A New York City landlord will spend one year in jail and has been forced to fork over $5 million in tax settlements after being sentenced on charges of tax fraud, according to the New York State Attorney General’s Office. In an Oct. 3, 2017 press release, the office states that a year-long investigation allegedly revealed that Steven Croman was purchasing Manhattan buildings with “rent-stabilized units” and would not long after attempt to force out those tenants then try and refinance the mortgage.
The culmination of this case is of interest to New York-based attorney Jeffrey Benjamin, who previously obtained a landmark punitive damage verdict at the end of a real estate fraud trial. Mr. Benjamin, who has decades of experience with real estate and fraud cases, says that it’s rare to see a landlord sentenced to jail time; and New York State Attorney General Eric T. Schneiderman concurs.
“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,” Schneiderman said in the press release. “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,” he continued.
According to the release, Croman pleaded guilty to third-degree grand larceny as well as first-degree falsifying business records and fourth-degree criminal tax fraud. The attorney general’s office adds that the jail term and hefty fine — $3 million of which has already been paid — has been enforced as to “send a strong message to landlords” that real estate and fraud allegations will be thoroughly investigated and prosecuted “to the fullest extent of the law.” The press release goes on to state that Croman was inflating the rent figures and income that he reported as to obtain better refinancing terms. Additionally, he allegedly received some $45 million in loans as a result of his alleged practices, which also included withholding payroll taxes from bonus payments that were being made to one of Croman’s former property managers. That manager, according to the attorney general’s office, was receiving bonuses for evicting the rent-controlled tenants from Croman’s buildings.
According to attorney Jeffrey Benjamin, disturbing and unfair real estate cases like this one warrant the thorough investigation and prosecution that was put to use here. Mr. Benjamin, whose knowledge of the New York Deceptive Practices Act has helped many of his clients in court. He says that those who feel they’ve been wronged shouldn’t hesitate to reach out to a competent and experienced fraud lawyer for guidance and advice.