Steve Croman Released From Jail; Lawmakers Push Legislation to Combat Predatory Equity

Steve Croman after his surrender May 9, 2016.

Steve Croman after his surrender May 9, 2016.

Property owner Steve Croman was sprung from jail on Friday, after serving eight months of a one-year sentence for mortgage and tax fraud. Croman owns a large portfolio of buildings throughout New York City, including many properties on the Lower East Side.

While his official release date was Sunday, Croman actually walked out of the Manhattan Correctional Facility in Lower Manhattan a couple of days early.

Croman pleaded guilty last summer, as part of a deal with the state attorney general’s office.  In a separate civil case, he agreed to pay tenants $8 million and accept a court-ordered monitor for his real estate empire.

In an email, Croman’s high-powered attorney, Ben Brafman, told The Real Deal, “Anyone who gets a one-year sentence gets released after 2/3 of the sentence is served… It’s the law for city jail sentences.” Brafman said his client plans to, “relax and spend time with family.” Page Six reported that Croman’s wife is planning big “welcome home” party for him in Greece.

While news broke over the weekend regarding Croman’s release, two local elected officials were holding a news conference outside the headquarters of another controversial landlord, first son-in-law Jared Kushner. State Sen. Brad Hoylman and State Assembly member Harvey Epstein announced legislation to crack down on “predatory equity.” According to a press release:

The legislation directs the New York State Department of Finanical Services (DFS) to collect data on financial institutions that lend to property owners with the intent to displace current tenants. Specifically, the bill requires DFS to investigate the role financial institutions play in encouraging anti-tenant practices by notorious landlords like Jared Kushner, Steven Croman and Raphael Toledano.  Similar to the subprime mortgage crisis of 2008, lax underwriting standards and a general lack of transparency have allowed speculators and real estate agents to secure outsized mortgages with very little discretion and oversight. Owners use these loans to make purchases based on unrealistic projections of rising rents, and in turn have difficulty paying the mortgages. Building owners — anxious to recoup on their hefty investments — often resort to abusive and exploitative tactics to drive rent-regulated tenants out. These abusive practices, known as predatory equity, are best-exemplified by figures like Steven Croman and Jared Kushner.


On Friday, the Stabilizing NYC coalition released its annual list of 10 predatory landlords. Steve Cromaan was among those property owners singled out. Local advocates and tenant leaders gathered at City Hall to draw attention to the updated list. One of the founders of the “Stop Croman Coalition,” Cynthia Chaffee, said, “Even though Croman is (was) in jail, the harassment of tenants continues, including the deprivation services, poor maintenance and the lack of repairs… We will not stop until Croman is permanently eliminated as a landlord. Period.”

On May 17, tenants living in Croman building on the Lower East Side staged rallies to drive home the point that they fully intend to keep up the pressure on the notorious landlord for as long as it takes.

Council member Carlina Rivera at Stabilizing NYC event. Photo: John McCarten/New York City Council.

Council member Carlina Rivera at Stabilizing NYC event. Photo: John McCarten/New York City Council.


Local Tenants and Activists Demand Changes in Signature Bank’s Lending Practices

Protest outside Signature Bank meeting, April 25, 2018. Photos courtesy of ANHD.

Protest outside Signature Bank meeting, April 25, 2018. Photos courtesy of ANHD.

Activist groups in New York City have a long history of fighting back against landlords intent on pushing out rent stabilized tenants. In the past couple of years they’ve also been going after banks that help developers purchase vulnerable rent regulated buildings. Case in point: a protest staged last month in Midtown Manhattan, where Signature Bank was holding its annual shareholder meeting.

Tenants from across the city and members of advocacy groups, carried signs with slogans like, “Don’t underwrite displacement,” and called on Signature to, “fully adopt responsible lending practices to protect tenants’ rights.” 

Signature is not the only bank targeted by activists, but it has been a main focus of their campaign during the past year. In protracted negotiations with bank officials, they have pressed for commitments to stop granting loans that put rent regulated residents at risk of displacement and to monitor unsafe construction practices. Tenant leaders say Signature has made some concessions but has not gone nearly far enough.

One of the groups leading the charge on the issue is the Association for Neighborhood & Housing Development (ANHD). In a statement, ANHD’s Jaime Weisberg said, “When banks make loans that are too large for the current rents to support, landlords have even more reason to find all possible ways to raise rents – legal, semi-legal, or illegal – all unscrupulous… We have seen this again and again. Banks may not be the only problem in these situations, but they are definitely part of the problem, and should instead become part of the solution.”

Among those attending last month's rally was State Assemblyman Harvey Epstein, a longtime tenant advocate.

Among those attending last month’s rally was State Assemblyman Harvey Epstein, a longtime tenant advocate.

Another organization involved in the coalition is the Cooper Square Committee, which is on the front lines advocating for tenants on the Lower East Side. Several property owners with buildings in the neighborhood — including Icon Realty Management, Jared Kushner and the Sabet Group — have Signature loans.

This past fall, Sabet picked up a 20-unit walkup building at 61 East 7th St. for $8.3 million. It was not long after the transaction took place that counselors at Cooper square Committee began hearing from tenants about disruptive renovation projects in the building and questionable buyout offers. According to public records, Signature provided the Sabet Group with a loan in the amount of $6.375 million, raising suspicions among tenants that they were now living in an over-leveraged building. They grew more concerned after learning about previous legal battles between Sabet and tenants living in Chelsea.

Earlier this spring, the Tenant Harassment Protection Task Force paid a visit to the building, which resulted in a partial stop work order. In a March 23 letter to executives at Signature Bank, the tenant association detailed various problems, including the discovery that fire stopping was not used during building renovations. “Our association,” they wrote, “has been monitoring and logging the unsafe breathing levels in apartments… with soot and debris continuing to infiltrate our homes.” The tenants pleaded with the bank executives, “Please consider in the future the consequences of the money you lend to landlords (with questionable track records).”


Yonatan Tadele, a housing coordinator at Cooper Square Committee, told The Lo-Down, “Whenever rent-regulated buildings are being financed, Signature Bank must improve their lending standards across the board – from initiating loans, to dealing with problems that arise in buildings currently financed by the Bank.”

In December, Signature Bank came out with a statement, which was titled, “Our Pledge to the Community.” Among other points, Signature asserted, “The Bank’s underwriting for multi-family loans considers cash flow projections based on in-place rents and market rate projections for vacant apartments.”

“In the event building conditions affecting safety or quality of life are brought to the Bank’s attention,” the bank noted, “we will work diligently to encourage our borrowers to ameliorate those conditions.”  In a statement provided to WNYC last year, Signature said, “No one and no bank is perfect. But our overall record should be applauded and not denigrated. We note some of the names in question and have worked toward encouraging positive outcomes for tenants to the extent legally possible.”

But Cooper Square Committee pointed out that Signature has still not reached and agreement with tenants and advocacy groups. The pledge, said Yonatan, “falls short of a number of key items; namely, specific protections to prevent tenant displacement and utilizing responsible tenant engagement.  One such protection that would’ve made a lasting difference at 61 East 7th Street is having a defined policy that would prevent hazardous construction and ensure tenants’ safety.”