‘Bernie Madoff of landlords’ gets one year in jail

Steve Croman

By Kyle Campbell

One of the cityʼs most notorious landlords has been jailed for a year in a rare move by State Attorney General Eric Schneiderman to sound a warning bell to unscrupulous New York building owners.

Steven Croman, who has been dubbed “The Bernie Madoff of Landlords,” was sentenced to one year at Rikers Island on Tuesday after pleading guilty to grand larceny and tax fraud.

Croman was also fined $5 million in a plea deal that saw him admit to third-degree grand larceny, first-degree falsifying business records and fourth-degree criminal tax fraud.

Between 2012 and 2014, Croman acquired $45 million in refinancing loans by submitting applications with phony rent rolls that showed market rate rents for units held by rent-stabilized tenants. He also inflated commercial rent payments to pad his on-paper profits and obtain larger loans, according to Schneiderman.

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Pols urging left-leaning NYers to become activists

State Attorney General Eric Schneiderman with State Senator Liz Krueger (Photos by Maria Rocha-Buschel)

By Maria Rocha-Buschel

Local elected officials are urging left-leaning New Yorkers to become political activists, saying there’s been a surge in citizen activism around the country since President Trump took office.

The push was made at an event last Wednesday evening, hosted by State Senator Liz Krueger and State Attorney General Eric Schneiderman with an introduction by City Councilmember Dan Garodnick. Garodnick has previously hosted other so-called “State of the Resistance” forums, which offer information about how to get involved in local politics and with non-profit organizations around the city. More than 300 residents attended last week’s event, hosted at the Porshansky Auditorium in the CUNY Graduate Center.

“The state of the resistance is really seen in the burst of local activism since the election,” Garodnick said. “New Yorkers are holding their elected officials accountable. (Constituents) are breaking the all-time record for the number of calls to elected representatives.”

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Round two for IRS scam calls

By Sabina Mollot

Throughout this week, a few readers of Town & Village alerted us to the fact that an overseas phone scam, in which the callers pretend to be from the IRS while threatening people with lawsuits or even arrest, had returned to the Stuy Town/Peter Cooper neighborhood.

One of the readers, a Stuy Town senior, told T&V the calls had even seemed to get more aggressive because they’ve become more frequent — annoying her five times in a span of three days.

“They keep saying this is my final warning. I wish it would be,” she fumed. “It’s very threatening. It’s 8-9 in the morning.”

While the resident said she thought the call sounded ridiculous, like others who called us, she was more concerned about others who might get frightened by the mention of the IRS. “Maybe some people will still get scared and send them money,” she said.

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Con Ed settles over accusations of sexual harassment, inequality

Con Edison building at 4 Irving Place

Con Edison building at 4 Irving Place

By Maria Rocha-Buschel

Con Edison has agreed to a settlement with Attorney General Eric Schneiderman to resolve accusations of ongoing discrimination and sexual harassment against women working in field positions for the company.

The agreement requires that Con Ed reserve up to $3.8 million that will be distributed to over 300 female workers employed in field jobs through a claims process administered by the EEOC and the attorney general. A representative from Con Edison said that the utility had voluntarily entered into the settlement agreement to resolve the investigations that began in 2007 and the agreement resolves the investigation without findings of wrongdoing. However, complaints alleged that the company failed to take effective action to improve or prevent the discriminatory conditions. The women in field positions even reported that they faced retaliation when they complained to supervisors or to Con Edison’s Office of Diversity & Inclusion about their work conditions.

“I worked at Con Edison for thirteen years, primarily as an Inspector in the field,” Con Ed Inspector Kawana Howard said. “I loved my job, was good at what I did and took pride in the fact that I was helping to keep our city running. Yet over the years I faced gender-based discrimination from my some of my male supervisors and co-workers and was retaliated against when I complained, ultimately culminating in my recent termination.”

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Beth Israel sued over Medicaid payments

Beth Israel's First Avenue building (Photo by Sabina Mollot)

Beth Israel’s First Avenue building (Photo by Sabina Mollot)

By Sabina Mollot
On Friday, Attorney General Eric Schneiderman announced that he was filing a lawsuit against Beth Israel and St. Luke’s-Roosevelt hospitals as well as Continuum Health Partners, accusing all three of accepting Medicaid payments they were not entitled to. Continuum is the company that owned both hospitals prior to a recent merger with Mt. Sinai.
The lawsuit accuses the hospitals and Continuum of failing to return money to Medicaid they knew was only received due to a computer error in 2009 and 2010. According to the suit, the hospitals submitted improper claims to Medicaid due to the error until the New York State comptroller notified Continuum in 2010 that there were problems with those claims.
The complaint also said that in February of 2011, Continuum found over 900 potentially improper claims to Medicaid after conducting an internal investigation. The total of those claims was over one million dollars. But according to the A.G., the hospitals’ parent company then failed to repay it all within 60 days, instead only repaying “small batches of affected claims” over the next two years. The rest were finally paid by March, 2013, but, the A.G. said, repayments for over 300 of those claims were only made after federal involvement.
This was in June, 2012, when the United States Attorneys’ Office for the Southern District of New York issued a Civil Investigative Demand to Continuum. The complaint against Continuum, Beth Israel and St. Luke’s-Roosevelt was filed under the New York False Claims Act and other statutes in U.S. District Court for the Southern District of New York.
A spokesperson for Mt. Sinai, Gregory Williams, said the company doesn’t comment on pending litigation. However, Williams added, “We intend to argue our case vigorously in court.”

James settles lawsuit with owner of Gramercy hardware store for $10

Warshaw Hardware owner Ed Warshaw (Photo by Sabina Mollot)

Warshaw Hardware owner Ed Warshaw (Photo by Sabina Mollot)

By Sabina Mollot

Earlier in the year, the owner of Gramercy’s Warshaw hardware shop found himself on the receiving end of a lawsuit by the former president of the National Arts Club, which was also filed against the club.

In the suit, O. Aldon James accused business owner Ed Warshaw of breaking into apartments he controlled, so the club could clear out the spaces, which were hoarded, after he stepped down as president amidst allegations of misusing the club’s money and real estate. At the time, James said he lost no less than $10 million worth of personal property, including items that would have helped defend him in his legal battle with the club, as a result of the cleanup.

However, that lawsuit has since been settled, Warshaw shared this week. A deal was actually reached in July, when Warshaw was away, in which James would agree to the suit in exchange for a settlement to Warshaw of $10.

“I’m still waiting for my ten dollars,” noted Warshaw, although he admitted he doesn’t care about the money. After the suit was filed, Warshaw denied any wrongdoing, saying that although he had done locksmithing work for the club, he didn’t have anything to do with the entering of any James-controlled spaces.

“It just hurt my feelings,” he said this week, “for him to include me in his shenanigans. I’ve known the guy for so long.”

The settlement was actually part of a larger settlement James reached with Attorney General Eric

Former National Arts Club President O. Aldon James (Photo courtesy of National Arts Club)

Former National Arts Club President O. Aldon James (Photo courtesy of National Arts Club)

Schneiderman in July, in which he was made to pay $950,000 to the club. In exchange a number of lawsuits between him, his twin brother John and friend Steven Leitner against the club and vise versa, all ended, according to Roland Riopelle, the club’s attorney.

Over the phone this week, Riopelle explained, “It ended when that settlement went down in July.”

Since then, he said the National Arts Club has been “thriving,” and that he wishes James success in “whatever endeavor he has moved onto.”

The lawsuit was also against the club for what James called a “malicious” attempt by the administration that replaced him to throw him, John and Leitner out of their apartments at the club building on Gramercy Park South.

He said the club’s then Vice President John Morisano had Warshaw break into his apartment and change the locks to a space leased to John James to store artwork. Other items O. Aldon James said were locked up and later destroyed included 25 years worth of day planners and important financial records like credit card receipts, billing slips and some benefactor data.

However, those charges were denied by Riopelle. Riopelle told T&V at the time the only things tossed during the cleanup were items that were “obviously junk” and not paperwork. He also defended Warshaw, confirming the business owner’s story that he hadn’t been involved in the locksmithing work.

“This is like the Japanese horror movie version of litigation,” Riopelle told this paper. “It’s like Godzilla’s tail wiping out the hardware store while battling with the National Arts Club.”

When asked for comment, Barry Felder, the attorney representing James in the case said, “There was a global settlement and Warshaw was included in the global settlement.”

Prior to the settlement, Warshaw said he actually ran into the club’s former longtime leader nearby the club building on East 20th Street. Warshaw attempted to talk to him, but said James got flustered in response. “He kept saying, ‘I wasn’t the guy. I wasn’t the guy.’”

Letters to the Editor, Oct. 17

Why are short-term renters targets for A.G.?

Re: “Airbnb won’t cooperate with A.G. investigation,” T&V, Oct. 10

To the Editor:

I am intrigued that Eric Schneiderman decided to prioritize investigating Airbnb. Wasn’t he supposed to be prosecuting the banksters responsible for our continuing economic disaster? Come to think of it, where are those indictments?

Rich people don’t sublet their homes for short periods. Middle-class homeowners and renters do. There may be some nefarious businesspeople subletting to even lurkier subtenants on Airbnb, but I’m pretty sure most of the people using Airbnb to make money or have a place to stay are ordinary middle class people. Some people rent out their apartments because they have lost jobs and are traveling, looking for work. Others are having difficulty paying their monthly costs due to stagnating wages combined with continually rising co-op maintenance fees and endless assessments.

Again, the rich don’t have these troubles. Should middle-class homeowners be forced to sell their apartments or incur credit problems because of temporary financial setbacks?

I can’t sublet my apartment on Airbnb due to the fact I store confidential materials here, but if that wasn’t an issue I probably would occasionally sublet it.

I have fond memories of the “illegal” sublet I rented as a young graduate student in 1990. If that apartment hadn’t been available, I never would have been able to live in Manhattan, close to my school and internship. Again, this type of issue is not a problem for the rich — only for the middle class.

Schneiderman and Liz Krueger might want to think about the fact that most of the middle-class people who sublet on Airbnb in New York are registered Democrats…

Sincerely,

Anne Rettenberg,
Kips Bay

Sukkah in park not unconstitutional

Re: Letter, “Sukkah doesn’t belong in public park,” T&V, Oct. 10

To the Editor:

The writer who objects to sukkahs in public parks has gone beyond the facts in stating, “the Constitution espouses the separation of church and state.”

The First Amendment forbids legislating, “an establishment of religion, or prohibiting the free exercise thereof,” and Article VI forbids a religious test for holding federal office. An establishment of religion, the thing forbidden, is a requirement that all citizens worship God in the manner of only one religion and must contribute to its financial support.  Allowing the free exercise of religion means that every citizen may choose to worship God, or not, in the manner he or she deems right, and in doing so may exercise all the other First Amendment freedoms — of speech, the press and peaceable assembly.

The Constitution mandates freedom for religion, not freedom from religion.

Yet Mendy Weitbaum may have exceeded these rights, in the same way one would by erecting a personal sign in a public park suggesting, “Drink Coca-Cola,” or “Fly American Airlines.” Yet, if he did exceed his rights, it’s because of erecting a symbol of his personal preferences, not because the symbol is a religious one.

Don Murray, ST

Re: Letter, “Sukkah doesn’t belong in public park,” T&V, Oct. 10

The phrase, “separation of church and state” is nowhere to be found in the Constitution. Thomas Jefferson used it in a letter to the Danbury Baptist Association in 1802 to assure them that the state of CT would not interfere with their religious practices.

James Madison said the purpose of the First Amendment was to prohibit Congress from establishing a national religion. Just because someone doesn’t want to see a sukkah, a cross, or anything else in a public park doesn’t make it unconstitutional, so the rabbi can put up a sukkah anywhere he wants.

Thank you for your consideration.

Joan Carmody,  PCV

‘Interesting’ owners

They have three transients in every eight apartments; they send you reminder notices on the day they’ve cashed your check; they inspect your apartment to insure that you’re using your 22-year-old refrigerator; two of five washing machines in a laundry room meant for over 100 apartments are unplugged. They hang padding 24/7 in elevators that rent stabilized tenants have paid for so transients can readily move in and out. They are the most interesting landlords in the world.

Name withheld, ST

Notary services available for residents exempt from mid-lease rent increases

Letter issued by CompassRock

Letter issued by CompassRock

The Stuyvesant Town-Peter Cooper Village Tenants Association has announced that notary services will be available on several different days for the tenants who were led to believe by leasing agents that there would be no mid-lease increases and then got them, anyway.

On Monday, Town & Village Blog reported that following an investigation by Attorney General Eric Schneiderman, an agreement was reached with management so that those residents will not have to pay their new, higher rents.

Residents in this situation have until June 30 to fill out an affidavit that was slipped under their doors on Friday by CompassRock and have it notarized. Otherwise, they’ll have to start paying their increased rent in July. In related news, the agreement reached by the attorney general and CompassRock means there will be no additional mid-lease increases.

Schneiderman, Council Member Dan Garodnick and the Tenants Association have been working together over the past few weeks to identify 39 tenants who were misled.

Commenting on the settlement, Tenants Association President John Marsh said, “We appreciate the Attorney General’s taking the important action that he did. The allegations of misrepresentations were serious and numerous. We urge all those who received either written or verbal assurances that their rent would not be increased mid-lease to sign and return the affidavit.”

The TA also issued instructions, via email to residents, who need to get their paperwork notarized:

Complete the affidavit and sign it in front of a notary public.  If you have an e-mail or other correspondence with a renting agent, attach it.  If you simply recall a conversation on the matter of the mid-lease clause, write about it in the space provided.

Take the affidavit and any supporting material to be notarized. You must appear in person to sign and show photo ID. To facilitate this process, Tenants Association volunteers with a notary’s license will be available, at no charge, at the Community Center Tuesday, June 18, Thursday, June 20, and Tuesday, June 25, between 6:00 and 8:00 pm., and Saturday, June 22 and Sunday June 23, between 2:00 and 4:00 pm.  Please note that a notary only affirms your signature, not the content of the document.

(If you have discarded the material that came under your door, thinking it was a ruse, you can pick up a new affidavit at the Community Center at those hours) or you can print out the letter and affidavit linked here.

Return the notarized affidavit and support material, if any, by June 30th to:

Office of the Attorney General of the State of New York
Attn: Elissa Rossi
Real Estate Finance Bureau
120 Broadway, 23rd Floor
New York, NY 10271

Send a copy of this affidavit to:

PCVST Legal Department
Attention:  Roberts Administrator
317 Avenue C
New York, NY 10009

Important:  Your response must be postmarked no later than June 30, 2013

Mid-lease increases to be reversed in cases of misrepresentation

Letter issued by CompassRock

Letter issued by CompassRock

View full CompassRock letter

By Sabina Mollot

In news that is sure to be welcome to tenants who were recently on the receiving end of mid-lease increases, those who were led to believe by a leasing agent that they wouldn’t be getting mid-lease hikes will not have to pay their new, higher rents.

On Friday, management slipped notices under tenants’ doors, signed by the property’s general counsel, Fred Knapp, conceding that, “It has come to CompassRock’s attention that, in a limited number of cases,” tenants who signed leases pending the Roberts v. Tishman Speyer settlement “claimed that they were told by leasing agents that the increase set to go into effect on July 1, 2013 (the “July 1 Increase”) would not be applicable to them during the term of their lease.”

CompassRock said if tenants were in that situation then they should fill out an affidavit, which was attached to Knapp’s letter, with details of statements made to them, including emails or other documentation if available, and their rents would stay the same. The deadline for tenants to file their paperwork is June 30. Otherwise, they’ll have to pay their new, inflated rent starting July 1.

The notice came after Attorney General Eric Schneiderman conducted an investigation into allegations of tenants being misled by leasing agents. The matter was brought to the A.G. by Council Member Dan Garodnick after he said he’d heard complaints from numerous tenants. As of this week, Garodnick said there were a total of 39 tenants who said they were told, inaccurately, they wouldn’t be getting a mid-lease increase.

As for tenants who have no written proof of agreements that there would be no mid-lease hike, but have said they were told it wouldn’t happen, the rent rollbacks would apply to them as well.

“It is our understanding that verbal assurances will be treated the same way as written evidence, but there does need to be some sort of description” of statements, said Matt Mittenthal, press secretary for the attorney general.

Or, as the notice from CompassRock went on to suggest, tenants could also avoid paying the new rents simply by moving out.

“As you know, “ wrote Knapp, “you also have the right to terminate your lease and vacate your apartment. This notice does not affect that right in any way.”

The letter concluded by saying nothing “should be construed as an admission of wrongdoing or liability” against CompassRock or CWCapital.

Garodnick, who said around 1,100 tenants got mid-lease increases (around 1,300 got rent adjustment notices), added, “We appreciate this strong step taken by the attorney general. There clearly was an issue here that affected many people and any misrepresentations will now not be able to stand.”

Schneiderman, meanwhile, said ST/PCV residents “have been through battle after battle to preserve the character and affordability of their community. That’s why I was so concerned to learn that some tenants had been misled by leasing agents into signing leases that would result in skyrocketing rents. I am pleased that the owners cooperated with our office’s investigation and have entered into an agreement that ensures tenants are treated fairly: No one who was promised a steady rent will be socked with a mid-lease increase.”

Schneiderman added that the agreement means CW can’t impose any additional mid-lease rent hikes and, he noted, he’d be watching the special servicer to make sure of this.
“My office will keep a close watch in the coming weeks to ensure that all aspects of the agreement are honored,” Schneiderman said.

Even before Roberts was settled, attorneys were already warning tenants that CW could issue rent hikes, even mid-lease, as a result of language the special servicer had inserted into new leases. Rent hikes have reportedly been as high as over $2,000, although most are in the hundreds.

In response to the investigation and the agreement, CW said in an official statement that management had only known about 10 incidents of misrepresentations regarding the increases.

“Despite an exhaustive effort to solicit complaints from residents that leasing agents had represented mid-term rent adjustments would not occur, we have received only 10 complaints from affected residents,” CWCapital said on Tuesday.

“While it is clear that, legally, any such representation would have been superseded by the class action settlement in which residents received a $173 million benefit, we volunteered to make official our practice of deferring rent increases to the end of a lease term for any resident that has a factual basis for their confusion. Additionally, we agreed to make official our intention not to issue additional mid-term rent increases. We appreciate the Attorney General’s assistance in balancing our legal rights with a desire to accommodate any resident that was confused about the content of their lease due to purported misstatements by employees of the managing agent.”

This article has been updated to include quotes from CW Capital and Attorney General Schneiderman.