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Lawsuit: Developer selects sites to avoid Blacks

Updated: May 17, 2023

May 5, 2023

Audio recordings of Clover Group executives purport to show an effort to build apartment complexes only in predominantly white enclaves. Michael Joseph, the company’s CEO, is a prominent civic leader and prolific political donor. By Geoff Kelly

INVESTIGATIVE POST

www.investigativepost.or

Editor’s note: This is the first of three stories on The Clover Group. Wednesday we profile Michael Joseph, the company’s CEO and major player around town. Our story Thursday details the numerous subsidies Clover has received over the years to help grow its business.


When the Clover Group — one of the region’s biggest real estate development and management firms — reviews potential building sites for senior citizen apartment complexes, it pays careful attention to what its executives call “the Canadian factor.”

When the firm’s executives talk about “Canadians,” however, they’re using a code — for Black people. And those executives know the company’s leadership isn’t interested in building housing where there’s a lot of them.

That’s according to a lawsuit filed today in federal court by a former Clover employee who recorded the company’s executives talking about its use of racial demographics to determine where they’ll invest — sometimes in coded language, sometimes explicitly.

The whistleblower said the company fired him after six months on the job when he objected to what he described as the company’s “racist and illegal practices.”

The lawsuit alleges that Clover Group companies and its executives:

  • “intentionally engaged in illegal race-based housing discrimination by refusing to develop housing in or near Black neighborhoods.”

  • commented “on the number of ‘Canadians’ or ‘shvartzes’ (a Yiddish racial slur)” living near a potential building site.

  • were warned that their use of racial demographics as a site-selection parameter might violate the federal Fair Housing Act.

  • fired the whistleblower “in a blatant and illegal act of retaliation” after he refused to participate in the company’s “illegal race-based housing discrimination.”

The former employee, Peter Rizzo, captured audio recordings of Clover executives discussing the company’s aversion to developing sites in communities with a heavy “Canadian” population.

“Rich’s Canadian factor was the thing I wasn’t sure he was going to be okay with,” said Robert Jack, a Clover vice president, during a Jan. 4 meeting with Rizzo and a second executive identified in the lawsuit as Russell Caplin, a land acquisition manager. They were discussing a potential development site near East St. Louis, a city whose population is more than 96 percent Black. “Rich” refers to Richard Greenspan, vice president for operations at Clover, who has the final say on site selection, according to the lawsuit.

“There are a ton of Canadians — if I’m using the term correctly — immediately to the west in East St. Louis,” Caplin acknowledged.

Here Rizzo, the whistleblower, chimed in: “What is it about the ‘Canadian factor’ that drives … our decisions and where we’re going? How does it affect our business?” Rizzo asked.

Jack responded: “Man, that’s an uncomfortable question. I don’t even know how to answer that, Peter. Rich likes to stay away from those areas. I don’t know. It’s … it’s an uncomfortable question. I don’t know.”

“Yeah,” Rizzo replied. “Have you ever asked the question?” “Ask him that question, go ahead. You’ll get a colorful response,” Jack said. “He just doesn’t like what it does to the leasing.”

Jack assured Rizzo he did not share Greenspan’s objections to building in areas with what Greenspan considered a high percentage of Black people — any number over 20 percent, according to Rizzo. Another Clover employee who spoke to Investigative Post on condition of anonymity said the company’s unwritten limit was half that.

Jack said he hoped, as Clover expanded its development activities into Southern states, the company would “come around a corner on that” policy.

There followed a brief silence, broken by Caplin.

“Let’s just all hope we never get deposed on that,” he said. Investigative Post sought an interview with or comment from Clover’s president and CEO, Michael Joseph, as well as executives Rizzo recorded. None responded to our inquiries, but a public relations firm Clover hired sent a written statement describing Rizzo as “an angry and disgruntled former employee” and his allegations as “meritless, baseless, and misleading.” “Clover does not make business decisions on the basis of any unlawful criteria,” the statement continued. “The company intends to defend itself vigorously.”

In addition to Rizzo, Investigative Post spoke to one current and one former Clover employee, both of whom requested anonymity because they feared retaliation. Both confirmed Rizzo’s allegation that Clover rejects development sites in communities with what the company considers too many Black people.

“Clover knows what they’re doing is wrong,” Rizzo told Investigative Post.

“That’s what really was the saddest part of this. They didn’t bat an eye when I let them know that this is illegal. They know it’s illegal. It’s how they’ve made hundreds of millions of dollars in the last couple of decades.”

Clover and its CEO

The Clover Group was founded in 1987 by Joseph, the company’s president and chief executive officer. According to its website, the company has purchased or developed more than 10,000 apartment units and 800,000 square feet of commercial space in seven states. The company says it currently manages about 7,000 rental units.

The company website advertises more than 50 apartment complexes in seven states marketed to senior citizens. It has 11 such properties in Western New York. All but one of those local complexes are located in predominantly white ZIP codes with a Black population lower than 20 percent. In all but two locations, the surrounding Black population is lower than 10 percent. The average Black population in other ZIP codes where Clover lists senior housing complexes, beyond Western New York, is less than 6 percent, according to U.S. Census data. None of the communities outside Western New York where Clover has developed senior housing has a Black population over 20 percent.

As the company has grown, so has Joseph’s engagement in civic affairs. Joseph, his wife and his companies have donated more than $660,000 to candidates for elected office and other political campaign committees over the past 20 years — mostly, though not exclusively, to Democrats. The biggest beneficiary was former Gov. Andrew Cuomo, who took in about a third of that total. Gov. Kathy Hochul, U.S. Rep. Brian Higgins, and Erie County Executive Mark Poloncarz have also benefited. Joseph currently chairs the board of directors for Roswell Park Cancer Institute, which has battled allegations of race and gender discrimination during his tenure. He also serves on the board of the AKG Art Museum, formerly known as the Albright-Knox Art Gallery.

Richard Greenspan has been with Clover from the beginning. Rizzo described Greenspan as Joseph’s “lifelong best friend” and the man in charge of enforcing Clover’s “Canadian” policy. Rizzo recorded a conversation with Greenspan on Jan. 4 of this year, the same morning he recorded the conversation with Jack and Caplin — the executive who hoped he’d never have to answer questions about the “Canadian factor” under oath.

In this conversation, Rizzo asked Greenspan for his opinion of the proposed building site near East St. Louis.

“Actually Rob [Jack] just sent this to me, I looked at it. I don’t like that,” Greenspan said, landing hard on the last word.

“What’s ‘that’?” Rizzo said. “Canadians,” Greenspan said in a low tone.

Rizzo asked Greenspan what the issue was with Canadians.

“We’re not going into a heavily Black area,” Greenspan said. “It’s just — it’s tough. Operationally, it’s tough.”

Last year Clover agreed to spend $7.1 million to settle a fair housing lawsuit, after a yearlong investigation found its senior housing complexes discriminated against tenants with disabilities, in violation of federal law. That lawsuit was brought by multiple fair housing agencies across six states, including Housing Opportunities Made Equal, located in Buffalo.

“It was something we just decided to settle rather than litigate,” Joseph told the Buffalo News last year. “We did what we thought made sense.”

Rizzo believes Joseph is fully aware of his company’s policies — both written and unwritten — when it comes to site selection.

“There's no way that [Michael Joseph] did not know,” Rizzo told Investigative Post. “He has his thumb on the pulse of every decision that is made at the company. He is briefed regularly on everything, and his best friend is the guy who enforces the racist site selection policy.”

The whistleblower

Rizzo is no stranger to calling out corporate and governmental misbehavior.

Before he joined the Clover Group, he worked for seven years for the U.S. Department of Veterans Affairs. During his tenure there, he and a colleague — James Metcalfe, the cemetery’s director — were critical of the agency’s re-design of a veterans cemetery in Pembroke, arguing the exit and entrance design posed serious traffic safety issues. They claimed their criticisms were ignored and made them targets for retaliation, and they sought whistleblower protections.

In 2021 the VA built the entrance and exit Rizzo and Metcalfe tried to stop. A year later, two elderly veterans were killed in a traffic accident as they exited the cemetery. Also in 2021, Rizzo performed a critical analysis of Buffalo Mayor Byron Brown’s school zone speed cameras that the Common Council cited when it voted to rescind the unpopular program. Last May, a corporate headhunter contacted Rizzo, saying she was recruiting talent for a Buffalo real estate firm with a national portfolio looking for a director of development. The job paid more than Rizzo made at the VA and he was looking for a change. When he interviewed with senior executives at Clover — all of them except Joseph, Rizzo said — they told him they understood what transpired at the VA and “were sympathetic.”

“They said, ‘You’re a unicorn,’ ” Rizzo said, citing his experience finding and securing development sites, planning projects and navigating government agencies to secure the necessary approvals for projects.

He started August 1, 2022. It wasn’t long before he heard staff talking about “Canadians” in the context of site selection for new projects.

“I really thought they were talking about Canadians. I have relatives who are Canadian … seems so bizarre … Why are they worried about Canadians in New Mexico? Right?”

By November, Rizzo said, he had caught on. Once he did, he decided three things: first, he needed to find a new job; second, he needed to document what he’d learned; and third, once he had collected evidence, he needed to confront Clover’s management to see if they would change their practices.

He recorded three meetings on the morning of January 4, including the two described above. The third was with Emily Brady, another Clover vice president. “I think for some of our communities, like here in the City of Buffalo, they — some of the urban area properties — they struggle because residents have a lot of trouble paying their rent,” Brady told Rizzo, when asked about the “Canadian factor.”

“[Greenspan] doesn't want to put [Joseph] in that position where you know, he chooses land that's in an urban area that, you know, may have some type of issue with residents paying their rent.”

“I mean, Kentucky?” she added. “There’s a huge Black population.”

Clover lists three senior housing complexes in Louisville, Kentucky, a city whose population is 24 percent Black. Clover’s Louisville properties are in ZIP codes that are 8.5, 8.1, and 5.6 percent Black.

Rizzo’s termination

On January 5, Rizzo took his concerns — though not the recordings he’d made the day before — to Allison Joseph Pendleton, who is Michael Joseph's daughter and the company’s chief operating officer. He also recorded that conversation, in which Pendleton said she wasn’t involved in site selection but would take Rizzo’s concerns to her father.

Subsequently, Pendleton told Rizzo her father wanted him to complete an anti-discrimination policy for the company. Rizzo said he did so, but he wasn’t convinced the guidelines would be implemented.

As a test, he drew up a proposal for a senior housing development site in Prince Georges County, Maryland. The area scored well on the factors considered in the company’s site selection rubric — parcel size, surrounding home values, median income and over-65 population. “It would be the wealthiest community Clover’s ever developed,” Rizzo told Investigative Post. However, the surrounding population is 80 percent Black.

His immediate boss — Robert Jack, who appeared in the first recorded conversation — approved the site, Rizzo said. The next step was Greenspan, Joseph’s right-hand man.

“It was immediately killed,” he said. “They didn't want to talk about it.”

A week later, Rizzo said, Jack told him the company had financial troubles and his job was being eliminated, effective that day. Clover offered him one month’s severance pay, which he refused. Instead, Rizzo engaged Advocates for Justice, a public interest law firm based in New York City, to represent him in what he considered a case of wrongful termination that violated federal whistleblower laws. His attorneys presented Rizzo’s audio recordings to Clover and the company’s attorney, Adam Perry of the firm Hodgson Russ. Clover was unmoved, Rizzo said, so he decided to turn to the courts.

Since then, Clover has removed Richard Greenspan’s picture and biography from its website. They’ve added a statement about the company’s commitment to diversity, equity and inclusion that did not exist in an archived version of the website from December.

On top of that, Rizzo said, the company changed its approach to pursuing land, limiting site selection to metropolitan areas where the company already owned property.

“Basically, areas they've already vetted, that have enough white people,” Rizzo said. In the statement issued by Clover through its communication firm, the company said, “We believe that these allegations constitute a malicious effort by Mr. Rizzo to defame and disparage the company and its management in order to garner an unwarranted monetary payment."

Rizzo’s lawsuit asks the court to affirm his contention that Clover’s practices violate both federal and state law. He also asks for $15 million for back and future pay lost, as well as “pain and suffering and punitive damages.” Geoff Kelly posted 1 week ago - May 5, 2023

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