May 15
2025
In legal hot water again
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Brent Manor Apartments at 366 Elmwood Avenue, owned by APL Property Group. Photo by I’Jaz Ja’ciel
The state Attorney General last week filed a lawsuit accusing a former judge-turned-developer and his property management company of misappropriating tenants’ security deposits.
Anthony LoRusso and employees of APL Property Group used security deposits to fund the company’s payroll and other operations, according to the company’s former director of accounting, Ann Morelli. LoRusso is a former Erie County Family Court judge who resigned in 1993 amid sexual harassment allegations from several female employees.
“The cash deposit was recorded and credited to the tenant. However, the cash was used for other purposes, because they drained that account,” Morelli told Investigative Post.
An investigation by the Attorney General found 26 transfers were made from the security deposit account to other accounts between January 2021 and September 2023. The transfers ranged from $5,000 to $50,000 and totaled $444,448.
“Respondents deceived tenants and violated New York law by designating tenant funds as ‘security deposits’ and then commingling the security deposits with Respondents’ general operating funds,” the lawsuit states.
Morelli said she brought the discrepancy to the attention of LoRusso and Howard Rein, listed in the lawsuit as APL Property Group’s chief financial officer. She said LoRusso and Rein “brushed me off” and told her not to worry about the issue, although she informed them their practices violated several New York State laws.
Morelli filed a complaint with the State Attorney General in May 2023.
Reached by phone, LoRusso told Investigative Post that he did not want to comment on the case until his lawyer got back in town.
Anthony LoRusso, courtesy of WKBW.
“It’s nonsense, but we’ll talk about it later,” he said.
Rein, who also works for the accounting firm Freed Maxick, told Investigative Post he was never APL Property Group’s CFO.
“I was an independent contractor. I never worked for the company,” Rein said in a phone call, adding that he had no involvement with moving funds across the company’s accounts and that he didn’t recall the conversations Morelli said she had with him.
Investigative Post also reached out to APL Property Group and Sara O’Brien of Barclay Damon, LLP, who is listed in the Attorney General’s lawsuit as legal counsel for the company. Both declined to comment.
Two former tenants of Brent Manor, a 116-unit apartment at 366 Elmwood Ave. and the largest complex owned by APL Property Group, told Investigative Post that their security deposits were not returned when they moved out. They also said the property – which is where the company’s staff is based, including LoRusso’s office – was ridden with bed bugs, cockroaches and rodents.
“That building is infested, and then at night, you got a lot of rats running around. It’s really, really bad,” said Keenan Bynoe, a former tenant at Brent Manor.
“It’s this reoccurring issue of them saying they’re going to fix an issue and never really fixing it, then taking your money,” said Natasha Frazier, who also lived in the building.
Moving the money
Morelli said she began working at APL Property Group in September 2022 and immediately found a discrepancy between the company’s balance sheet, which showed $217,409.08 had been collected in security deposits, and the security deposit banking account, which had a balance of only $9,681.50.
“The first thing I noticed was that while there was a bank account that reconciled on the ledger, the offsetting liability of security deposits and the bank account balance had a big difference, and typically they should be equal in proper accounting,” Morelli told Investigative Post.
She also noticed that the security deposits account at Evans Bank was not an interest-bearing account. New York State law requires landlords of apartment buildings with six or more units to keep security deposits in an interest-bearing account on behalf of tenants. Six of 14 properties owned by LoRusso and APL Property Group have more than six units.
The law also mandates landlords provide tenants in writing the name and location of the bank in which their security deposits are kept, another protocol Morelli said LoRusso and APL Property Group didn’t follow.
Morelli said that when she initially raised the issue about security deposits being transferred to the company’s operating and payroll accounts, Rein told her that the company suffered during the COVID-19 pandemic due to many tenants failing to pay rent while an eviction moratorium was in place.
“Basically they said they had to use the money for operations during the period of COVID and afterwards until they could resume evictions,” Morelli said.
During the pandemic, APL Property Group, which LoRusso owns, received a Paycheck Protection Program loan for $104,100, according to federal records. The company used $78,075 to supplement payroll for 15 jobs, $13,013 to pay utilities and an identical amount for rent.
Donate to support our nonprofit newsroomIn court documents, Morelli said Rein informed her that security deposits were also being used to pay property mortgages and to fund the expansion of LoRusso’s solar farm at 2030 Elmwood Ave. through his company Solar Solutions of Upstate NY.
The Attorney General is asking the courts to demand LoRusso and APL Property Group return security deposits to entitled tenants and pay civil penalties to the state.
“I just want the right thing to be done,” Morelli said. “I want the tenants made whole. I want retroactive interests paid to them. I think that’s the only way that people like Anthony understand wrongdoing, is when they’re financially penalized.”
Poor property conditions
Bynoe, the former Brent Manor tenant, filed a small claims suit in March against APL Property Group for loss of property, including his bed and couch, due to his apartment’s bed bug infestation. He withdrew his case because he couldn’t provide itemized receipts. He said the infestation caused him to move out earlier this year, but that the problem existed since 2023, when he first moved in.
“My family told me not to move in there, but I was in a desperate situation. I had no choice, but the building was infested with bed bugs,” he said.
Bynoe said he exterminated his apartment himself and that a building maintenance worker only sprayed his apartment for bed bugs once.
Morelli confirmed conditions at the building, saying there were bed bugs in the washers. She said all of LoRusso’s properties that she visited were in substandard condition, including areas where employees worked.
“We had cockroaches in our office. We had a tenant who threw them at us,” she said.
Morelli said she made reports to the Erie County Department of Health, but never received confirmation that any of the apartments were inspected or cited for violations.
Bynoe said the property manager told him when he moved out that he could get his security deposit back, but he was later told that he was not entitled to it because he owed back rent, which Bynoe denied.
Frazier, who lived in Brent Manor for four years, said a property manager told her in March that she missed her rent payment for the month, although she had records proving otherwise.
“I looked on my portal, I gave him the receipts I had, and he still didn’t adjust my account. So he just basically said that that month was missing, and they just took the funds,” she said.
Other legal woes
LoRusso was elected to Buffalo City Court in 1976 and Erie County Family Court in 1989. Four years later, he was censured by the State Commission on Judicial Conduct for “offensive, undignified and harassing conduct toward some female employees in the court system.”
Allegations from four former female employees ranged from suggestive remarks and groping to initiating sex acts in his chambers. LoRusso resigned in March 1993, citing “personal and professional reasons.”
He came under fire again in 2019 when WKBW reported that he sealed records and dismissed charges in a case involving a Lovejoy man named Paul Gaeta who was accused of child sexual abuse in 1978.
APL Property Group is currently being sued by LaBella Associates D.P.C., a Rochester-based environmental consulting firm. The lawsuit claims that LoRusso’s company failed to pay $131,981.07 for the environmental assessment of his proposed Clayton Street Apartments project in March 2022.
