Notorious landlord Croman arrested on slew of charges by A.G. Schneiderman

Landlord Steven Croman, holding a folder to cover his handcuffs, is walked into Manhattan Supreme Court on Mon., May 9, to be arraigned on his charges. A police detective is on the left and Croman's attorney is on the right. Photo by Jefferson Siegel

Landlord Steven Croman, holding a folder to cover his handcuffs, is walked into Manhattan Supreme Court on Mon., May 9, to be arraigned on his charges. A police detective is on the left and Croman’s attorney is on the right. Photo by Jefferson Siegel

BY COLIN MIXSON | State Attorney General Eric Schneiderman unleashed 20 withering felony criminal and civil charges against landlord Steven Croman on Monday, accusing him of using “harassment, coercion and fraud” as tools for driving out rent-stabilized tenants amid schemes to convert their apartments into lucrative market-rate units.

Croman, who owns 140 buildings across Manhattan, is among the city’s wealthiest and most influential landlords to encounter such devastating allegations in recent years, and the charges represent a state willing to prosecute high-profile targets suspected of flagrantly violating tenants’ rights, according to Schneiderman.

Based on the A.G.’s lengthy investigation, Croman has already been indicted on the criminal charges.

“My message to unscrupulous landlords is simple: If you put your own profits over your tenants’ legal protections, we will investigate you and prosecute you to the fullest extent of the law,” the attorney general said. “My office will not tolerate anyone who attempts to line their own pockets by gaming the system. No one is above the law — no matter how rich or powerful.”

The criminal charges focus on Croman’s alleged schemes to defraud the New York Community and Capital One banks. Schneiderman claims Croman — along with mortgage banker Barry Swartz, who was also indicted on 15 charges — colluded to submit false mortgage documents to their lenders, including rent rolls describing market-rate units that were, in fact, occupied by rent-stabilized tenants, along with inflated rents charged for commercial spaces located in buildings Croman owned.

In reporting an allegedly exaggerated income, Croman hoped to obtain honeyed terms when refinancing, and, over the course of three years, Croman obtained more than $45 million in loans under false pretenses, according to the attorney general.

All told, the various criminal allegations leveled against Croman could net him 25 years in prison.

But it’s the civil charges brought against the lightning-rod landlord, which allege a widespread, institutional policy of harassment against rent-stabilized tenants, which have renters giddy with excitement.

“All the tenants are very happy about this,” said George Tzannes, a rent-stabilized tenant of Croman’s living on E. Sixth St. between Avenues A and B.

Croman directed his employees to offer rent-stabilized tenants meager buyouts worth a few months’ rent, and, in the event they declined the offers, to utilize less-seemly tactics to persuade them, according to the attorney general.

These included filing baseless lawsuits against rent-stabilized tenants, and investigators claim to have uncovered internal e-mails sent by company employees acknowledging that the bogus suits would “aggravate” tenants into accepting a buyout.

Furthermore, the embattled landlord incentivized property managers to gain access to tenants’ apartments in an effort to falsely accuse residents of violating their leases, according to Schneiderman.

In particular, Croman employed private investigator Anthony Falconite — a former New York Police Department officer whom the landlord referred to as his “secret weapon” — to enter tenants’ apartments under false pretenses, usually pretending to be a city worker, according to the state prosecutor.

Falconite himself referred to obtaining buyouts as a “team sport,” to which one property manager responded in an e-mail, “I know that!! Who’s our next target? We have to start lining them up!!!,” according to Schneiderman.

Croman purchased the building where Tzannes has resided for 45 years in 2007, and the East Villager’s experience exactly matched the charges leveled against the alleged slumlord.

The local claims it was soon after Croman bought the property before lawsuits started flying, with the landlord’s lawyers claiming Tzannes and his wife were in rent arrears, despite the company routinely cashing the couple’s checks.

“It started immediately,” Tzannes said.

Croman ultimately dropped each of the three suits he brought against Tzannes, but not before the E. Sixth St. resident had wasted thousands of dollars on lawyers’ fees preparing to fight the baseless claims.

Amid the alleged harassment, Croman’s contractors went about renovating unoccupied apartments in the tenement, with work causing potentially lead-tainted dust to spread throughout their homes. At one point, gas was shut off for 15 months due to the construction, and complaints from tenants were taken as invitations by Croman to send contractors — along with his wife — into their homes in attempts to suss out violations, according to Tzannes.

“They have ways of weaseling their way in,” Tzannes said. “At one point his wife, Harriet, came by and started grilling me.”

Tenants’ excitement over Croman’s indictment is tempered by anxiety about the future of their homes, and the expectation of decreased services as their landlord turns his focus toward combating the state’s allegations.

A spokesperson for the attorney general’s office said they’ll be filing a request with the courts to appoint an operator to manage Croman’s various properties, though a timeline for that appointment is not readily apparent, and the landlord is expected to challenge that motion in court.

Also unclear is the scope of the attorney general’s civil claims, and the amount of fines the prosecutor is seeking as restitution for Croman’s alleged crimes. But the penalty is expected to be in the tens of millions of dollars,  with the money split between former renters and the state, according to an A.G. spokesperson.

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