1 00:00:02,310 --> 00:00:08,270 In this episode of American Greed, buying a winning lottery ticket is a 2 00:00:08,270 --> 00:00:09,270 come true. 3 00:00:09,450 --> 00:00:10,329 I'm here! 4 00:00:10,330 --> 00:00:13,770 We have the winning ticket right here! People are fascinated by this case 5 00:00:13,770 --> 00:00:16,010 because everyone's fascinated by the lottery. 6 00:00:16,250 --> 00:00:21,770 When the winner of a $16 million jackpot refuses to identify himself, officials 7 00:00:21,770 --> 00:00:23,570 suspect a rigged game. 8 00:00:23,950 --> 00:00:28,290 Ding, ding, ding. Something is screwing. It turns into the biggest lottery scam 9 00:00:28,290 --> 00:00:29,570 in American history. 10 00:00:29,950 --> 00:00:31,090 He figured out a way. 11 00:00:31,740 --> 00:00:32,900 To keep winning the lottery. 12 00:00:33,940 --> 00:00:38,260 And later, New York City's housing crisis hits home. 13 00:00:38,940 --> 00:00:40,840 Tenants are not seen as human beings. 14 00:00:41,100 --> 00:00:43,280 They're standing in the way of dollar signs. 15 00:00:43,720 --> 00:00:46,040 The case of the landlord from hell. 16 00:00:46,560 --> 00:00:50,960 He cared nothing about making 23 families homeless. 17 00:00:51,360 --> 00:00:56,300 Stephen Croman rules a Manhattan real estate empire. More money, more 18 00:00:57,040 --> 00:01:01,560 He wanted it on. But prosecutors have other accommodations in mind for him. 19 00:01:15,520 --> 00:01:21,640 It's Christmastime 2010 in Des Moines, and Iowans are feeling the holiday 20 00:01:22,680 --> 00:01:25,020 The hot lotto jackpot keeps growing. 21 00:01:25,550 --> 00:01:31,410 Blowing past the $15 million mark, it's one of the Hawkeye State's most popular 22 00:01:31,410 --> 00:01:32,450 lottery games. 23 00:01:33,130 --> 00:01:37,690 Winning numbers right here. And part of an $80 billion a year industry. 24 00:01:38,310 --> 00:01:43,750 Hot Lotto is a game that you pick five different white balls and one hot ball. 25 00:01:43,930 --> 00:01:44,929 Winning tickets. 26 00:01:44,930 --> 00:01:48,090 It was a big, big jackpot at the time. So people were getting excited. 27 00:01:48,290 --> 00:01:50,390 Big, big, big, big, big winner. 28 00:01:50,590 --> 00:01:53,090 And as jackpots rise, more and more people jump in. 29 00:01:53,530 --> 00:01:58,430 Anyone able to choose the correct six numbers will have a very merry 30 00:01:59,950 --> 00:02:06,290 On December 23rd, a heavyset man in a black jacket, cap, and hoodie walks up 31 00:02:06,290 --> 00:02:09,949 the counter of a quick -trip convenience store off Interstate 80. 32 00:02:11,390 --> 00:02:15,730 You can't quite see his face. You can hear his voice a little bit. 33 00:02:16,010 --> 00:02:17,950 Hello. Can I wear your hat, dog? 34 00:02:18,230 --> 00:02:19,230 Yes, sir. 35 00:02:21,870 --> 00:02:22,870 373. 36 00:02:27,870 --> 00:02:32,390 This man buys the ticket, goes out to his SUV, drives away. 37 00:02:33,930 --> 00:02:40,550 A few days later, September 29, 2010, it's announced that the winning lotto 38 00:02:40,550 --> 00:02:44,150 ticket was bought at this quick trip gas station in Des Moines, Iowa. 39 00:02:44,850 --> 00:02:47,970 The prize is worth $16 .5 million. 40 00:02:48,990 --> 00:02:51,570 There's a buzz in the crisp winter air. 41 00:02:52,320 --> 00:02:55,700 Somewhere out there is a heck of a ticket worth $16 .5 million. 42 00:02:56,360 --> 00:02:57,620 Who's the lucky winner? 43 00:02:58,560 --> 00:03:01,800 People love to talk about the lottery. They love to play the lottery. It's just 44 00:03:01,800 --> 00:03:06,680 that dream chance that you could achieve the American dream without having to do 45 00:03:06,680 --> 00:03:07,680 anything. 46 00:03:08,240 --> 00:03:13,800 Days pass as lottery officials wait for someone to come forward and wait. 47 00:03:15,380 --> 00:03:16,600 Someone has the ticket. 48 00:03:16,940 --> 00:03:19,380 The Iowa Lottery wants to give away the money. 49 00:03:20,130 --> 00:03:23,670 We want someone to commence. We can show you the money, give you the money. 50 00:03:25,150 --> 00:03:29,490 Most people wait a little while to claim their jackpot because they want to talk 51 00:03:29,490 --> 00:03:33,550 to a financial advisor and talk to a lawyer. But then this one really took a 52 00:03:33,550 --> 00:03:38,470 crazy turn because people didn't show up after 30 days, didn't show up after six 53 00:03:38,470 --> 00:03:39,470 months. 54 00:03:39,790 --> 00:03:44,270 Lottery officials remind the public there's a one -year deadline to claim 55 00:03:44,270 --> 00:03:45,269 prize. 56 00:03:45,270 --> 00:03:48,130 The clock ticks down until... 57 00:03:48,890 --> 00:03:54,090 It was only an hour and a half left when, in fact, we had two lawyers walk 58 00:03:54,090 --> 00:03:56,370 and said, ladies and gentlemen, we have the winning ticket. 59 00:03:56,930 --> 00:03:59,170 Yeah, this little baby we've been looking for for a while. 60 00:03:59,590 --> 00:04:02,570 I'll hold it for a second. We're very excited to have this ticket. 61 00:04:02,770 --> 00:04:08,050 The lawyers are hired to represent a trust based in Belize, a Central 62 00:04:08,050 --> 00:04:09,050 tax haven. 63 00:04:09,390 --> 00:04:10,369 Ding, ding, ding. 64 00:04:10,370 --> 00:04:15,870 Something is screwy. So we said we're not going to pay unless we know who 65 00:04:15,870 --> 00:04:17,029 it. Tell us who bought the ticket. 66 00:04:17,800 --> 00:04:20,560 The mystery client is unwilling to identify himself. 67 00:04:20,980 --> 00:04:25,480 That's fine in other states where winners can claim jackpots anonymously. 68 00:04:26,640 --> 00:04:28,880 But it doesn't fly in Iowa. 69 00:04:29,840 --> 00:04:34,360 Ladies and gentlemen, the hot lotto jackpot claim has been withdrawn. 70 00:04:34,720 --> 00:04:41,700 This man's anonymity was worth $16 .5 million for him. They didn't know 71 00:04:41,700 --> 00:04:45,480 that a crime had been committed. They just knew that there was a puzzle. 72 00:04:46,160 --> 00:04:48,120 No one ever claims the prize. 73 00:04:48,680 --> 00:04:53,060 This puzzle spurs the Iowa Attorney General and Division of Criminal 74 00:04:53,060 --> 00:04:55,520 Investigation to launch a probe. 75 00:04:55,940 --> 00:05:02,320 It stalls for three years until an ambitious prosecutor named Rob Sand gets 76 00:05:02,320 --> 00:05:03,320 case. 77 00:05:03,380 --> 00:05:10,120 My boss just handed me the file and said something like happy birthday. Everyone 78 00:05:10,120 --> 00:05:14,400 in the office knew that this was something that was basically a pain. 79 00:05:14,970 --> 00:05:18,150 Sand specializes in financial crimes. 80 00:05:19,150 --> 00:05:23,430 I think of them as crimes against gratitude, and they're crimes of greed. 81 00:05:24,690 --> 00:05:30,870 His brothers -in -law call him Baby Jesus because, one, he's a bit of a 82 00:05:30,990 --> 00:05:32,910 and two, he can't grow a beard. 83 00:05:33,560 --> 00:05:34,560 Just like baby Jesus. 84 00:05:35,000 --> 00:05:39,300 Sand considers one piece of evidence his best shot at solving the case. 85 00:05:40,020 --> 00:05:42,880 Surveillance video of the winning ticket buyer. 86 00:05:43,340 --> 00:05:47,460 We were going to have to release that video and provide people with a way to 87 00:05:47,460 --> 00:05:48,459 submit tips. 88 00:05:48,460 --> 00:05:51,940 Because if we had held that back, you never know who might have been out 89 00:05:52,340 --> 00:05:56,920 Investigators post an online news release with a link to the 74 -second 90 00:05:56,920 --> 00:05:59,200 appealing to the public for help. 91 00:05:59,460 --> 00:06:01,660 The video itself is actually very blurry. 92 00:06:02,170 --> 00:06:04,770 You really can't make out who that man might be. 93 00:06:04,970 --> 00:06:08,690 And yet they receive a stunning series of tips within days. 94 00:06:09,350 --> 00:06:15,650 It's not the face or the look of the man that rings the bell. It's his voice. 95 00:06:17,370 --> 00:06:24,250 He has this very distinct Texas twang that could only belong to 96 00:06:24,250 --> 00:06:26,350 one man. His name's Eddie Tipton. 97 00:06:26,970 --> 00:06:31,250 51 -year -old Eddie Tipton is one of the most respected people in the lottery 98 00:06:31,250 --> 00:06:37,370 business. He works at the multi -state lottery association called Muscle and is 99 00:06:37,370 --> 00:06:38,930 prominently featured on its website. 100 00:06:39,650 --> 00:06:44,830 Muscle supervises day -to -day functions of lotteries in three dozen states and 101 00:06:44,830 --> 00:06:47,450 territories, including Iowa. 102 00:06:47,890 --> 00:06:49,610 He was a computer expert. 103 00:06:50,160 --> 00:06:53,480 He would do their security audits. He would visit other lotteries and help 104 00:06:53,480 --> 00:06:56,280 install machines and help make sure that everything was clear. 105 00:06:56,520 --> 00:07:01,200 In a television interview just months earlier, Tipton stresses the importance 106 00:07:01,200 --> 00:07:02,300 password security. 107 00:07:03,120 --> 00:07:07,800 Security's always been an add -on, and when something happens, it's too late. 108 00:07:07,880 --> 00:07:08,880 Cat's out of the bag. 109 00:07:09,120 --> 00:07:13,040 Tipton is popular with work colleagues like Jason Maher. 110 00:07:13,640 --> 00:07:18,800 He was a very happy, large, boisterous guy. You'd always know he was in the 111 00:07:18,800 --> 00:07:19,800 room. 112 00:07:19,840 --> 00:07:20,840 He had a very distinct voice. 113 00:07:21,620 --> 00:07:27,300 He'd walk into my office, put his hand down on my shoulder and say, Hey, man, I 114 00:07:27,300 --> 00:07:29,400 just want you to know I'm your friend. 115 00:07:29,700 --> 00:07:31,400 You know, with his little southern accent. 116 00:07:32,860 --> 00:07:37,480 Tipton grew up in a small Texas town near Houston called Flatonia. 117 00:07:37,880 --> 00:07:40,920 He shows a flair for computers early on. 118 00:07:41,760 --> 00:07:46,640 His brothers and sister were playing outside on the family farm growing up. 119 00:07:47,100 --> 00:07:50,260 Eddie would be inside fiddling with computers. We went to school for 120 00:07:50,260 --> 00:07:52,600 technology at the University of Houston. 121 00:07:53,620 --> 00:07:58,580 Tipton builds a solid reputation at Muscle, earning a promotion to 122 00:07:58,580 --> 00:07:59,920 security director. 123 00:08:00,780 --> 00:08:05,820 It comes with a six -figure salary, but Tipton isn't a big spender. 124 00:08:06,220 --> 00:08:12,840 Eddie was never a glamorous person. He had a truck. He had 300 ,000 miles on 125 00:08:12,960 --> 00:08:14,080 Frugal kind of guy. 126 00:08:14,890 --> 00:08:20,110 When Tipton builds a 5 ,000 -square -foot house outside Des Moines, it's 127 00:08:20,110 --> 00:08:21,690 with his own hands. 128 00:08:22,610 --> 00:08:25,530 He was always trying to get people to come visit his house. 129 00:08:25,750 --> 00:08:29,990 He lived out in the middle of a field in a huge castle, just massive, being it 130 00:08:29,990 --> 00:08:30,990 was a hotel. 131 00:08:31,370 --> 00:08:36,830 Though close to his extended clan back in Texas, the divorcee yearns for a 132 00:08:36,830 --> 00:08:38,010 family of his own. 133 00:08:38,270 --> 00:08:39,669 He was a very lonely person. 134 00:08:40,770 --> 00:08:42,270 Eddie always wanted a family. 135 00:08:42,809 --> 00:08:44,010 He built this whole thing. 136 00:08:44,380 --> 00:08:46,560 from scratch, for a family. 137 00:08:46,820 --> 00:08:51,360 And I told him he should get the family first, then the massive house. 138 00:08:52,040 --> 00:08:53,840 Tipton's dream must wait. 139 00:08:54,600 --> 00:09:00,060 Authorities arrest him in January 2015 for cheating the very industry he's 140 00:09:00,060 --> 00:09:01,320 entrusted with protecting. 141 00:09:03,380 --> 00:09:10,280 Next on American Greed, Eddie Tipton stands trial, but what else is he 142 00:09:10,280 --> 00:09:11,280 hiding? 143 00:09:11,480 --> 00:09:13,440 You've got a money tree in your backyard. 144 00:09:13,700 --> 00:09:15,160 You can't help but keep looking at it. 145 00:09:28,640 --> 00:09:33,840 Authorities suspect Eddie Tipton of rigging an Iowa lottery worth $16 146 00:09:35,470 --> 00:09:41,350 The 52 -year -old stands trial in July 2015 on two counts of felony fraud. 147 00:09:41,730 --> 00:09:47,110 I thought that I had a good case. I also thought and knew that a jury might 148 00:09:47,110 --> 00:09:53,810 disagree. To win the case, Prosecutor Rob Sand must convince jurors it's 149 00:09:53,810 --> 00:09:57,430 buying the winning lottery ticket in this surveillance video. 150 00:10:03,970 --> 00:10:09,830 Tipton's defense attorney, Dean Stowers, argues it can't be his client for a 151 00:10:09,830 --> 00:10:10,830 very simple reason. 152 00:10:11,210 --> 00:10:16,030 Eddie Tipton didn't have a beard at that time, and we had photographs and other 153 00:10:16,030 --> 00:10:17,210 evidence to support that. 154 00:10:18,190 --> 00:10:21,510 Tipton's brother, Tommy, testifies for Eddie. 155 00:10:28,690 --> 00:10:32,270 Prosecutors called Eddie's friend, Jason Maher, as a witness. 156 00:10:33,320 --> 00:10:37,780 There's no other guy that could possibly have this guy's voice, have the same 157 00:10:37,780 --> 00:10:42,840 height, have the same build, be the same size as Eddie. 158 00:10:43,160 --> 00:10:48,440 The case boils down to whether Eddie tampered with equipment to rig the game. 159 00:10:48,680 --> 00:10:54,260 The IOMA lottery uses computers equipped with random number generators to pick 160 00:10:54,260 --> 00:10:55,260 winning numbers. 161 00:10:55,700 --> 00:10:59,520 The machines are sealed and operated a few miles away at Muscle. 162 00:10:59,980 --> 00:11:04,540 the multi -state lottery association where Tipton worked for a decade. 163 00:11:05,760 --> 00:11:08,900 Drawing these numbers is like launching a nuclear missile. 164 00:11:09,480 --> 00:11:11,320 They have a small room. 165 00:11:11,540 --> 00:11:14,760 That room is under constant camera surveillance. 166 00:11:15,520 --> 00:11:20,420 When they go in, there's two computers, both in locked glass boxes. 167 00:11:21,320 --> 00:11:25,200 Sand theorizes Eddie snuck into the room where they draw the numbers and 168 00:11:25,200 --> 00:11:27,760 installed malicious software with a flash drive. 169 00:11:28,160 --> 00:11:30,740 It allowed him to predict the winning numbers. 170 00:11:30,980 --> 00:11:35,040 The computers that had drawn the winning numbers had been wiped. 171 00:11:35,260 --> 00:11:37,200 There was nothing left to go off of on them. 172 00:11:37,660 --> 00:11:41,200 What I was doing was building a case off of circumstantial evidence that he had 173 00:11:41,200 --> 00:11:41,999 done it. 174 00:11:42,000 --> 00:11:47,020 Defense attorney Stowers attacks the state's theory, likening it to a 175 00:11:47,020 --> 00:11:48,320 movie gone bad. 176 00:11:48,940 --> 00:11:52,900 He calls it the Mission Impossible theory, where Eddie's sneaking into the 177 00:11:52,900 --> 00:11:57,420 room being Tom Cruise and trying to stick this into the computer and take 178 00:11:57,420 --> 00:11:58,420 the computer. 179 00:11:58,840 --> 00:12:02,780 Stowers can't hide his contempt for the prosecution's case. 180 00:12:03,220 --> 00:12:07,600 This case is like Keystone Cops being in charge of an investigation, and 181 00:12:07,600 --> 00:12:09,360 sometimes the Keystone Cops... 182 00:12:10,040 --> 00:12:11,240 get their man anyway. 183 00:12:11,640 --> 00:12:17,300 How is it that he won the biggest random number generated game that muscle runs 184 00:12:17,300 --> 00:12:19,700 at one of its record jackpot levels? 185 00:12:19,980 --> 00:12:26,140 There's too much going on for people to think that this was just random luck. 186 00:12:27,760 --> 00:12:32,980 The jury find the defendant, Edward Tippin, guilty of fraud as alleged in 187 00:12:32,980 --> 00:12:37,040 one. The judge sentences Eddie to 10 years in prison. 188 00:12:38,010 --> 00:12:42,330 He's free pending appeal when news reporters catch up to him for his 189 00:12:42,890 --> 00:12:43,890 Shock. 190 00:12:45,130 --> 00:12:46,130 That's it. 191 00:12:46,230 --> 00:12:50,230 It seemed the hot lotto scandal was nearing an end. 192 00:12:50,810 --> 00:12:52,410 But it was only the beginning. 193 00:12:53,690 --> 00:12:54,690 Trial's done. 194 00:12:54,750 --> 00:12:59,090 They find out there's all these other tickets. And I think that's where things 195 00:12:59,090 --> 00:13:00,470 really get interesting. 196 00:13:01,390 --> 00:13:06,030 Sand has barely boxed up his trial exhibits when he gets a phone call that 197 00:13:06,030 --> 00:13:07,230 changes everything. 198 00:13:08,190 --> 00:13:14,590 That phone call was a man from Texas who asked me in a deep Texas drawl, did you 199 00:13:14,590 --> 00:13:16,830 all know that Eddie Tipton's brother won the lottery? 200 00:13:17,510 --> 00:13:19,950 Maybe about ten years ago, out west somewhere. 201 00:13:20,350 --> 00:13:25,670 It turns out Eddie's brother, Tommy, a former deputy sheriff and justice of the 202 00:13:25,670 --> 00:13:29,710 peace from Texas, had won the Colorado lottery in 2005. 203 00:13:31,040 --> 00:13:35,320 He claimed more than a half million dollars in prize money through an 204 00:13:35,320 --> 00:13:36,320 acquaintance. 205 00:13:36,780 --> 00:13:39,980 Big hat, big belt buckle, loud voice. 206 00:13:40,640 --> 00:13:43,460 I think as they say in Texas, all hat, no cattle. 207 00:13:44,140 --> 00:13:46,780 Sand's team widens the investigation. 208 00:13:47,600 --> 00:13:52,160 And there were always questions in the back of our head as to whether or not 209 00:13:52,160 --> 00:13:53,920 there were others out there. 210 00:13:54,780 --> 00:13:58,560 Reason being, you almost never catch a financial brook. 211 00:13:59,500 --> 00:14:03,460 the first time they're committing their act. They compile a spreadsheet of 45 212 00:14:03,460 --> 00:14:08,340 ,000 winning lottery tickets spread across the country and comb through 213 00:14:08,340 --> 00:14:11,640 and LinkedIn pages for any tie to Eddie Tipton. 214 00:14:12,220 --> 00:14:15,520 Rob Sand and his investigators start making all the connections. 215 00:14:15,800 --> 00:14:19,300 There's a connection to a ticket in Colorado back in 2005. 216 00:14:19,520 --> 00:14:23,040 There's a connection to a ticket in Oklahoma, in Kansas, in Wisconsin. 217 00:14:23,660 --> 00:14:28,920 The winner of the Wisconsin Megabucks in December 2007 just happens to be 218 00:14:28,920 --> 00:14:31,320 Eddie's close friend, Robert Rhodes. 219 00:14:31,680 --> 00:14:35,300 Robert Rhodes was an incredibly successful businessman in Texas. 220 00:14:35,620 --> 00:14:37,780 He had really made a name for himself. 221 00:14:38,700 --> 00:14:41,020 Robert Rhodes was also the man. 222 00:14:41,370 --> 00:14:47,530 When Eddie Tipton had a $16 .5 million ticket in Iowa, Eddie Tipton felt that 223 00:14:47,530 --> 00:14:51,470 could trust him and pass him this ticket and say, let's figure out a way to 224 00:14:51,470 --> 00:14:52,470 claim this. 225 00:14:52,810 --> 00:14:57,750 Investigators uncover a conspiracy stretching across America's heartland. 226 00:14:58,170 --> 00:15:03,330 So after Rob Sand, fellow investigators look over all these possible winning 227 00:15:03,330 --> 00:15:07,880 tickets. What they find, six winning tickets in five different states over 228 00:15:07,880 --> 00:15:08,880 course of ten years. 229 00:15:09,000 --> 00:15:12,620 But how exactly does the gamer gain the system? 230 00:15:12,980 --> 00:15:17,700 We are going to need to know exactly what happened from Eddie himself. 231 00:15:19,700 --> 00:15:24,900 Next on American Greed, will Eddie Tipton finally come clean? 232 00:15:25,280 --> 00:15:27,220 Mr. Tipton, what do you have to tell me, sir? 233 00:15:43,080 --> 00:15:47,800 Iowa authorities suspect Eddie Tipton, his brother Tommy, and close friend 234 00:15:47,800 --> 00:15:53,060 Robert Rhodes of running the biggest lottery scam in American history. The 235 00:15:53,060 --> 00:15:59,440 alleged conspiracy spanned a decade, five states, and $25 million in 236 00:15:59,440 --> 00:16:03,800 jackpots. It was the way that it stretched across multiple states. It was 237 00:16:03,800 --> 00:16:07,700 way that it stretched so far back in time. Everything about it was unique. 238 00:16:08,190 --> 00:16:12,930 Now investigators are closer than ever to solving the mystery of how Eddie 239 00:16:12,930 --> 00:16:17,370 pulled it off. We knew that whatever Eddie had done had something to do with 240 00:16:17,370 --> 00:16:18,369 draw dates. 241 00:16:18,370 --> 00:16:23,610 The answer is hidden inside computers Eddie programmed at the Multistate 242 00:16:23,610 --> 00:16:24,610 Association. 243 00:16:25,350 --> 00:16:29,790 Muscle oversees games in three dozen states and territories. 244 00:16:30,290 --> 00:16:34,430 A lot of what he would do would be getting these new lottery machines in 245 00:16:35,100 --> 00:16:40,220 and sending them out to states. And that means Eddie essentially has the keys to 246 00:16:40,220 --> 00:16:40,939 the kingdom. 247 00:16:40,940 --> 00:16:46,300 Random number generators used in the Iowa lottery back in 2010 are of little 248 00:16:46,300 --> 00:16:47,500 help to investigators. 249 00:16:48,080 --> 00:16:53,740 The computers that had drawn the winning numbers had been wiped to Department of 250 00:16:53,740 --> 00:16:55,020 Defense standards three times. 251 00:16:55,240 --> 00:16:57,260 There was nothing left to go off of on them. 252 00:16:57,690 --> 00:17:03,650 But Wisconsin, where Robert Rhodes had won a $2 million megabucks in 2007, is 253 00:17:03,650 --> 00:17:04,650 another story. 254 00:17:05,910 --> 00:17:10,410 Investigators recover computers from storage that Eddie had personally 255 00:17:10,410 --> 00:17:11,430 years earlier. 256 00:17:12,450 --> 00:17:16,849 Forensic analysis reveals a tiny code buried in the software. 257 00:17:17,550 --> 00:17:22,130 This was a big mystery that had gone on for over a decade, and that was the 258 00:17:22,130 --> 00:17:22,848 smoking gun. 259 00:17:22,849 --> 00:17:26,390 The amazing part of this is this isn't some genius computer code. 260 00:17:27,390 --> 00:17:32,430 easily available on the internet. He was able to find this piece of code, insert 261 00:17:32,430 --> 00:17:36,890 it into these machines, and bypass the randomness of the lottery to make it 262 00:17:36,890 --> 00:17:42,370 predictable. The code allows Eddie to predict winning numbers on three days of 263 00:17:42,370 --> 00:17:43,370 the year. 264 00:17:43,490 --> 00:17:49,430 May 27th, November 23rd, and December 29th. 265 00:17:50,410 --> 00:17:56,460 If you could have the time machine to go into the future two weeks, Wouldn't 266 00:17:56,460 --> 00:17:58,980 that be the first thing you'd do, is you'd find out what the winning lottery 267 00:17:58,980 --> 00:18:02,960 ticket is, come back to now, and then buy it? That's what Eddie had. He made a 268 00:18:02,960 --> 00:18:03,960 time machine. 269 00:18:04,400 --> 00:18:09,260 Eddie brings his brother Tommy and good friend Robert Rhodes along for the ride. 270 00:18:10,320 --> 00:18:13,320 Eddie generates a list of numbers for them to play. 271 00:18:13,800 --> 00:18:16,940 They use acquaintances to claim the prize money. 272 00:18:17,240 --> 00:18:18,240 It worked. 273 00:18:18,400 --> 00:18:22,060 And it might have kept working if Eddie had quit while he was ahead. 274 00:18:23,920 --> 00:18:27,560 If you've got a money tree in your backyard, you can't help but keep 275 00:18:27,560 --> 00:18:32,400 it. When the Iowa lottery rises to $16 million in 2010, 276 00:18:33,120 --> 00:18:35,580 Eddie can't resist buying the ticket himself. 277 00:18:37,260 --> 00:18:41,960 Unfortunately for him, he picks one of the only quick trips in the state of 278 00:18:41,960 --> 00:18:45,420 equipped to record both video and audio. 279 00:18:52,970 --> 00:18:57,970 With prosecutors closing in on the Tipton brothers and their Texas buddy 280 00:18:57,970 --> 00:19:02,370 Rhodes, Eddie can feel his luck finally running out. 281 00:19:02,570 --> 00:19:07,230 He was down at his friend Robert Rhodes' house down in Texas, sitting in the 282 00:19:07,230 --> 00:19:09,850 backyard, and he says, am I paying for my sins? 283 00:19:10,050 --> 00:19:13,610 Am I paying for my sins here? This was really weighing on Eddie. 284 00:19:13,990 --> 00:19:19,550 What Eddie Tipton doesn't realize is that Rhodes is about to flip and turn 285 00:19:19,550 --> 00:19:20,610 state's evidence. 286 00:19:21,710 --> 00:19:26,250 He was willing to testify against Eddie and Tommy, and he provided us with very 287 00:19:26,250 --> 00:19:27,250 good evidence. 288 00:19:27,510 --> 00:19:30,510 Eddie's defense attorney negotiates a plea agreement. 289 00:19:30,890 --> 00:19:36,690 The deal means Eddie's brother must plead guilty to theft, but will only 290 00:19:36,690 --> 00:19:38,410 75 days in jail. 291 00:19:38,750 --> 00:19:43,270 Eddie was the older brother of Tommy, and Tommy had children, and that was a 292 00:19:43,270 --> 00:19:47,430 great concern to Eddie that Tommy not be separated from his children. 293 00:19:48,200 --> 00:19:53,660 Eddie Tipton pleads guilty in June 2017 to ongoing criminal conduct. 294 00:19:54,100 --> 00:19:58,260 At the time at Earthcode, I wasn't sure. It was more of a trying to see if I 295 00:19:58,260 --> 00:20:00,880 could do it. He probably did want to see if he could do it. 296 00:20:01,220 --> 00:20:04,920 Just knowing Eddie, maybe he thought that he'd be at a different place in his 297 00:20:04,920 --> 00:20:06,600 life than he was. 298 00:20:07,080 --> 00:20:10,180 And he's like, how can I get in a place where I'm happier? 299 00:20:10,440 --> 00:20:14,060 Even if he wants to tell himself he was just doing it one step at a time and it 300 00:20:14,060 --> 00:20:15,060 wasn't about the money. 301 00:20:15,450 --> 00:20:19,110 There's no denying that in the back of his head, there were dollar signs. 302 00:20:19,550 --> 00:20:24,870 Eddie Tipton addresses the court at his sentencing hearing in August 2017, 303 00:20:25,270 --> 00:20:30,430 nearly seven years after buying the lottery ticket that sealed his fate. 304 00:20:30,910 --> 00:20:33,230 Mr. Tipton, what do you have to tell me, sir? 305 00:20:33,470 --> 00:20:35,690 Well, I certainly regret my actions. 306 00:20:39,690 --> 00:20:42,290 It's difficult, even saying that. 307 00:20:45,450 --> 00:20:48,530 With all the people that I know behind me that I hurt. 308 00:20:49,710 --> 00:20:55,850 And I regret it. I'm sorry. The judge sentences Eddie to the maximum 25 years 309 00:20:55,850 --> 00:21:00,910 prison. He and his brother must also pay back more than $2 million in 310 00:21:00,910 --> 00:21:06,230 restitution. I think he has gone through a fair amount of depression over the 311 00:21:06,230 --> 00:21:07,230 whole situation. 312 00:21:07,450 --> 00:21:12,610 Eddie Tipton is sent to serve time at the Clarinda Correctional Facility in 313 00:21:12,610 --> 00:21:13,610 southern Iowa. 314 00:21:13,960 --> 00:21:16,320 He'll likely be paroled within seven years. 315 00:21:17,720 --> 00:21:22,780 Eddie and Tommy Tipton declined requests to speak with American Greed. 316 00:21:23,320 --> 00:21:28,220 Robert Rhodes pleaded guilty to fraud and was sentenced to two years probation 317 00:21:28,220 --> 00:21:30,600 and six months of house arrest. 318 00:21:31,060 --> 00:21:34,200 He did not respond to repeated requests for comment. 319 00:21:35,880 --> 00:21:41,060 The Iowa lottery has moved past the scandal. Business is better than ever. 320 00:21:41,660 --> 00:21:45,120 Though the state no longer offers hot lotto games. 321 00:21:45,540 --> 00:21:50,420 I absolutely believe Eddie Tipton would still be doing this today if we would 322 00:21:50,420 --> 00:21:55,120 have allowed anonymous winners. I think there's this fascination to the anti 323 00:21:55,120 --> 00:22:00,660 -hero type character. As much as what he did was evil or full of greed, you 324 00:22:00,660 --> 00:22:03,760 almost have to tip your hat to the guy. He figured out a way. 325 00:22:04,510 --> 00:22:09,150 to keep winning the lottery. For prosecutor Rob Sand, the Iowa lottery 326 00:22:09,150 --> 00:22:12,810 boils down to a simple moral straight from the Bible. 327 00:22:13,750 --> 00:22:14,810 Thou shall not steal. 328 00:22:15,710 --> 00:22:20,030 There's still a few rules that no matter what should apply to everybody. 329 00:22:23,110 --> 00:22:28,330 Next on American Greed, it's the case of the landlord from hell. 330 00:22:28,930 --> 00:22:30,690 Tenants are not seen as human beings. 331 00:22:30,910 --> 00:22:33,290 They're standing in the way of dollar science. 332 00:22:48,200 --> 00:22:54,520 New York, a densely packed city of 8 .5 million people, is a world capital of 333 00:22:54,520 --> 00:22:57,980 finance, culture, and cuisine. 334 00:22:58,980 --> 00:23:03,920 While many here take a stab at the American dream, few can find an 335 00:23:03,920 --> 00:23:05,160 place to live. 336 00:23:05,960 --> 00:23:09,780 New York has been in a housing crisis for more than 100 years. 337 00:23:10,980 --> 00:23:14,320 All these people coming here, all these folks wanting to live here. 338 00:23:14,830 --> 00:23:16,970 How do you have enough affordable housing? 339 00:23:17,170 --> 00:23:19,510 The government's answer is rent regulation. 340 00:23:20,190 --> 00:23:24,950 For regulated apartments, rents can only increase a certain percentage every 341 00:23:24,950 --> 00:23:29,430 year, if at all, keeping apartments lower than the market rate. 342 00:23:30,270 --> 00:23:32,850 I am only here because of the rent regulations. 343 00:23:33,070 --> 00:23:35,670 If I didn't have it, I wouldn't be able to stay here. 344 00:23:36,670 --> 00:23:40,670 But unfortunately, what we've also seen is that a lot of landlords have abused 345 00:23:40,670 --> 00:23:41,670 the process. 346 00:23:42,460 --> 00:23:45,460 Tenants who live in rent -stabilized apartments have really paid the price. 347 00:23:45,940 --> 00:23:51,520 Among the city's most notorious landlords is a wheeler dealer named 348 00:23:51,520 --> 00:23:55,800 Croman. Steve Croman, he was always, like, at the top of all the bad landlord 349 00:23:55,800 --> 00:24:01,440 lists. And he, I think, more than anybody, became, like, the face of what 350 00:24:01,440 --> 00:24:02,640 happening in the city. 351 00:24:03,320 --> 00:24:07,500 Croman has come a long way from his South Orange, New Jersey roots. 352 00:24:07,960 --> 00:24:10,120 Real estate runs in his blood. 353 00:24:11,080 --> 00:24:15,300 I believe his father was in real estate, and so it was kind of the family 354 00:24:15,300 --> 00:24:19,720 business. And he struck out on his own and wanted to build his own real estate 355 00:24:19,720 --> 00:24:26,480 empire. In 1992, the 26 -year -old buys his first multifamily apartment building 356 00:24:26,480 --> 00:24:31,480 north of the Little Italy neighborhood, 221 Mott Street. 357 00:24:31,940 --> 00:24:36,660 Tenement buildings that are often more than 100 years old, these are the sort 358 00:24:36,660 --> 00:24:39,960 buildings that are very attractive to a landlord like Mr. Croman. 359 00:24:40,640 --> 00:24:46,280 Where others see dreck, Croman sees gold, and the young man drafts a cunning 360 00:24:46,280 --> 00:24:52,560 playbook. Step one, persuade rent -regulated tenants to sell their lease 361 00:24:52,560 --> 00:24:56,820 few thousand dollars or a couple of months of free rent. 362 00:24:57,450 --> 00:25:03,410 It's called unlocking value. And how you unlock value is you push out who's ever 363 00:25:03,410 --> 00:25:04,269 living there. 364 00:25:04,270 --> 00:25:08,870 Automatically, you are allowed to add 20 % to the rent just by getting somebody 365 00:25:08,870 --> 00:25:09,509 to leave. 366 00:25:09,510 --> 00:25:13,570 But for folks like Croman, that's not enough. What you can do is renovations. 367 00:25:13,610 --> 00:25:16,630 You then are allowed to increase the rent even more. 368 00:25:17,730 --> 00:25:24,070 Just a year after Croman buys 221 Mott Street, New York amends a law that for 369 00:25:24,070 --> 00:25:25,970 him is like manna from heaven. 370 00:25:27,340 --> 00:25:32,540 It places an upper limit on rent stabilization, stipulating that once an 371 00:25:32,540 --> 00:25:37,660 apartment crosses a certain threshold, currently about $2 ,700 a month, 372 00:25:38,620 --> 00:25:42,720 you lose another one of these apartments to the free market. 373 00:25:43,040 --> 00:25:47,240 And suddenly, Krohman can rent an apartment for as much as he wants. 374 00:25:47,640 --> 00:25:51,780 And I think he was one of the first landlords to see the combination of all 375 00:25:51,780 --> 00:25:53,820 those things and what you could do with a building. 376 00:25:54,460 --> 00:25:58,480 So the building now has 18 units, and only two of them are regulated units. 377 00:25:59,060 --> 00:26:01,840 221 Mott Street is just the start. 378 00:26:02,820 --> 00:26:08,640 Over the next 25 years, Crowman expands into Chinatown, the Lower East Side, the 379 00:26:08,640 --> 00:26:11,940 East and West Villages, Hell's Kitchen, and Harlem. 380 00:26:13,680 --> 00:26:19,140 Building a real estate empire of more than 150 properties, from the East River 381 00:26:19,140 --> 00:26:20,140 to the Hudson. 382 00:26:21,610 --> 00:26:26,310 We have some estimates that he was worth upwards of $600 or $700 million. 383 00:26:26,970 --> 00:26:31,890 The Jersey boy treats his family to a lifestyle befitting his wealth. 384 00:26:32,450 --> 00:26:37,070 He converts a six -story multifamily apartment building on the Upper East 385 00:26:37,070 --> 00:26:40,990 into one of Manhattan's largest single -family homes. 386 00:26:42,110 --> 00:26:47,070 There is an interesting provision in the law in New York that allows for an 387 00:26:47,070 --> 00:26:50,990 owner to evict rent -stabilized tenants. 388 00:26:51,520 --> 00:26:54,180 from a property if they intend to use the unit for themselves. 389 00:26:54,840 --> 00:27:00,220 Croman went about moving each one of the tenants out, some of whom were rent 390 00:27:00,220 --> 00:27:02,000 -stabilized and had lived there for years. 391 00:27:02,800 --> 00:27:07,040 Croman eventually settles with most tenants for an undisclosed sum. 392 00:27:08,240 --> 00:27:13,120 But his actions wrinkle others, especially when they later find social 393 00:27:13,120 --> 00:27:15,840 photos posted by Croman's close friends. 394 00:27:16,780 --> 00:27:20,680 They depict lavish parties in the city and the Hampton. 395 00:27:21,990 --> 00:27:24,870 Parties like Studio 54 parties. 396 00:27:25,270 --> 00:27:26,810 We call them bacchanals. 397 00:27:27,030 --> 00:27:28,150 They're not parties. 398 00:27:28,830 --> 00:27:31,530 They're just so decadent. 399 00:27:32,130 --> 00:27:34,470 Life is good for Stephen Croman. 400 00:27:34,870 --> 00:27:38,610 But for tenants like Cynthia Chaffee, it's another story. 401 00:27:39,790 --> 00:27:43,970 She's an artist who moved into this rent -regulated apartment near the Gramercy 402 00:27:43,970 --> 00:27:46,030 Park neighborhood in 1978. 403 00:27:47,690 --> 00:27:50,270 I love the apartment because it was spacious. 404 00:27:50,880 --> 00:27:55,340 I like looking at the sky, and I love looking at the Empire State Building. 405 00:27:55,800 --> 00:28:02,000 When Croman buys her building two decades later, Chaffee says renovations 406 00:28:02,000 --> 00:28:03,120 almost immediately. 407 00:28:04,080 --> 00:28:07,460 We are living in a combat zone. 408 00:28:09,920 --> 00:28:10,960 It's horrible. 409 00:28:11,180 --> 00:28:14,220 I got so sick from his renovations. 410 00:28:14,820 --> 00:28:19,240 This whole place flooded with dust. It was everywhere. 411 00:28:20,280 --> 00:28:23,280 I could still taste that dust in my mouth. 412 00:28:25,060 --> 00:28:29,920 Chaffee alleges Croman sometimes fails to maintain basic services and make 413 00:28:29,920 --> 00:28:35,020 repairs. We didn't have electric for two months one year, and then another year 414 00:28:35,020 --> 00:28:36,380 we didn't have gas for a few months. 415 00:28:36,600 --> 00:28:39,700 Then we've had water pouring through the bathroom ceilings. 416 00:28:41,800 --> 00:28:46,780 Chaffee says Croman won't acknowledge her rent payments and drags her to 417 00:28:46,780 --> 00:28:48,420 court for unpaid fees. 418 00:28:50,320 --> 00:28:54,700 Chaffee and other tenants claim frivolous lawsuits are just another form 419 00:28:54,700 --> 00:28:58,500 harassment to wear them down and accept a buyout. 420 00:28:59,420 --> 00:29:00,960 What's wrong with this picture? 421 00:29:01,960 --> 00:29:05,540 We're all paying for Croman to get rich. 422 00:29:05,780 --> 00:29:09,700 Because what happens is he uses the courts and uses the harassment to empty 423 00:29:09,700 --> 00:29:12,680 these apartments out, and he is very successful at it. 424 00:29:13,160 --> 00:29:19,100 Croman denies the allegations in court filings and claims to strictly follow 425 00:29:19,100 --> 00:29:20,480 government building regulations. 426 00:29:21,020 --> 00:29:26,560 He argues it's tenants like Chaffee who are the problem, standing in the way of 427 00:29:26,560 --> 00:29:29,620 badly needed repairs to century -old structures. 428 00:29:30,460 --> 00:29:34,440 Croman declined American Greed's repeated requests for an interview. 429 00:29:35,220 --> 00:29:39,980 Manhattan has many renters who say they're fed up with Croman's tactic. 430 00:29:41,320 --> 00:29:46,100 Robert Penter claims to have experienced similar harassment in his apartment 431 00:29:46,100 --> 00:29:50,760 building. The Milwaukee native was thrilled to find a rent -regulated 432 00:29:50,760 --> 00:29:54,080 in the East Village neighborhood in 1982. 433 00:29:55,080 --> 00:29:57,740 I loved the apartment when I moved in here. 434 00:29:58,140 --> 00:30:03,640 At that time, the neighborhood was, you know, not so nice. 435 00:30:04,200 --> 00:30:07,780 The neighborhood gentrifies over the next three decades. 436 00:30:08,650 --> 00:30:12,610 And then in 2012, Stephen Croman swoops in. 437 00:30:12,970 --> 00:30:19,110 Steve Croman bought our building, I think, a month before Superstorm Sandy 438 00:30:21,390 --> 00:30:26,570 I always like to say that Croman's tenure of ownership here rivaled Sandy's 439 00:30:26,570 --> 00:30:27,570 ferocity and destruction. 440 00:30:28,450 --> 00:30:33,750 Penter says it starts innocently enough with renovations to the apartment above 441 00:30:33,750 --> 00:30:38,200 him. Then his closet collapses and dust pours in. 442 00:30:39,700 --> 00:30:45,160 I had to just grab my coat and run out of the apartment because I could not 443 00:30:45,160 --> 00:30:49,560 breathe. Everything was contaminated, the entire apartment, with dust. 444 00:30:50,180 --> 00:30:54,780 Pinter says workmen eventually placed plastic wrapping over the doors of 445 00:30:54,780 --> 00:30:59,020 apartments being renovated, but he believes his health was damaged. 446 00:30:59,400 --> 00:31:01,600 I ended up getting a cough. 447 00:31:02,010 --> 00:31:07,330 I went to the pulmonologist, and I was diagnosed with bronchial asthma. 448 00:31:08,290 --> 00:31:12,330 While Petter and other tenants believe renovations are aimed at making their 449 00:31:12,330 --> 00:31:13,330 lives miserable, 450 00:31:14,070 --> 00:31:18,790 Croman's office claims it's doing everything by the book to protect 451 00:31:20,650 --> 00:31:26,490 Petter says most of his neighbors caved, accepting buyouts ranging from $5 ,000 452 00:31:26,490 --> 00:31:27,490 to $10 ,000. 453 00:31:28,560 --> 00:31:31,940 It's almost like he was trying to soften them up and make people crazy enough 454 00:31:31,940 --> 00:31:34,240 that they would just want to leave. 455 00:31:35,660 --> 00:31:42,200 I didn't leave during that horrendous period simply because this is my home. 456 00:31:43,460 --> 00:31:48,920 Next on American Greed, the office of the New York State Attorney General 457 00:31:48,920 --> 00:31:50,580 on the mega landlord. 458 00:31:51,120 --> 00:31:54,480 More money, more property, more cars. 459 00:31:55,240 --> 00:31:58,420 He wanted on. But can anyone stop Croman? 460 00:31:59,760 --> 00:32:02,160 Want inside information from the show? 461 00:32:02,760 --> 00:32:04,740 Join the Greed social network. 462 00:32:05,220 --> 00:32:07,740 Like us on American Greed's Facebook page. 463 00:32:08,140 --> 00:32:09,180 We'll be right back. 464 00:32:19,310 --> 00:32:25,550 New York landlord Stephen Croman takes in an estimated $63 million in 2014 465 00:32:25,550 --> 00:32:31,110 with a portfolio of rental buildings stretching from one tip of Manhattan to 466 00:32:31,110 --> 00:32:32,110 other. 467 00:32:32,190 --> 00:32:37,390 His personal properties include a 19 ,000 -square -foot mansion on the Upper 468 00:32:37,390 --> 00:32:43,800 East Side reported to include two swimming pools, And a Hamptons getaway 469 00:32:43,800 --> 00:32:48,980 for parties so extravagant they fill up gossip columns and social media posts. 470 00:32:49,780 --> 00:32:54,920 Meanwhile, his work crews are in the city causing toxic destruction in all of 471 00:32:54,920 --> 00:32:59,320 these buildings, causing suffering, and he's out there enjoying himself. 472 00:32:59,740 --> 00:33:05,540 The 48 -year -old Jersey boy seems to have the world at his fingertips and 473 00:33:05,540 --> 00:33:07,500 no signs of slowing down. 474 00:33:08,120 --> 00:33:10,420 Mr. Croman is an intense man. 475 00:33:11,150 --> 00:33:15,930 He is very focused on all aspects of his business. 476 00:33:16,430 --> 00:33:18,890 We've been told he opens every piece of mail. 477 00:33:19,470 --> 00:33:23,630 Croman is a perennial on lists of New York's worst landlords. 478 00:33:24,130 --> 00:33:27,290 So it's like dealing with the Wild West out there, and these landlords are 479 00:33:27,290 --> 00:33:30,150 getting away with doing whatever they want to do. 480 00:33:30,590 --> 00:33:34,610 Chaffee and other tenants form a grassroots protest group. 481 00:33:58,440 --> 00:34:03,460 Protests fall on deaf ears for decades until tenants bring their complaints to 482 00:34:03,460 --> 00:34:06,140 the office of the New York State Attorney General. 483 00:34:06,360 --> 00:34:09,900 A group of tenants asked to come in and meet with us. The things that they 484 00:34:09,900 --> 00:34:12,159 described were pretty disturbing. 485 00:34:12,760 --> 00:34:17,300 So disturbing that Jessica Addy opens a civil investigation into the 486 00:34:17,300 --> 00:34:18,300 allegations. 487 00:34:18,900 --> 00:34:24,380 In witness statements, former employees describe Croman pacing his spacious 488 00:34:24,380 --> 00:34:25,380 Broadway office. 489 00:34:25,929 --> 00:34:30,790 They say he offers up to five figure bonuses for persuading tenants to take a 490 00:34:30,790 --> 00:34:34,989 buyout. He would be yelling things like buyouts, buyouts, like some sort of 491 00:34:34,989 --> 00:34:35,989 cartoon villain. 492 00:34:37,290 --> 00:34:38,969 Tenants are not seen as human beings. 493 00:34:39,510 --> 00:34:41,790 They're standing in the way of dollar signs. 494 00:34:42,510 --> 00:34:45,750 We just have to get this thing out of the way and then we can make all the 495 00:34:45,750 --> 00:34:46,750 that we want to make. 496 00:34:46,889 --> 00:34:50,969 Though Croman is more than willing to confront tenants face -to -face, he 497 00:34:50,969 --> 00:34:55,510 unleashes a brawny private investigator and former New York City cop named 498 00:34:55,510 --> 00:34:57,030 Anthony Falconite. 499 00:34:57,430 --> 00:35:00,970 Stephen Croman referred to Anthony Falconite as his secret weapon. 500 00:35:01,590 --> 00:35:07,510 Anthony Falconite was the person who would go to the tenants and persuade, 501 00:35:07,850 --> 00:35:11,070 coerce, or threaten them into taking buyouts. 502 00:35:11,550 --> 00:35:17,010 Tenants tell prosecutors that Falconite bullies his way into units under false 503 00:35:17,010 --> 00:35:18,010 pretenses. 504 00:35:18,790 --> 00:35:24,510 I heard him described as an architect, a city inspector. 505 00:35:24,750 --> 00:35:26,950 He would gain entry into their apartments. 506 00:35:27,390 --> 00:35:33,230 Once inside, Falconite hunts for any impropriety that may force a resident 507 00:35:33,230 --> 00:35:35,490 a buyout or an eviction. 508 00:35:35,830 --> 00:35:40,130 He'd photograph their bathrooms, their pill bottles, their mail. 509 00:35:41,070 --> 00:35:45,030 He would take pictures of them sitting there in their pajamas or partially 510 00:35:45,030 --> 00:35:48,890 dressed. They often said he made them feel like criminals in their own home. 511 00:35:49,610 --> 00:35:53,470 It's very intimidating having a stranger in strong -arming you to leave your 512 00:35:53,470 --> 00:35:55,650 home. You're talking about shelter. 513 00:35:55,910 --> 00:35:57,550 You're talking about somebody's home. 514 00:35:58,010 --> 00:36:01,510 Falk and I did not respond to repeated requests for comment. 515 00:36:03,930 --> 00:36:07,670 While Addie carefully builds a civil case against Croman... 516 00:36:08,140 --> 00:36:11,300 She discovers behavior that triggers a criminal investigation. 517 00:36:12,020 --> 00:36:16,680 Her colleague, Travis Hill, takes a deeper dive into Croman's finances. 518 00:36:17,820 --> 00:36:23,740 He discovers Croman has inflated his rent rolls to secure loans of more than 519 00:36:23,740 --> 00:36:29,640 million. He definitely knew the rules, and if he couldn't get what he wanted 520 00:36:29,640 --> 00:36:35,120 through legal means, he would use fraud and deception to go about getting more 521 00:36:35,120 --> 00:36:36,120 money. 522 00:36:36,840 --> 00:36:42,220 On May 9th, 2016, the office of the New York State Attorney General indicts 523 00:36:42,220 --> 00:36:44,720 Stephen Croman on 20 felonies. 524 00:36:46,020 --> 00:36:49,540 They range from grand larceny to tax fraud. 525 00:36:50,660 --> 00:36:54,920 The scope of this enterprise was really unlike any other that we've seen in New 526 00:36:54,920 --> 00:36:55,920 York. 527 00:36:56,980 --> 00:37:01,760 Prosecutors also hit Croman with a civil lawsuit, suing him for forcing tenants 528 00:37:01,760 --> 00:37:03,540 out of their rent -regulated units. 529 00:37:04,490 --> 00:37:08,310 The charges are a long time coming for Croman's tenants. 530 00:37:08,770 --> 00:37:11,110 The day that he was arrested, we were relieved. 531 00:37:11,710 --> 00:37:14,330 It was the first time we were beginning to feel safe. 532 00:37:15,290 --> 00:37:21,010 Croman pleads not guilty. If convicted, he faces up to 25 years in prison. 533 00:37:23,690 --> 00:37:25,390 Next on American Greed. 534 00:37:26,200 --> 00:37:30,300 Will the charges stick against Croman? I think he was shocked that he was 535 00:37:30,300 --> 00:37:33,680 actually charged with anything because he had done things with impunity for so 536 00:37:33,680 --> 00:37:34,680 long. 537 00:37:48,230 --> 00:37:53,470 In May 2016, the Office of the New York State Attorney General charges Stephen 538 00:37:53,470 --> 00:37:57,730 Croman with 20 felonies, including tax and mortgage fraud. 539 00:38:00,490 --> 00:38:05,690 Prosecutors also sue him for harassing and forcing rent -stabilized tenants 540 00:38:05,690 --> 00:38:06,690 their homes. 541 00:38:07,430 --> 00:38:12,630 You could tell by the lawyers he hired to represent him that he took the 542 00:38:12,630 --> 00:38:16,310 seriously. But I don't think that he thought that he would end up doing any 543 00:38:16,310 --> 00:38:22,160 time. Croman's team of high -priced defense attorneys include Benjamin 544 00:38:22,460 --> 00:38:26,860 Criminal cases have nothing whatsoever to do with the tenant harassment 545 00:38:27,160 --> 00:38:28,240 They're very good advocates. 546 00:38:28,460 --> 00:38:29,940 They're very well experienced. 547 00:38:30,260 --> 00:38:32,760 They understand the law. They understand the issues. 548 00:38:32,980 --> 00:38:35,120 And they advocate it well for their client. 549 00:38:35,460 --> 00:38:39,840 Croman and the government spend the next year negotiating a plea agreement. 550 00:38:40,670 --> 00:38:45,850 Though Croman could face up to 25 years in prison, Prosecutor Hill feels the 551 00:38:45,850 --> 00:38:49,090 real estate mogul is eerily focused on the bottom line. 552 00:38:49,410 --> 00:38:53,710 He was always most concerned about how much money am I going to have to pay to 553 00:38:53,710 --> 00:38:54,710 get out from under this. 554 00:38:55,770 --> 00:39:00,990 On June 6, 2017, Croman pleads guilty to three felony. 555 00:39:03,070 --> 00:39:07,530 So ultimately what we got Stephen Croman for was him lying to the banks. 556 00:39:07,950 --> 00:39:12,610 falsifying documents on his loan application so that he could get higher 557 00:39:12,610 --> 00:39:16,770 amounts, and then also misrepresenting his income. 558 00:39:17,530 --> 00:39:19,870 All other charges are dropped. 559 00:39:20,350 --> 00:39:25,810 Croman agrees to serve one year in jail and pays a $5 million tax settlement for 560 00:39:25,810 --> 00:39:26,930 defrauding the state. 561 00:39:27,650 --> 00:39:32,950 It was unprecedented. It really was the first case of a landlord really being 562 00:39:32,950 --> 00:39:35,110 prosecuted for his... 563 00:39:35,550 --> 00:39:39,090 real estate business practices and receiving jail time for that. 564 00:39:39,370 --> 00:39:42,850 I thought even one year was an extraordinary accomplishment. 565 00:39:43,470 --> 00:39:46,230 Landlords, they never pay a price for anything. 566 00:39:46,470 --> 00:39:51,830 And for him to go to prison, I thought, great, this is great. 567 00:39:52,250 --> 00:39:56,710 Some observers point out that criminal convictions don't have anything to do 568 00:39:56,710 --> 00:39:58,850 with how Croman treated his tenants. 569 00:39:59,270 --> 00:40:03,890 The fact that he got any jail time is something, but it's also something that 570 00:40:03,890 --> 00:40:04,910 wasn't actually charged. 571 00:40:05,390 --> 00:40:08,110 At all, criminally, with harassing tenants. 572 00:40:08,390 --> 00:40:10,570 He was charged mainly with financial crimes. 573 00:40:10,970 --> 00:40:16,010 Under the current law, we were not able to show improved tenant harassment 574 00:40:16,010 --> 00:40:19,610 beyond a reasonable doubt. We couldn't do that, and it wasn't part of the 575 00:40:19,610 --> 00:40:23,190 indictment. Croman still faces a civil lawsuit. 576 00:40:23,810 --> 00:40:29,210 He turns himself in on October 3, 2017, to begin serving time at the Manhattan 577 00:40:29,210 --> 00:40:30,470 detention complex. 578 00:40:31,250 --> 00:40:33,170 It's known as the Tunes. 579 00:40:34,720 --> 00:40:39,420 It's a dramatic fall from grace for a real estate tycoon worth an estimated 580 00:40:39,420 --> 00:40:40,420 million. 581 00:40:41,100 --> 00:40:45,020 And yet, the 51 -year -old hardly shows any emotion. 582 00:40:45,940 --> 00:40:50,740 His expression never changed from the day he was arraigned until the day he 583 00:40:50,740 --> 00:40:55,220 sentenced and sent off to jail. His family never showed up, not for a single 584 00:40:55,220 --> 00:40:56,220 court date. 585 00:40:57,700 --> 00:41:01,180 Two months in, while Coleman adjusts to his new surroundings... 586 00:41:01,550 --> 00:41:05,010 The New York Attorney General announces a settlement in the civil lawsuit. 587 00:41:06,330 --> 00:41:12,610 A consent decree requires Croman to pay $8 million to a tenant restitution fund, 588 00:41:12,810 --> 00:41:15,830 the largest ever settlement for an individual landlord. 589 00:41:16,610 --> 00:41:21,890 Croman also agrees to let an independent management company run more than 100 of 590 00:41:21,890 --> 00:41:24,290 his residential properties for five years. 591 00:41:24,830 --> 00:41:30,350 We sued Anthony Falconite as well. He's not allowed to have interactions with 592 00:41:30,350 --> 00:41:31,350 the tenants. 593 00:41:31,420 --> 00:41:32,440 Mr. Croman's portfolio. 594 00:41:33,140 --> 00:41:35,820 Falconite is never criminally charged. 595 00:41:37,020 --> 00:41:42,600 I will remember the Steve Croman case as a decisive victory for the tenants of 596 00:41:42,600 --> 00:41:43,600 New York City. 597 00:41:44,020 --> 00:41:48,440 We know that the battle doesn't end when we sign the settlement agreement. We're 598 00:41:48,440 --> 00:41:54,620 still very committed to making sure that he stays in line and that he complies 599 00:41:54,620 --> 00:41:56,420 with all the different terms of the agreement. 600 00:41:57,310 --> 00:42:02,930 A spokesperson for Croman's firm, 9300 Realty, sent the following statement to 601 00:42:02,930 --> 00:42:03,930 American Read. 602 00:42:04,130 --> 00:42:07,830 We entered into a comprehensive settlement agreement with the State 603 00:42:07,830 --> 00:42:13,110 General, which we are diligently implementing in line with our ongoing 604 00:42:13,110 --> 00:42:17,230 using best practices to provide quality housing for our residents. 605 00:42:19,230 --> 00:42:24,970 Croman is released from the tombs on June 1, 2018, after serving eight 606 00:42:26,640 --> 00:42:31,200 He's out of jail and running his business under supervision for seven 607 00:42:31,700 --> 00:42:36,760 Yet his critics feel Croman may resume business as usual. 608 00:42:37,060 --> 00:42:40,360 You think Croman's going to stop being vicious and greedy? 609 00:42:40,600 --> 00:42:43,400 I don't think so. I don't think he's been converted. I've prayed for his 610 00:42:43,400 --> 00:42:45,080 conversion, but I don't think he's done it.