Schneiderman Announces Indictment of NYC Landlord in $5 Million Mortgage Fraud Scheme

New York Attorney General Eric Schneiderman speaking at New York Law School. Image credit: CityLaw

A New York City landlord was indicted for mortgage fraud scheme in Lower Manhattan, stemming from tenant harassment investigation. On April 6, 2017, New York State Attorney General Eric T. Schneiderman announced the indictment of Dean Galasso, a New York City landlord. Galasso was indicted on six felony charges in relation to an alleged scheme to fraudulently obtain a multi-million-dollar mortgage to finance the acquisition of a rental building. Galasso faces one count of Grand Larceny, two counts of Forgery, two counts of Criminal Possession of a Forged Instrument, and one count of Falsifying Business Records. If convicted, Galasso could face up to 25 years in prison.

The indictment was a result of an investigation led by the Tenant Harassment Prevention Task Force, which was created in February 2015. That investigation resulted in a referral of the criminal case to the Attorney General’s Office from the New York State Division of Homes and Community Renewal. According to the indictment, Galasso submitted false mortgage documents to Investors Bank to obtain a $5,025,000 mortgage to purchase 43 Essex Street, a ten-unit rental building in Lower Manhattan. Galasso also allegedly forged leases in an effort to support the false information contained in the rent roll.

“Bad landlords are now on notice: if you attempt to break the law, we will find you and prosecute you to the fullest extent of the law,” Attorney General Schneiderman said. “Our task force will continue to identify, investigate, and prosecute those who try to game the system.”

“We will use every tool at our disposal, including the criminal courts, to go after bad landlords who abuse their authority and hurt tenants,” Mayor Bill de Blasio said. “I thank Attorney General Schneiderman, DOB and HPD and our agency task force partners as we move to clean up the fraud and greed that hurts New York families.”

This incident typifies a crisis of tenant harassment growing at an exponential rate in New York City. Often this issue is related to larger illegal behavior such as predatory equity or fraud as in the Galasso case. In two weeks, the City Council will consider a package of bills to strengthen tenant protections from harassing landlords and building owners. Such protections could stem tenant harassment and may lead to the prosecution of larger crimes.

For CityLand’s prior coverage of that legislation, click here.

By: Jonathon Sizemore (Jonathon is the CityLaw Fellow and a New York Law School Graduate, Class of 2016).

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