Engel Votes Against Republicans’ Inadequate Government Funding Bill

  Congressman Eliot Engel, a top member of the House Energy and Commerce Committee, issued the following statement after voting against the Continuing Resolution passed by House Republicans:

“Congressional Republicans have decided to cap off one of the least productive years in the history of Congress with yet another continuing resolution that kicks the can down the road on some of our nation’s most pressing issues. This abdication of duty is shameful – and especially galling after their gleeful display at the White House yesterday where they applauded themselves for their tax scam on the middle-class.

“I believe we should not end the year without enacting a solution for the hundreds of thousands of young people who had their immigration status so cruelly revoked by the President in September. Every day, another 122 DREAMers lose their protected status and are at risk of deportation. Yet, despite bipartisan support, this bill does not include a fix for DACA.

“We also should not have ended the year without fixing the mess House Republicans made when they allowed funding for the Children’s Health Insurance Program (CHIP) to expire. This CR fails our nation’s children, putting an inadequate patch on CHIP instead of a long-term, bipartisan reauthorization. This won’t help states plan and it won’t give CHIP families peace of mind.

“On top of that, this CR fails to provide adequate funding to care for our nation’s veterans. The VA is facing a dire shortfall and a shortage of 45,000 doctors, nurses and health care providers. It is unconscionable of GOP leaders not to authorize these funds and deny care to veterans.

“Finally, the House also voted today on a supplemental disaster relief package – but one that doesn’t sufficiently meet the needs of fellow Americans in Puerto Rico and the U.S. Virgin Islands. I voted against this package as well. We must do more to aid those struggling to rebuild in Hurricane Maria’s wake.

“No long-term, bipartisan funding for CHIP. No support for our veterans. No help for our DREAMers and inadequate assistance for Puerto Rico and the Virgin Islands. Failing to fix our biggest problems is exactly what has happened this year under Republican leadership.”

Twelve Members And Associates Of The Mount Vernon Goonies Street Gang Charged In Superseding Indictment With Murder, Racketeering, Narcotics, And Firearms Offenses

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Anthony A. Scarpino Jr., Westchester County District Attorney, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging MARKEL OVERTON, a/k/a “Kellz,” THOMAS BLANTON, a/k/a “LT,” MARQUIS COLLIER, a/k/a “Keise,” KADEEM DINHAM, a/k/a “Polo,” DONNIE DIXON, a/k/a “Scooter,” DAVID HARDY, a/k/a “Mooka,” JERMAINE HUGHLEY, a/k/a “Blacks,” RAHEEM JONES, a/k/a “Rah Trigger,” a/k/a “Trigga,” SINCERE SAVOY, a/k/a “Bitty,” JAMAAL SINCLAIR, a/k/a “Diggz,” NOEL SMITH, a/k/a “Georgie,” and ERNEST WEBB, a/k/a “Ern,” a/k/a “Ern Millz,” with various crimes relating to racketeering, murder, narcotics, and firearms offenses.  The defendants have been charged as a result of their membership in the “Goonies” street gang that operated in the City of Mount Vernon, New York.  Eight of the defendants were previously charged in United States v. Overton, et al., 17 Cr. 644 (NSR) (the “Indictment”).  The Superseding Indictment, S1 17 Cr. 644 (NSR) (the “Superseding Indictment”), charges four additional defendants with racketeering charges and also charges the following two murders in Mount Vernon, New York:

 DAVID HARDY, a/k/a “Mooka,” MARQUIS COLLIER, a/k/a “Keise,” JERMAINE HUGHLEY, a/k/a “Blacks,” and SINCERE SAVOY, a/k/a “Bitty,” with the December 31, 2016, murder of Shamoya McKenzie, a 13-year-old innocent bystander; and

 ERNEST WEBB, a/k/a “Ern,” a/k/a “Ern Millz,” with the September 22, 2014, murder of Dean Daniels.    

Acting U.S. Attorney Joon H. Kim said:  “When gangs flourish, neighborhoods suffer, parents grieve, and children die.  It is as simple as that.  Dreams like the ones Shamoya McKenzie must have had for herself — as she sat innocently in the car, next to her mother on New Year's Eve, coming from basketball practice — should be cultivated and allowed to flourish, not violently crushed, a tragic victim of an utterly senseless war between street gangs.  Shamoya McKenzie deserved better.  Dean Daniels deserved better.  Mount Vernon deserves better.  And that is why we, with our federal and local partners, have brought this prosecution.  Today’s announcement is part of our Office’s ongoing and steadfast commitment to making the streets of Mt. Vernon, and the communities of Westchester safe.”

Westchester County District Attorney Anthony A. Scarpino Jr. said:  “For the better part of a decade, the Goonies have had a grip on neighborhoods in and around the City of Mount Vernon.  Through intimidation and violence, they’ve jeopardized the safety and quality of life for the hard working residents of Mount Vernon.  That violence turned deadly on at least two occasions when the lives of Shamoya McKenzie and Dean Daniels were cut short.  While we were able to charge David Hardy for the senseless murder of Shamoya, our partnership with the United States Attorney’s Office and the FBI will now enable us to charge others who also participated in those crimes.  Thanks to the collaborative efforts of federal, state and local law authorities, these defendants will all be held accountable for the crimes they now stand accused of.”

FBI Assistant Director William F. Sweeney Jr. said:  “The new charges members of this criminal gang now face show just how badly they allegedly terrorized a community.  They used violence to push illegal drugs and demonstrate how tough they were as a gang.  They didn’t think about who was hit by their bullets, and in the end that disregard cost an innocent young girl her life.  The FBI Westchester County Safe Streets Task Force won’t let up on their investigations into gangs that believe they act with impunity.  They don’t and now they will face justice for their deadly actions.”

According to the Superseding Indictment[1] unsealed today in White Plains federal court, and prior proceedings in the matter:

From 2007 to 2017, in the Southern District of New York and elsewhere, OVERTON, BLANTON, COLLIER, DINHAM, DIXON, HARDY, HUGHLEY, JONES, SAVOY, SINCLAIR, SMITH, and WEBB were members or associates of a racketeering enterprise known as the “Goonies.”  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Goonies committed, conspired, attempted, and threatened to commit acts of violence, including murder, attempted murder and robbery; they conspired to distribute and possess with the intent to distribute narcotics; and they obtained, possessed, and used firearms, including by brandishing and firing them.  BLANTON, COLLIER, DINHAM, DIXON, and JONES also conspired with one another, and certain other members of the Goonies, to distribute and possess with the intent to distribute crack cocaine and marijuana.

The Goonies have been engaged in a long-standing and violent feud with several rival Mount Vernon street gangs, including, among others, the “Boss Playa Family,” the “Get Money Gangstas,” the “Gunnas,” and the “Much Better Gang,” among others.  On December 31, 2016, the intended target of the shooting was a rival gang member.  Shamoya McKenzie was in the front passenger seat of a car driving by the shooting location, in the vicinity of Tecumseh Avenue and Third Street in Mount Vernon, New York, and was struck in the head by a bullet, resulting in her death.  As set forth in the Superseding Indictment, on or about September 22, 2014, in the vicinity of Park Avenue in Mount Vernon, Dean Daniels was shot to death.       

OVERTON, BLANTON, COLLIER, DINHAM, DIXON, JONES, and SMITH were already in custody based on the charges in the Indictment.  HARDY and HUGHLEY were already in custody on state charges, and were transferred to federal custody today.  SAVOY was arrested this morning in New Rochelle.  WEBB remains a fugitive.  The defendants who are in custody will be arraigned before the Honorable Lisa Margaret Smith, United States Magistrate Judge, this afternoon in White Plains federal court.  The case is assigned the United States District Judge Nelson S. Román.    

The maximum potential sentences in this case are prescribed by Congress and are provided in the attached table for informational purposes only, as any sentencings of the defendants will be determined by a judge.

Mr. Kim thanked the Westchester County District Attorney’s Office and praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises agents and detectives from the FBI, Yonkers Police Department, Westchester County District Attorney’s Office, Westchester County Police Department, Peekskill Police Department, Mount Vernon Police Department, New York City Police Department, and U.S. Probation.

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Anden F. Chow, Sarah Krissoff, Olga Zverovich, Christopher Clore, and Special Assistant United States Attorneys John O’Rourke and Lauren Abinanti are in charge of the prosecution.

The charges contained in the Indictment and Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

United States v. Markel Overton, et al.

CHARGE	DEFENDANTS	MAXIMUM PENALTIES
Count One Racketeering Conspiracy	MARKEL OVERTON   a/k/a “Kellz” THOMAS BLANTON   a/k/a “LT” MARQUIS COLLIER   a/k/a “Keise” KADEEM DINHAM   a/k/a “Polo” DONNIE DIXON   a/k/a “Scooter” DAVID HARDY   a/k/a “Mooka” JERMAINE HUGHLEY    a/k/a “Blacks” RAHEEM JONES   a/k/a “Rah Trigger”   a/k/a “Trigga” SINCERE SAVOY   a/k/a “Bitty” JAMAAL SINCLAIR   a/k/a “Diggz” NOEL SMITH   a/k/a “Georgie” ERNEST WEBB   a/k/a “Ern,”   a/k/a “Ern Millz”	Life in prison
Count Two Firearms Offense	MARKEL OVERTON THOMAS BLANTON MARQUIS COLLIER KADEEM DINHAM DONNIE DIXON DAVID HARDY RAHEEM JONES JAMAAL SINCLAIR NOEL SMITH	Life in prison with a mandatory minimum of 10 years in prison
Count Three Conspiracy to Commit Murder in Aid of Racketeering	DAVID HARDY MARQUIS COLLIER JERMAINE HUGHLEY SINCERE SAVOY	10 years in prison
Count Four Murder in Aid of Racketeering	DAVID HARDY MARQUIS COLLIER JERMAINE HUGHLEY SINCERE SAVOY	Mandatory minimum:  Life in prison Maximum sentence:  Death
Count Five Use, Carrying, and Possession of Firearms, Resulting in Death	DAVID HARDY MARQUIS COLLIER JERMAINE HUGHLEY SINCERE SAVOY	Mandatory minimum:  5 years in prison Maximum sentence:  Death
Count Six Conspiracy to Commit Murder in Aid of Racketeering	ERNEST WEBB	10 years in prison
Count Seven Murder in Aid of Racketeering	ERNEST WEBB	Mandatory minimum:  Life in prison Maximum sentence:  Death
Count Eight Use, Carrying, and Possession of Firearms, Resulting in Death	ERNEST WEBB	Mandatory minimum:  5 years in prison Maximum sentence:  Death
Count Nine Narcotics Conspiracy	THOMAS BLANTON MARQUIS COLLIER KADEEM DINHAM DONNIE DIXON RAHEEM JONES	Life in prison with a mandatory minimum of 10 years in prison

DEFENDANT	AGE
MARKEL OVERTON	27
THOMAS BLANTON	24
MARQUIS COLLIER	26
KADEEM DINHAM	26
DONNIE DIXON	28
DAVID HARDY	22
JERMAINE HUGHLEY	25
RAHEEM JONES	29
SINCERE SAVOY	20
JAMAAL SINCLAIR	29
NOEL SMITH	34
ERNEST WEBB	29

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the Superseding Indictment, and the description of the Indictment and Superseding Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Former Embraer Sales Executive Pleads Guilty To Foreign Bribery And Fraud Charges

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced that COLIN STEVEN pled guilty to Foreign Corrupt Practices Act, wire fraud, money laundering, and false statement charges arising from his role in paying bribes to a foreign official in exchange for assistance in obtaining business for STEVEN’s employer, Embraer S.A. (“Embraer”).  STEVEN, a former executive in Embraer’s Executive Jets Division, arranged for Embraer to pay over $1.5 million in bribes to an official at the state-owned and state-controlled national oil company of Saudi Arabia (the “Saudi Arabia Company”), and ultimately received a kickback from a portion of the bribe proceeds.  STEVEN pled guilty today before U.S. District Judge Alison J. Nathan.

According to the allegations contained in the Information to which STEVEN pled guilty, and statements made during the plea and other court proceedings:

Embraer, an aircraft manufacturer based in Brazil, has operations and subsidiaries in various locations around the world, including the United States and the Middle East.  Embraer manufactures commercial, executive, and defense aircraft for governmental and private customers throughout the world.  STEVEN, a British national, was an executive responsible for overseeing the generation of sales for a particular Embraer division in regions that included the Middle East.

In approximately 2006, STEVEN learned that the Saudi Arabia Company was interested in purchasing aircraft, and for a period of three years after that STEVEN and a salesperson who reported to him had occasional contact with employees of the Saudi Arabia Company to discuss the potential sale of three Embraer jets.  In late 2009, STEVEN met with an official of the Saudi Arabia Company (the “Saudi Arabia Official”) in London, England.  The Saudi Arabia Official offered to help Embraer win the aircraft contract from the Saudi Arabia Company, and to ensure that the Saudi Arabia Company would buy new – not used – jets from Embraer, in exchange for a payment.  STEVEN agreed to cause Embraer to pay the Saudi Arabia Official $550,000 per aircraft, for a total bribe amount of $1.65 million.

In late 2009 and early 2010, STEVEN developed a plan to use a company based in South Africa (the “South Africa Company”) as a purported agent on the transaction, which would result in Embraer paying the South Africa Company $1.65 million in “finders fees,” when in fact the South African Company would perform no work on the transaction and would be used to facilitate and to disguise the payment to the Saudi Arabia Official.

In early 2010, on the Saudi Arabia Official’s recommendation, a committee at the Saudi Arabia Company approved the purchase of three new aircraft from Embraer for $93 million.  A subsidiary of Embraer also entered into an agreement with the South Africa Company, pursuant to which the South Africa Company would purportedly promote the sale of Embraer aircraft to a subsidiary of the Saudi Arabia Company.  In reality, the South Africa Company provided no services to Embraer other than serving as a conduit to funnel payments to the Saudi Arabia Official.  An Embraer subsidiary subsequently wired $1.65 million to the South Africa Company, in December 2010 and February 2011.  Between February 2011 and April 2011, the South Africa Company wired approximately $1.4 million to bank accounts in Switzerland and Bahrain held by an individual who was acting as an intermediary for the Saudi Arabia Official.

STEVEN also developed a plan to take a portion of the bribe proceeds as a kickback, and ultimately received approximately $130,000 in wire transfers from the South Africa Company in October and December 2011.

STEVEN was later interviewed by an agent of the Federal Bureau of Investigation in December 2014, and falsely stated that a wire transfer he received from the South Africa Company in 2011 was for the purpose of buying real estate in connection with a potential business venture between STEVEN and an executive of the South Africa Company.

The guilty plea entered today follows the execution in October 2016 of a deferred prosecution agreement between the Department of Justice and Embraer, under which Embraer agreed to pay a $107 million penalty as part of a $205 million global resolution to investigations by the Department, the Securities & Exchange Commission, and Brazilian authorities related to corrupt conduct in several countries, including Saudi Arabia.  The agreement acknowledged Embraer’s cooperation with the investigations.

STEVEN, 61, resides in Dubai, United Arab Emirates.  A chart listing the maximum sentences relating to the charges in the Information is below.  As part of his plea agreement, STEVEN is also required to pay forfeiture and restitution.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  STEVEN is scheduled to be sentenced by Judge Nathan on June 21, 2018.

The FBI’s International Corruption Squads, based in Miami, Florida, and Los Angeles, California, investigated the case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.  The Office also appreciates the cooperation and assistance provided by authorities in Brazil, the Dominican Republic, South Africa and Switzerland in this matter.

Count	Charge		Maximum sentence
One	Conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”), 18 U.S.C. § 371		Five years in prison
Two	Violation of the FCPA, 15 U.S.C. §§ 78dd-1 and 78ff(c)(2)(A), and 18 U.S.C. § 2		Five years in prison
Three	Conspiracy to commit wire fraud, 18 U.S.C. § 1349		20 years in prison
Four	Wire fraud, 18 U.S.C. §§ 1343 and 2		20 years in prison
Five	Conspiracy to commit money laundering, 18 U.S.C. § 1956(h)		20 years in prison
Six	Money laundering, 18 U.S.C. §§ 1956(a)(2)(A) and 2		20 years in prison
Seven	False statements, 18 U.S.C. § 1001		Five years in prison

Postal Worker Arrested For Stealing Valuable Items From U.S. Mail

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Special Agent-in-Charge Eileen Neff of the Northeast Area Field Office, U.S. Postal Service Office of Inspector General (“USPS-OIG”), announced the arrest of JOSEFINA SALAS, an employee of the U.S. Postal Service for over eighteen years, on charges of mail theft.  SALAS was presented yesterday in Manhattan federal court before the Honorable Sarah Netburn.

Acting U.S. Attorney Joon H. Kim said:  “During the holiday season when the spirit of giving abounds, Josefina Salas, a postal employee, was allegedly interested only in taking and stealing. Salas allegedly used her access to U.S. mail to steal valuable items from people who trusted their mail would be delivered safely. We thank the U.S. Postal Service for their work to halt postal theft and insure the integrity of the mail.” 

Special Agent-in-Charge of USPS-OIG Eileen Neff said:  “If an employee of the Postal Service abuses their position and the public’s trust, as alleged in this matter, OIG agents thoroughly and vigorously investigate to resolve the situation.”

According to the allegations in the Complaint sworn out in Manhattan federal court:[1]

Over the course of approximately a year, SALAS, who was employed as an elevator operator at the USPS Processing and Distribution Center (“PDC”) located at 341 Ninth Avenue in New York, New York, stole various items from the United States mail, including cash, gift cards, jewelry, clothing, and a phone.  SALAS was previously captured on video using a box-cutter to open mail packages and then stealing the contents of those packages.  SALAS was arrested yesterday at the end of her shift at the PDC. 

SALAS, 66, of the Bronx, New York, is charged with one count of mail theft by a U.S. Postal Service employee, which carries a maximum sentence of 5 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the USPS-OIG.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900, or Wendy.Olsen@usdoj.gov

(link sends e-mail)

For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html. The USPS OIG Hotline can be reached by phone 888-USPS-OIG and online at www.uspsoig.gov. 

The charge contained in the Complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Juan Thompson Sentenced In Manhattan Federal Court To 60 Months In Prison For Cyberstalking And Making Hoax Bomb Threats To JCCs And Other Victim Organizations

Juan Thompson Admitted to Threatening Jewish Community Centers as Part of a Campaign to Harass and Intimidate His Victim.

  Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JUAN THOMPSON was sentenced today by U.S. District Judge P. Kevin Castel to 60 months in prison for cyberstalking and making hoax bomb threats as part of THOMPSON’s campaign to harass and intimidate a particular woman (“Victim-1”).  Over a period of months in 2016 and 2017, THOMPSON, among other things, communicated at least 12 threats to Jewish Community Centers (“JCCs”) and other Victim Organizations in Victim-1’s name and his own name and made false allegations about Victim-1 to Victim-1’s employer.  THOMPSON was arrested by the Federal Bureau of Investigation (“FBI”) on March 3, 2017, and pled guilty before Judge Castel on June 13, 2017.

Acting U.S. Attorney Joon H. Kim said:  “Today, Juan Thompson was held to account and justly punished for his efforts to harass an ex-girlfriend by sending disturbing and dangerous hoax threats to Jewish Community Centers and other organizations across the country in her name.  Thompson’s harassment and threats caused severe distress to both his victim and to Jewish communities around the country.  We thank our partners at the FBI for their excellent work on this important case.”

According to the Complaint, the Information, and statements made at sentencing:

In July 2016, THOMPSON began a months-long campaign of harassment targeting Victim-1 after Victim-1 ended their relationship.  THOMPSON’s conduct culminated with a series of hoax threats, including hoax bomb threats, targeting JCCs, organizations that provide service to and on behalf of the Jewish community, schools, and police departments.

THOMPSON started his campaign of harassment of Victim-1 in 2016.  In July of that year, an email was sent to Victim-1’s employer, which made false allegations about Victim-1, including that she had broken the law, using an internet protocol (“IP”) address that THOMPSON had previously used to access his social media account.  On October 15, 2016, an IP address that traced back to THOMPSON’s residence was used to falsely report that Victim-1 possessed child pornography.  When confronted by law enforcement on November 22, 2016, THOMPSON claimed that his email account had been hacked a few weeks earlier. 

THOMPSON also made at least 12 hoax threats targeting JCCs.  For instance, on February 21, 2017, the Anti-Defamation League (“ADL”) received an emailed threat at their midtown Manhattan office that indicated that “[Victim-1’s name and birthdate] is behind the bomb threats against jews. She lives in nyc and is making more bomb threats tomorrow.”  The next day, the ADL received a phone call claiming that explosive material had been placed in the ADL’s midtown Manhattan office. 

Some of THOMPSON’s threats were made in his own name, as part of an apparent effort to claim that Victim-1 was trying to frame THOMPSON for a crime.  For instance, on or about February 7, 2017, a JCC in Manhattan received an emailed bomb threat from an anonymous email account, which stated: “Juan Thompson [THOMPSON’s birthday] put two bombs in the office of the Jewish center today.  He wants to create Jewish newtown tomorrow.”  The email’s use of the phrase “Jewish newtown” appeared to refer to a December 2012 school shooting in Newtown, Connecticut, in which a gunman murdered 26 victims.

In February 2017, a Twitter account used by THOMPSON (the “Thompson Twitter Account”) was used to accuse Victim-1 of responsibility for the JCC Threats and claim that Victim-1 was trying to frame THOMPSON for her crimes.  For instance, on February 24, 2017, the Thompson Twitter Account posted: “[s]he [Victim-1], though I can’t prove it, even sent a bomb threat in my name to a Jewish center, which was odd given her antisemitic statements.  I got a visit from the FBI.  So now I’m battling the racist FBI and this vile, evil, racist white woman.”  On February 26, 2017, the Thompson Twitter Account posted: “The hatred of Jews goes across all demos.  Ask NYC’s [Victim-1’s employer].  They employ a filthy anti-Semite in [Victim-1].  These ppl are evil.”

In addition to the prison term, THOMPSON, 32, of St. Louis, Missouri, was sentenced to  three years of supervised release.

Mr. Kim praised the outstanding investigative work of the FBI, and thanked the United States Secret Service, New York City Police Department, and Saint Louis Police Department for their ongoing investigative assistance. 

A.G. Schneiderman Announces Unprecedented Consent Decree With NYC Landlord Steven Croman

Consent Decree Forces Croman to Pay $8 Million in Restitution to Tenants – Largest-Ever Monetary Settlement with an Individual Landlord

Over 100 Croman Properties will be Run by New Independent Management for 5 Years; Monitor will Oversee Compliance with Settlement and Report to AG for 7 Years – Longest-Ever Monitorship in a Tenant Harassment Case

Croman Currently Serving a Year in Jail, Paid $5 Million Settlement for Separate Criminal Charges Brought by AG Schneiderman

  New York Attorney General Eric T. Schneiderman announced an unprecedented settlement with Steven Croman, a major New York City landlord, for engaging in illegal conduct, including harassment, coercion, and fraud, to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units.

The consent decree requires Croman to pay $8 million into a Tenant Restitution Fund – the largest-ever monetary settlement with an individual landlord. The settlement also requires over 100 Croman residential properties to be run by a new, independent management company with no ties to Croman, for five years – the longest-ever term for independent management in OAG history. Moreover, the settlement requires seven years of a monitor who will oversee compliance with the terms of the consent decree and provide regular reporting to the Attorney General – the longest-ever monitorship required in any tenant harassment case.

Croman is currently serving one year in jail and paid a separate $5 million settlement as a result of criminal charges brought by Attorney General Schneiderman.

“Over and over again, Steven Croman acted as though he was above the law, putting profits before his tenants’ safety and wellbeing. Earlier this year, we put Mr. Croman in jail for an elaborate scheme that was intended to push out rent-regulated tenants. And today, we’re ensuring tenants get the restitution and protections they deserve – including the largest-ever settlement with an individual landlord, and unprecedented independent management and monitoring at his properties,” said Attorney General Schneiderman. “New Yorkers are already struggling with high rents. We have zero tolerance for those who try to boost their bottom line by disregarding the welfare of their tenants. My office will continue to ensure that all landlords play by the rules, and aggressively pursue anyone who doesn’t to the fullest extent of the law.”

Eligible tenants will be able to apply for restitution; the Office of the Attorney General (OAG) will announce details of a claims process early next year. Tenants will be eligible for restitution if they are or were a tenant in a rent-stabilized or rent-controlled apartment owned by Croman between July 1, 2011 and the date of the agreement (December 20, 2017); they received a buyout of less than $20,000, not including any amount that purported to cover rent or arrears; and no other tenant in their apartment received money from the restitution fund.

The Attorney General’s office will approve both the independent management company and the monitor. The independent management company will oversee operations and institute new policies at the Croman properties to ensure full compliance with the law and correction of all past violations. It will also post a comprehensive set of Tenants Rights in every building it manages.  The monitor will provide quarterly reports to the Attorney General, which will include at minimum any complaints received from tenants and actions taken; the total number of rent-regulated apartments that became deregulated during the reporting period, the reason for deregulation, and all supporting documents; and the monitor’s assessment as to whether Croman has complied with the consent decree.

The consent decree also ensures that Anthony Falconite – another defendant in the Attorney General’s lawsuit whom Croman allegedly referred to as his “secret weapon” in intimidating rent-regulated tenants – will have no interaction with any Croman tenants.

In addition to the $8 million Tenant Restitution Fund, Croman is responsible for covering the costs of the management company and monitor, as well as any outstanding government fines.

Click here to read the consent decree.

In May 2016, Attorney General Schneiderman filed a civil lawsuit against Croman and Falconite for allegedly engaging in illegal, fraudulent, and deceptive conduct in connection with Croman’s real-estate business. The lawsuit alleged that Croman directed an illegal operation that wielded harassment, coercion, and fraud to force rent-regulated tenants out of their apartments and convert their apartments into highly profitable market-rate units. The lawsuit further alleged that Croman deployed Falconite, a former New York City police officer, to frighten and intimidate rent-regulated tenants into surrendering their apartments.

The civil lawsuit, which was the product of an independent investigation, alleged that Croman used the following illegal tactics to push working-class and low-income tenants out of their homes:

• Harassing tenants into surrendering their apartments—and their rights under the rent-stabilization laws—in exchange for “buyouts,” which are often no more than a few thousand dollars or a few months of free rent.
• Incentivizing his employees and agents to obtain buyouts, at the expense of their other responsibilities. Employees allegedly referred to rent-regulated tenants as “targets” and competed with each other to obtain the most buyouts. In one characteristic exchange, Falconite allegedly wrote to a property manager that obtaining buyouts was a “team sport,” to which the property manager responded, “I know that!! Who’s our next target? We have to start lining them up!!!”
• Pressuring tenants into surrendering their apartments by repeatedly filing baseless lawsuits against them. In internal emails, company employees acknowledged that such lawsuits would “aggravate” tenants or pressure them to accept buyouts. In some cases, Croman’s employees allegedly created a false record for litigation by refusing to acknowledge receipt of tenants’ rent checks and then suing them for unpaid rent—a deliberate fraud upon the court.

The lawsuit also alleged that Falconite, whom Croman referred to as his “secret weapon,” used deceptive and frightening tactics to intimidate rent-regulated tenants, including using false pretenses to gain access to tenants’ apartments, often posing as a repairman or building manager.

In addition, the lawsuit alleged that Croman, in his rush to flip vacant rent-regulated apartments into high-rent units, presided over a disturbing pattern of illegal and hazardous construction. The lawsuit alleged numerous examples of illegal construction, including the following:

• On at least 175 occasions, Croman’s companies allegedly performed construction without obtaining permits.
• Croman allegedly regularly directed his employees to flout stop-work orders and conceal unlawful construction from Department of Building inspectors.
• Croman allegedly filed false documents with the Department of Buildings on dozens of occasions in an attempt to avoid stricter oversight of his construction projects and elude tenant protection measures.
• Croman and his companies allegedly violated lead-safety laws repeatedly, exposing numerous tenants to lead-contaminated dust. On more than 20 occasions, the Department of Health (DOH) found impermissibly high levels of lead dust in Croman’s buildings, including levels up to 65 times the legal threshold.
• Croman allegedly defied DOH orders to address the lead hazards. On one occasion, after DOH ordered Croman to stop all work and begin lead-abatement measures, Croman directed his property manager to postpone the lead abatement so that the construction could continue.
• Croman’s alleged illegal construction had devastating consequences for tenants. As alleged in the lawsuit, DOH identified lead-dust hazards in the apartment of a tenant who cared for her young grandsons, ages three and nine, both of whom were disabled. The tenant had to move her grandsons out of the apartment because of the dangers posed by the construction and lead dust and was forced to sue Croman to obtain repairs.

In addition, Croman allegedly repeatedly defied court orders to make repairs and address intolerable living conditions. The lawsuit alleged that throughout his portfolio, Croman had been issued hundreds of “hazardous” and “immediately hazardous” violations, which he had failed to correct. The suit further alleged that, on six occasions, the city has sued Croman’s companies for falsely certifying that they corrected violations on his properties.

In October, Croman was sentenced to a year in jail and paid a $5 million tax settlement following separate criminal charges brought by Attorney General Schneiderman for fraudulent refinancing of loans and tax fraud. Rarely, if ever, has a landlord been sentenced to serve time in jail for engaging in these practices.

Earlier this year, the Attorney General Schneiderman formally introduced new legislation aimed at holding the city’s most unscrupulous landlords criminally accountable for Harassment of a Rent Regulated Tenant. Current state law demands prosecutors reach an inexplicably high bar in order to criminally charge landlords with that crime—which is why in the past twenty years, not a single landlord has ever been convicted of the crime of Harassment of a Rent Regulated Tenant.

The Attorney General’s legislation would set a more reasonable standard that removes the need to prove physical injury to a tenant, and opens the door to Harassment of a Rent Regulated Tenant prosecutions arising out of more commonplace and insidious tactics, such as turning off heat and hot water, exposing young children to lead dust, and making rent-stabilized buildings deliberately uninhabitable for current tenants and their families.

The Attorney General has taken a number of other steps to combat tenant harassment and illegal practices by landlords across New York City, including:

• Enhancing and streamlining the office’s resources to combat tenant harassment, deceptive lending practices, deed theft, bank fraud, and other housing issues facing constituents.
• Filing additional felony charges against a landlord for committing mortgage fraud.
• Forming the Tenant Harassment Prevention Task Force with city and state officials.

The Attorney General would like to thank the NYC Department of Buildings, NYC Department of Housing Preservation and Development, NYC Department of Health, and NY State Homes and Community Renewal for vital assistance in this case.