Almost $10K In Cable TV Fees Are Missing and Unaccounted For


My wife and I have yet to receive the audit workpapers for a number of years, including 2006, 2008 and 2011, as prepared by CondoCPA, that the City of Chicago has directed the Association to make available for inspection.


On May 20, 2015, my wife and I finally received a complete copy of State Parkway’s 2007 Audited Financial Statements, even though State Parkway’s general counsel promised, in writing, to distribute them to the unit owners by April 1, 2008, pursuant to the Declaration. This means we received a complete copy of State Parkway’s 2007 Audited Financial Statements seven years, one month and nineteen days late!

Each unit owner pays the same amount for cable fees. That is, total cable tv fees for the Association should equal exactly 160 times what each unit owner pays. This wasn’t the case in 2006 and 2007, where a total of $9,656 of cable tv fees is missing and unaccounted for in State Parkway’s 2006 ($6,496) and 2007 ($3,160) Audited Financial Statements.

The 2006 cable tv fees shortfall was reported to State Parkway’s management, general counsel and auditor immediately after State Parkway’s 2006 Audited Financial Statements were distributed in September 2007. However, I never received a response.

Association-Owned Unit Still Vacant (June 28, 2018 Update)

UPDATE: JUNE 28, 2018

Believe it or not, it’s been three years since the Engineer’s Unit, Unit #906, was last occupied by anyone, including a renter. This means the unit is now starting its 4th year as vacant. Vacancy means loss of revenue, and loss of passive revenue means loss of passive expenses and deductions.

Assuming rent is $2.66/s.f./month, State Parkway’s unit owners are paying $24K/year more in higher assessments to replace the lost rental revenue.

If this isn’t abandonment/wasting of assets by State Parkway’s board of directors and management, I don’t know what is. However, State Parkway’s board of directors will have to make a decision whether or not to keep the Engineer’s Unit out of service. If taken out of service, the Association won’t be permitted to deduct book depreciation since it was taken out of service.



Almost another 18 months have gone by and the Engineer’s Unit is still vacant! And this spring will mark the start of the 14th year the board and management have tried to sell the Engineer’s Unit.


More than six months have elapsed since the last update, and the Engineer’s Unit is still vacant. That’s more than two years of lost rental income (and higher unit owner assessments). What a waste!


At last night’s board meeting, the board announced it was considering converting the Engineer’s Unit, which the Association can’t rent (due to tax evasion) and can’t sell (due to massive fraud) into a party room. The board said the laundry room and exercise room used to be 1-bedroom units. If this were to happen, unit owner ownership (and assessments) would increase by .391225%.



My wife and I requested to inspect the purported tax opinion letter the Association received from its independent accountant, Picker and Associates, regarding the tax implications from the sale of the Engineer’s Unit. With the help of the City of Chicago, we finally received a copy of the document after we filed yet another complaint with the City of Chicago. Guess what? It’s riddled with gross errors and incorrect assumptions.

Before I begin, let me remind you that the Association’s former accountant, CondoCPA, back in 2009, only advocated the sale of the Engineer’s Unit if taxes from the sale can be avoided. However, at the November 1, 2016, special meeting of the unit owners, the board finally admitted there would be tax consequences from the proposed sale of the Engineer’s Unit. Picker and Associates advised the board that “the net effect of the taxable result [from the sale of the Engineer’s Unit] could only be $4,000 to $7,000 federal tax to the association.” However, prior to making this statement, Picker and Associates said, “Reviewing the past few years of association tax returns, losses were generated by deductions in excess of non-exempt function income of about $(50,000) (sic). These losses estimated at $(50,000) (sic) then can be used to offset a portion of the taxable gain from the sale of the unit. We would also review any further expenses for any additional allocations to non-exempt function income or non-member income to further reduce the taxable income to the association.”

To make matters worse, Picker and Associates, neglected to report all of State Parkway’s gross income on the annual tax returns beginning in 2014. The unreported income is in the hundreds of thousands of dollars per year. Moreover, Picker and Association also neglected to take in consideration depreciation recapture because his predecessor generally depreciated the Engineer’s Unit on State Parkway’s annual tax returns from 1994 through 2013. Consequently, the assumptions Picker and Associates used in its purported tax opinion letter are grossly incorrect and State Parkway’s tax liability from the proposed sale of the Engineer’s Unit will actually cost the Association tens and tens of thousands of dollars.

The copy of the tax opinion letter issued by Picker and Associates can be found here: tax-opinion-on-sale-of-the-engineers-unit-10-26-2016.


At last month’s special meeting of the unit owners, the motion to sell the Engineer’s Unit at a significantly lower price (about $185K) fell well short of the required two-thirds approval. At this special meeting, President Mary Marta admitted that my wife and I were the only people that actually viewed the Engineer’s Unit in the fourteen months it was listed on the market. Meanwhile, the 2017 Budget the board approved last month, like this year’s budget, assumed the Engineer’s Unit would be sold prior to the start of the new year.

Seven months ago I said, in my original post below, that I wouldn’t buy the Engineer’s Unit, even at $150K. Well, now I wouldn’t even buy it for $125K.


At last night’s sham board meeting, the board took no action on the Engineer’s Unit, meaning the unit will remain on the market at $229K instead of being leased out. The board, however, may try to have another special meeting of the unit owners for the purpose of getting at least two-thirds of the unit owners to lower the sales price.


At last night’s sham special unit owner’s meeting, the board “fell more than 40% short” of obtaining the required two-thirds majority needed to lower the sales price of the Engineer’s Unit to the current appraisal of some $185K, or more than 23.78% lower than the current list price of $229K. Prior to the vote, the board backtracked on the issues of no income taxes on the gain from the sale (there is an income tax liability) and what to do with the net proceeds from the sale (the board lacks the authority to make interfund transfers). Most likely the board will decide at the November 8, 2016, board of directors’ meeting to take the Engineer’s Unit off the market and lease the unit again.


At State Parkway’s September 26, 2016, Board of Directors’ Meeting, President Marta announced that since the unit has been listed (for $229K) more than a year ago, there has ONLY been ONE viewing. (My wife and I viewed the unit shortly after it was listed so we must have been the only ones that viewed the unit.) Now the board wants to have a special meeting to lower the sales price floor from $223K to $175K. I asked the board about the contradictory tax effects of the sale, but they refused to respond. So the next step is for the board to hold another special meeting of the unit owners to approve the sale of the Engineer’s Unit below $223K. (Please note that four months ago I said I wouldn’t even buy the Engineer’s Unit for $150K.)


At State Parkway’s May 26, 2015, Board of Directors meeting, after a discussion during executive session, the board voted to approve the lease cancellation for the tenant in Unit #906, effective June 30, 2015. Less than one month earlier, the board, at the April 27, 2015, board of directors meeting, had approved a one-year lease renewal through May 31, 2016.

It’s now been a year since the Board of Directors abruptly changed course on the association-owned unit (also known as Engineer’s Unit) and listed the unit for sale ($229K) but there have been no takers. This means State Parkway has lost the opportunity to collect at least $18,600 in rent during the last 12 months. Meanwhile, the Association is still paying for the unit’s assessments and property taxes (over $10K/year) even though State Parkway’s 2016 Budget had assumed the unit would be sold prior to January 1, 2016.

It’s probably a good thing State Parkway is selling the Engineer’s Unit, especially since State Parkway’s independent accountants often forget to report the rental income the association received on State Parkway’s tax returns, not to mention State Parkway claimed a whopping $186,274 (which is 81.34% of the current sales price) in rental expense deductions, exclusive of depreciation, during the three years ended December 31, 2013. I never realized that owning just one piece of rental property can be so expensive!

Due to State Parkway’s current financial position as described in my Verified Memorandum in Law (see my June 1, 2016 post), I wouldn’t buy the Engineer’s Unit even if it was listed for just $150K.

State Parkway’s 2015 Financial Review Cost 65.8% More Than Expected



The $2,500 “additional” fee for State Parkway’s 2015 Financial Review that was completed in March 2016, was finally paid during the month of August. It had not been recorded as a liability prior to the recent payment.


UPDATE: Despite completing State Parkway’s 2015 Financial Review, dated March 3, 2016, State Parkway has yet to receive and/or record the $2,500 invoice for “2015 Review extensions.”


On January 29, 2016, I filed documents in state court that detailed the massive fraud, oppression, misapplication or misuse of assets at State Parkway. Instead of responding by ordering an audit of State Parkway’s 2015 financial statements, the Board of Directors did absolutely nothing.

An annual audit requires additional procedures that are not mandated in the performance of a review or compilation. An audit involves testing of transactions and balances, communication with third parties, an understanding of internal controls, and other procedures. The conclusion and objective of an audit is to issue an opinion as to whether the association’s financial statements are free from material misstatement, and are presented fairly, not that every single line on the financial statements is perfect.

Annual reviews and compilations are the middle- and lower levels of accounting services, respectively. At the conclusion of a review, the accountants state whether the financial statements are in need of significant adjustments in order to be in conformity with accounting principles generally accepted in the United States of America. No opinion is expressed on the financial statements as a whole. A compilation involves very limited procedures, and simply presents the association’s financial statements, without the expression of any opinions or assurance on the financial statements. Reviews and compilations are less costly alternatives to annual audits.

State Parkway’s current independent accountant prepared State Parkway’s 2015 Financial Review without an executed engagement letter, not to mention board approval. To make matters worse, Lieberman Management Services, Inc., State Parkway’s managing agent, was paying for the independent accountant’s unauthorized services.

Wait, it gets better! State Parkway’s independent accountant issued State Parkway’s 2015 Financial Review on or about March 3, 2016, or more than two months prior to to the receipt of the management representation letter signed by various State Parkway representatives (president, treasurer and managing agent) on May 10-11, 2016. See section .24 of AICPA’s Statements on Standards for Accounting Review Services in the following link regarding receipt of the management representation letter prior to the release of the financial review:


The engagement letter noted the fee for State Parkway’s 2015 Financial Review would be $3,800. However, the independent CPA ended up charging an additional $2,500 for “review extension,” bringing the total cost of the 2015 Financial Review to $6,300. It obviously would have been cheaper to have an audit instead of a review.

State Parkway’s 2015 Tax Returns Posted on Lieberman Management Services’ eStar Portal


The income tax worksheets the Association’s independent accountant, CondoCPA and Picker and Associates, had offered to make available for mine and my wife’s inspection, for a fee of $500 and $600, respectively, have yet to made available for our inspection in response to a complaint my wife and I filed with the City of Chicago. We hope the city’s attorneys compel State Parkway to make these tax worksheets available for our inspection long before the hearings on February 15, 2017.


UPDATE: On June 24, 2016, State Parkway’s Board of Directors filed its response in state court but the expected affidavits were nowhere to be found. Meanwhile, also on June 24, 2016, the U.S. Department of Justice contacted me and asked me to apply for a vacancy announcement for a position that “conducts forensic audit investigations of highly complex nature.”

Today my wife and I received an email from State Parkway, informing us State Parkway’s 2015 federal and state tax returns have been posted on eStar. I immediately went online to examine them.

For the second straight year, State Parkway neglected to report rental income from the Engineer’s Unit, the laundry room license income, and the gross garage parking income. All of which is incredible because 26 U.S. Code § 61 defines gross income as all income from whatever source derived.

The difference in the gross income reported by State Parkway’s independent accountants is staggering. State Parkway’s 2013 tax return reported $310.8K of gross income, whereas State Parkway’s 2015 tax return only reported $8.7K of gross income, or a difference of $302.1K! I can assure you State Parkway’s business model did not change much ever since my family and I moved in our condominium almost thirteen years ago.

I uncovered the massive tax fraud at State Parkway last October through January. State Parkway’s former accountant, whom had prepared State Parkway’s tax returns since at least the turnover from the developer in 1994 through 2013, was somewhat good about reporting all of State Parkway’s gross income. The problem is, as I explained in the federal and state tax fraud sections of my Verified Memorandum of Law in the previous post, this former accountant also falsely inflated deductions to the tune of several hundred thousand dollars per year. State Parkway’s new accountant, since the 2014 tax year, doesn’t have several hundred thousands of dollars in falsely inflated deductions. He doesn’t have to because he’s not even reporting more than 95% of State Parkway’s gross income!

Evading the payment of taxes by underreporting gross income or falsely inflating deductions is a felony. Go directly to jail. Do not pass Go. Do not collect $200.

On May 20, 2016, State Parkway’s defense attorneys represented to the Honorable Judge Atkins that State Parkway’s “two different sets of independent accountants” are “very well-known and respected condo accountants.” I can’t wait to see their sworn affidavits, expected around June 24, 2016.

I would love to be a fly on the wall when the IRS visits State Parkway’s two independent accountants. I, of course, will still need CART (“Communication Access Realtime Translation”) services during the audit.

Motion for Temporary Restraining Order and Preliminary and Interlocutory Injunctive Order for the Appointment of a Custodian to Manage the Affairs of The State Parkway Condominium Association


The briefing on this motion is expected to be completed by February 28, 2017. Stay tuned.


On January 29, 2016, I filed a state court motion for the appointment of a custodian to manage the affairs of The State Parkway Condominium. In support of my motion, I concurrently filed a 197-page Verified Memorandum of Law, which details the massive fraud, oppression, and misapplication or wasting of assets at State Parkway. The Fraud Section is comprised of the following: Fraud on the United States of America; Fraud on the State of Illinois; Fraud on the Unit Owners; Insurance Fraud, and Fraud on the Cook County Circuit Court. The Fraud on State Parkway’s unit owners includes Financial Reporting Fraud, Reserve Study Fraud, Engineer’s Unit Fraud, Budget Fraud, Life Safety Evaluation Report Fraud, and Declaration Fraud.

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