Hungary’s ‘Apartment Mafia’ Accused of Home-Eviction Swindle

Gizi Kiss sheds a tear every time she looks out the window of her tiny room in her sister’s house.

Opposite is the apartment building where Kiss, 62, lived for nearly 20 years in her own three-room flat -- until Hungary’s “apartment mafia” tricked her out of it and threw her onto the streets of Budapest, she says.

“This is all I have left,” she said, pointing to a few dusty framed photographs on the table.

Many Hungarians have struggled to adapt to the new ways of capitalism and a market economy since the end of communism in 1990. The transition has created fertile ground for shadowy criminal enterprises that offer housing loans with tempting terms -- only to play tough with those who fall behind on payments.

Victims say the groups, which have sprung up nationwide, involve not only con artists but corrupt lawyers, public notaries, police and judges who use their powers to whitewash shady deals in return for a cut of the profits.

“The problem is corruption,” charged Erzsebet Torok-Szabo, who runs Fellows in Fate, a self-help group for victims of the loan scams. “The apartment mafia can pay off lawyers, police and the officials at the land office so that everything they do seems perfectly legal.”

Kiss’ ordeal began in 1995 when her son wanted to cash in on the new economy and open a pool hall. She wanted to help but had little money, and banks were reluctant to make loans to fledgling small businesses.

Then Kiss saw a newspaper ad offering about $2,200 in venture capital that she needed, so she signed the papers.

All was well until Kiss had to be hospitalized for a major operation and needed to suspend her loan payments for a month.

“I phoned the lender and he said we would have to sign an agreement to extend the contract on the loan,” she said. “I thought that was fine and signed the papers he gave me.”

But a week after returning home from the hospital, Kiss answered a knock at her door to find a woman claiming to be the flat’s new owner -- with two bodyguards in tow. They threw her out onto the street.

“They had forged my signature on a contract to sell the flat, and a lawyer had stamped it as if I had been present,” she said. “I didn’t have a leg to stand on.”

The lawyer refused to testify in court, and the judge showed little interest in finding out if the signature was genuine.

“I lost my [$70,000] flat to them when I owed only [$1,500],” Kiss said. “It has been sold twice since I lost it, which makes it even more difficult to try and get it back.”

The woman who claimed Kiss’ flat is involved in 15 other cases, said Torok-Szabo, whose tiny office in a rundown part of Budapest is crammed with files. The office is also her home -- she was tricked out of her apartment seven years ago.

Victims are pinning their hopes on a parliamentary panel that began investigating the apartment mafia in mid-January and also will look into ways to compensate victims.

Fellows in Fate has more than 700 victims of the scam on its books, but Torok-Szabo said the real number is several thousand.

“People are afraid to say what happened to them,” she said. “Some have been threatened or beaten up, and the mafia’s thugs have already smashed up my car twice.”

Police often refuse to investigate, pointing to contracts that appear to have been signed and sealed. But critics contend that often the lawyers involved are crooked. One attorney has escaped legal action despite links to 10 cases in which people allege contracts were not signed legally, Torok-Szabo said.

Lawyers deny that they give legitimacy to dubious deals.

“We cannot check whether an identity card or other document is real or not, or whether a person was beaten up to make them sign before they entered a lawyer’s office,” said Janos Banati, president of the Budapest Lawyers Assn.

“This is a sociological problem,” he said. “So many people were given good flats downtown under communism and now cannot afford their upkeep and get into debt.”

But not all victims of the apartment mafia are poor.

Gyorgy Kassa, who lived in a villa in an elite Budapest district, still treasures a photograph of himself with former U.S. President Reagan. It was taken in the early 1990s, when Kassa’s plastics business made him one of the richest men in Hungary.

Kassa believed the public notary who told him that the loan papers he was signing would not put his house at risk. But after Kassa returned from a business trip abroad, he found his house occupied by someone else.

Despite a court ruling returning the house to Kassa, ensuing legal wrangles have prevented him from moving back. Another court said that before Kassa can get the house back, he must pay for all the improvements made since he lost it.

“I put all my wealth into that house. Without it, I have nothing,” said Kassa, who lives in a summer chalet in a friend’s garden on the edge of town.