were aware that the apartment would not be ready immediately, but they became inpatient. Megos gave Silvan $1,000 back on Nov. 2. He said he had been renovating the place to her specifications, including installing carpets and removing trees.

Silvan acknowledged receipt of half the $2,000 and said she was supposed to receive the rest in January, when she said Megos told her "I'll see you in court."

Silvan and Dudley filed a complaint with the state Small Claims Court on Feb. 19 against Megos and Taylor for the entire $2,000. A hearing is set for May 22.

Meeting at Tim Hortons

Unsolicited by Silvan and Dudley, "The People's Court" and a similar show, "Judge Mathis," have sent them letters asking them to appear on television. That led to a chance encounter and more allegations about dealings with Megos.

On the day the first Fed Ex letter arrived, Silvan was surprised and excited at the celebrity notice.

Sherrell Barlow, who lives upstairs, heard the commotion and came down to see her new neighbor. Silvan started to explain her experiences with Megos.

"The same thing happened to me!" a surprised Barlow said.

Barlow said that in 2010 she saw a roadside sign on which Megos was offering apartments for rent. He told her he had rent-to-own opportunities, and Barlow felt this would be her chance at the American Dream. He showed her a house on Bos well Avenue, another on Laurel Hill Avenue, and 25 Rogers Ave., the same condemned building he would later show Silvan and Dudley.

She liked the house at 288 Laurel Hill Ave., at the time owned by FC Stony Point LLC of New York, and paid what she had, $400, as a deposit. It wasn't enough, Megos told her. She gave him another $350 and agreed to meet him in the former Tim Hortons doughnut shop parking lot on Route 82 to sign a lease and paperwork.

Barlow said she got worried when she met the owner of the Boswell Avenue house, who said it was not for rent. She asked Megos for her deposit back.

Megos had given Barlow a one-page, refund of deposit request form dated March 23, 2010, but she had never signed it. She didn't like provisions in the letter, one of which stated: "I understand that this is a request for a refund and does not obligate the Landlord to release any money to me." Barlow said she did not get her money back. She called the Better Business Bureau and made a complaint to Norwich police.

Police referred her to Small Claims Court, but Barlow said she couldn't afford to go to court. She threw out her receipts and gave up.

Kate Kennedy was living in the Fairhaven Building at 24-28 Broadway when it was suddenly condemned on April 28, 2009, for numerous code violations, unsanitary and unsafe conditions. Desperate for a new apartment, Kennedy saw Megos' office sign a couple of doors up at 54 Broadway and went there hoping she could find a new apartment quickly. Megos did not own 54-56 Broadway.

She gave him a $1,300 deposit for an apartment upstairs from his office. But she quickly had to find a new place, as the owner of the building objected that she was dealing drugs, Kennedy said. Megos then offered her an apartment at 25 Rogers Ave., the condemned building that he wouldn't own for another five months.

On April 29, 2009, Kennedy made her first payment to Megos for 25 Rogers Ave, and they agreed she would move in that July. Kennedy turned over her $370 Fairhaven relocation check from Norwich Human Services to Megos as part of her deposit.

Then Kennedy was arrested on June 25 for selling drugs. She spent seven months in prison and was placed on parole for five months. When she got out, she made new payments to Megos for 25 Rogers Ave., believing she was paying in advance for months' worth of rent and that Megos was using the money to renovate the apartment.

Kennedy said she planned to concentrate on setting up a new business as a personal trainer, having graduated from the National Personal Training Institute in New Jersey.

But the apartment never became available. After paying a total of $7,393.66, from April 2009 through September 2010 and bouncing between living with her mother and a friend, she told Megos she had to move in by Nov. 1, 2010.

"That's when he stopped taking my calls," she said, so she hired attorney Chuck Norris.

Kennedy filed a complaint in Small Claims Court and won a judgment of $7,393.66 on Feb. 7 of this year. She has not been paid.

"For people who make minimum wage, that's half their year's income," she said. "Thankfully, I have good jobs and can make ends meet."

Megos said he plans to file a motion to reopen Kennedy's case and "will put up my defense in court." He said Kennedy "disappeared" when she went to jail, and he held the apartment for her. After she made additional deposits upon her release, she then changed her mind, he said, and no longer wanted the apartment.

Kennedy, 27, lives in New London with her 7-year-old son. She works three jobs, including her full-time job as a personal trainer at Work Out World in Norwich.

She juggles schedules and prays her car won't break down, as she leaves for work after placing her son on the school bus, then darts home in time to take him off, make dinner and get ready for her next job. Neighbors' children know when Kennedy is cooking, and she always has enough for them. "I'm always cooking," she said one evening. "When I get stressed out, I cook."

No running water

In December 2011, Racheal Perry, 22, was leaving her husband and needed to find a home fast for herself and her 3-year-old daughter. She found a "beautiful" apartment at 75 Fourth St. pictured on Craigslist and called Megos.

Although Perry works full time at Thomas G. Faria Corp. in Montville, she didn't have the $1,785 for advanced rent and security deposit. Her mother, Donna Butler, borrowed from her 401k retirement fund and a family friend loaned the rest. Perry met Megos on Dec. 27 at the then-vacant Tim Hortons doughnut shop and paid $1,190 in cash. On Jan. 7, she paid another $595 in cash.

"It struck me as strange" to pay in cash, her mother said, "but some landlords prefer cash because sometimes checks bounce."

Megos gave her a lease with the name Meyers & Bailey and receipts for the deposits. Then Megos told the women that repairs to the apartment were being delayed because a contractor had "stiffed" him, Butler said.

The women were supposed to meet Megos again on Jan. 24 in the Tim Hortons parking lot - now a Five Guys restaurant - on Route 82. Megos didn't show up.

Butler at one point drove to 75 Fourth St. to see if the repairs had been made. She was met by Laurel Edwards in the driveway. Edwards told her Megos owed her $1,000.

Edwards moved into an apartment at 75 Fourth St. last August. Although the building had not yet been condemned, Assistant Building Official Greg Arpin said no one should have been living there. Edwards and her three children, now ages 14, 12 and 10, lived there for a month with no running water. Megos told them "it was coming." But the building inspectors came before water was restored. Edwards came home from work Sept. 16 and found yellow caution tape surrounding the house.

Inspectors were surprised to find people living in the house - with no running water, a rotted three-story rear wooden stairway and other violations. Arpin declared the stairs unsafe after he thrust his flashlight through a rotted board with little effort. He condemned the building.

With no place to live, Edwards called Megos.

"He said they did that because they had to fix the back stairs," she recalled, and he said it would be resolved by that afternoon.

She had paid Megos $1,785 in total, and he returned $500. Now, she wants the rest and said she plans to file a complaint in Small Claims Court. She paid $70 a month to put her belongings in storage and had to move in with her mother.

Edwards said Megos was supposed to meet her at the Tim Hortons parking lot on a Monday, but he didn't show up.

Unlike the would-be tenants who paid deposits or advanced rent to Megos but never dwelled in the apartments, Edwards was eligible for relocation funds from the city of Norwich for a new apartment. She received $370 from Norwich Human Services, and the city placed a lien on the house at 75 Fourth St. for the amount. She also filed a complaint with Norwich police.

Norton, Edwards' brief neighbor at 75 Fourth St., had lived there for only one week before the place was shut down. Norton had seen an ad on Craigslist for an apartment in Taftville at the end of June 2011 and said he paid Megos $3,000 as a deposit. But Megos told him that apartment wasn't ready.

"That's his favorite saying - two more weeks," Norton said. Norton said Megos used his comp points at Mohegan Sun Casino to put Norton up in the casino hotel and then for a short time at a motel in Groton owned by Megos' friend.

Then in September, Megos said Norton could move into 75 Fourth St. until his Taftville apartment was ready.

He did, even though the apartment had no water. He went to a friend's house for showers. He filled jugs with water to flush the toilet.

A week later, the inspectors came and shut the building down. Norton wants his deposit back, but isn't holding out hope.

c.bessette@theday.com

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