Suffolk to Mega winners: Pay property tax debt

A nonprofit run by Suffolk's Mega Millions winner Richard Morrison owes more than $72,000 in property taxes on six homes - two of which have been shuttered as uninhabitable - that the company has used to house formerly homeless people.

The Brookhaven Town building department last year deemed two of the homes unsafe, while the other four are occupied. Neighbors say they've complained about some of the homes for problems that include litter and pest infestations - and all the homes have had code violations from the town.

Suffolk County officials say they want the couple to pay off the tax debt or it will seek to auction off some of the properties, which are owned by Love'M Inc., a nonprofit group directed by Richard Morrison, to recoup the money. Morrison and his wife, Mary, of Miller Place, won $165 million in a December Mega Millions drawing, the largest in Long Island history.

An attorney for the Morrisons said the couple is not obligated to pay the tax bill from personal funds because it was accumulated by Love'M Inc., a corporate entity, and not by the couple. Also, the Morrisons' attorney says that the county does not need to auction the property, since Love'M has an agreement to sell the houses to a Medford firm that would pay off the tax debts and fix the homes if it gets a federal grant to do so.

But Suffolk officials - who are seeking nearly $1 million from the couple in a separate dispute over charges it paid under a contract to shelter homeless people - say there's no guarantee the sale will go through. "You have an outstanding bill and you have the wherewithal to pay for it. Pay for it," said Suffolk County Treasurer Angie Carpenter.

Who should pay?

Love'M racked up the tax debts in town, county, school and other local property taxes in the 2006-2007 fiscal year, said Carpenter. The county has since reimbursed the other government agencies, she said.

Although nonprofits are tax exempt, Love'M Inc.'s nonprofit status was temporarily revoked when it missed a filing deadline that year, town officials say.

The debts are from six houses, in Port Jefferson Station, Medford and Centereach, that Love'M rented to formerly homeless people. The firm last year transferred management of the houses to the Medford firm. The violations cited were all from the years Love'M managed them.

Suffolk is in the process of acquiring tax deeds so it can seize and sell one or more of the houses to pay off the debt, said Gregory Blass, commissioner of the Suffolk County Department of Social Services. The county will first attempt to sell the houses that are unoccupied, he said.

Michael Solomon, the Morrisons' Greenport attorney, said: "The Morrisons want whatever is due to be paid. But it's not their responsibility to do it."

No easy resolution

Forcing the managers of a nonprofit group to pay off a tax debt can be tricky, said Ronald Colombo, professor of corporate and securities law at Hofstra University. He said the Morrisons' lottery winnings are "not one of the factors you would ever consider in piercing the corporate veil."

Solomon said Love'M's contract to sell the six houses is with Concern for Independent Living, which has agreed to pay debts and improve the conditions of the homes. Concern for Independent Living has managed the homes since November, said Ralph Fasano, chief executive officer of the firm.

Fasano said his firm has applied for a federal grant to "purchase the sites, pay off any liabilities that exist and fix them up." Love'M, as a nonprofit, is not permitted to profit from the sale, state officials said.

Love'M had managed the homes since 2002, when the state Office of Temporary and Disability Assistance gave the firm $600,000 to operate the homes as permanent housing for homeless families, said Anthony Farmer, a state spokesman. The firm was responsible for managing the properties and collecting rent from tenants, Farmer said.

The six houses have been served with 11 code violations since 2007, court records show. Love'M has paid $12,000 in fines associated with the violations, town officials said.

Kato Ortiz, who lives next to a shuttered Love'M Inc. home on Concord Circle in Port Jefferson Station, said the boarded house has attracted cockroaches, which required him to get an exterminator for his own home. "Now that they hit the Lotto, that's an excuse just to let the house go?" he said.

WHAT SUFFOLK COUNTY WANTS

• $72,112.56 in property taxes to Suffolk County
• $950,000 stemming from a Suffolk audit that found Love'M Sheltering Inc. overbilled for homeless shelters they once ran. The Morrisons deny they owe any money. The case is winding through State Supreme Court.