Arson for Hire

June 2, 1980

There are two crimes that are more than just felonies—they are treason. One is the importation, distribution, and sale of heroin. The other is arson for profit.

There are not crimes of passion or desperation. They are crimes of organized greed. They cause the deaths of innocent citizens and brave firefighters. They kill blocks, ruin neighborhoods, and destroy cities. Ultimately, these are crimes that annul hope and diminish humanity.

Arson breaks up families, frightens away investment and jobs, and deprives the poor of housing. Every arsonist is potentially a mass murderer. Those subversives who hire others to torch occupied buildings—like those who move the envelopes of fine white powder—are the first vultures of late capitalism.

It was more than two years ago that we first stumbled upon this city’s biggest arson ring of landlords, lawyers, brokers, and insurance adjusters.

In the winter of 1978, the South Bronx was already a moonscape with abandoned, charcoaled shards. The cops who worked in the 41st Precinct no longer called their station “Fort Apache.” They called it “The Little House on the Prairie,” because there were so few surviving buildings or families in the area.

In the winter of 1978 the burning of the Bronx had moved north into neighborhoods called Morris Heights, Morrisania, Tremont, Highbridge, Kingsbridge, and Fordham. Whenever there was a suspicious fire and the homeless tenants were Hispanic or black, the media would call the area the South Bronx. But it was really other communities, and other police precincts.

For several days that winter we walked around these dying blocks with a cop named Joe Dean, who was then assigned to the Bronx arson task force in the 48th Precinct. We met not only the most recent victims of arson, but those who feared they would become tomorrow’s refugees.

We saw tenants and small shopkeepers plead for protection, saying the building next to them had burned the night before, and that their house would be next. But because of budget cuts, neither the police or the fire marshals or the district attorney’s office had the manpower to watch a building through the night.

Each day Joe Dean had to explain this to poor people who sensed they would soon be burned out for the second or third time in their lives. And Joe Dean felt powerless to do anything about it.

Within a week we saw the tenants of 201 Marcy Place, 1126 Kelly Street, and 1403 Grand Concourse turned into urban boat people by arson. And soon Dean was so frustrated by the suffering he saw—and could not stop—that he asked to be transferred to more risky plain-clothes work in Times Square.

Eventually, we discovered a pattern to the burning of the Bronx, and later of Brooklyn, Manhattan, and Queens. Over the last five years, 250 buildings, all owned by one interlocking network of landlords—and all insured for large amounts—have had fires.

The maypole of this circle of landlords appears to be 50-year-old Joe Bald, a convicted felon with ties to the mafia. In 1978 we named Bald as one of the 10 worst landlords in New York. Now he is about to go on trial in Queens for burning one rent-controlled building that he did not own. Other landlords affiliated with Bald in carious realty companies, mortgages, transactions, deeds, partnerships, or fire insurance policies include Harry Rosen, Henry Katkin, Kenneth Passifiume, Marvin Siegel, Abe Sloan, Kenneth Aska, James Blackwell and Benjamin Tabak.

Sometimes Bald’s own name appears on the deed to a property. Sometimes the property is registered in the name of a front, frequently a superintendent or managing agent. Sometimes Bald only buys an interest in the mortgage. Sometimes the property is in the name of another landlord who has shared a dummy company with Bald in the past. Sometimes the property is never registered at all with the city.

Sometimes the building is in the name of one of 50 different shell companies that Bald uses with names like Kajo Realty, 820 Suburban Realty Company, 952 Rehab Corporation, 748 St. Marks Development Corporation, or M.B. Management. Sometimes Bald’s interest in a property is completely hidden and is not on paper anywhere.

According to law enforcement agents, Bald even acts as a “fire broker” for other landlords. He will supply a torch for a building gin which he has no financial interest—for a free or a future consideration.

But there is always the extraordinary coincidence of fire and money, or arson and insurance. There is the pattern of the building bought, the swift withdrawal of heat and hot water from the tenants, and then the fire set in the middle of the night in a top rear apartment.

Over the last five years, Bald and a variety of his associates have collected an estimated $5 million in fire insurance claims. Bald’s properties have been insured by Lloyds of London, by the FAIR plan, and by other private companies.

Despite Bald’s indictment for arson last September in Queens, he seems to be as active as ever. Three buildings purchased by Bald this year around the Grand Concourse have already had a series of fires, and are now abandoned. One of these buildings is 55 East 175
th Street—a six-floor, brick apartment house acquired in January of 1980 by 446 Management Corporation, in which Bald holds a financial interest. This large, decent building had two suspicious fires on March 3, another on March 4, another one April 27, and a fifth fire on May 11. It now stands empty, the roof gone, the windows broken, mounds of burnt garbage in the courtyard.

We have spent 30 months trying to piece this story together, not merely to name these urban traitors but also to explore and explain why whole neighborhoods of this city have been put to the torch. The idea that tenants set most of the fires themselves in order to quality for public housing—or that vandals or street gangs set them—is a myth. The fact is that landlords set the fires in order to collect insurance money.

And, for years, the insurance industry has not cared. The fire insurance underwriters have simply passed the costs of arson along to the public in the form of higher and higher rates.

Joe Bald’s operations span the city, from Harlem to the Grand Concourse, from Bed-Stuy to Far Rockaway, but his chief place of business is Room 703, 16 Court Street, Brooklyn. His name is on the door, beneath the heading Real Estate, along with the names of two other companies and three individuals.

Inside Bald’s suite is a tiny waiting area, shut off by a locked door from the actual offices. A secretary peers out from behind a window, making the operation look more like a ghetto check-chasing service than a real-estate firm. But Bald hasn’t been spending much time in the office lately; believing, perhaps, that his phone is tapped, Joe Bald has been making a lot of calls from the pay phones downstairs on Court Street.

Bald’s career is somewhat opaque. Over the past 10 years he has been identified as a rabbi, a furniture dealer, an interior decorator, a landlord and a management agent. What’s known for certain is that arson for profit was not his first criminal business.

According to Michael Hellerman’s autobiographical Wall Street Swindler, Bald was instrumental in several Hellerman-masterminded stock fraud schemes involving top organized crime figures. Bald is portrayed as a mere tool in these transactions, most of which took place in 1970 and 1971.

When Hellerman decided to handle a stock swindle involving a mob-connected New Jersey car-leasing firm, he used Bald as a front and go-between. Among the “investors” in this ripoff were mobsters Vinnie Aloi, John “Dio” Dioguardi, and Vincent Lombardo, son-in-law of crime genius Meyer Lansky.

Some time later, when Hellerman needed a place to cash checks he was collecting in a bigger stock manipulation, he went to Bald again. “Bald was a man of many contacts,” wrote Hellerman, “and the check cahiers he came up with were a couple of rabbis who worked in the New York Jewelry Exchange. Bald assured me that the rabbis were reliable men, willing to cash the checks for us, no questions asked . . . ” Hellerman decided to swindle the rabbis too, but Bald apparently betrayed him out of fear. The rabbis retaliated by kidnapping one of Hellerman’s associates and holding him prisoner for three days, until Bald produced enough second mortgages and cash to secure his release.

None of this made the papers, and it’s entirely possible that Bald’s Queens neighbors thought of him simply as a good family man with mysterious business activities. But in November 1970 Bald was implicated in the Imperial Investment Corporation fraud case along with Hellerman, New York mob boss Carmine Tramunti, Aloi, Dioguardi, and Lombardo. Shortly before the indictments came down, Bald, his brother-in-law Harold Blond, a Democratic fund-raiser named Edward Adams, and an aide to Republican senator Hiram Fong of Hawaii began seeking ways to fix the Imperial case. But neither Bald nor his associates realized that Hellerman had long since become an FBI informant. Before an undercover agent blew it open, the bribery attempt had been carried to the point where Fong aide Robert Carson offered $100,000 to Deputy Attorney General Richard Kleindienst. Bald pleaded not guilty when the bribery arrests were first made. But by November 1971, when the case when to trial, he had changed his plea to guilty. Though he never directly fingered the organized crime investors, Bald testified that “we offered a million dollars if the Imperial Investment Corporation matter could be taken care of.”

Thanks to his somewhat cooperative testimony, Bald got only a few months in jail. Not counting a brief furlough to attend his son’s bar mitzvah, Bald spent three months in Danbury federal prison and entered the world of real estate upon his release in May 1972.

Joe Bald is at the center of a group of fire-prone landlords, some of whom have been h is partners in front corporations, others who have merely sold Bald buildings to dispose of as best he could.

Kenneth Passafiume, Bald’s partner in Nony Realty and Kajo Realty, was perhaps his closest associate. Kajo-owned buildings had at least 21 fires deemed suspicious, incendiary, or unknown, between April 1976 and August 1977. The modus operandi was simple. In the case of a 28-unit building at 161 Clarkson Avenue in Flatbush, bought by Bald and Passafiume in April 1976, they cut off services to the tenants, repairs went undone, and homes went unheated until, in late summer, the suspicious fires began. Finally, over a two-week period in December, two larger fires broke out. Bald and Passafiume collected $15,200 from the FAIR plan, a state-run insurance pool, and a few months later the building was sealed. By March 1977, Bald and Passafiume were applying for a low-cast city loan to “rehabilitate” 161 Clarkson.

Passafiume, who lived in New Jersey while his Brooklyn properties burned, ignored at least one court order directing him to make repairs at 161 Clarkson. His previous record shows two arrests: one in 1975 for possession of a gun and “menacing,” and another in 1977 for drunk driving.

A second Bald associate, more respectable at first glance, is Henry Katkin, a Brooklyn landlord whose city tax arrears once reached $170,00. Katkin and Bald own at least two buildings together, one recorded under the bizarre name of Terrain Renewal. Located at 280 East 91st Street in Brooklyn, the building had two fires of unknown origin a month earlier. The insurable loss on both buildings totaled $37,000.

One of the most active of Bald’s associates is Marvin Siegel, with whom he has done business under the corporate name of Sagamore Realty. Over a period of eight months in 1977, Siegel bought up at least a dozen properties in the South Bronx for nominal cash. Then, on February 22, 1978, he turned them over to Bald, again for a nominal consideration. On paper, these properties were worth about $350,000 in all. Each one has since had a serious fire of suspicious origin, and three—at 1173 West Farms Road, 1126 Kelly Street, and 559 Southern Boulevard—were burned to the ground. According to law enforcement authorities, all of these buildings were insured for amounts far in excess of their assessed valuation or the amount Bald’s companies paid for them. Nearly all were in tax arrears.

Landlords don’t burn buildings themselves in most cases, although sometimes the “torch” will also be used as a front man to disguise a building’s ownership.

Joe Bald’s favorite torches appear to be Kenneth Aska, Richard Payne, James Blackwell, and Ralph Turane. These four men, all considerably younger than Bald, will soon go on trial with him for the incendiary fires at 750 Empire Avenue in Queens.

Aska, who has also gone under the aliases of Kenneth Brooks and Alvin Donelly, was born in New York 31 years ago and now lives in the pleasant suburb of Central Islip. He drives a while 1978 Lincoln Mark V, and reportedly owns three other cars. He lists his occupation as “investment consultant” and his business address as “820 Realty, 1727 Townsend Avenue, Bronx.” Seventeen twenty-seven Townsend is owned by one Joseph Benedicke, who shares Bald’s business address at 16 Court Street, and shares a business phone with Joseph Mayer, Bald’s partner in a front office called M.B. Management Corporation. The building at nearby 820 Suburban Place, which was taken by the city for nonpayment of taxes in 1978 (and to which the name 820 Realty refers), was owned by M.B. management.

Aska’s offices were raided by the police on September 20, 1979, the same day he was arrested for arson and conspiracy in the burning of 750 Empire Avenue. Among the papers taken from his office was a long list of buildings located in the Bronx, Brooklyn, and Manhattan, some of which have suffered serious fires. Also collated from materials found at the office was a list of property owners or managers who have done business with 820 Realty, and whose properties have been investigated by the Fire Department for suspected arson.

Among these landlords are Benjamin Tabak and Harry Rosen, who have been sued many times for violations of tenant rights and humane behavior. Tabak, who owns properties in Williamsburg, was almost arrested in 1977 for failing to appear in court to answer tenant charges against him. He was also one of the Voice‘s “10 worst landlords” of 1978. Those tenants told the Voice that, along with no heat or hot water and no effort to correct 200 violations of the building code, there were four suspicious fires during Tabak’s effort to drive them out of their homes at 184 Grand Street. (While collecting rents from these tenants, Tabak didn’t bother to pay any property taxes to the city.) The religious organization used by Tabak as a front for his ownership of 184 Grand Street also appears in the group of names found at Aska’s office.

Harry Rosen is an old-timer; we have been told that one of the first court cases ever filed by the city for housing code violations was against Rosen. But such efforts by the city don’t seem to have affected him much: in November 1978, after a two-year court battle with city authorities over hazardous conditions in two of his Brooklyn buildings, Rosen and his partner Sam Biller were fined $4000 for contempt by a civil court judge.

Law enforcement sources believe Aska and his associates were running a sort of arson service business out of their offices at 1727 Townsend. Aska himself has been arrested on two previous occasions. In 1971 he and his brother-in-law Richard Payne were charged with grand larceny and coercion, or causing fear of injury to a person/property. The following year he was arrested on a misdemeanor charge of “obstructing governmental administration.” Both of these cases arose out of Aska’s involvement with Black Economic Survival, a group of black Bronx construction workers whose leader, James Sims, was convicted of extortion in 1975. The charges against Aska and Payne were ultimately dropped.

Aska—a touch guy who tried to kick a Voice photographer last week and later threatened violence against him—appears to be the most senior of Bald’s helpers. He knew enough about arson mythology to accuse an elderly Jewish tenant leader of setting the fires at 750 Empire Avenue when he was arrested for that crime last September.

Last week in Queens Supreme Court we saw the defendants in the 750 Empire case for the first time. They were brought to Judge John Leahy’s courtroom in handcuffs, having spent the previous evening in jail. Though the five of them were originally released on $50,000 bail each, they’d spend the night behind bars because of an incident in the courthouse hallway the day before. After a pretrial hearing, Bald, the attorney representing him, and the other defendants were waiting for an elevator. Standing next to them was Queens assistant district attorney Joseph Maddalone, who says that Bald began making “smart remarks” in his direction about “letters being sent to the judge.’ Maddalone says he asked Bald’s Attorney, Arnold, Weiss—who happens to be a former Democratic from leader from Manhattan—to “control his client.” Weiss’ response was: “Tell it to the judge.”

That’s what Maddalone did, and the five defendants’ bail was temporarily revoked. We watched them apologize humbly to Maddalone and the judge in the courtroom the next day. The judge reinstated their bail, and they left.

The tension in that courtroom reflects just how “hot” this particular arson case has become. The building which burned was a site of community controversy for more than a year before it was set on fire with flammable liquids and a road flare. Far Rockaway is undergoing convulsions much feared by its middle-class residents, who focused on 750 Empire Avenue as a symbol of local deterioration. According to documents in possession of the former tenants, a nonprofit corporation was formed by members of a local temple, Kneseth Israel, to buy the building and demolish it so that one and two family homes could be built on the site.

The dummy corporation which took over the building in November 1978 was called Golem—Yiddish for “monster”—Realty Corporation. According to law enforcement sources, the real owner was Dorn Management, whose president Mordechai Sohn is also the president of Temple Kneseth Israel. Because the new owners refused to provide heat or services, the 20 tenants remaining in the 48-unit structure often withheld their rent. Between January and March of 1979, the complex suffered four incendiary blazes, the firs for which Bald and company were indicted on courts of arson and conspiracy.

Bald’s relationship to this particular set of fires is exceptional, and in a way it’s ironic that he is finally being prosecuted for this case. From the doorway of 739 Elvira Avenue in Far Rockaway, where Bald has lived for many years with his wife and children, he could see 750 Empire Avenue. The irony of the case is that Bald and his cronies are about to be tried for a crime that may have been a favor to friends in the neighborhood, friends who have accomplished their goal without being caught. Bald may find time to ponder this in prison.

It is also possible that he may not go to prison again. Few arsonists are convicted, particularly when they have lawyers as skilled as those representing Bald and Aska.

Aside from Bald’s deep involvement with mob-linked stock swindles 10 years ago, the clearest signals of organized-crime involvement in the arson plague are Bald and Aska’s lawyers. Thought ex-reformer Arnold Weiss appeared for Bald in court last week, he did it only as a favor to Bald’s busy attorney of record, Jay Goldberg.

Goldberg is a Harvard Law graduate, who once worked for Attorney General Robert Kennedy on racketeering cases in Indiana. He is now a prosperous mob lawyer. For a brief period in the mid ’60s, Goldberg used his gangbuster reputation to seek reform Democratic support for assembly and district attorney races in the Bronx. Now, having represented several top mob figures as a criminal defender since those days, Goldberg is defending a landlord who has helped to destroy the Bronx. Among Goldberg’s organized crime clients are Vinnie Aloi, Johnny Dio, Carmine Galante, Matty “the Horse” Ianiello, the brothers Anthony “Tony Pro” and Salvatore Provenzano, the late porn boss Michael Zaffarno, and porno lawyer Seymour Detsky.

Aska’s attorney is Herbert Lyons, another high-priced criminal lawyer. Lyons’s most celebrated client was former Brooklyn congressman Frank Brasco, who despite Lyons’s talents, was convicted of taking a bribe from a mobster.

People who study arson disagree about motive. Some believe most arsons are motivated by revenge, insanity, or thrill seeking. Another popular notion is that poor people burn their own homes so that welfare agencies will help them move to better housing. But we’ve never heard a professional fire investigator say that less than 25 per cent of all arsons were set for profit.

Our knowledge of arson is limited in substantial part, because the biggest insurance companies have done so little about the problem. Though arsonists make millions by defrauding insurance companies, the corporate response has been less than overwhelming. They are naturally concerned with covering their own asses first, which means worrying more about lawsuits for disclosure of insurance data to law enforcement agencies or for withholding fire claims in suspicious circumstances, than about the social problem of arson. The insurance industry is very big on recommendations, advisory committees, generalized research, and conference discussions; it’s short on action. The industry’s lethargy may have something to do with its ability to redline threatened neighborhoods and, when too many losses threaten profits, to raise fire insurance rates on all residential buildings. This approach leaves much to be desired, since the solutions penalize honest homeowners and tenants much more than they hamper crooks.

The exceptions to this rule have been among the state-chartered FAIR plans, for one excellent reason: FAIR plan insurance is mandated for poor neighborhoods, and profit is not its goal. FAIR plans are supported by funds from all insurance companies, as a sort of high-risk pool; they nearly always lose money. As a result, they have become a prime target of arsonists for profit. Even so, the FAIR plans didn’t fight back until fairly recently. The most encouraging sign of change has been in Massachusetts, where Boston-area arson ring of 33 people were indicted by the state attorney general. According to Mark Zanger, an investigative reporter who uncovered much of the information leading to those arrests, the Massachusetts FAIR plan spent between $700,000 and $2 million to finance that probe.

One problem is that most insurance companies do little investigations of properties on their won before insuring them. Lloyd’s of London, which has reportedly been victimized by arson fraud in New York and elsewhere, has just begun to probe some of its fire claims but only after enormous losses.

And there seems to be clear evidence that at least some insurance claims adjusters are in league with the arsonists. Others may simply turn a blind eye to suspicious evidence. The Village Voice has learned, for example, that Bald’s insurance adjuster has continued to settle claims on his properties long after he was indicted for arson.

Without some cooperation or willful ignorance on the part of insurers, how could landlords insure properties for hundreds of thousands of dollars more than the purchase price or assessed value? One law enforcement agent told us privately that he believes insurance agents are actually running the Bronx and Brooklyn arson rackets. But because it is so difficult to convict a torch, let alone a landlord, it’s hard to “flip” a witness who will testify against insurance adjusters—or mob figures—in court.

Arson is the cremation ritual of a diseased housing system. A striking fact for anyone who tours a New York neighborhood ravaged by arson and abandonment is that there are still many people living there—in public housing. The private sector has been unable to create an attractive level of profit from low-income housing (without subsidies or tax shelters) for decades. In part, this has been caused by rising costs, including interest rates, fuel, and labor. In part it has been caused by the continuing lack of sufficient income for the poor and working poor to pay higher rents. (Contrary to neo-conservative mythology, these problems have not been caused by rent controls: they exist in cities without rent controls, and the situation is worst in neighborhoods where rent-control prices would be well above market levels.)

There is simply no incentive for banks, landlords, insurance companies, or anyone else with money to invest in building or rebuilding dwellings at reasonable rents. So landlords are encouraged to let their low-income housing fall apart until they’ve milked the last dollar of rent, and evaded every dollar of taxes. Ultimately, the easiest and most lucrative step is to burn it, or sell it to someone else who will burn it. In housing, the final stage of capitalism is arson.