NEW YORK CITY—According to a consent decree signed on Wednesday, landlord Steven Croman has agreed to pay $8 million to tenants, and allow an independent management company with which he has no ties to manage over 100 of his residential properties. The settlement with New York Attorney General Eric Schneiderman also requires that a monitor oversee Croman’s compliance with the settlement, providing quarterly reports to Schneiderman’s office for seven years.
As reported by GlobeSt.com in October, Croman began a one-year jail sentence and paid a $5 million tax settlement for the AG’s separate criminal charges of fraudulent refinancing of loans and tax fraud.
Regarding the civil case, Schneiderman says, “We’re ensuring tenants get the restitution and protections they deserve—including the largest-ever settlement with an individual landlord, and unprecedented independent management and monitoring at his properties.”
The AG’s office reports the case resulted in the longest terms for independent management and monitoring required in any tenant harassment case in the OAG’s history. The OAG will approve both the independent management company and the monitor. The monitor’s reports will include any tenant complaints and actions taken, the total number of rent-regulated apartments that become deregulated during the reporting period, the reason for deregulation, and an assessment of Croman’s compliance.
Early next year, the OAG will announce details of the process for tenants to apply for restitution. Both former and current tenants will be eligible for restitution if they were tenants in a rent-stabilized or rent-controlled apartment owned by Croman between July 1, 2011 and the date of the consent agreement, Dec. 20, 2017, or if they received a buyout of less than $20,000, not including amounts that covered rent obligations. Only one tenant per apartment is eligible for money from the restitution fund.
The agreement also ensures that Anthony Falconite, whom Croman allegedly called his “secret weapon” in intimidating rent-regulated tenants, will have no interaction with any of the Croman property tenants.
In addition, Croman is responsible for covering the costs of the management company and the monitor, as well as any government fines.
Falconite’s attorney Edward M. Spiro, a partner at Morvillo, Abramowitz, Grand, Iason & Anello P.C., provided the following statement to GlobeSt.com:
“Under the terms of the Consent Decree, the Attorney General’s petition will be dismissed with prejudice, without any admission of wrongdoing by Mr. Falconite. He continues to deny the allegations against him.”
In May 2016, AG Schneiderman filed the civil lawsuit against Croman and Falconite. The case alleged that Croman used harassment, coercion and fraud to muscle out rent-regulated tenants and then converted their apartments to highly profitable market-rate rental units. The complaint alleged that Croman used Falconite, a former New York City police officer, to frighten and intimidate rent-regulated tenants to give up their properties. Falconite was not named in the criminal matter.
The civil case alleged Croman harassed tenants into surrendering their rent-stabilized apartments with the following tactics:
(1) Croman obtained buy-outs from tenants for a few thousand dollars or a few months of free rent.
(2) He motivated employees, who referred to rent-regulated tenants as “targets,” to compete with one another to obtain the most buy-outs. Falconite was accused of referring to this as a “team sport.” A property manager allegedly responded “I know that! Who’s our next target?”
(3) He repeatedly filed baseless lawsuits against tenants to aggravate or pressure them into accepting buyouts.
(4) Croman orchestrated illegal and hazardous construction, at least on 175 occasions without permits, and repeatedly violated lead-safety laws.
Benjamin Brafman, the founder of Brafman & Associates, represented Croman in his criminal case. Joel Cohen of Stroock & Stroock & Lavan LLP was Croman’s attorney of record in the civil matter and did not provide comments.
However, a spokesperson from Croman’s management firm, 9300 Realty, Inc., tells GlobeSt.com: “We are pleased to have reached a mutually acceptable settlement with the Attorney General to end the ongoing inquiry into our business. We look forward to working with his office to implement the terms of our agreement and continuing to provide quality rental housing throughout New York City.”