Steve Croman has, once again, gotten himself into trouble over rent regulation.
The state’s Tenant Protection Unit alleged that Croman’s Centennial Properties ran afoul of the rules by renting nine rent-stabilized apartments in five buildings through extended-stay platform Blueground.
A review by the unit of the Division of Homes and Community Renewal found the Manhattan tenants were charged more than the legal rent and were not provided rent-regulated leases.
Croman cooperated with the review and agreed to pay $514,000 without admitting any wrongdoing, according to a statement from his attorney Ken Fisher of Cozen O’Connor.
Centennial has also since offered one- or two-year leases to the tenants, who have not accepted. Rent-stabilized apartments must be a tenant’s primary residence, but Blueground’s customers are typically not seeking permanent residency.
The company offers furnished, short-term rentals of 31 days or more. Rent-stabilized leases in New York are for one or two years, and their rents are tightly controlled. Croman’s Blueground arrangement also violated the rule against subletting rent-stabilized units.
Croman’s son, Jake Croman, said in the statement, “Blueground provides an important service and we are glad to be able to continue to work with them, despite this unfortunate situation affecting just nine of our apartments.”
Despite the small size of the case, Gov. Hochul blasted word of the settlement in a press release Wednesday, chastising the landlord “for unlawfully defrauding renters amid a statewide housing crisis.”
“Croman engaged in a scheme to lease regulated units for a term of less than one or two years, making the apartments unavailable for New Yorkers seeking safe, stable housing,” Hochul’s release said.
The governor has made housing her No. 2 priority behind public safety, but has failed to get the state legislature to pass her housing bills.
The settlement reimburses Blueground’s tenants for the difference between the legal rents and what they paid, and also awards them damages. The case stemmed from complaints in August from people who saw Croman’s units advertised on Blueground’s platform.
Centennial, which manages more than 100 primarily market-rate apartment buildings in Manhattan, leased the rent-stabilized units to Blueground for 11 months before the scheme was halted, state officials said.
Alex Fotopoulos of Kourkoumelis & Fotopoulos, who joined Fisher in representing Croman, said there were some “novel legal issues” they thought they could have raised in the administrative proceedings, but decided to settle and avoid the costs and uncertainty of litigation.
Croman, considered one of the city’s most notorious landlords, has long been a target of authorities and tenant advocates, but they have had trouble holding him accountable.
He did spend 2018 incarcerated at Rikers Island after pleading guilty to mortgage fraud in a case brought as authorities were trying to crack down on his treatment of tenants. Mortgage fraud is easier to prove than tenant harassment.
Since being released, Croman has been under the watch of a court-appointed monitor to assure his compliance with an $8 million civil settlement regarding Centennial’s 150-property portfolio.
His attorney said he’s been in substantial compliance with the decree, which expires in 2025.
Croman has run into financial trouble at some of his buildings since the pandemic. A court-appointed referee recently found he owed $35 million to Maverick Real Estate Partners after defaulting on a $23 million loan backed by four Kips Bay properties. Croman has called Maverick, which had bought Croman’s loan, “a bully in the schoolyard.”
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