Steve Croman, a Manhattan landlord who rose to infamy trying to force bad buyout deals on his tenants, says this time he’s the one who got hosed.
Croman claims that his crooked attorney, convicted felon Mitch Kossoff, steered him into signing a one-sided property management agreement with a real estate executive who had a secret financial arrangement with the cash-strapped lawyer.
While Croman was serving a jail sentence in 2018 after pleading guilty to multiple felonies, Kossoff helped negotiate a property management agreement with Michael Besen of Besen Associates to oversee 100 properties owned by the landlord as part of a consent decree.
Instead, Croman claims that Kossoff, who himself was sentenced to up to 13.5 years in prison earlier this year for stealing more than $14 million from clients, negotiated a bad deal because Besen was giving him what amounted to a $1 million interest-free loan, according to a lawsuit filed Thursday in Manhattan Supreme Court.
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Kossoff’s “financial entanglement with Besen meant that it was an illusion” that the attorney had negotiated the agreement at arms-length, Croman claimed in court papers.
The deal, he said, was riddled with bad terms.
Croman alleges Kossoff convinced him to agree to a fixed-fee arrangement with Besen’s management company, New York City Management, rather than a more standard one based on a percentage of rents collected.
This hit Croman particularly hard during the first year of the pandemic, when vacancies concentrated mostly in his free-market apartments rose to 17 percent, but the management fees didn’t go down.
Croman said he was also making payments for NYCM’s offices, which occupied two floors in a building on West 38th Street owned by Besen. Over the life of the property management agreement, Croman said, the number of buildings Besen managed fell by 40 percent, but overhead costs including rent for the office space didn’t fall accordingly.
Croman pushed back on the costs to no avail, because the side deal “established a hold on Kossoff that kept him from taking more aggressive action” to get a handle on the expenses.
The Attorney General’s office never would have approved Besen as property manager if the office knew of the financial arrangement with Kossoff, Croman said. He is suing for unspecified damages.
Besen didn’t respond to a request for comment and Croman’s attorney, Cozen O’Connor’s Ken Fisher, declined to comment.
The complaint is just the latest drama for Croman, who served eight months of a one-year prison sentence after pleading guilty in 2017 to three counts of grand larceny, tax fraud, and mortgage fraud. Two weeks ago he put four Kips Bay apartment buildings into bankruptcy, arguing he was a victim of predatory lenders.
Besen, for his part, has had his own battles. In 2018 he had an ugly breakup with former partner Amit Doshi, who decamped from Besen & Associates for Meridian Investment Sales.