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A.G. Underwood reminds current & former Croman tenants of fraud restitution fund deadline

PRESS RELEASE

NEW YORK, N.Y. -- New York Attorney General Barbara D. Underwood reminded New Yorkers today that tenants who live or formerly lived in buildings owned by New York City landlord Steven Croman may be eligible to apply for restitution, as part of the unprecedented settlement reached by the Attorney General's office in December 2017. In order to participate, tenants must file a claim by November 4, 2018. Claim forms and eligibility requirements are available at www.cromanrestitutionfund.com.

"Again and again, Steve Croman acted as though he was above the law. My office secured an unprecedented $8 million settlement for Croman's illegal tenant harassment, coercion, and fraud – the largest-ever settlement with an individual landlord," said Attorney General Underwood. "I encourage eligible tenants to submit a claim by November 4th so they can receive the restitution they deserve. We will continue to aggressively pursue predatory landlords to the fullest extent of the law."

The settlement arose out of an investigation and lawsuit filed by the Attorney General's office against Croman for engaging in illegal conduct — including harassment, coercion, and fraud — in order to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units. The consent decree requires Croman to pay $8 million into a Tenant Restitution Fund – the largest-ever monetary settlement with an individual landlord.

Tenants are eligible for restitution if they are or were a tenant in a rent-stabilized or rent-controlled apartment owned by Croman between July 1, 2011 and December 20, 2017; they received a buyout of less than $20,000, not including any amount that purported to cover rent or arrears; and no other tenant in their apartment received money from the restitution fund. Several hundred current and former tenants are potentially eligible to apply for these restitution funds.

In August 2018, the claims administrator JND Legal Administration mailed claim notices and forms to current and former rent-stabilized and rent-controlled tenants in Croman's buildings. Those forms and additional information are also available at www.cromanrestitutionfund.com. The $8 million will be divided equally among eligible claimants and distributed to tenants in installments over a period of 38 to 42 months, with the first installment coming as soon as the claims administrator processes all of the first-round claim forms.

In addition to the $8 million Tenant Restitution Fund, the settlement also requires over 100 Croman residential properties to be run by a new, independent management company with no ties to Croman, for five years – the longest-ever term for independent management in OAG history. Moreover, the settlement requires seven years of independent monitorship to oversee compliance with the terms of the consent decree and provide regular reporting to the Attorney General – the longest-ever monitorship required in any tenant harassment case.

Earlier this year, OAG approved New York City Management as the independent management company; the management company took over operations of the buildings on July 1, 2018. Pursuant to the settlement, New York City Management is instituting new policies at the Croman properties to ensure full compliance with the law and correction of all past violations. It will also post a comprehensive set of Tenants Rights in every building it manages.

The settlement was the result of a May 2016 civil lawsuit brought by the Attorney General's office against Croman and his agent Anthony Falconite for allegedly engaging in illegal, fraudulent, and deceptive conduct in connection with Croman's real-estate business. The lawsuit alleged that Croman directed an illegal operation that wielded harassment, coercion, and fraud to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units. The lawsuit further alleged that Croman deployed Falconite, a former New York City police officer, to frighten and intimidate rent-regulated tenants into surrendering their apartments.

In October 2017, Croman was sentenced to a year in jail and paid a $5 million tax settlement following separate criminal charges brought by the Attorney General's office for fraudulent refinancing of loans and tax fraud. Rarely, if ever, has a landlord been sentenced to serve time in jail for engaging in these practices.