FILED: NEW YORK COUNTY CLERK 06/07/2016 04:08 PM NYSCEF DOC. NO. 19
INDEX NO. 450545/2016 RECEIVED NYSCEF: 06/07/2016
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK THE PEOPLE OF THE STATE OF NEW YORK, by ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, Petitioner,
CORRECITED VERIFIED PETITION
-againstSTEVEN CROMAN, ANTHONY FALCONITE, CROMAN REAL ESTATE INC., 9300 REALTY MANAGEMENT INC., 9300 REALTY INC., FALCONITE LLC, 3-5 WEST 103RD LLC, 7 EAST 75 LLC, 9 WEST 103RD LLC, 15 WEST 103RD LLC, 17 WEST 103RD LLC, 40 AVENUE B LLC, 44 AVE B LLC, 44 EAST 1ST LLC, 60 AVENUE B LLC, 68 CLINTON STREET LLC, 72 WEST 108TH ASSOCIATES LLC, 99-105 THIRD AVENUE REALTY LLC, 102 EAST 7TH ST LLC, 115 AVE A LLC, 115 MULBERRY LLC, 118 EAST 7 LLC, 120-120½ FIRST LLC, 124 RIDGE LLC, 127 EAST 7TH STREET LLC, 134 ORCHARD LLC, 138 EAST 16TH STREET LLC, 145 E 26 LLC, 159161 STANTON LLC, 171 EAST 102ND LLC, 179181 ESSEX LLC, 182 STANTON LLC, 193-195 STANTON LLC, 199 EAST 3RD ST LLC, 200 STANTON LLC, 206 EAST 83RD LLC, 208-214 E 25TH ST LLC, 209 E 25 LLC, 212-214 EAST 105 LLC, 213 E 26 LLC, 215 AVENUE B REALTY LLC, 218 A LLC, 219 EAST 28 LLC, 227 E. 82 LLC, 228-230 E 32ND LLC, 232 ELIZABETH LLC, 232 W 14TH LLC, 234-236 W 14TH LLC, 257 BLEECKER LLC, 277 E. 10TH LLC, 290 W12 LLC, 309 WEST 97 LLC, 314 E 106 LLC, 321 EAST 10TH LLC, 321 W. 16TH LLC, 325 E 5TH LLC, 326 E 35TH LLC, 326-338 E 100TH LLC, 334 E 6TH LLC, 343 EAST 8TH LLC, 343-345 E. 5TH ST LLC, 345 WEST 53RD LLC, 351-357 WEST 45 LLC, 358 W 51 LLC, 380-382 E. 10TH LLC, 411 E. 12TH ST LLC, 420 E. 9TH LLC, 420 W 51 LLC, 422 E. 9TH LLC, 424 E. 9TH LLC, 434 WEST 52 LLC, 436 WEST 52 LLC, 459 W 50 ST LLC, 529 E. 6TH ST. LLC, 560-566 HUDSON LLC, 635 E 6 LLC, 697
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Index No. 450545/2016 IAS Part ______________________ Assigned to Justice Shlomo Hagler
TENTH LLC, 722-724 TENTH AVENUE HOLDING LLC, 1373 FIRST AVENUE ASSOCIATES LLC, 1590 LEXINGTON LLC, M&E 234 LLC, M&E 336-348 E. 18TH ST. LLC, M&E 410 EAST 13TH ST. LLC, M&E 416 E 13TH STREET LLC, M&E 432 E. 13TH LLC, M&E CHRISTOPHER LLC, M&E MOTT LLC, MAJOR LEROY CORP., MAJOR MOTT ST. CORP., PRINCE HOLDINGS 2012 LLC, SECOND AVENUE & 50TH STREET REALTY LLC, Respondents. The People of the State of New York, by their attorney, Eric T. Schneiderman, Attorney General of the State of New York, as and for his Petition, respectfully allege: INTRODUCTION 1.
Over the past decade, Steven Croman has amassed a portfolio of more
than 140 apartment buildings throughout Manhattan that are managed by entities he owns and operates. He grows his portfolio by using a business model predicated on fraudulent and illegal practices that exploit rent-regulated tenants, and on flouting laws designed to protect the safety and well-being of New York residents. With each new building he acquires, Croman and his business associates harass, coerce, and deceive rent-regulated tenants to drive them out of their long-term homes, so that they can then convert the apartments into highly profitable market-rate units. Croman has implemented this model so successfully that he has deregulated the majority of the rent-stabilized tenants in many of his buildings within just a few years of purchase—a rate much higher than the average New York City landlord. 2.
To carry out his scheme, Croman pressures property managers to obtain
“buyouts”— payments to tenants who agree to vacate their apartments, often amounting
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to no more than a few thousand dollars or a few months of free rent—and awards to the managers bonuses of up to $10,000 for each buyout. When tenants refuse to take a buyout, Croman and his associates resort to an array of illegal methods: (a) Croman deploys his agents and employees to intimidate, stalk, and threaten rent-regulated tenants. Upon purchasing a building, Croman dispatches private investigator and former NYPD officer Anthony Falconite to conduct “building sweeps” targeting each and every rentregulated tenant in the building. Falconite regularly uses false pretenses to get into tenants’ apartments, posing as a repairperson, deliveryman, or building manager. Once inside, he accuses the tenants, some of whom have lived in their apartments for decades, of illegally occupying the units, and threatens them with eviction. Falconite has even stalked tenants— visiting them multiple times at their homes, confronting them at work, and tracking down friends and family members out-of-state—all for the purpose of coercing them into surrendering their apartments. (b) Croman files frivolous lawsuits against rent-regulated tenants. Croman intensifies the pressure on besieged tenants by filing baseless lawsuits against them (sometimes multiple times against the same tenant), requesting repeated adjournments to delay the court process, and then, in numerous cases, dropping the suit, only to commence another one shortly thereafter. Croman often manufactures a false basis for such lawsuits by refusing to deposit tenants’ checks and then suing them for non-payment. Even after tenants prevail in these frivolous lawsuits, Croman continues to harass them by refusing to deposit their rent checks, charging them unlawfully for legal fees, and threatening them with eviction. (c) Croman turns buildings with rent-regulated apartments into hazardous construction zones. To create as many market-rate units as possible in the shortest amount of time, Croman cuts corners during renovations, engages in dangerous construction practices, and regularly fails to create legally required tenant-protection plans. The slipshod construction exacerbates the already substandard conditions of rentregulated apartments, which Croman has deliberately allowed to fall into disrepair as part of his tenant harassment tactics. Tenants who reside in the buildings during construction must contend with constant and pervasive lead-contaminated dust, ceilings collapsing in their children’s bedrooms, sewage backflowing through their pipes, and rain pouring through holes in the roof. Croman conceals his illegal practices from safety inspectors by intentionally failing to secure work permits, flouting stop-work orders, and falsely certifying to authorities that his buildings are unoccupied. (d) Croman uses fraud and subterfuge to elude the government
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authorities who attempt to hold him accountable for his unlawful conduct. Croman’s disregard for his legal obligations as a landlord is near absolute. He routinely files false documents with government agencies responsible for enforcing building and construction codes and simply ignores administrative and judicial orders that demand compliance with minimum legal standards. 3.
The Attorney General’s investigation into Croman’s business operations
has confirmed that Respondents engaged in—and continue to perpetuate—an illegal and fraudulent scheme that has victimized hundreds of tenants, pushed out long-time residents from their homes, and accelerated the loss of affordable housing in New York City. Respondents’ many violations of city and state law include the following: (a) Unlawful tenant harassment, 9 N.Y.C.R.R. § 2525.5, N.Y.C. Admin. Code §§ 27-2004(a)(48), 27-2005(d); (b) Deceptive business practices, N.Y. General Business Law § 349, by using false pretenses and deception to gain access to tenants’ apartments, filing baseless lawsuits against tenants, and serving tenants with false and deceptive rent demands and eviction threats; (c) Illegal construction practices, N.Y.C. Construction Codes, N.Y.C. Admin. Code § 28-105.1 et seq., by routinely working without permits, violating stop-work orders, preventing government authorities from inspecting work sites, and making false statements to the Department of Buildings; (d) Violations of city lead-safety laws, N.Y.C. Admin. Code § 27-2056.1 et seq.; 28 R.C.N.Y. §§ 11-06(g)(1)(ix)(D), (g)(2)(vii)-(3)(viii)) et seq., by failing to protect tenants from lead-paint hazards, violating Department of Health orders to abate lead paint, misleading tenants about lead hazards in their buildings, and failing to provide tenants with required lead notices; (e) Violations of the Real Estate Broker Law, N.Y. Real Property Law § 441, by conducting tenant buyouts without real-estate brokers’ licenses; (f) Violations of the Private Investigator Law, N.Y. General Business Law § 79(1), by demonstrating untrustworthiness and accepting compensation that is tied to the outcome of the investigation; (g) Fraud, N.Y. Exec. Law § 63(12), by filing false instruments with the Department of Buildings, filing baseless lawsuits against tenants, serving tenants with false rent and eviction notices, and using false pretenses to gain access to tenants’ apartments; and
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(h) Violations of security deposit laws, 9 N.Y.C.R.R. § 2525.4, N.Y. Gen. Obligations § 7-103, by failing to place tenants’ security deposits in trust accounts, commingling tenants’ security deposits with the companies’ general funds, and unlawfully refusing to return security deposits to tenants. PARTIES 4.
Petitioner is the People of the State of New York, by its attorney, Eric T.
Schneiderman, the Attorney General of the State of New York. 5.
Respondent Steven Croman (or “Croman”) is an individual residing in
New York City. 6.
Croman is the president, founder, and sole owner of Respondent Croman
Real Estate Inc. and the Chief Executive Officer of Respondents 9300 Realty Inc. and 9300 Realty Management Inc. 7.
Croman also exercises control over each special-purpose entity described
in paragraphs 11-101 below (collectively, the “Landlord LLCs”). 8.
Respondent Croman Real Estate Inc. is a domestic corporation with its
principal office and place of business at 632 Broadway in New York City, from which it has transacted business at all times mentioned herein. (a) Croman Real Estate is a real-estate brokerage licensed under New York law. (b) Steven Croman is a licensed associate broker affiliated with Croman Real Estate. 9.
Respondent 9300 Realty Inc. is a domestic corporation with its principal
office and place of business in New York City, from which it has transacted business at all times mentioned herein. (a) 9300 Realty Inc. advertises on its website that its “brokerage team” can 5 5 of 78
help renters find apartments in “buildings [that] have undergone extensive renovations.” (b) 9300 Realty Inc. is not a licensed real-estate brokerage. 10.
Respondent 9300 Realty Management Inc. is a domestic corporation with
its principal office and place of business in New York City, from which it has transacted business at all times mentioned herein. 9300 Realty Management Inc. is a wholly owned subsidiary of 9300 Realty Inc. 9300 Realty Management Inc. is the employer of the property managers for Steven Croman’s apartment buildings. 11.
Respondent Anthony Falconite (or “Falconite”) is an individual residing in
New York City. (a) Falconite holds a private investigator license issued by the New York Department of State Division of Licensing Services. (b) Falconite is a licensed real estate salesperson affiliated with Croman Real Estate. 12.
Respondent Falconite LLC is a domestic limited liability company with its
principal office and place of business in New York City, from which it has transacted business at all times mentioned herein. (a) Falconite is the president and founder of Respondent Falconite LLC. (b) Anthony Falconite is Falconite LLC’s only employee. 13.
Respondent 3-5 West 103rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 3-5 West 103rd LLC has transacted business from its principal office and was the owner of the real property located at 3 and 5 West 103rd Street, New York, New York.
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14.
Respondent 7 East 75 LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 7 East 75 LLC has transacted business from its principal office and was the owner of the real property located at 7 East 75th Street, New York, New York. 15.
Respondent 9 West 103rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 9 West 103rd LLC has transacted business from its principal office and was the owner of the real property located at 9 West 103rd Street, New York, New York. 16.
Respondent 15 West 103rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 15 West 103rd LLC has transacted business from its principal office and was the owner of the real property located at 15 West 103rd Street, New York, New York. 17.
Respondent 17 West 103rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 17 West 103rd LLC has transacted business from its principal office and was the owner of the real property located at 17 West 103rd Street, New York, New York. 18.
Respondent 40 Avenue B LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 40 Avenue B LLC has transacted business from its principal office and was the owner of the real property located at 40 Avenue B, New York, New York. 19.
Respondent 44 Ave B LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 44 Ave B LLC has transacted business from its principal office and was the owner of the
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real property located at 44 Avenue B, New York, New York. 20.
Respondent 44 East 1st LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 44 East 1st LLC has transacted business from its principal office and was the owner of the real property located at 44 East 1st Street, New York, New York. 21.
Respondent 102 East 7th St LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 102 East 7th St LLC has transacted business from its principal office and was the owner of the real property located at 102 East 7th Street, New York, New York. 22.
Respondent 60 Avenue B LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 60 Avenue B LLC has transacted business from its principal office and was the owner of the real property located at 60 Avenue B, New York, New York. 23.
Respondent 68 Clinton Street LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 68 Clinton Street LLC has transacted business from its principal office and was the owner of the real property located at 68 Clinton Street, New York, New York. 24.
Respondent 72 West 108th Associates LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, 72 West 108th Associates LLC has transacted business from its principal office and was the owner of the real property located at 72 West 108th Street, New York, New York. 25.
Respondent 99-105 Third Avenue Realty LLC is a domestic limited
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liability company with its principal office and place of business in New York City. At all times mentioned herein, 99-105 Third Avenue Realty LLC has transacted business from its principal office and was the owner of the real property located at 99 3rd Avenue, New York, New York. 26.
Respondent 115 Ave A LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 115 Ave A LLC has transacted business from its principal office and was the owner of the real property located at 115 Avenue A, New York, New York. 27.
Respondent 115 Mulberry LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 115 Mulberry LLC has transacted business from its principal office and was the owner of the real property located at 115 Mulberry Street, New York, New York. 28.
Respondent 118 East 7 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 118 East 7 LLC has transacted business from its principal office and was the owner of the real property located at 118 East 7th Street, New York, New York. 29.
Respondent 120-120½ First LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 120-120½ First LLC has transacted business from its principal office and was the owner of the real property located at 120 and 120½ First Avenue, New York, New York. 30.
Respondent 124 Ridge LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 124 Ridge LLC has transacted business from its principal office and was the
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owner of the real property located at 124 Ridge Street, New York, New York. 31.
Respondent 127 East 7th Street LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, 127 East 7th Street LLC has transacted business from its principal office and was the owner of the real property located at 127 East 7th Street, New York, New York. 32.
Respondent 134 Orchard LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 134 Orchard LLC has transacted business from its principal office and was the owner of the real property located at 134 Orchard Street, New York, New York. 33.
Respondent 138 East 16th Street LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, 138 East 16th Street LLC has transacted business from its principal office and was the owner of the real property located at 138 East 16th Street, New York, New York. 34.
Respondent 145 E 26 LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 145 E 26 LLC has transacted business from its principal office and was the owner of the real property located at 145 East 26th Street, New York, New York. 35.
Respondent 159-161 Stanton LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 159-161 Stanton LLC has transacted business from its principal office and was the owner of the real property located at 159 and 161 Stanton Street, New York, New
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York. 36.
Respondent 171 East 102nd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 171 East 102nd LLC has transacted business from its principal office and was the owner of the real property located at 171 East 102nd Street, New York, New York. 37.
Respondent 179-181 Essex LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 179-181 Essex LLC has transacted business from its principal office and was the owner of the real property located at 179 Essex Street, New York, New York. 38.
Respondent 182 Stanton LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 182 Stanton LLC has transacted business from its principal office and was the owner of the real property located at 182 and 184 Stanton Street, New York, New York. 39.
Respondent 193-195 Stanton LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 193-195 Stanton LLC has transacted business from its principal office and was the owner of the real property located at 193 and 195 Stanton Street, New York, New York. 40.
Respondent 199 East 3rd St LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 199 East 3rd St LLC has transacted business from its principal office and was the owner of the real property located at 199 and 201 East 3rd Street, New York, New York. 41.
Respondent 200 Stanton LLC is a domestic limited liability company with
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its principal office and place of business in New York City. At all times mentioned herein, 200 Stanton LLC has transacted business from its principal office and was the owner of the real property located at 200 Stanton Street, New York, New York and 139, 141, and 143 Ridge Street, New York, New York. 42.
Respondent 206 East 83rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 206 East 83rd LLC has transacted business from its principal office and was the owner of the real property located at 206 East 83rd Street, New York, New York. 43.
Respondent 208-214 E 25th St LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 208-214 E 25th St LLC has transacted business from its principal office and was the owner of the real property located at 208, 210, 212, and 214 E 25th Street, New York, New York. 44.
Respondent 209 E 25 LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 209 E 25 LLC has transacted business from its principal office and was the owner of the real property located at 209 East 25th Street, New York, New York. 45.
Respondent 212-214 East 105 LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 212-214 East 105 LLC has transacted business from its principal office and was the owner of the real property located at 212 and 214 East 105th Street, New York, New York. 46.
Respondent 213 E 26 LLC is a domestic limited liability company with its
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principal office and place of business in New York City. At all times mentioned herein, 213 E 26 LLC has transacted business from its principal office and was the owner of the real property located at 213 East 26th Street, New York, New York. 47.
Respondent 215 Avenue B Realty LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, 215 Avenue B Realty LLC has transacted business from its principal office and was the owner of the real property located at 147 Avenue A, New York, New York. 48.
Respondent 218 A LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 218 A LLC has transacted business from its principal office and was the owner of the real property located at 218 Avenue A, New York, New York. 49.
Respondent 219 East 28 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 219 East 28 LLC has transacted business from its principal office and was the owner of the real property located at 219 East 28th Street, New York, New York. 50.
Respondent 227 E 82 LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 227 E 82 LLC has transacted business from its principal office and was the owner of the real property located at 227 East 82nd Street, New York, New York. 51.
Respondent 228-230 E 32nd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 228-230 E 32nd LLC has transacted business from its principal office and was the
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owner of the real property located at 228 and 230 East 32nd Street, New York, New York. 52.
Respondent 232 Elizabeth LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 232 Elizabeth LLC has transacted business from its principal office and was the owner of the real property located at 232 and 234 Elizabeth Street, New York, New York. 53.
Respondent 232 W 14th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 232 W 14th LLC has transacted business from its principal office and was the owner of the real property located at 232 West 14th Street, New York, New York. 54.
Respondent 234-236 W 14th LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 234-236 W 14th LLC has transacted business from its principal office and was the owner of the real property located at 234 and 236 West 14th Street, New York, New York. 55.
Respondent 257 Bleecker LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 257 Bleecker LLC has transacted business from its principal office and was the owner of the real property located at 257 Bleecker Street, New York, New York. 56.
Respondent 277 E 10th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 277 E 10th LLC has transacted business from its principal office and was the owner of the real property located at 277 East 10th Street, New York, New York. 57.
Respondent 290 W 12 LLC is a domestic limited liability company with
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its principal office and place of business in New York City. At all times mentioned herein, 290 W 12 LLC has transacted business from its principal office and was the owner of the real property located at 290, 292, and 294 West 12th Street, New York, New York. 58.
Respondent 309 West 97 LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 309 West 97 LLC has transacted business from its principal office and was the owner of the real property located at 309 West 97th Street, New York, New York. 59.
Respondent 314 E 106 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 314 E 106 LLC has transacted business from its principal office and was the owner of the real property located at 314 East 106th Street, New York, New York. 60.
Respondent 321 East 10th LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 321 East 10th LLC has transacted business from its principal office and was the owner of the real property located at 321 East 10th Street, New York, New York. 61.
Respondent 321 W. 16th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 321 W. 16th LLC has transacted business from its principal office and was the owner of the real property located at 321 West 16th Street, New York, New York. 62.
Respondent 325 E 5th LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 325 E 5th LLC has transacted business from its principal office and was the owner of the
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real property located at 325 East 5th Street, New York, New York. 63.
Respondent 326 E 35th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 326 E 35th LLC has transacted business from its principal office and was the owner of the real property located at 326 East 35th Street, New York, New York. 64.
Respondent 326-338 E 100th LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 326-338 E 100th LLC has transacted business from its principal office and was the owner of the real property located at 326, 330, 332, 338, and 340 East 100th Street, New York, New York. 65.
Respondent 334 E 6th LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 334 E 6th LLC has transacted business from its principal office and was the owner of the real property located at 334 East 6th Street, New York, New York. 66.
Respondent 343 East 8th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 343 East 8th LLC has transacted business from its principal office and was the owner of the real property located at 343 East 8th Street, New York, New York. 67.
Respondent 345 West 53rd LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 345 West 53rd LLC has transacted business from its principal office and was the owner of the real property located at 345 West 53rd Street, New York, New York. 68.
Respondent 343-345 E. 5th St LLC is a domestic limited liability company
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with its principal office and place of business in New York City. At all times mentioned herein, 343-345 E. 5th St LLC has transacted business from its principal office and was the owner of the real property located at 343 and 345 East 5th Street, New York, New York. 69.
Respondent 351-357 West 45 LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 351-357 West 45 LLC has transacted business from its principal office and was the owner of the real property located at 351, 353, 355, and 357 West 45th Street, New York, New York. 70.
Respondent 358 W 51 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 358 W 51 LLC has transacted business from its principal office and was the owner of the real property located at 358 West 51st Street, New York, New York. 71.
Respondent 380-382 E 10th LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 380-382 E 10th LLC has transacted business from its principal office and was the owner of the real property located at 380 and 382 East 10th Street, New York, New York. 72.
Respondent 411 E 12th St LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 411 E 12th St LLC has transacted business from its principal office and was the owner of the real property located at 411 East 12th Street, New York, New York. 73.
Respondent 420 E. 9th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned
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herein, 420 E. 9th LLC has transacted business from its principal office and was the owner of the real property located at 420 East 9th Street, New York, New York. 74.
Respondent 420 W 51 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 420 W 51 LLC has transacted business from its principal office and was the owner of the real property located at 420 West 51st Street, New York, New York. 75.
Respondent 422 E. 9th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 422 E. 9th LLC has transacted business from its principal office and was the owner of the real property located at 422 East 9th Street, New York, New York. 76.
Respondent 424 E. 9th LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 424 E. 9th LLC has transacted business from its principal office and was the owner of the real property located at 424 East 9th Street, New York, New York. 77.
Respondent 434 West 52 LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 434 West 52 LLC has transacted business from its principal office and was the owner of the real property located at 434 West 52nd Street, New York, New York. 78.
Respondent 436 West 52 LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 436 West 52 LLC has transacted business from its principal office and was the owner of the real property located at 436 and 438 West 52nd Street, New York, New York.
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79.
Respondent 459 W 50 St LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 459 W 50 St LLC has transacted business from its principal office and was the owner of the real property located at 459 West 50th Street, New York, New York and 734 10th Avenue, New York, New York. 80.
Respondent 529 E. 6 St. LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 529 E. 6 St. LLC has transacted business from its principal office and was the owner of the real property located at 529 East 6th Street, New York, New York. 81.
Respondent 560-566 Hudson LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 560-566 Hudson LLC has transacted business from its principal office and was the owner of the real property located at 560, 562, 564, and 566 Hudson Street, New York, New York. 82.
Respondent 635 E 6 LLC is a domestic limited liability company with its
principal office and place of business in New York City. At all times mentioned herein, 635 E 6 LLC has transacted business from its principal office and was the owner of the real property located at 635 East 6th Street, New York, New York. 83.
Respondent 697 Tenth LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, 697 Tenth LLC has transacted business from its principal office and was the owner of the real property located at 697 Tenth Avenue, New York, New York. 84.
Respondent 722-724 Tenth Avenue Holding LLC is a domestic limited
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liability company with its principal office and place of business in New York City. At all times mentioned herein, 722-724 Tenth Avenue Holding LLC has transacted business from its principal office and was the owner of the real property located at 722 and 724 Tenth Avenue, New York, New York. 85.
Respondent 1373 First Avenue Associates LLC is a domestic limited
liability company with its principal office and place of business in New York City. At all times mentioned herein, 1373 First Avenue Associates LLC has transacted business from its principal office and was the owner of the real property located at 1373 First Avenue, New York, New York. 86.
Respondent 1590 Lexington LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, 1590 Lexington LLC has transacted business from its principal office and was the owner of the real property located at 1590, 1592, and 1594 Lexington Avenue, New York, New York. 87.
Respondent M&E 234 LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, M&E 234 LLC has transacted business from its principal office and was the owner of the real property located at 234 Mott Street, New York, New York. 88.
Respondent M&E 336-348 E. 18th St. LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, M&E 336-348 E. 18th St. LLC has transacted business from its principal office and was the owner of the real property located at 336, 338, 340, 346, and 348 East 18th Street, New York, New York.
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89.
Respondent M&E 410 East 13th St. LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, M&E 410 East 13th St. LLC has transacted business from its principal office and was the owner of the real property located at 410 and 414 East 13th Street, New York, New York. 90.
Respondent M&E 416 East 13th St LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, M&E 416 East 13th St LLC has transacted business from its principal office and was the owner of the real property located at 416 and 418 East 13th Street, New York, New York. 91.
Respondent M&E 432 E. 13th LLC is a domestic limited liability company
with its principal office and place of business in New York City. At all times mentioned herein, M&E 432 E. 13th LLC has transacted business from its principal office and was the owner of the real property located at 432 East 13th Street, New York, New York. 92.
Respondent M&E Christopher LLC is a domestic limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, M&E Christopher LLC has transacted business from its principal office and was the owner of the real property located at 118 Christopher Street, New York, New York and 110 Bedford Street, New York, New York. 93.
Respondent M&E Mott LLC is a domestic limited liability company with
its principal office and place of business in New York City. At all times mentioned herein, M&E Mott LLC has transacted business from its principal office and was the owner of the real property located at 246, 248, 250, and 252 Mott Street, New York, New
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York. 94.
Respondent Major Leroy Corp. is a domestic corporation with its principal
office and place of business in New York City. At all times mentioned herein, Major Leroy Corp. has transacted business from its principal office and was the owner of the real property located at 51 and 53 Leroy Street, New York, New York. 95.
Respondent Major Mott St. Corp. is a domestic corporation with its
principal office and place of business in New York City. At all times mentioned herein, Major Mott St. Corp. has transacted business from its principal office and was the owner of the real property located at 221 Mott Street, New York, New York. 96.
Respondent Prince Holdings 2012 LLC is a New Jersey limited liability
company with its principal office and place of business in New York City. At all times mentioned herein, Prince Holdings 2012 LLC has transacted business from its principal office and was the owner of the real property located at 309 East 8th Street, New York, New York. Respondent Second Avenue & 50th Street Realty LLC is a domestic
97.
limited liability company with its principal office and place of business in New York City. At all times mentioned herein, Second Avenue & 50th Street Realty LLC has transacted business from its principal office and was the owner of the real property located at 939 and 941 Second Avenue, New York, New York. 98.
Steven Croman directly owns a majority interest in each of the following
Landlord LLCs: (a)
68 Clinton Street LLC
(b)
102 East 7th St LLC
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(c)
208-214 E 25th St LLC
(d)
411 E. 12th St LLC
(e)
M&E 234 LLC
(f)
M&E 336-348 E. 18th St. LLC
(g)
M&E 410 East 13th St. LLC
(h)
M&E 416 East 13th St LLC
(i)
M&E 432 E. 13th LLC
(j)
M&E Christopher LLC
(k)
M&E Mott LLC
(l)
Second Avenue & 50th Street Realty LLC.
99.
Steven Croman owns a majority interest through various holding
companies in the following Landlord LLCs: (a)
7 East 75 LLC
(b)
44 East 1st LLC
(c)
99-105 Third Avenue Realty LLC
(d)
115 Mulberry LLC
(e)
118 East 7 LLC
(f)
124 Ridge LLC
(g)
134 Orchard LLC
(h)
138 East 16 Street LLC
(i)
145 E 26 LLC
(j)
182 Stanton LLC
(k)
199 East 3rd St LLC
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(l)
213 E 26 LLC
(m) 218 A LLC (n)
219 East 28 LLC
(o)
232 W 14th LLC
(p)
277 E. 10th LLC
(q)
325 E 5th LLC
(r)
326 E 35th LLC
(s)
334 E 6th LLC
(t)
722-724 Tenth Avenue Holding LLC
(u)
1373 First Avenue
100.
Steven Croman owns a minority interest and controls a majority interest
through various family trusts in the following Landlord LLCs: (a)
3-5 West 103rd LLC
(b)
9 West 103rd LLC
(c)
15 West 103rd LLC
(d)
17 West 103rd LLC
(e)
40 Avenue B LLC
(f)
44 Ave B LLC
(g)
60 Avenue B LLC
(h)
72 West 108th Associates LLC
(i)
115 Ave A LLC
(j)
127 East 7th Street LLC
(k)
159-161 Stanton LLC
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(l)
171 East 102nd LLC
(m) 179-181 Essex LLC (n)
193-195 Stanton LLC
(o)
200 Stanton LLC
(p)
206 East 83rd LLC
(q)
209 E 25 LLC
(r)
212-214 East 105 LLC
(s)
215 Avenue B Realty LLC
(t)
227 E. 82 LLC
(u)
228-230 E 32nd LLC
(v)
232 Elizabeth LLC
(w) 234-236 W 14th LLC (x)
257 Bleecker LLC
(y)
290 W12 LLC
(z)
309 West 97 LLC
(aa) 314 E 106 LLC (bb) 321 East 10th LLC (cc) 321 W. 16th LLC (dd) 343 East 8th LLC (ee) 351-357 West 45 LLC (ff) 358 W 51 LLC (gg) 380-382 E 10th LLC (hh) 420 E. 9th LLC
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(ii)
420 W 51 LLC
(jj)
422 E. 9th LLC
(kk) 424 E. 9th LLC (ll)
434 West 52 LLC
(mm)436 West 52 LLC (nn) 529 E. 6 St. LLC. (oo) 560-566 Hudson Street LLC (pp) 459 W 50 St LLC (qq) 635 E 6 LLC (rr) 697 Tenth LLC 101.
Steven Croman owns a majority interest and controls a minority interest
through various family trusts in 343-345 E. 5th St LLC. 102.
Steven Croman owns a minority interest through a trust and controls a
majority interest through family trusts in 345 West 53rd LLC. 103.
Steven Croman owns a minority interest through a holding company and
controls a majority interest through a holding company and family trusts in 120-120½ First LLC, and Prince Holdings 2012 LLC. 104.
Steven Croman is the sole owner of Major Leroy Corp. and Major Mott
St. Corp. JURISDICTION AND VENUE 105.
The Attorney General brings this action on behalf of the People of the
State of New York under the New York State Executive Law, General Business Law, and General Obligations Law.
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106.
Under the Executive Law, the Attorney General is authorized to bring a
special proceeding in this Court seeking injunctive relief, restitution, damages, disgorgement, and costs on behalf of the People of the State of New York “[w]henever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business.” N.Y. Exec. Law § 63(12). 107.
Under the General Business Law, the Attorney General is authorized to
bring a special proceeding in this Court seeking injunctive relief and restitution on behalf of the People of the State of New York “[w]henever . . . any person, firm, corporation or association or agent or employee thereof has engaged in or is about to engage in” any deceptive acts or practices in the conduct of business. N.Y. Gen. Bus. Law § 349. 108.
Under the General Obligations Law, the Attorney General is authorized to
bring a special proceeding in this Court seeking injunctive relief and costs in the name of the People of the State of New York “[i]f it appears . . . that any person, association, or corporation has violated or is violating any of the provisions” of Title 1 of the General Obligations Law, which governs money deposited as security to be held in trust. N.Y. Gen. Obl. Law § 7-109. 109.
Petitioner has served Respondents with a pre-litigation notice as required
by General Business Law § 349(c). 110.
Venue is properly laid in New York County because Respondent Steven
Croman resides there, each Respondent LLC has its principal office there, and the events and omissions giving rise to the claims took place in New York County. 111.
This Court may exercise personal jurisdiction over Respondents Seven
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Croman and Anthony Falconite because each resides in New York City. 112.
The Court may exercise jurisdiction over all Respondent entities because
they are domestic corporations with their principal offices and places of business in New York City. INVESTIGATION 113.
In 2014, the Attorney General began investigating complaints from
numerous residents of rent-regulated apartments owned and managed by Steven Croman, 9300 Realty, and the Landlord LLCs (collectively, “Croman Company” or “Company”). 114.
The tenants’ complaints described intimidation and harassment by Croman
Company employees and/or agents, their failure to make repairs, dangerous construction practices, over- and improper billing, and protracted and baseless lawsuits challenging tenants’ occupancy rights. 115.
Pursuant to Executive Law § 63(12), the Attorney General issued
subpoenas for documents from the Croman Company, as well as testimony of current employees. The Attorney General reviewed documentary evidence produced by Respondents and obtained from other sources, including but not limited to Company correspondence, business records, public records, submissions to City agencies, and financial records. The Attorney General also took sworn testimony from current and former employees and/or agents of Croman and the Company and conducted witness and tenant interviews. 116.
The Attorney General’s investigation revealed that Respondents have
engaged in multiple ongoing violations of law impacting hundreds of tenants all over Manhattan that continue unabated to this day.
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117.
More specifically, the Attorney General found that Croman and his
Company engage in illegal and fraudulent conduct as a matter of course in their realestate management business by, among other things, unlawfully harassing rent-regulated tenants under New York City and New York state law; committing fraud in violation of Executive Law § 63(12); undertaking deceptive business practices in violation of N.Y. General Business Law § 349; conducting illegal construction in violation of multiple provisions of the New York Construction Code; and repeatedly violating city lead-safety laws under the New York City Childhood Lead Poisoning Prevention Act and implementing regulations. 118.
The Attorney General further found that Anthony Falconite, who assists
Croman and the Company in their illegal acts, has engaged in unlawful tenant harassment, fraud, and deceptive conduct, among other violations of law. 119.
In the face of hundreds of tenant complaints and in defiance of dozens of
City and State agency orders and adverse findings, Steven Croman continues to conduct his business in flagrant violation of applicable laws. 120.
The Attorney General instituted this proceeding to obtain judicial
intervention to stop these unlawful activities and provide relief to the hundreds of tenants impacted by Respondents’ illegal and fraudulent conduct. FACTUAL ALLEGATIONS The Central Role of Buyouts in the Croman Enterprise 121.
Steven Croman’s model of real-estate development is premised on using
any means necessary to drive tenants out of rent-regulated apartments and convert the apartments into high-rent market-rate units.
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122.
In 2012, Croman formed 9300 Realty which, at all times relevant to the
allegations in this Petition, operated as a real-estate management company that serves all residential rental properties owned directly or indirectly by Croman. Croman oversees the operations of 9300 Realty and all Landlord LLCs. 123.
Croman closely manages all aspects of the business operations conducted
by and through 9300 Realty and the Landlord LLCs. 124.
Oren Goldstein (“Goldstein”) is the Chief Operating Officer (“COO”) of
9300 Realty and reports directly to Croman. 125.
Croman and Goldstein together supervise more than 60 individuals who
handle the daily business of the Company, including building superintendents, construction and maintenance workers, accounting personnel, and property managers. 126.
The property managers are responsible for the daily operations of
Croman’s Company. Their job duties include, among other things, taking tenant complaints and questions, scheduling repairs, and personally meeting residents of the properties. 127.
Property managers also are responsible for securing “buyouts,” i.e., the
surrender of a rent-regulated apartment for some compensation, which is almost always inadequate to obtain a comparable market-rate apartment in the same neighborhood. Further, buyouts involve the relinquishment of tenant protections unique to rent-regulated leases. 128.
Each property manager oversees approximately 20 to 30 buildings and
communicates directly with tenants on a regular basis. 129.
Although property managers have a wide range of duties, Croman
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demands that they focus on buyouts, to the detriment of their other duties. 130.
Croman walks through the office chanting, “buyouts, buyouts!” and
reprimands employees for not obtaining enough buyouts. 131.
Additionally, Croman incentivizes property managers to secure buyouts
through their compensation structure: each is paid a base salary and a bonus for each buyout that the property manager obtains. 132.
Buyout bonuses for property managers have ranged from $3,000 to
$10,000 per buyout. 133.
Croman also has held workplace competitions in which the property
manager who obtains the most buyouts over a month receives a special bonus or award. 134.
The Croman Company has paid building superintendents a bonus of
approximately $500 for relaying information that led to the surrender of a rent-regulated apartment. 135.
In email correspondence, COO Goldstein suggested to Croman that he
reduce the amounts paid to property managers through buyout bonuses and that he offer them merit-based salary increases. 136.
In the same email, Goldstein suggested that the Company increase the
amount of Falconite’s per-buyout bonus because he was “doing most of the heavy lifting for buyouts and has facilitated almost all the buyouts since [Falconite] started.” 137.
Croman did not implement Goldstein’s proposals.
138.
Croman has referred to Falconite, who is a former New York Police
Department officer, as his “secret weapon.” 139.
Most of Falconite’s work for the Croman Company involves investigating
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residents of its rent-regulated apartments and obtaining buyouts. Goldstein has stated in email correspondence to Croman that Falconite’s “sole job function” is to obtain buyouts from tenants. 140.
Falconite conveys his findings to Croman and Company employees in
formal “investigation reports” and informal communications, such as emails, text messages, and in-person and telephonic exchanges 141.
Falconite does not officially report to anyone and does not have a
designated supervisor within the Company. 142.
In addition to a base salary, the Croman Company pays Falconite a $1,000
bonus for every rent-regulated apartment surrendered with Falconite’s involvement. 143.
Falconite, individually or in conjunction with a property manager,
participates in every step of the buyout negotiation process by, among other things, making an initial inquiry to gauge a tenant’s response to a buyout offer, extending the first buyout offer to a tenant, negotiating the dollar amount or other terms of the buyout, and obtaining a tenant’s ultimate agreement to surrender the apartment. 144.
Falconite also gives property managers advice about negotiating a buyout
with particular tenants. 145.
Property managers also participate in every step of the buyout negotiation
process, from making initial inquiries to determine a tenant’s susceptibility to a buyout, to discussing dollar amounts or other terms of the buyout, to obtaining a tenant’s signature on the final agreement. 146.
Even if a tenant has no interest in a buyout or expressly says that she or he
does not want to discuss a buyout again, property managers and/or Falconite have
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returned to the tenant and continued to ask about a buyout against the tenant’s wishes. Falconite and Property Managers Regularly Deceive Tenants 147.
As a general practice, Croman and his property managers have Falconite
investigate all rent-regulated tenants in Company buildings. 148.
Croman and his property managers have not asked Falconite to similarly
investigate all market-rate tenants. 149.
When investigating the rent-regulated tenants, Falconite regularly makes
unscheduled and unannounced visits to their apartments. 150.
Falconite also conducts unannounced “building sweeps” in which he
knocks on the door of every rent-regulated tenant in a given building, often at the request of the property manager responsible for that building. 151.
During his work for the Croman Company, Falconite has made a regular
business practice of affirmatively misrepresenting himself to and/or deliberately misleading tenants about his identity or purpose for needing to speak to them or see their apartments. 152.
When Falconite speaks with tenants, he does not always identify himself
as a private investigator. 153.
For example, Falconite stated, under oath, that he identifies himself as
“UPS” to gain access to buildings and that he tells tenants that he is “a contractor from the building management … here to assess the apartment.” 154.
Property managers have told Falconite to use a false identity, or have
condoned his use of a false identity or other misleading representations, to gain access to tenants’ apartments. 155.
For example, on May 2, 2013, senior property manager Christine 33 33 of 78
Bermudez told Falconite to refer to himself as a “fielding manager” who was checking for “inspections and violations when visiting a tenant’s apartment.” Falconite later sent Bermudez a text message confirming that, as suggested, he had told the tenant he was an inspector. 156.
Similarly, on July 9, 2013, Bermudez texted Falconite that a construction
manager was headed to the same building where Falconite was going to investigate a tenant, and suggested he use “false pretenses” to gain access to the tenant: Bermudez:
Tommy [a construction manager] is on his way too for a separate matter by u want you to go in under those false pretenses as well [sic]
Falconite:
Yes. Let me know when tommy will be here….gonna run into 1590 lex
Bermudez:
Kk cool U could go to 102 pretend your [sic] with the construction department tell her your [sic] not going to use the hallway
Falconite:
K
Falconite Uses His Tenant “Investigations” to Harass 157.
Once he obtains access to the rent-regulated apartment and residents,
Falconite has demanded that tenants produce identification, threatened to drill their locks or throw their belongings onto the street, and taken photographs of people and the contents of the apartment, without permission. 158.
Falconite has repeatedly made buyout offers to tenants, often in
conjunction with threats and accusations. 159.
Dozens of tenants have reported being intimidated or threatened by
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Falconite during their encounters. 160.
After learning the true identity of Falconite, multiple tenants have
expressed to Croman, Goldstein, and property managers, through email correspondence and phone conversations, their anger and dissatisfaction with Falconite and/or their property manager because of the deception. 161.
For instance, on August 19, 2013, Bermudez and Falconite used a ruse to
gain access to a rent-regulated tenant’s apartment. 162.
Bermudez had told the tenant that a construction manager was coming to
look at a broken ventilation unit in the kitchen. 163.
When Falconite arrived instead, the tenant assumed he was the
construction manager and allowed him into the apartment. 164.
Later, after the tenant realized she had been deceived, the tenant sent
Bermudez an email stating, Who is Anthony Falconite? And why was he knocking on my door at 9 am? I would have appreciate[d] a heads up if he wanted to come and talk to me about the buyout. I just assumed he was here to look at the ventilation on the roof (you said the construction manager was going to come check it out)…. I gave him my number – if he needs to discuss anything further with me please tell him to call me. I don’t like being bum rushed at 8:45 am under false pretenses. 165.
More recently, in January 2016, two rent-regulated tenants won a
preliminary injunction prohibiting Falconite “from entry to the [tenant’s] Building or within 500 Feet of the Building” based on allegations of harassment. The court held that plaintiff established a likelihood of success on the merits of their claims of harassment, which included “banging on tenants’ doors, yelling and screaming at the tenants, and
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causing the elderly plaintiffs stress leading to [one plaintiff] suffering a heart attack.” (Doc. No. 13, Decision and Order dated Feb. 3, 2016 in Mandeville v. 138 East 16th Street LLC, Index No. 161881/2015 (appeal pending).) Falconite Follows and Harasses Tenants Outside Their Homes 166.
Falconite has followed rent-regulated tenants once they leave their
apartments to intimidate and harass them. 167.
For example, in October 2013, Falconite exchanged text messages with
property manager Christine Bermudez saying that he was waiting for one particular rentregulated tenant he had previously met to leave his apartment and that the tenant “almost blew a gasket” when Falconite confronted him “on the street.” 168.
Another rent-regulated tenant sent a letter to state Senator Brad Hoylman,
describing having been “stalked” by Falconite, who had tracked down the tenant down in New Jersey in the summer of 2013: I also have also been followed by Anthony Falconite, who last summer traveled to New Jersey and stalked me. He then showed up at the home of a woman … to whom I am a health advocate. [This woman] is permanently disabled and she was terrified by Falconite’s intrusion and intimidation. He wanted to know if her house was where I lived, did I own her house, what was her relationship to me. Needless to say, as a woman, it is very frightening to have a man the size of Anthony Falconite stalk you or show up at your door. 169.
In 2013, Falconite and property manager Janeth Donovan repeatedly
attempted to force elderly rent-regulated tenant V.H. to speak with them, against her will. 170.
Over a six-week period, Falconite and Donovan made six unscheduled
visits to V.H.’s New York apartment and the New Jersey home of her deceased mother. 171.
Falconite and Donovan made three of these visits after V.H. had informed
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Donovan in an email that she did not want to meet in person and wanted to limit future contact to written correspondence. 172.
During their second trip to the New Jersey property to find V.H., Falconite
repeatedly rang the doorbell, circled the property, and photographed V.H. in her partially closed doorway, despite her insistence that they leave and that she was going to call the police. 173.
When the police arrived, they spoke with Falconite and Donovan.
174.
As a result of their conduct, Donovan and Falconite each received
summonses to appear in municipal court in Raritan, New Jersey on charges of criminal stalking. Falconite Abuses his Status and Connections as a Former NYPD Officer 175.
On multiple occasions, Falconite has relied on his position as a former
New York City police officer to threaten and/or intimidate rent-regulated tenants. 176.
For example, the 141 Ridge Tenants’ Association wrote to Croman to
complain about Falconite’s conduct, stating that, “[Falconite] lied to tenants pretending to be a delivery person to gain access to the building; shoved his way into apartments without being invited; and threatened to have tenants arrested by ‘his friends at the Police Department’ when they have objected to his behavior.” 177.
In sworn testimony, Falconite has conceded that he used his position as an
ex-NYPD officer and/or connections with NYPD personnel to access confidential complaint logs at a police precinct. 178.
For example, Falconite admitted that he used non-public information that
he gleaned from the NYPD complaint logs to threaten and intimidate a rent-regulated tenant with disabilities whose life partner had died six months earlier and who Falconite 37 37 of 78
was “investigating.” Steven Croman Knows About and Approves of the Tenant Harassment 179.
After learning about the criminal charges against Donovan and Falconite,
neither Croman nor Goldstein, nor any other Company employee, reprimanded or otherwise told Falconite and Donovan to change their conduct. 180.
In correspondence to Falconite dated July 24, 2014, the Attorney General
demanded that Falconite cease and desist all illegal activities, including “harassment of tenants, misleading and deceptive business practices directed at tenants, and performance of tenant relocation services without a license.” A copy of the letter was also sent to Croman. 181.
After receiving the Attorney General cease-and-desist letter, neither
Goldstein nor Croman asked or told Falconite to change his behavior in any way. 182.
Even after issuance of the cease-and-desist letter, rent-regulated tenants
report that Falconite continues to engage in the same harassing conduct. The Croman Company Brings Baseless Lawsuits and Abuses Judicial Process to Harass Rent-Regulated Tenants 183.
The Croman Company has repeatedly brought baseless lawsuits against
rent-regulated tenants. 184.
One of the Company’s purposes in bringing these actions is to harass rent-
regulated tenants. 185.
Another reason the Company brings these lawsuits is to pressure rent-
regulated tenants to surrender their apartments or accept buyouts and vacate the apartment. 186.
The Croman Company typically brings one of two types of housing cases
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against rent-regulated tenants: holdover cases and non-payment cases. 187.
In numerous holdover and non-payment suits, Falconite and the property
managers fabricate a false documentary record to support the claims in the litigation. 188.
The Croman Company also has a practice of withholding and/or ignoring
information that establishes a tenant’s right to the apartment. 189.
For instance, the Company routinely refuses to accept a tenant’s timely
tendered rent payments, then claims the tenant is in arrears and commences a nonpayment action against the tenant. 190.
In the case of rent-regulated tenant Nicolas Giacobbe, the Company
stopped cashing his rent checks sometime after 2012 and, in 2014, brought a lawsuit for non-payment: (a) After failing to serve Mr. Giacobbe, the Company obtained a default judgment in its favor and then executed a warrant of eviction, removing Mr. Giacobbe’s possessions from the apartment. (b) In ruling on Mr. Giacobbe’s motion for post-conviction relief, the court stated that the Croman Company had perpetrated a “fraud upon the court” by not disclosing Mr. Giacobbe’s timely attempts to pay rent. 115 Mulberry LLC v. Giacobbe, 46 Misc. 3d 1229(A), at *5 (N.Y. Cty. Civ. Ct. 2015). (c) The court also stated, “If there were any remaining doubt as to the lack of good faith in Petitioner’s actions herein, one need only add that the eviction was conducted on Friday February 27, and the next day Petitioner alleges that it demolished the Subject Premises and rendered it
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uninhabitable.” 115 Mulberry LLC, 46 Misc. 3d at *19. 191.
With respect to rent-regulated tenants Stefan and Helen Grega, the
Croman Company brought three baseless eviction lawsuits against them between 2012 and 2014: (a) Each action was based on allegations that the Gregas had altered their apartment in violation of their lease and without their landlord’s permission. 127 East 7th Street LLC v. Grega, 2015 N.Y. Misc. LEXIS 4310, at *1, 2015 NY Slip Op 32235(U) (Civ. Ct. N.Y. Cty. Nov. 24, 2015). (b) The first action was dismissed and the second action withdrawn. (c) In the third action, the court found that “the proceeding borders on frivolous, and Petitioner does not appear to have had a good faith basis to commence this litigation.” Id. at *13-14. 192.
Another example of baseless litigation involves the Company’s suit
against Manuel Roman, a rent-regulated tenant at 343 East 5th Street, who suffers from advanced dementia, Parkinson’s disease, and cardiac disease, and who has an appointed Guardian Ad Litem: (a) On June 18, 2012, the Company commenced a non-primary holdover case against Mr. Roman alleging that he did not occupy the apartment at 343 East 5th Street but instead lived at 1875 Third Avenue. (b) Internal company emails from August 2012 show that the Company’s private investigator at the time, John Tansey, advised the Company that
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the tenant at 1875 Third Avenue was not Manuel Roman but someone else. (c) Despite this revelation, the Company did not drop the litigation or amend the pleadings. (d) In 2013, the Company deposed Mr. Roman at his home at 343 East 5th Street, without any counsel present. Mr. Roman was unable to answer even the simplest questions and quickly because confused and agitated. (e) Despite being aware of Mr. Roman’s condition, the Company also has begun demanding that he appear personally at its office to deliver his rent. (f) As of April 2016, the Croman Company continues to litigate this action. 193.
The Company has filed multiple baseless lawsuits against rent-regulated
tenants Cynthia and Peter Chaffee, as follows: (a) In January 2012, the Company sued the Chaffees, demanding rent that had already been paid. Over a two-month period, the Company sent the Chaffees debt-collection letters, eviction threats, and notices of petition, all of which stated falsely that the Chaffees owed money in rent. The Company ultimately discontinued the action. (b) In November 2012, Croman Company employees acknowledged in internal emails that the Chaffees had made timely rent payments and that they were current on their rent obligations. (c) Even after this, the Company continued to send the Chaffees false rent demands. (d) In 2014, the Croman Company again brought a non-payment action
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against the Chaffees that they knew or should have known lacked factual basis. (e) Even though the Chaffees, and later their pro bono counsel, provided to Company employees proof (including the rent ledger that the Company had itself produced in litigation) that they were current on their rent, the Croman Company did not discontinue the case. (f) In 2015, the Company lost in the action after the court found the allegations underlying the suit had no factual bases. (g) Nevertheless, the Company continues to send the Chaffees false rent demands. In the Chaffees’ January 2016 rent statement, the company demanded back rent of $25,880.89, an amount that includes the money that the Company employees acknowledged receiving in internal emails in 2012 (see paragraph 193(b) supra) and the rent amount at issue in the 2014 litigation, which a court had concluded was not lawfully owed to the Company. The Croman Company Charges Rent-Regulated Tenants Unauthorized Legal Fees 194.
The Croman Company has a policy and practice of charging “legal fees”
to tenants who they sue in housing court. 195.
The Company does not obtain court orders prior to charging such legal
fees, even though landlords are legally required to obtain a court order authorizing fees and setting the amount owed. 196.
The Company also charges tenants legal fees following litigation that is
still pending or in which the tenants were the prevailing parties. 197.
In an email to COO Goldstein, an employee from the accounting 42 42 of 78
department described the policy as follows: “Steven has us charge legal fees to anyone we put in legal [proceedings] they never really pay it and it shows as outstanding until we are told to remove them.” 198.
In sworn testimony given in 2015, Goldstein stated that, after the Attorney
General commenced its investigation into the Croman Company, it stopped charging unauthorized legal fees. 199.
In the same testimony, Goldstein stated that the Company did not
retroactively remove legal fees from the accounts of tenants who had not paid legal fees that were charged before the Attorney General’s investigation began and which had carried over month-to-month as an unpaid balance since then. 200.
When asked why the legal fees were not retroactively removed, Goldstein
testified that it was “not that big of an issue.” 201.
After commencing litigation, the Croman Company also follows a pattern
of requesting multiple, successive adjournments of court dates to extend the life of the lawsuit and further harass the tenant. 202.
In litigation related to unpaid attorneys’ fees, counsel for the Croman
Company in many of these lawsuits, Rose & Rose, acknowledged that the purpose of repeated adjournments was to “wear[] down” tenants. The Company Engages in Unlawful and Hazardous Construction in Total Disregard for Rent-Regulated Tenants’ Safety and Local Law 203.
The Croman Company regularly performs illegal and hazardous
construction work in his buildings. 204.
The Company routinely conducts demolition and renovations without
seeking or obtaining necessary permits from City agencies.
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205.
The Company also engages in construction that violates building codes
and stop-work orders. 206.
These construction practices pose risks to the health and safety of the rent-
regulated tenants who reside in these apartment buildings. 207.
When rent-regulated tenants have complained about the construction and
related building conditions, Croman Company property managers have directly or indirectly suggested that they move or accept a buyout. 208.
On multiple occasions, Croman has personally directed and/or condoned
employees and agents engaging in construction without permits or in contravention of stop-work orders. 209.
Examples of such incidents include but are not limited to:
(a) January 17, 2013: Company construction managers, the contractor, and Oren Goldstein were notified of a complaint to the New York City Department of Buildings (“DOB”) about work without a permit at 200 Stanton Street. The construction manager emailed Goldstein and others: “I have notified Steven. Waiting for his reply. They will come by again and we have a big [chance] of getting stop work order.” Later that evening, the contractor responded, “Just got call from Steven he wants to keep going here.” (b) April 18, 2013: In response to a complaint about work without a permit at 199 E. 3rd St., Goldstein wrote, “Can we stop working and get permits? What is being done over there? Please let S.C. [Steven Croman] know we’re getting complaints and see if he wants to stop work….” The
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construction manager responded, “He is aware of the complaints and wants to continue both here and at 127 east 7th.” (c) May 28, 2013: Property manager Christine Bermudez asked a Company contractor whether an apartment would be ready for new tenants. The contractor responded, “You know there was a stop work order here on Saturday???” Bermudez responded, “Yes so my question is will there be delays with finalizing this unit?” The contractor answered, “I am trying to get the guys in there on the QT but of [sic] dob come we screewed [sic] so I cant [sic] give you a straight answer but we will try.” (d) September 14, 2013: Croman Company employees were notified of a complaint about work without a permit at 234 Mott Street. Property manager Janeth Donovan forwarded the email notification to Croman, Goldstein, and others and wrote: “This is probably for #16, wash and brush, should I have Casur [the construction company] to stop for a few days?” Croman responded, “No. Just be careful.” 210.
The Croman Company also engages in a pattern of affirmatively
concealing unlawful construction from government inspectors. 211.
On several occasions, Croman and Goldstein have directed employees
and/or agents to prevent government agents from inspecting the worksites, including by locking means of entry. 212.
For example, on March 10, 2014, after learning about a DOB complaint
concerning the illegal construction at 219 East 28th Street, Croman asked property managers: “What is this for? What work is going on? Please confirm all doors locked.”
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213.
The same day, Christopher Douma, a construction manager, wrote to
property manager Janeth Donovan and copied Croman, to “[m]ake sure the building is locked. Have the super lock all the doors. Especially the roof top and set the alarm. Make sure the cellar is locked.” 214.
Douma later testified that Croman directed him to ensure that the building
was locked to prevent DOB from gaining access. 215.
Similarly, on August 9, 2013, Croman Company employees were notified
of a complaint to DOB about work being performed in violation of a stop-work order at 358 W. 51st Street. In response, Goldstein wrote: “See below, another complaint that we’re violating the stop work order on 51st Street. Please act accordingly.” 216.
Tommy Tran, the construction manager, responded, “Yes, super is on
guard and workers are aware of the situation. We [are] also working on filing electrical permit.” 217.
Croman was included on the email exchange and did not voice opposition
to proceeding without the requisite permits. 218.
The Croman Company also regularly makes false statements to DOB,
claiming that buildings identified for construction were unoccupied when, in fact, tenants were living there. 219.
By failing to disclose that the buildings are occupied, the Company avoids
having to create and implement a “tenant protection plan” pursuant to New York City Administrative Code § 28-104.8.4. 220.
Relevant New York City code provisions require landlords who are about
to engage in construction in occupied buildings to submit a tenant protection plan which
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must include, among other things, details about the specific units that are or may be occupied during construction; provision of adequate and unobstructed means of egress; fire safety and structural safety measures; methods to be used for controlling dust, disposing of construction debris, and pest control; and noise restrictions. N.Y.C. Admin. Code § 28-104.8.4. 221.
Nevertheless, the Croman Company routinely fails to create tenant
protection plans prior to or during construction in buildings where they are legally required. 222.
For example, between 2012 and 2014, on 65 separate occasions, the
Croman Company submitted Plan Work applications (PW1s) and other documents to DOB indicating that certain buildings were unoccupied, while contemporaneously filing rent registrations with the New York State Division of Homes and Community Renewal (“DHCR”) indicating those same buildings were occupied. 1 Lead-Safety Violations; Conditions-Related Health & Safety Hazards 223.
The Croman Company regularly violates city lead-safety laws.
224.
The Company does not have any policies concerning and do not provide
training or guidance to employees about lead law compliance. 225.
Although New York City law requires that tenant protection plans include
details about safety measures that will be undertaken during construction of a covered apartment building, the Company regularly fails to create and implement such plans. 226.
The Company also regularly fails to take measures to protect tenants from
1
On October 16, 2014, DOB issued violations at 3 West 103rd Street for (a) falsely certifying that the property was unoccupied, and (b) failing to file a tenant-protection plan in violation of 28 N.Y.C. Admin. Code § 28-104.8.4. Ex. 88. At that point, the Company begin submitting corrected PW-1s for certain properties. Attie Aff. ¶ 140.
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lead dust and other hazards associated with repairs and construction. 227.
The Company has defied orders of the NYC Department of Health &
Mental Hygiene (“DOH”) directing it to undertake lead remediation and/or lead safety measures and submit dust-clearance tests, after finding elevated lead levels, in excess of legal limits, at properties under construction. 228.
The DOH has repeatedly found unlawfully high lead levels and ordered
the Company to take remedial and/or protective measures at numerous buildings. 229.
The Company repeatedly failed to comply with DOH’s orders concerning
lead-safe work practices. 230.
Further, the Company has received and ignored DOB orders to remedy
building and construction code violations. 231.
The Company routinely fails to conduct mandatory lead-contamination
dust clearance tests after apartments are vacated and renovated for new tenants. 232.
Upon receipt of a lead violation or an order to correct, the Company
typically failed to perform proper dust-clearance tests and provide the results to occupants. 233.
The Company does not conduct annual inspections for lead-based hazards
in apartments with children of applicable age. The Croman Company Fails to Maintain or Repair Apartments to Pressure RentRegulated Tenants to Vacate 234.
The Croman Company routinely fails to address repeated and significant
interruptions of essential services such as heat, electricity, and hot water, even when ordered to do so by courts and government inspectors. 235.
The Company’s rent-regulated tenants also endure other substandard
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living conditions such as falling ceilings, holes in walls, leaks in ceilings, and burst pipes as a result of the general failure to maintain the properties, as well as the dangerous construction undertaken by the Company. 236.
When its rent-regulated tenants complain about problems with conditions
and essential services, the Company responds by failing to make timely or effective repairs or offering buyouts in lieu of repairs. 237.
One example of this conduct involves a request for repairs made by a rent-
regulated tenant at 410 East 13th Street: (a) A repair request was submitted to the appropriate property manager in 2012. (b) Before responding to the request, the property manager forwarded the email to COO Goldstein asking, “This apartment needs a complete gut. What should I do? …. Should we try to negotiate a buyout before starting any work here?” (c) Goldstein did not direct the property manager to undertake or look into the repair request, instead responding, “Please do an updated detailed investigation.” (d) By June 2013, the Company still had not made the repairs requested and the tenant filed a complaint with DHCR. (e) DHCR’s investigation found numerous hazardous conditions in the apartment including ceilings in the kitchen, living room, and bedroom that had collapsed and others on the brink of caving, floors and walls filled with holes, and a rusted and unusable bathtub.
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(f) On October 3, 2013, DHCR ordered the Company to make repairs. (g) Between July and October 2013, DHCR issued 27 building code violations for the conditions at 410 East 13th Street, almost all of which were “hazardous” or “immediately hazardous.” 238.
Over the course of 2013, tenants at 309 East 8th Street lived with
collapsed ceilings, sewage backups, a non-working lock on the front door, multiple boiler malfunctions causing loss of heat and hot water, and toxic dust accumulation in common areas. 239.
The Company failed to adequately address the complaints, responding
sporadically with temporary fixes that failed to remedy the problem. 240.
Instead of remediating conditions in the building, the Croman Company
began spying on the building’s residents. (a) In November 2013, Falconite asked another former New York Police officer, Thomas Barrett, to secretly attend a tenant-coalition meeting concerning problems at 309 East 8th Street. (b) Separately, property manager Janeth Donovan obtained notes from someone else who went to the same meeting and sent those notes to Goldstein and Croman. (c) In March 2014, when the tenant coalition was planning to meet again to discuss unresolved issues with management, Goldstein emailed Croman saying that he wanted to send someone to the meeting to find out what the tenants were discussing. (d) After the meeting took place, property manager Anthony Pagan emailed
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Goldstein about what had transpired based on information he received from his “secrete Sources [sic].” (e) Later that month, at Goldstein’s request, Falconite obtained full social security numbers for all the rent-regulated tenants at 309 East 8th Street. 241.
In the midst of the complaints and tenant meetings, the Company
continued with construction at 309 East 8th Street. (a) In April 2014, Croman Company construction workers caused structural damage so severe that the City issued a partial vacate order for the cellar. (b) When five tenants brought suit to compel the company to make the repairs, on October 8, 2014, the court ordered the Company to correct all outstanding violations and repair the cellar or face civil penalties and/or contempt. (c) In the ensuing nine months, the Croman Company continued to ignore the mounting damage and disrepair, resulting in 18 HPD violations, all of which were for “hazardous” or “immediately hazardous” conditions. 242.
At four adjoining buildings on West 45th Street—buildings 351, 353, 355
and 357—the Croman Company incurred 62 HPD violations between January 31, 2015 and January 31, 2016, almost all of which were for “hazardous” or “immediately hazardous” conditions. (a) After failing to correct the violations, the Company was sued by both HPD and tenants in three separate actions. See HPD v. 351-357 West 45 LLC, Index No. 15-1380 (filed July 31, 2015); Dempsey v. 351-357 West 45
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LLC, Index No. 6188/2015 (filed July 14, 2015); Rutherford v. 351-357 West 45 LLC, Index No. 6189/2015 (filed July 14, 2015). (b) In February and March 2016, the Company entered into settlement agreements resolving each action and consenting to fixing the various hazards in the two buildings and paying penalties. 243.
At the same time that the Croman Company disregards repair requests and
court orders about building conditions, it submits false certifications to HPD stating that it has remedied the problems and complied with agency or court orders. (a) For example, HPD has sued the Croman Company on six separate occasions for falsely certifying that they corrected a total of 23 violations, including four Class C, or “immediately hazardous” violations. See HPD v. 420 W 51 LLC, Index No. 2143/15 (N.Y. Cty. Civ. Ct. 2016); HPD v. Major Mott Street Corp., Index No. 2326/13 (N.Y. Cty. Civ. Ct. 2014); HPD v. 7 East 75 LLC, Index No. 897/14 (N.Y. Cty. Civ. Ct. 2014); HPD v. 159-161 Stanton LLC, Index No. 901/14 (N.Y. Cty. Civ. Ct. 2014); HPD v. M&E 336-338 18th LLC, Index No. 2078/13 (N.Y. Cty. Civ. Ct. 2013); HPD v. M&E Christopher LLC, Index No. 1124/13 (N.Y. Ct. Civ. Ct. 2013). The Company Commingles Tenants’ Security Deposits with Other Funds 244.
Croman and the Company have repeatedly commingled tenants’ security
deposits with the Company’s general bank accounts, in violation of state law. 245.
In sworn testimony, COO Goldstein admitted that the Landlord LLCs only
started escrowing some security deposits after the Attorney General commenced its investigation. 52 52 of 78
246.
Goldstein also testified that not all of the tenants’ security deposits have
been placed in escrow. 247.
The Company also has regularly failed to return security deposits to
departing tenants when it was legally required to do so. 248.
A number of tenants resorted to suing the Landlord LLCs in small-claims
court or filing a complaint with the Attorney General for the return of their deposits. 249.
The Croman Company regularly fails to disclose to tenants the name and
address of the financial institution where the deposit is being held and the amount of the deposit. FIRST CAUSE OF ACTION Tenant Harassment – N.Y. Exec. Law § 63(12) Violation of New York Rent Stabilization Code, 9 N.Y.C.R.R. § 2525.5 250.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 251.
Petitioner asserts the First Cause of Action against Respondents Steven
Croman, Anthony Falconite, Croman Real Estate, 9300 Realty, and Falconite LLC. In addition, Petitioner asserts the First Cause of Action against the following Respondent Landlord LLCs: 115 Mulberry LLC, 127 East 7th Street LLC, 138 East 16th Street LLC, 171 East 102nd LLC, 179-181 Essex LLC, 200 Stanton LLC, 234-236 E. 13th St LLC, 321 East 10th LLC, 326-338 E 100th LLC, 343-345 E. 5th St LLC, 3-5 West 103rd LLC, 60 Avenue B LLC, M&E 336-348 E. 18th St. LLC, M&E 410 East 13th St. LLC, M&E Christopher LLC, M&E Mott LLC, Prince Holdings 2012 LLC, 560-566 Hudson LLC, and 436 W 52 LLC. 252.
Executive Law § 63(12) authorizes the Attorney General to bring a
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special proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 253.
Under the New York Rent Stabilization Code, it is unlawful for “any
owner” of a housing accommodation “or any person acting on his or her behalf, directly or indirectly, to engage in any course of conduct . . . including but not limited to interruption or discontinuance of required services, or unwarranted or baseless court proceedings,” that either “interferes with, or disturbs, or is intended to interfere with or disturb the privacy, comfort, peace, repose or quiet enjoyment of a tenant in his or her use or occupancy of the housing accommodation,” or “is intended to cause the tenant to vacate such housing accommodation or waive any right afforded” under the Code. 9 N.Y.C.R.R. § 2525.5. 254.
The Respondent Landlord LLCs named in paragraph 251 above own
apartment buildings in which rent-regulated tenants were unlawfully harassed. 255.
Steven Croman and the Croman Company seek to drive out and have
successfully driven out rent-regulated tenants by repeatedly and unlawfully harassing them and their families through the following actions and actions, among others: (a) Filing baseless lawsuits and sent false rent demands and notices to tenants. (b) Engaging in hazardous construction and causing and/or failing to remedy repeated and lengthy disruption of essential services, including hot water, heat, and electricity. (c) Retaining Respondents Falconite LLC and Falconite, who regularly work in tandem with Company employees and agents to harass tenants
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through intimidation, deception, repeated buyout offers, threats, and other coercive conduct. 256.
Respondents’ harassing conduct disturbs the quiet enjoyment of tenants
in their use of their rent-regulated apartments. 257.
Respondents’ harassing conduct has caused tenants financial, emotional,
and physical harm. 258.
In addition, or in the alternative, Respondents’ conduct is intended to
disturb tenants’ quiet enjoyment, to cause tenants to vacate rent-regulated apartments, and to waive their rights under the Rent Stabilization Code. 259.
By engaging in conduct that violates 9 N.Y.C.R.R. § 2525.5, the
Respondents named in paragraph 251 above have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). SECOND CAUSE OF ACTION Tenant Harassment – N.Y. Exec. Law § 63(12) Violation of New York City Administrative Code § 27-2005 260.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 261.
Petitioner asserts the Second Cause of Action against Respondents Steven
Croman, Anthony Falconite, Croman Real Estate, 9300 Realty, and Falconite LLC. In addition, Petitioner asserts the Second Cause of Action against the following Respondent Landlord LLCs: 115 Mulberry LLC, 127 East 7th Street LLC, 138 East 16th Street LLC, 171 East 102nd LLC, 179-181 Essex LLC, 200 Stanton LLC, 321 East 10th LLC, 326-338 E 100th LLC, 343-345 E. 5th St LLC, 3-5 West 103rd LLC, 60 Avenue B LLC, M&E 336-
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348 E. 18th St. LLC, M&E 410 East 13th St. LLC, M&E Christopher LLC, M&E Mott LLC, Prince Holdings 2012 LLC, 560-566 Hudson LLC, and 436 W 52 LLC. 262.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 263.
Under the New York City Administrative Code, the “owner of a
dwelling shall not harass any tenants or persons lawfully entitled to occupancy of such dwelling.” N.Y.C. Admin. Code § 27-2005. Unlawful harassment includes “any act or omission by or on behalf of an owner” that causes or is intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate the unit or surrender or waive any rights related to such occupancy, and that falls into one of seven categories, including but not limited to the following: repeated interruptions or discontinuances of essential services, commencement of repeated baseless or frivolous court proceedings, and “other repeated acts or omissions of such significance as to substantially interfere with or disturb the comfort, repose, peace or quiet” of a lawful occupant and that “cause or are intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy.” N.Y.C. Admin. Code § 27-2004(a)(48). 264.
The Respondent Landlord LLCs named in paragraph 261 above are the
owners of apartment buildings in which rent-regulated tenants were unlawfully harassed. 265.
Steven Croman and the Croman Company seek to drive out and have
successfully driven out rent-regulated tenants by repeatedly and unlawfully harassing
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them and their families through the following actions and inactions, among others: (a) Filing baseless lawsuits and sent false rent demands and notices to tenants. (b) Engaging in hazardous construction and/or failing to remedy repeated and lengthy disruption of essential services, including hot water, heat, and electricity. (c) Retaining Respondents Falconite LLC and Falconite, who regularly work in tandem with the Company to harass tenants through intimidation, deception, repeated buyout offers, threats, and other coercive conduct. 266.
Respondents’ harassing conduct disturbs the quiet enjoyment of tenants
in their use of their rent-regulated apartments. 267.
Respondents’ conduct is intended to disturb tenants’ quiet enjoyment, to
cause tenants to vacate rent-regulated apartments, and to waive their rights to continue occupying their apartments. 268.
By engaging in conduct that violates N.Y.C. Admin. Code § 27-2005,
Respondents Steven Croman, Anthony Falconite, Croman Real Estate, 9300 Realty, Falconite LLC, and the Landlord LLCs listed in paragraph 261 have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). THIRD CAUSE OF ACTION Building Safety – N.Y. Exec. Law § 63(12) Violation of New York City Construction Codes § 28-101.1 et seq. 269.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249.
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270.
Petitioner asserts the Third Cause of Action against Respondents Steven
Croman and 9300 Realty. In addition, Petitioner asserts the Third Cause of Action against the following Respondent Landlord LLCs: 102 East 7th St LLC, 115 Ave A LLC, 118 East 7 LLC, 134 Orchard LLC, 1373 First Avenue Associates LLC, 145 E 26 LLC, 199 East 3rd St LLC, 200 Stanton LLC, 208-214 E 25th St LLC, 209 E 25 LLC, 219 East 28 LLC, 228-230 E 32nd LLC, 232 W 14th LLC, 309 West 97 LLC, 321 East 10th LLC, 326 E 35th LLC, 345 West 53rd LLC, 358 W 51 LLC, 380-382 E. 10th LLC, 40 Avenue B LLC, 411 E. 12th St LLC, 44 East 1st LLC, 68 Clinton Street LLC, 7 East 75 LLC, 722724 Tenth Avenue Holding LLC, 420 E. 9th LLC, 99-105 Third Avenue Realty LLC, M&E 336-348 E. 18th St. LLC, M&E 410 East 13th St. LLC, M&E 416 E 13th St LLC, M&E 432 E. 13th LLC, M&E Mott LLC, M&E 234 LLC, M&E Christopher LLC, Major Leroy Corp., Major Mott St. Corp., Prince Holdings 2012 LLC, Second Avenue & 50th St Realty LLC, and 560-566 Hudson LLC. 271.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 272.
Under the New York City Construction Codes, it is unlawful to cause to
be done any work to construct, alter, repair, or demolish any building or structure “unless and until a written permit therefore shall have been issued by the commissioner [of buildings] in accordance with the requirements of this code.” N.Y.C. Admin. Code § 28-105.1. In addition, if the Commissioner of Buildings issues an order to stop work that is unlawful, dangerous, or unsafe, “[n]o person shall with knowledge or notice of a stop work order allow, authorize, promote, continue or cause to be continued any work
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covered by the stop work order.” Id. § 28-207.2.2. Finally, for all work for which a permit is required, “[i]t shall be the duty of the permit holder to cause the work to remain accessible and exposed for inspection.” Id. § 28-116.1. 273.
Under the New York City Construction Codes, it is unlawful to make a
material false statement in any certificate, professional certification, form, signed statement, application, report or certification of the correction of a violation that is either submitted directly to the department or that is generated with the intent that the department rely on its assertions. Id. § 28-211.1. 274.
The Respondent Landlord LLCs listed in paragraph 270 above caused
construction, demolition, alteration, and/or repair work to be conducted without permits required under the New York City Construction Code, Title 28 of the N.Y.C. Administrative Code. 275.
Respondents 118 East 7 LLC, 358 W 51 LLC, and Prince Holdings 2012
LLC each ordered, and/or caused to be continued, work that was covered by a stopwork order of which they had notice. 276.
Respondent 219 East 28 LLC concealed from inspectors and rendered
inaccessible construction work for which a permit was required. 277.
Steven Croman and/or his agents or employees falsely stated that his
buildings were unoccupied and/or not rent-stabilized in forms and applications submitted to the Department of Buildings in violation of N.Y.C. Admin. Code §§ 28104.8.4, 28-211.1. 278.
All Landlord LLCs named in paragraph 270 acted through Respondent
Steven Croman and Croman company employees, who together directly instructed
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construction workers and contractors to engage in unpermitted construction and/or in violation of stop-work orders. 279.
By engaging in conduct that violates Title 28 of the New York City
Administrative Code, Respondents Steven Croman, 9300 Realty, and the Landlord LLCs listed in paragraph 270 have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). FOURTH CAUSE OF ACTION Lead Safety – N.Y. Exec. Law § 63(12) Violation of New York City Childhood Lead Poisoning Prevention Act § 27-2056.1 et seq. and Implementing Regulations 280.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 281.
Petitioner asserts the Fourth Cause of Action against Respondents Steven
Croman and 9300 Realty. In addition, Petitioner asserts the Fourth Cause of Action against the following Respondent Landlord LLCs: 3-5 West 103rd LLC, 60 Avenue B LLC, 120-120½ First LLC, 206 East 83rd LLC, 314 E 106 LLC, 321 East 10th LLC, 334 E 6th LLC, 343 East 8th LLC, 436 West 52 LLC, 529 E. 6TH ST. LLC, M&E Mott LLC, and Prince Holdings 2012 LLC. 282.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 283.
Under the New York City Childhood Lead Poisoning Prevention Act,
the owner of a dwelling unit built before 1960 must, upon turnover of the unit to a new tenant or if a child of applicable age lives in the unit, use lead-safe work practices, remediate all lead-paint based hazards and underlying defects, seal off work areas, and 60 60 of 78
conduct construction in a manner that minimizes the penetration or dispersal of lead contaminants or lead-contaminated materials from the work area to other areas of the dwelling unit and building. N.Y.C. Admin. Code §§ 27-2056.2(13), 27-2056.11(a)(3), 27-2056.11(a)(1)-(2). If an order to correct or notice of violation is issued by the Department of Housing Preservation and Development (“HPD”), the owner must use HPD work practices, perform dust clearance tests, and provide the results to the occupants. Id. §§ 27-2056.11(a)(1); 27-2056.11(d), 27-2056.4(a). In addition, owners have a duty to ascertain if a child under age six residents in an apartment and, if so, the owner must send a yearly notice to each occupant and investigate at least once a year for lead hazards. Id. §§ 27-2056.4(e)(1)(3), 27-2056.5. 284.
The Respondent Landlord LLCs listed in paragraph 279 above own
buildings constructed before 1960 that have multiple dwelling units. 285.
Respondents Steven Croman and 9300 Realty, who manage these
buildings, repeatedly failed to use lead-safe work practices, exposing tenants and others to lead-contaminated dust hazards. 286.
Respondents Steven Croman and 9300 Realty, who manage these
buildings, have not implemented any lead-safety policies at these buildings. 287.
Respondents Steven Croman and 9300 Realty regularly fail to provide
the requisite notice and disclosure to tenants at their buildings about the presence of lead-based paint hazards. 288.
Respondents Steven Croman and 9300 Realty have no policies or
practices that require dust clearance tests or identification of child-occupied units at the buildings they manage.
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289.
Respondents Steven Croman and 9300 Realty have routinely failed to
conduct mandatory lead-contamination dust clearance tests upon turnover of apartments. 290.
Upon receiving notice of a lead violation, Respondents Steven Croman
and 9300 Realty repeatedly failed to perform proper dust-clearance tests and provide the results to occupants. 291.
Respondents Steven Croman and 9300 Realty failed to conduct annual
inspections for lead-based hazards in apartments with children of applicable age. 292.
By engaging in conduct that violates Title 27 of the New York City
Administrative Code, Respondents Steven Croman, 9300 Realty, and the Landlord LLCs listed in paragraph 279 have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). FIFTH CAUSE OF ACTION Unlicensed Tenant Relocation – N.Y. Exec. Law § 63(12) Violation of New York Real Property Law § 441 293.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 294.
Petitioner asserts the Fifth Cause of Action against Respondents Steven
Croman, Croman Real Estate, 9300 Realty, Anthony Falconite, and Falconite LLC. 295.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 296.
Under New York Real Property Law, any person who acts as a “tenant
relocator” must obtain a real estate broker’s license. N.Y. Real Prop. Law § 441(a). A tenant relocator includes any person who “for a fee . . . supervises, organizes, arranges,
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coordinates, handles, or is otherwise in charge of or responsible for the relocation of commercial or residential tenants from buildings or structures that are to be demolished, rehabilitated, remodeled or otherwise structurally altered.” Id. § 440(4). 297.
Respondents Anthony Falconite, Falconite LLC, and 9300 Realty have not
possessed, at any time relevant to the conduct complained of in this action, a license to work as a tenant relocator in New York State. 298.
Despite not having the requisite license, Falconite, as the sole owner and
employee of Falconite LLC, and the property managers, who are employed by 9300 Realty, regularly work in concert to supervise, organize, arrange, coordinate, and handle the relocation of rent-regulated tenants from the apartment buildings managed by 9300 Realty. 299.
In exchange for these services, Falconite and the property managers
receive a bonus fee for each tenant that they relocate from an apartment that is to be demolished, remodeled, or otherwise structurally altered. 300.
By engaging in conduct that violates section 441 of the New York Real
Property Law, Respondents 9300 Realty, Anthony Falconite, and Falconite LLC have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). SIXTH CAUSE OF ACTION Real Estate Broker Licensure Laws – N.Y. Exec. Law § 63(12) Violation of New York Real Property Law § 441-c 301.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 302.
Petitioner asserts the Sixth Cause of Action against Respondents Steven
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Croman, Croman Real Estate, 9300 Realty, Anthony Falconite, and Falconite LLC. 303.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 304.
Under the New York Real Property Law, a licensed real estate broker or
real estate salesperson is subject to penalties, including license revocation, if he or she “is guilty of fraud or fraudulent practices” or “has demonstrated untrustworthiness or incompetency.” Where a licensed real estate broker or salesperson is “engaged in the business of a tenant relocator,” untrustworthiness or incompetency includes, but is not limited to, “any course of conduct … that interferes with or disturbs the peace, comfort, repose and quiet enjoyment of a tenant.” N.Y. Real Prop. Law § 441-c(1)(a). 305.
A real estate salesperson must be supervised by a licensed real estate
broker. “Supervision” for such purposes is defined as “regular, frequent and consistent personal guidance, instruction, oversight and superintendence.” 19 N.Y.C.R.R. § 175.21(a). 306.
A real estate salesperson may only be compensated by a “duly licensed
real estate broker with whom he is associated.” N.Y. Real Prop. Law § 442-a. 307.
Respondents Steven Croman and Croman Real Estate are licensed real
estate brokers, and Respondent Anthony Falconite is a licensed real estate salesperson. 308.
Respondents Croman Real Estate, Steven Croman, and Anthony
Falconite engaged in fraudulent practices. 309.
Respondents Croman Real Estate, Steven Croman, and Anthony
Falconite have demonstrated untrustworthiness and incompetency because they have
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engaged in, among other things, a harassing and deceptive course of conduct, see supra paragraphs 250-259 and infra paragraphs 332-342, that has interfered with the quiet enjoyment of tenants in rent-regulated apartments. 310.
Respondents Croman and Croman Real Estate also have demonstrated
untrustworthiness and incompetency by failing to supervise Anthony Falconite as required by licensure rules and regulations. 19 N.Y.C.R.R. § 175.21(a). 311.
Respondent
Falconite
has
demonstrated
untrustworthiness
and
incompetency by performing the functions of a real estate salesperson without a license. 312.
After Respondent Falconite acquired a real estate salesperson license, he
further demonstrated untrustworthiness and incompetency by accepting compensation from entities other than his associated broker, Croman Real Estate, including 9300 Realty and certain Landlord LLCs. 313.
By engaging in conduct that violates section 441-c of the New York Real
Property Law, Respondents Croman, Croman Real Estate, and Anthony Falconite have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). SEVENTH CAUSE OF ACTION Private Investigator Licensure Laws – N.Y. Exec. Law § 63(12) Violation of New York General Business Law § 79 314.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 315.
Petitioner asserts the Seventh Cause of Action against Respondents
Falconite LLC and Anthony Falconite.
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316.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated illegal acts or persistent illegality in the conducting of business. 317.
Under the New York General Business Law, a licensed private
investigator is subject to penalties, including license revocation, if he or she “has practiced fraud, deceit or misrepresentation,” “has demonstrated incompetence or untrustworthiness in his actions,” or has otherwise violated any of the licensure rules under the General Business Law. N.Y. Gen. Bus. Law § 79(1). These licensure rules include a prohibition against private investigators entering into any agreement to provide services for which compensation is “dependent in any way upon the result achieved.” Id. § 84(1). 318.
Respondent Anthony Falconite is a licensed private investigator under
New York State law. 319.
Respondent Anthony Falconite has engaged in fraud, deceit and/or
misrepresentation on a regular basis while working on behalf of Croman and his Companies. 320.
Respondent Anthony Falconite has demonstrated incompetence and
untrustworthiness because he has engaged in, among other things, a harassing and deceptive course of conduct toward rent-regulated tenants. See supra paragraphs 250259 and infra paragraphs 332-342. 321.
Respondents Anthony Falconite also violated New York General
Business Law licensure rules by agreeing with Steven Croman and 9300 Realty to provide private investigator services in exchange for a bonus fee that is wholly
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dependent on whether the investigative work performed results in the buyout of a rentregulated tenant. 322.
By engaging in conduct that violates section 349 of New York General
Business Law, Respondents Falconite LLC and Anthony Falconite have engaged in repeated and persistent illegal conduct in violation of Executive Law § 63(12). EIGHTH CAUSE OF ACTION Deceptive Business Practices – N.Y. Exec. Law § 63(12) Violation of New York General Business Law § 349 323.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 324.
Petitioner asserts the Eighth Cause of Action against Respondents Steven
Croman, Anthony Falconite, Croman Real Estate, 9300 Realty, and Falconite LLC. In addition, Petitioner asserts the Ninth Cause of Action against the following Respondent Landlord LLCs: 115 Mulberry LLC, 138 East 16th Street LLC, 145 E 26 LLC, 171 East 102nd LLC, 179-181 Essex LLC, 200 Stanton LLC, 219 East 28 LLC, 326-338 E 100th LLC, 334 E 6th LLC, 343 East 8th LLC, 697 Tenth LLC, M&E 336-348 E. 18th St. LLC, M&E Christopher LLC, Prince Holdings 2012 LLC, 560-566 Hudson LLC, and 436 W 52 LLC 325.
Under the New York General Business Law, “[d]eceptive acts or practices
in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful.” N.Y. Gen. Bus. Law § 349(a). 326.
Respondents Respondents Steven Croman, Anthony Falconite, Croman
Real Estate, 9300 Realty, Falconite LLC, and the Landlord LLCs named in paragraph 322 have engaged in deceptive and misleading consumer-directed conduct.
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327.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 322 have filed baseless lawsuits against rent-regulated tenants. 328.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 322 have served rent-regulated tenants misleading and deceptive rent demands and notices. 329.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 322 have charged rent-regulated tenants improper legal fees. 330.
Additional penalties are warranted under GBL § 349-c, which provides for
a supplemental civil penalty, not to exceed $10,000 per respondent, for fraud perpetuated against one or more elderly persons, i.e., persons who are 65 years of age or older. N.Y. GBL § 349-c. 331.
Respondents’ victims include numerous elderly persons.
332.
Respondents Anthony Falconite, Falconite LLC, and the property
managers employed by 9300 Realty have used false pretenses and deception to gain access to rent-regulated tenants’ apartments. 333.
By reason of the conduct alleged above, Respondents have engaged in
repeated and persistent deceptive acts and practices in the conduct of business in violation of GBL Article 22-A § 349. NINTH CAUSE OF ACTION Fraud N.Y. Exec. Law § 63(12) 334.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249.
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335.
Petitioner asserts the Ninth Cause of Action against Respondents Steven
Croman, Anthony Falconite, Croman Real Estate, 9300 Realty, and Falconite LLC. In addition, Petitioner asserts the Tenth Cause of Action against the following Respondent Landlord LLCs: 115 Mulberry LLC, 127 East 7th Street LLC, 138 East 16th Street LLC, 145 E 26 LLC, 171 East 102nd LLC, 179-181 Essex LLC, 200 Stanton LLC, 219 East 28 LLC, 234-236 W 14th LLC, 314 E 106 LLC, 325 E 5th LLC, 326 E 35th LLC, 326-338 E 100th LLC, 334 E 6th LLC, 343 East 8th LLC, 3-5 West 103rd LLC, 380-382 E. 10th LLC, 420 W 51 LLC, 422 E. 9th LLC, 459 W 50 St LLC, 697 Tenth LLC, M&E 336-348 E. 18th St. LLC, M&E Christopher LLC, Prince Holdings 2012 LLC, 560-566 Hudson LLC, and 436 W 52 LLC. 336.
Executive Law § 63(12) authorizes the Attorney General to bring a special
proceeding when any person or entity engages in repeated fraudulent acts or persistent fraud in the operation of a business. 337.
Fraud under Executive Law § 63(12) is broadly defined to include “any
device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.” 338.
Respondents have engaged in repeated and persistent fraud in the
operation of their real-estate business. 339.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 333 have filed baseless lawsuits against rent-regulated tenants. 340.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 333 have served misleading and deceptive rent demands and notices on rentregulated tenants.
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341.
Respondent Steven Croman and the Respondent Landlord LLCs listed in
paragraph 333 have charged rent-regulated tenants improper legal fees. 342.
Steven Croman has repeatedly made false statements to the New York
City Department of Buildings when applying for construction permits by falsely certifying that his buildings were unoccupied and/or contained no rent-regulated housing. 343.
Respondents Anthony Falconite, Falconite LLC, and the property
managers employed by 9300 Realty have used false pretenses and deception to gain access to rent-regulated tenants’ apartments. 344.
Respondent Croman Real Estate has engaged in unlicensed relocation of
rent-regulated tenants. 345.
By reason of the conduct alleged above, Respondents have engaged in
repeated and persistent fraudulent conduct in violation of Executive Law § 63(12). TENTH CAUSE OF ACTION Security Deposits N.Y. Gen. Obl. Law § 7-103 346.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 347.
Petitioner asserts the Tenth Cause of Action against Respondent Steven
Croman and the following Respondent Landlord LLCs: 118 East 7 LLC, 120-120½ First LLC, 124 Ridge LLC, 134 Orchard LLC, 1373 First Avenue Associates LLC, 138 East 16th Street LLC, 145 E 26 LLC, 15 West 103rd LLC, 1590 Lexington LLC, 159-161 Stanton LLC, 17 West 103rd LLC, 171 East 102nd LLC, 179-181 Essex LLC, 182 Stanton LLC, 193-195 Stanton LLC, 199 East 3rd St LLC, 200 Stanton LLC, 208-214 E 25th St LLC, 206 East 83rd LLC, 209 E 25 LLC, 212-214 East 105 LLC, 213 E 26 LLC, 215
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Avenue B Realty LLC, 219 East 28 LLC, 227 E. 82 LLC, 232 Elizabeth LLC, 232 W 14th LLC, 234-236 W 14th LLC, 257 Bleecker LLC, 277 E. 10th LLC, 290 W12 LLC, 314 E 106 LLC, 321 W. 16th LLC, 325 E 5th LLC, 326 E 35th LLC, 326-338 E 100th LLC, 334 E 6th LLC, 343 East 8th LLC, 345 West 53rd LLC, 3-5 West 103rd LLC, 351-357 West 45 LLC, 358 W 51 LLC, 420 W 51 LLC, 434 West 52 LLC, 436 West 52 LLC, 44 Ave B LLC, 459 W 50 St LLC, 529 E. 6 St. LLC, 60 Avenue B LLC, 635 E 6 LLC, 72 West 108th Associates LLC, 9 West 103rd LLC, 420 E. 9th LLC, 422 E. 9th LLC, 424 E. 9th LLC, M&E 336-348 E. 18th St. LLC, M&E Christopher LLC, Prince Holdings 2012 LLC, Second Avenue & 50th St Realty LLC, and 560-566 Hudson LLC. 348.
New York General Obligations Law § 7-109 authorizes the Attorney
General to bring a special proceeding whenever it appears to the Attorney General that any person has violated any of the provisions of the General Obligations Law pertaining to money deposited for rental of real property. N.Y. Gen. Oblig. Law §§ 7-101 to 7-109. 349.
Under the General Obligations Law, a landlord must not commingle a
tenant’s security deposit with the landlords’ own money, and must provide written notice to the tenant that indicates the name and address of the bank in which the security deposit is located and the amount of the deposit. N.Y. Gen. Oblig. Law § 7103(1)-(2). Whenever the security deposit is for the rental of property containing six or more family dwelling units, the landlord must deposit it in an interest bearing account. Id. § 7-103(2-a). 350.
Respondent 9300 Realty and the Landlord LLCs listed in paragraph 344
collected security deposits for the rental of properties that each contain six or more residential apartments.
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351.
Respondent Steven Croman and the Croman Company failed to place
any such security deposits in interest-bearing accounts. 352.
Respondent Steven Croman and the Croman Company also commingled
such security deposits with Steven Croman’s own funds and the funds of other entities owned and controlled by him. 353.
Respondent Steven Croman and the Croman Company also failed to
notify tenants of the name and location of the banks holding such deposits. 354.
By reason of the conduct alleged above, Respondents Steven Croman,
9300 Realty, and the Landlord LLCs listed in paragraph 344, have engaged in violations of section 7-103 of the New York General Obligations Law. ELEVENTH CAUSE OF ACTION Security Deposits – N.Y. Exec. Law § 63(12) Violation of 9 N.Y.C.R.R. § 2525.4 355.
The Attorney General repeats and re-alleges, as though fully set forth
herein, paragraphs 1-249. 356.
Petitioner asserts the Eleventh Cause of Action against Respondent Steven
Croman and the following Respondent Landlord LLCs: 118 East 7 LLC, 120-120½ First LLC, 124 Ridge LLC, 134 Orchard LLC, 1373 First Avenue Associates LLC, 138 East 16th Street LLC, 145 E 26 LLC, 15 West 103rd LLC, 1590 Lexington LLC, 159-161 Stanton LLC, 17 West 103rd LLC, 171 East 102nd LLC, 179-181 Essex LLC, 182 Stanton LLC, 193-195 Stanton LLC, 199 East 3rd St LLC, 200 Stanton LLC, 206 East 83rd LLC, 208-214 E 25th St LLC, 209 E 25 LLC, 212-214 East 105 LLC, 213 E 26 LLC, 215 Avenue B Realty LLC, 219 East 28 LLC, 227 E. 82 LLC, 232 Elizabeth LLC, 232 W 14th LLC, 234-236 W 14th LLC, 257 Bleecker LLC, 277 E. 10th LLC, 290 W12 LLC, 314
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E 106 LLC, 321 W. 16th LLC, 325 E 5th LLC, 326 E 35th LLC, 326-338 E 100th LLC, 334 E 6th LLC, 343 East 8th LLC, 345 West 53rd LLC, 3-5 West 103rd LLC, 351-357 West 45 LLC, 358 W 51 LLC, 420 W 51 LLC, 434 West 52 LLC, 44 Ave B LLC, 459 W 50 St LLC, 529 E. 6 St. LLC, 60 Avenue B LLC, 635 E 6 LLC, 72 West 108th Associates LLC, 9 West 103rd LLC, 420 E. 9th LLC, 422 E. 9th LLC, 424 E. 9th LLC, M&E 336-348 E. 18th St. LLC, M&E Christopher LLC, Prince Holdings 2012 LLC, Second Avenue & 50th St Realty LLC, 560-566 Hudson LLC, and 436 W 52 LLC12 LLC. 357.
Executive Law § 63(12) authorizes the Attorney General to bring a
special proceeding when any person or entity engages in repeated fraudulent acts in the operation of a business. 358.
Under the New York Rent Stabilization Code, an owner of a housing
accommodation must not commingle a tenant’s security deposit with the landlords’ own money, must keep such deposit in an interest-bearing account, and must provide written notice to the tenant that indicates the name and address of the bank in which the security deposit is located and the amount of the deposit. N.Y.C.R.R. § 2525.4. 359.
The Respondent Landlord LLCs listed in paragraph 353 collected
security deposits for the rental of housing accommodations. 360.
Respondent Steven Croman and the Croman Company failed to place
any such security deposits in interest-bearing accounts. 361.
Respondent Steven Croman and the Croman Company instead
commingled such security deposits with Steven Croman’s own funds and the funds of other entities owned and controlled by him.
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362.
Respondent Steven Croman and the Croman Company also failed to
notify tenants of the name and location of the banks holding such security deposits. 363.
By reason of the conduct alleged above, Respondents Steven Croman,
9300 Realty, and the Landlord LLCs listed in paragraph 353 have engaged in repeated and persistent fraudulent conduct in violation of Executive Law § 63(12). PRAYER FOR RELIEF Wherefore, it is respectfully requested that the Court issue an order and judgment as follows: A.
Permanently enjoining Respondents from engaging in the illegal and
fraudulent practices alleged in the Verified Petition; B.
Appointing a receiver over Respondents’ business operations;
C.
Directing Respondents to render an accounting to the Attorney General of
all sums received as a result of their false and misleading representations and illegal acts; D.
Directing Respondents to make full monetary restitution and pay
compensatory damages to all injured persons or entities, pursuant to N.Y. Exec. Law § 63(12); E.
Directing Respondents to render an accounting of profits and to disgorge
all profits resulting from the illegal and fraudulent practices alleged herein; F.
Directing Respondents to pay a civil penalty to the State of New York of
$2,000 for the first violation and $10,000 for each subsequent violation of Section 2525.5 of the New York Rent Stabilization Code, 9 N.Y.C.R.R. § 2525.5, pursuant to 9 N.Y.C.R.R. § 2526.2(c)(2);
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G.
Directing Respondents to pay a civil penalty of $10,000 for each violation
of Section 27-2005 of the New York City Housing Maintenance Code, N.Y.C. Admin. Code § 27-2005, pursuant to N.Y.C. Admin. Code § 27-2115(m)(2); H.
Directing Respondents to pay a civil penalty of $150 for each immediately
hazardous violation of Sections 27-2056.6 and 27-2056.8 of the New York City Childhood Lead Poisoning Prevention Act of 2003, and a separate additional penalty of $125 for each day the violation was not corrected, pursuant to N.Y.C. Admin. Code § 272115(a); I.
Directing Respondents to pay a civil penalty of fourteen times the amount
of the fees payable for all permits not secured in violation of the New York City Construction Codes, N.Y.C. Admin. Code §§ 28-105, 28-201.1, pursuant to N.Y.C. Admin. Code § 28-213.1.2; J.
Directing Respondents to pay a civil penalty of $5,000 for the initial
violation and $10,000 for every subsequent violation of any stop work order issued under New York City Construction Codes § 28-207.2, pursuant to N.Y.C. Admin. Code § 28207.2.5; K.
Directing Respondents to pay civil penalties for false statements made to
the Department of Buildings pursuant to N.Y.C. Admin. Code §§ 28-202.1(1), 28-211.1, § 28-201.2.1(2); L.
Directing Respondents to pay a penalty to the State of New York of four
times the sum of all money received as commission, compensation or profit by or in consequence of any tenant relocation or other work performed in violation of the
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licensure requirement of Section 441 of the New York Real Property Law, pursuant to N.Y. RPL § 442-e(3); M.
Revoking the license granted to Respondent Croman Real Estate, Inc. to
practice as a real estate broker, pursuant to N.Y. RPL § 441-c(1)(a); N.
Revoking the license granted to Respondent Steven Croman to practice as
an associated real estate broker, pursuant to N.Y. RPL § 441-c(1)(a); O.
Revoking the license granted to Respondent Anthony Falconite to practice
as a real estate salesperson, pursuant to N.Y. RPL § 441-d; P.
Revoking the license granted to Respondent Anthony Falconite to practice
as a private investigator, pursuant to N.Y. GBL § 79(1); Q.
Directing Respondents to pay a civil penalty to the State of New York of
$5,000 for each violation of General Business Law § 349, pursuant to GBL § 350-d; R.
Directing Respondents to pay a supplemental civil penalty for consumer
frauds against elderly persons to the New York State Elderly Victim Fund of $10,000 for violation of General Business Law § 349, pursuant to GBL § 349-c; S.
Directing Respondents to pay to the State of New York all interest owed
and all monies converted in violation of Section 103 of Article 7 of the General Business Law so that the true owners of such monies and interest can be ascertained; T.
Awarding Petitioner costs against each Respondent pursuant to CPLR
§ 8303(a)(6) and N.Y. GBL § 7-109; and U. DATED:
Granting such other and further relief as is just and proper. June 6, 2016 ERIC T. SCHNEIDERMAN Attorney General of the State of New York
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Attorney for Petitioner 120 Broadway New York, NY 10271 (212) 416-8250
By: _________________ LOURDES M. ROSADO Bureau Chief Civil Rights Bureau JESSICA ATTIE Special Counsel Civil Rights Bureau MAYUR SAXENA Civil Enforcement Section Chief Labor Bureau ANJANA SAMANT AJAY SAINI Assistant Attorneys General Civil Rights Bureau
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