For the first time ever, a civil suit was filed against a self-storage facility. The unfortunate situation offers some takeaways that fellow storage operators can use to protect themselves from similar woes.
Brooklyn storage facility Safeguard Self Storage was sued by New York City’s Office of Special Enforcement for allowing a tenant to store counterfeit items, but last week the two parties reached a settlement— one that may have far-reaching repercussions for the industry at large.
After an undercover sting operation last summer, members from Mayor Bloomberg’s special enforcement office arrested Barry Boubacar, 49, for selling bootlegged items at a Safeguard Storage facility on Atlantic Avenue in Brooklyn. Boubacar sold 100 counterfeit DVDs and CDs to the undercover agents on the storage facility premises. The agents seized 44,000 counterfeit items, including Rihanna, Pit Bull and Lady Gaga CDs, as well as bootleg copies of “The Hunger Games,” “21 Jump Street,” “The Avengers,” “Safe House,” and “We Bought A Zoo.” All told, the merchandise was valued at over $550,000.
Not only did Boubacar store the counterfeit discs inside three storage lockers; he also sold them on-site. This violating case of illegal enterprise is enough to make any facility owner shudder.
The Office of Special Enforcement ordered a temporary closing order against the storage facility until the two parties went to trial or reached a settlement. The latter occurred; on April 12, Safeguard proactively made their rental rules more stringent.
According to Mayor Bloomberg’s Chief Policy Advisor Feinblatt, “The message to the self-storage industry is clear: You can’t look the other way when criminals turn your storage facility into a warehouse for illegal activity.”
Back in 2006, Bloomberg created his Office of Special Enforcement in an effort to crack down on underground clubs, apartments operating as hotels, and the trafficking of counterfeit goods across the five boroughs. Since its inception, the Office has shut down over 60 storefronts and retrieved $52 million in counterfeit goods. Its lawsuit against a storage facility is unprecedented, as are the settlement terms.
A “Code of Best Practices”
As part of the Office’s settlement, Safeguard will now follow a “Code of Best Practices,” which requires them to report all suspected illegal activity to the authorities. According to the new lease provision, managers can access tenants’ units without prior notice, as long as they “reasonably believe a nuisance is occurring in that unit.”
Manager walkthroughs must be performed at least once a day, and internal records must be reviewed daily to see if any unusual activity has occurred in any units. If so, the manager is required to investigate further.
Safeguard leases now explicitly forbid the storage or sale of any counterfeit items on site. Additionally, there must be a sufficient amount of surveillance cameras on-site, and photocopies of tenant IDs must be retained for at least a year after they move out.
Safeguard CEO Allan Sweet declared this “Code of Best Practices” should become an industry standard. Do you think other operators will follow suit?