November 1, 2019
OAG Settlement Requires Ginosi USA To Pay $728K+ in Unpaid Sales Taxes, Interest, and Penalties, Imposes 10-Year Reporting Requirement
WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that Ginosi USA Corporation (“Ginosi”)—a California-based company—and its owners and officers are banned from selling illegal short-term rentals in residential apartment buildings in the District of Columbia. The settlement resolves a 2017 lawsuit, in which the Office of the Attorney General (OAG) alleged Ginosi violated the District’s housing and consumer protection laws by renting dozens of units in mostly rent-controlled apartment buildings in Wards 2 and 6 and converting them into unlicensed short-term, hotel-style rentals. Ginosi is further required to provide advance notice to OAG before resuming any other consumer-oriented business in the District for ten years. Additionally, the company must pay more than $782,000 in unpaid sales taxes, interest, and civil penalties.
“Ginosi violated District law by unlawfully converting building units that were intended to be available for long-term renters into short-term hotel-like units,” said AG Racine. “What’s more, the company failed to pay District sales taxes that they collected from guests. The District’s affordable housing crisis is squeezing our residents, and illegal schemes like Ginosi’s heighten the problem. OAG is committed to rooting out such illegal practices in order to preserve affordable housing for those residents that need it most.”
Ginosi is a California-based company that bills itself as “an international hospitality chain,” offering short-term rentals to consumers in cities in the United States and Europe. The company has been offering and selling such short-term accommodations in the District since at least January 2014. In April 2017, OAG filed a lawsuit against Ginosi, alleging that the company and its owners leased 70 apartment units (in mainly rent-controlled buildings) and illegally sold them as unlicensed hotel-style accommodations—violating the District’s Rental Act and housing regulations. In the District, it is illegal to convert long-term rental units into short-term transient rentals.
OAG further alleged that Ginosi deceived consumers with ‘drip pricing’ by neglecting to disclose all mandatory fees in initial price quotes; collected sales taxes from consumers but then failed to make any tax payments to the District; and failed to file any monthly and annual tax returns with the District.
As part of a Consent Order resolving the litigation, Ginosi is required to:
Stop doing business related to residential apartment units in the District: Ginosi must cease any operations, partnerships, or arrangements regarding the rental of residential apartment units—short-term or otherwise—in the District.
Give 60-day notice to the District before doing any business with D.C. consumers: For the next 10 years, Ginosi must provide a 60-day advance notice to the OAG before offering or selling any other goods or services to consumers in the District.
Pay the District $682,961.99 in unpaid sales taxes and interest: Ginosi must repay the District for sales taxes over the period they operated their short-term rental business, totaling $632,372.22 with an additional $50,589.77 in interest. Ginosi has completed its payment to the District.
Pay $100,000 in penalties to the District: Ginosi was required to pay civil penalties and cover costs incurred over the course of investigating and litigating the matter. Ginosi has completed its payment to the District.
Previously, OAG resolved complaints against the owner and managers of the buildings where Ginosi operated, requiring restitution for long-term residents, civil penalties, or costs with Daro Management Services, LLC and Daro Realty, LLC, T-C Mass Court LLC, Greystar RS NE, LLC, John Hancock Life Insurance Company USA, and Mill Creek Residential Trust LLC. As part of these prior settlements, OAG returned several hundred thousand dollars in rent refunds to long-term tenants impacted by Ginosi’s illegal operation.
A copy of the Consent Order is available at: https://oag.dc.gov/sites/default/files/2019-11/DC-v-Ginosi-Consent-Order.pdf
Resources for Tenants
OAG’s Social Justice Section works to improve the quality of life for residents in communities throughout the District and to preserve affordable housing by holding landlords accountable for providing safe and habitable conditions. Learn more and find resources to help renters on OAG’s Tenant Resources page.
How to Report Consumer Violations
Consumers who believe they have been defrauded by a business, or who have experienced scams or other unfair businesses practices, may contact OAG’s Office of Consumer Protection at (202) 442-9892, by emailing [email protected], or by submitting a complaint online.
Attachments
DC-v-Ginosi-Consent-Order.pdf
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Content retrieved from: https://oag.dc.gov/release/ag-racine-announces-ginosi-usa-banned-offering.