SAN FRANCISCO (CBS SF) – San Francisco City Attorney Dennis Herrera filed a lawsuit against a Bay Area couple, accusing them of illegally taking advantage of the city's affordable housing program.
The lawsuit claims Caroline Novak and Igor Lotsvin illegally obtained an affordable studio unit on the 300 block of Beale Street and illegally rented it out, while they lived in a $2.8 million home in the exclusive Redwood City neighborhood of Emerald Hills.
"The entire purchase was predicated on a lie. She lied not only on her initial application saying that she didn't own property but she continued with a series of lies over the years," spokesperson for the City Attorney's office John Cote said.
In a 2017 report, KPIX 5 caught up with Novak at the Redwood City home.
"Basically we wanted to understand how the system works for you guys, because we have heard that you are supposed to live in the unit," KPIX 5 said to her.
Novak responded: "I do live there."
KPIX 5: "So this is not your house?"
Novak: "I am just staying here, for a couple days."
"The fact that you were able to talk to her in her driveway was beneficial and shows she was in fact living in this house," said Cote.
"San Francisco is grappling with an unprecedented housing crisis," Herrera said in a statement. "The City's affordable housing program is not an investment scheme to be manipulated by would-be real estate moguls looking to profit off the housing crisis."
"It's unconscionable that this couple would cheat an eligible San Franciscan out of an affordable home, just so they can keep an investment property and a pied-à-terre," the city attorney went on to say. "Those days are over."
The lawsuit alleges that Novak lied on her affordable housing application back in 1999, saying she did not already own a property, when she owned a home in San Mateo.
Along with illegal renting of the unit, Novak and Lotsvin are also accused of leveraging the unit as security for more than $1.5 million in loans and lines of credit.
The lawsuit claims they have lived in Redwood City since 2015.
Herrera is seeking to require the couple to sell the property to a qualified owner, along with civil penalties.
The city attorney's office said this is the 22nd case so far in Herrera's investigation into affordable housing fraud.
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