Local Developers Indicted In $15.7 Million Mortgage Fraud Scheme

Five defendants were indicted by the U.S. Justice Department Thursday after they allegedly engaged in a $15.7 million fraudulent loan scheme to finance the failed Center of the North Shore development in Northbrook.

According to the U.S. Justice Department, three partners of the Center of the North Shore, a title company executive and a loan officer took out fraudulent loans to make interest payments on a $26.2 million loan to finance the development. The 517,000 square-foot mixed-use development, which was planned for 14 acres at Dundee Road and Skokie Boulevard, fell into foreclosure in October 2008.

Federal agents arrested Center of the North Shore partners Edward Renko, 49, of Glenview; Alexander Field, 42, of Northbrook; and Gary Fishkin, 54, of Glencoe; on Thursday. Renko and Fishkin were charged with two counts of wire fraud, one count of bank fraud and one count of making a false statement to influence the action of a bank, according to the Justice Department. Field was charged with two counts of wire fraud and one count of bank fraud.  

Agents also arrested Kalliope Shaykin, 51, of Chicago, former president of Absolute Title Services, Inc., in Schaumburg. She was charged with seven counts of wire fraud and one count of making a false statement to influence the action of a bank.

Tatyana Furman, 41, of Northbrook, was arrested today. Formerly a loan officer and mortgage broker at American United Mortgage Co. in Northbrook, Furman was charged with seven counts of wire fraud.

Concerns from the beginning

The developers first came to the village of Northbrook in August 2005, with a proposal for the empty fields at the northwest corner of Skokie Boulevard and Dundee Road, behind Zengeler Cleaners, according to Director of Development Tom Poupard. After several iterations, the village finally approved a plan for a 171-room hotel, 74 condominiums, 35,000 square feet of office space, 136,000 square feet of retail, a bank, a health club and banquet facility.

“I think our staff’s greatest concerns were probably just their level of expertise, whether they really knew what they were getting themselves into doing a project of that magnitude,” Poupard said.

As it turned out, the magnitude of the project’s financing in particular—and how the developers allegedly went about it—was what got them in trouble.

In too deep

Between June 2006 and November 2007, the defendants engaged in a complex mortgage fraud scheme to pay off the debts they owed on the proposed development, according to the U.S. Department of Justice.

Using three Greenwood Road homes that Renko, Field and Fishkin owned, the defendants fraudulently obtained more than $8 million in home loan proceeds by repeatedly obtaining mortgages for the residences. Instead of paying off the mortgages with the loans, they used the money for personal and business expenses as well as interest payments on the $26.21 million loan for the property at Dundee Road and Skokie Boulevard. The three homes—at 711, 700 and 688 Greenwood Road—have since been foreclosed on, according to Randall Samborn, a spokesperson for the U.S. Department of Justice.

According to the indictment, Furman prepared fake mortgage loan applications on behalf of Renko, Field and Fishkin, which did not disclose their existing mortgage liabilities. Shaykin stepped in by creating and submitting fraudulent title insurance policies that also omitted information about the defendant’s existing mortgages, according to the Department of Justice.

In total, Renko, Field and Fishkin were able to obtain $15,790,000 from their fraudulent home mortgages and a construction loan. The Justice Department seeks forfeiture of $10 million from the five defendants.

Paying the price

If the defendants are convicted, wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. Wire fraud affecting financial institutions, bank fraud and making a false statement to influence the action of a bank each carry a maximum penalty of 30 years in prison and a $1 million fine.

Renko, Field, Fishkin and Shaykin were arraigned Thursday and pled not guilty, according to Samborn. A bond hearing will be held for the four on Tuesday, June 7. Furman appeared voluntarily Friday and also pled not guilty. She was released on her own recognizance.