‘Bernie Madoff of Landlords’ Pleads Guilty to Fraud
June 8, 2017
As published by The New York Times, on June 6, 2017.
Steven Croman has been so loathed as a landlord that his tenants started a website against him. When he was charged in May 2016 with 20 felonies punishable by up to 25 years in prison, the attorney general described him as the “Bernie Madoff of landlords.” The night of his arrest, a pizza joint in the East Village offered free rosé wine to anyone who mentioned his name.
On Tuesday, Mr. Croman, 50, whose companies own more than 150 buildings citywide, mainly Manhattan apartment complexes with rent-regulated units, pleaded guilty to three felonies, for fraudulently refinancing loans and committing tax fraud. He agreed to serve a year in the jail complex at Rikers Island and pay a $5 million tax settlement. As part of the deal, the attorney general’s office said it had no other pending criminal investigations of Mr. Croman.
Tenants said they had mixed feelings about the agreement, even as the attorney general said it would send a strong message to landlords.
“Steven Croman is a fraudster and a criminal who engaged in a deliberate and illegal scheme to fraudulently obtain bank loans,” said the attorney general, Eric T. Schneiderman, a Democrat. “He went to outrageous lengths to boost his bottom line.”
For regulators and tenants, Mr. Croman became a test case for how bad landlords would be handled in the city. His business model was based on pushing people out of rent-regulated apartments and deregulating those units to collect much higher rents — demonstrating how rent regulations have been gutted in New York, putting affordable apartments far out of reach for average New Yorkers.
On Tuesday, many tenants said they thought Mr. Croman should get more jail time.
“It’s been constant harassment from him,” said Lannie Lorence, 46, whose building in Gramercy Park was bought by Mr. Croman’s company about 20 years ago. “It’s not just me. It’s thousands of people in the city. And he gets a year. A year! He should get at least 20.”
Cynthia Chaffee, a founder of the Stop Croman Coalition, praised the attorney general’s office for its work while blaming other government agencies for ignoring her complaints about Mr. Croman for years.
“Croman should be put away for life,” she said. “I’m disappointed, but it’s beyond what I thought would happen.”
In New York, several elected officials have defended tenants in rent-regulated apartments and pushed for more affordable housing in recent years. In 2012, Gov. Andrew M. Cuomo, a Democrat, set up the tenant protection unit, which referred the Croman case to the attorney general’s office. In 2014, Mayor Bill de Blasio, also a Democrat, announced that he planned to build or preserve 200,000 affordable units over 10 years. In 2015, the de Blasio administration and Mr. Schneiderman’s office set up a joint task force to focus on property owners who harassed tenants in rent-regulated apartments.
Mr. Croman, a frequent star of “worst landlords” lists, is the most prominent landlord in recent years to face such serious accusations in the city.
The 20 felonies he was charged with in May 2016 mostly related to accusations that he had inflated his rental income to secure more than $45 million in bank loans. His mortgage broker was also charged with 15 felonies; that case is still pending.
But highlighting a lack of laws targeting bad landlords, none of the criminal charges related to Mr. Croman’s treatment of tenants. The victims in these felonies — the banks, essentially — have been mum about the charges.
On Tuesday, Mr. Croman appeared before Justice Jill Konviser of State Supreme Court in Manhattan and pleaded guilty to grand larceny, falsifying business records and criminal tax fraud. One of Mr. Croman’s lawyers, Benjamin Brafman, said that his client had agreed to accept responsibility “and looks forward one day soon to putting this matter behind him.” Mr. Croman will be sentenced Sept. 19.
Last month, the attorney general’s office introduced legislation that would make it easier to criminally prosecute landlords who improperly push tenants out of rent-regulated apartments.
The attorney general’s office also filed a lawsuit against Mr. Croman last year, seeking to force him to give up his real estate business and pay millions of dollars in restitution and penalties. That lawsuit is pending.