NEW YORK CITY—New York City landlord Steven Croman, who owns more than 140 apartment buildings, was taken into custody on Tuesday to serve one year of jail time at Rikers Island. On Tuesday, he had pleaded guilty to grand larceny, tax fraud and falsifying documents. As part of the plea, Croman agreed to pay a $5 million tax settlement to the state, $3 million of which he paid last month.
Croman’s defense attorney Benjamin Brafman tells GlobeSt.com, “The sentence of one year was an agreed upon sentence consistent with the terms of a plea agreement we signed many months ago.”
Attorney General Eric T. Schneiderman’s investigation found that between 2012 and 2014, Croman submitted false documents for rent-stabilized apartments and commercial spaces. He inflated the annual rental income of these buildings to obtain more than $45 million in mortgage refinancing under false pretenses.
The investigation also found in 2011, he committed tax fraud, failing to withhold appropriate state payroll tax from employee paychecks. In addition, it found that unpaid taxes applied to a former property manager, who was awarded bonuses to get rent stabilized and rent controlled tenants out of Croman properties.
Schneiderman calls Croman’s actions an elaborate scheme intended to push out rent-stabilzed tenants. “A booming real estate market is no excuse for criminal activity aimed at displacing New Yorkers already struggling with high rents,” he says.
Last month, the attorney general settled a case against Icon Realty. The case similarly alleged the landlord subjected rent-regulated tenants to adverse living condition to muscle them from their homes. Earlier this year, Schneiderman introduced new legislation to prevent harassment of tenants in rent-stabilized and rent-controlled apartments. The law would open the door to prosecutions of cases arising from more commonplace tactics, such as turning off heat and hot water, exposing children to lead dust and making buildings deliberately uninhabitable.
Oral arguments in the attorney general’s ongoing civil lawsuit are scheduled for Nov. 13. Joel Cohen of Stroock & Stroock & Lavan LLP is representing Croman in that case.