Being a landlord should be simply a matter of supplying and maintaining a high-quality property that is leased to a tenant for a fair price. Unfortunately, some landlords cut corners and break laws in an effort to maximize their income, while minimizing their expenses, to the detriment of tenants. When that happens, the landlords may face litigation and charges.
A landlord in New York, New York, serves as a recent example of property management gone profoundly wrong. For years, he was one of New York's biggest multifamily landlords, yet the first week of June, he pleaded guilty to multiple felony charges. Those charges were tax fraud, grand larceny and fraud based on filing a false instrument.
Pleading guilty was part of his plea agreement. If the judge accepts the plea agreement, the landlord will serve a one-year sentence at the infamous Rikers Island institution. He will also have to pay a settlement totaling $5 million. Three million of that amount will need to be paid by his sentencing date, which is set for September 19.
The landlord has admitted to telling employees to file false documents, which included inflated rent rolls, so that he could secure high-value mortgages on his properties. He potentially faced a maximum sentence of 3.25 to 11 years. By pleading guilty, he avoided that, though he still faces the one year at Rikers Island and the fine.
The New York attorney general (AG) is the one who brought the charges against the landlord, and said that the landlord was a criminal and a fraudster who willfully defrauded multiple banks. The AG used the case as an opportunity to state that other unscupulous landlords will also be pursued and will also be prosecuted.
Other landlords, driven by greed to exploit tenants and financial institutions, may take the case as inspiration to reform their practices. Those who do not may find themselves the subject of legal action.
Source: The Real Deal, "Steve Croman pleads guilty, agrees to serve 1 year in Rikers," Rich Bockmann and Hiten Samtani, June 06, 2017