Ma­jor NYC Land­lord Steven Cro­man Sent to Rik­ers

The Jewish Voice - - NEW YORK - By Sam Stein

On the morn­ing of Tues­day, Oc­to­ber 3, Steven Cro­man, a ma­jor New York City land­lord who owns more than 140 apart­ment build­ings across Man­hat­tan, was of­fi­cially sen­tenced to one year in jail for fraud­u­lently re­fi­nanc­ing loans and com­mit­ting tax fraud.

Cro­man was taken into cus­tody on Tues­day and will serve out his sen­tence on Rik­ers Is­land. As part of his guilty plea, he is also pay­ing a $5 mil­lion tax set­tle­ment to the State; Cro­man paid the first $3 mil­lion of that set­tle­ment last month.

A year-long in­ves­ti­ga­tion by the At­tor­ney Gen­eral Eric T. Sch­nei­der­man's of­fice found that Cro­man pur­chased build­ings with rent-sta­bi­lized units and, im­me­di­ately af­ter pur­chase, be­gan the process of dis­plac­ing rent-sta­bi­lized ten­ants while si­mul­ta­ne­ously at­tempt­ing to re­fi­nance the ini­tial mort­gage.

Rarely, if ever, has a land­lord been sen­tenced to serve time in jail for en­gag­ing in these prac­tices. The jail time and multi-mil­lion set­tle­ment send a strong mes­sage to land­lords that the At­tor­ney Gen­eral will pur­sue any­one who en­gages in these types of prac­tices to the fullest ex­tent of the law.

AG Sch­nei­der­man said, “Steven Cro­man thought he was above the law. But to­day, he be­gins a sen­tence in Rik­ers Is­land for per­pe­trat­ing an elab­o­rate scheme that was in­tended to push out rent-sta­bi­lized ten­ants. The mea­sures Mr. Cro­man took to boost his own bot­tom line – while bla­tantly dis­re­gard­ing the well­be­ing of his ten­ants – are shock­ing. A boom­ing real es­tate mar­ket is no ex­cuse for crim­i­nal ac­tiv­ity aimed at dis­plac­ing New York­ers al­ready strug­gling with high rents. My of­fice will con­tinue to en­sure that all land­lords play by the rules – and pur­sue any­one who doesn't to the fullest ex­tent of the law.”

“The mea­sures Mr. Cro­man took to boost his own bot­tom line – while bla­tantly dis­re­gard­ing the well­be­ing of his ten­ants – are shock­ing.”

In June, Cro­man pleaded guilty to Grand Lar­ceny in the Third De­gree (a class D felony), and Fal­si­fy­ing Busi­ness Records in the First De­gree and Crim­i­nal Tax Fraud in the Fourth De­gree (both class E felonies). Cro­man fraud­u­lently ob­tained sev­eral multi-mil­lion-dol­lar re­fi­nanc­ing loans be­tween 2012 and 2014, and com­mit­ted tax fraud in 2011 by fail­ing to with­hold ap­pro­pri­ate NY State pay­roll tax from cer­tain Cro­man Real Es­tate em­ployee pay­checks.

The crim­i­nal re­fer­ral in the Cro­man in­ves­ti­ga­tion was pro­vided to the At­tor­ney Gen­eral's of­fice by the New York State Depart­ment of Hous­ing and Com­mu­nity Re­newal's Ten­ant Pro­tec­tion Unit (TPU).

Pur­suant to the plea agree­ment and the de­fen­dant's al­lo­cu­tion, Cro­man sub­mit­ted false doc­u­ments to banks, in­clud­ing rent rolls that falsely re­flected mar­ket rate rents for units that were ac­tu­ally oc­cu­pied by rent-sta­bi­lized ten­ants. Cro­man also in­flated the amount of rent charged for cer­tain com­mer­cial spa­ces in his build­ings in an ef­fort to show greater rental in­come. Cro­man fal­si­fied these rent rolls in or­der to in­flate the an­nual rental in­come of his build­ings, upon which his re­fi­nanc­ing terms are par­tially based. All told, over a three-year pe­riod, Cro­man re­ceived more than $45 mil­lion in loans un­der these false pre­tenses.

Cro­man also in­ten­tion­ally failed to with­hold New York State pay­roll taxes from bonus pay­ments made to a for­mer Cro­man Real Es­tate prop­erty man­ager, who was paid bonuses to get rent sta­bi­lized and rent con­trolled ten­ants out of Cro­man apart­ment build­ings.

The At­tor­ney Gen­eral also has a sep­a­rate civil law­suit against Cro­man for al­legedly en­gag­ing in ha­rass­ment of rent-reg­u­lated ten­ants and other il­le­gal, fraud­u­lent, and de­cep­tive con­duct in con­nec­tion with his real-es­tate busi­ness. That case re­mains on­go­ing.

At­tor­ney Gen­eral Eric T. Sch­nei­der­man wants to send a strong mes­sage to land­lords that he will pur­sue any­one who en­gages in these types of prac­tices to the fullest ex­tent of the law.

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