Fraud

Listed below are current examples how The State Parkway Condominium Association’s board of directors have acted, are acting, or will act in a manner that is fraudulent:

  • federal and state income tax evasion;
  • property tax evasion;
  • financial statement reporting fraud; 
  • budget fraud; 
  • reserve study fraud;
  • proxy fraud;
  • Declaration fraud;
  • Association-owned unit fraud; and
  • insurance fraud.

Each of the aforementioned issues is briefly summarized below:

Federal and State Income Tax Evasion

Since at least the 2003 tax year, State Parkway’s board of directors, with the assistance of either CondoCPA, Inc., and/or Picker and Associates CPAs, have willfully and intentionally evaded federal and state income taxes by underreporting the Association’s gross income and/or claiming falsely inflated deductions. For details regarding the income tax evasion during the 2017 tax year, see the following blog post:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, and have the Association’s 2015, 2016 and 2017 federal and state tax returns amended by an honest tax return preparer. Instead of trying to estimate how many monthly non-exempt cars were actually parked in the garage overnight, this information is readily available in sp+’s (garage operator) monthly Item Rate Stratification Reports. The board should review and approve the Association’s federal and state tax returns, and authorize an officer to sign them on behalf of the Association during an open board meeting; and management should resume posting State Parkway’s annual federal and state tax returns on Lieberman’s eSTAR portal.

Property Tax Evasion

Last year, State Parkway evaded Cook County property taxes on its Association-owned unit (which is not accessible to unit owners and/or residents), courtesy of the false affidavit filed by outgoing board president Howard Robinson. This year, however, State Parkway’s board of directors is filing an “appeal” instead of a Certificate of Error even though no property taxes are owed. To read about committing property tax fraud without having to remove a toilet, read the following blog post:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, fire the real estate law firm of Field & Goldberg, LLC, and retain a ethical real estate attorney to file a Certificate of Error with the Cook County Taxpayer Services Department so the Association can resume paying property taxes on the Association-owned unit.

Financial Statement Reporting Fraud

State Parkway’s financial statements, prepared by Lieberman Management Services, Inc., and reviewed/audited by CondoCPA, Inc., are not free of intentional misstatements or omissions of amounts or disclosures. To make matters worse, State Parkway’s 2017 Audited Financial Statements received a qualified opinion from CondoCPA, Inc., due to garage operations not being audited. To obtain a gist of what it’s like have a corrupt CPA audit State Parkway’s annual financial statements, check out the following blog post:

Complaints to City of Chicago’s Business Affairs and Consumer Protection, and Illinois Department of Financial and Professional Regulation, however, have fallen on deaf ears. Chicago’s Barbara Gressel will not allow her department to investigate future complaints regarding the Association’s alleged failure to make its books and records available for inspection pursuant to the Chicago Condominium Ordinance 13-72-080; and Illinois’ Eleni Markos incredulously saw nothing wrong with the Association’s property manager Bill Southall concealing hundreds of thousands of dollars of unrecorded invoices from unit owners.

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, fire both Lieberman Management Services, Inc., and CondoCPA, and replace them with an an ethical management company and an upstanding independent CPA firm, respectively. Additionally, direct the new independent CPA firm to also audit the Association’s garage operations for the first time in its 26-year history.

Budget Fraud

Beginning with the 2007 Proposed Budget and through the 2019 Proposed Budget, Lieberman Management Services, Inc., prepared annual budgets with material errors and/or omissions. In fact, deferred assessment increases are currently in excess of $1 million. Moreover, at the last budget adoption meeting on November 26, 2018, the board and management still refused to answer my questions regarding the 2019 Proposed Budget. This is a red flag when fiduciaries cannot answer a handful of questions prior to the board’s formal adoption. Read about the controversial 2019 Proposed Budget in the following blog post:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, and fire Lieberman Management Services, Inc., and replace it with an an ethical management company that can prepare short and long-term budgets that are free of deceit and untruthfulness.

Reserve Study Fraud

Since at least 2001, State Parkway retained Reserve Advisors, Inc., to prepare bogus reserve study updates (2001, 2005, 2012 and 2016) for the Association. In fact, the last several updates, as well as the next reserve study update, have or will cause massive assessment increase shocks that will have to be phased-in over two to four years. Since a picture is worth a thousand words, check out the trend in annual reserve contributions in the following chart:

https://bulliedbythestateparkwaycondominiumassociationboard.org/wp-content/uploads/2018/10/Reserve-Contribution-Chart-2016-.xlsx.pdf

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, fire Reserve Advisors, Inc., and replace it with an an reputable reserve study company to prepare a truthful condition assessment, estimates of the Association’s common elements, and a reserve funding plan to pay for future replacements when they are incurred. 

Proxy Fraud

During the Mary Marta dynasty (2008-2017), special meetings of the unit owners were either hijacked by the former board president or not held so the board could engage in proxy/vote fraud in both 2009 and 2015. And last year the board was forced to reject the will of the unit owners after they approved the 17th Amendment to the Declaration, via a purported supermajority vote, due to the Association being caught red-handed committing proxy fraud. Proxy and Declaration fraud at State Parkway would make Chicago politicians blush. Below is a blog post I posted more than a month before the Association had its ill-advised Special Meeting of the unit owners in late March 2018:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, fire Lieberman Management Services, Inc., and replace the management team with an an ethical management company. Also see recommended corrective and preventive action for Declaration Fraud below.

Declaration Fraud

State Parkway’s board of directors improperly made changes to the Declaration in 2015 even though unit owners’ votes fell short of the required two-thirds majority. Despite being informed of the voting irregularities, the Association’s general counsel, Levenfeld Pearlstein, LLC, recorded the changes to the Declaration with the Cook County Recorder of Deeds with the help of former director John Schwandke’s false affidavit.

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, fire Lieberman Management Services, Inc., and direct the Association’s new general counsel to rescind the recorded Declaration amendments that were made in 2015, as well as the purported unit owners’ decision in 2009 to sell the Association-owned unit.

Association-Owned Unit Fraud

The Association-owned unit, formerly Engineer’s Unit, has been vacant for almost 5 years. In addition, since 2005, the board has made countless attempts to sell the unit so it could transfer the net proceeds to shore up the Association’s weak Replacement Reserve Fund. 

According to representatives at The John Buck Company, real estate firm that made an unsolicited $45MM offer for all of State Parkway, current market rental rates in Chicago’s Gold Coast are approximately $2.80/s.f. Multiply this by 757 s.f. (as noted in the last appraisal of the unit) means the Association is losing $2,119.60/month, or $25,435.20/annually, in rental income. For more regarding the vacant Engineer’s unit, see the following blog post below, including related blog posts within the post:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, and board and management must come clean why the Association-owned unit hasn’t been rented out since early summer of 2015. If the Association-owned unit cannot be rented out due to the Association’s purported income tax situation, the unit should converted to use by unit owners and residents or sold.

Insurance Fraud

 State Parkway’s board of directors and management team filed for several insurance benefits they are not entitled to. This leads to higher insurance rates and inflated prices for everyone. Moreover, the Association is actually in protracted litigation with various insurance companies over these very same claims in both federal and state court. Below is one of the few blog posts regarding insurance fraud at State Parkway:

Recommended Corrective And Preventive Action: Replace State Parkway’s corrupt board of directors, and form a litigation committee to review the Association’s extensive litigation history since January 2007.

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