Residents of a building linked to a federal bribery probe earlier this year say their apartments were transformed into condominiums and sold without their knowledge, and their suspicions have prompted a state agency to investigate.
Tenants say they suspect their apartments at 2754 W. Washington Blvd. were sold to straw buyers by the building's owner, Prospect Development and Management.
They remain unclear as to who actually owns the building, have stopped paying rent, and have banded together to take care of the building's utilities and maintenance.
Petru Cladovan, identified in real estate filings as Prospect's president, was indicted in May along with 14 others, including contractors, developers and seven city inspectors. Federal authorities accused him of attempting to bribe a building inspector to secure a certificate of occupancy for the West Washington building.
Cladovan is a 48-year-old resident of Prospect Heights, the indictment says.
He could not be reached for comment late last night.
Chicago attorney Theodore Poulos is representing Cladovan in the federal criminal case. Reached at home late last night, Poulos said he was not immediately able to comment on the dealings at 2754 W. Washington.
Records from the Recorder of Deeds Office show Prospect bought the building in 2001. The following year, the building was deeded to L&P Development, LLC. Real estate records list Cladovan as the manager of L&P.
In February of 2008, records show, L&P obtained a condominium declaration, and in March, began selling the individual condominium units to KMA Construction Company.
KMA then sold the individual units as condos, according to mortgage documents.
Diane Mulvey, a tenant in the building, first became suspicious when she received a mortgage statement from a lender in Oklahoma in late March addressed to a man she had never met before.
That came as a surprise, because Mulvey, a medical student and a former investment banker who attended law school, had been paying rent to Cladovan, she says.
Other tenants, too, say they began receiving mortgage notices for men who did not live in the building, but apparently owned the condos the tenants had been renting as apartments.
Mulvey began looking up the building’s history of transactions on the Cook County Recorder of Deeds website.
The documents show her apartment had been purchased as a condo for $310,000, and that the new owner obtained a mortgage from Gateway Mortgage Group for $279,000.
“I contacted the director of this little tiny thing (Gateway Mortgage) and said, you know this condominium is not a condominium; it’s an apartment building. I think there’s something fraudulent going on here," says Mulvey.
Mulvey also noted the owner was paying nearly $2,000 monthly for his mortgage, while she rented the unit for $1,100.
“This just didn’t add up,” she says.
The bank said they would look into the complaint, but never followed up with her, says Mulvey.
A few weeks later, Mulvey says, a man purporting to be the owner of her unit called and threatened to terminate her lease because she had caused problems with his bank.
Gateway's attorney, John Douglas, confirmed yesterday that state investigators had requested documents from the company related to 2754 W. Washington.
Prior to the condo conversion, tenants say, they were satisfied with the management of the building.
“They always took care of things in a prompt manner; they were courteous,” says Patrick Saldana, another tenant.
But this spring, problems began at the building in East Garfield Park.
Several men claiming to be new owners approached tenants and asked them for rent.
The tenants refused.
Uncertain about who really had legal claim to their apartments, most of the tenants stopped paying rent by May, says Mulvey.
In June, Mulvey says, she found bills for trash collection, water and electricity for the common areas of the building had not been paid.
Prodded by Mulvey, the tenants quickly realized that they would need to organize themselves. In June, they began holding monthly meetings to discuss how to keep the building running.
Mulvey served as secretary and kept detailed minutes. Xochitl Saldana, a biomedical technician, served as treasurer.
“As the treasurer I have been collecting monthly fees from everybody,” says Saldana. “We have opened up a checking account in the name of the building. With those funds I make sure that the utilities have been paid—the light and the water for the building.”
In early August, after an unfamiliar couple showed up to clean the premises, the tenants changed the locks on the building entrances.
They organized a recycling system to avoid the expense of a private trash hauler.
They also hired a maintenance man from the neighborhood to perform cleaning and minor repairs and keep an extra set of eyes on the building.
Now the group is seeking assistance from lawyers from the Metropolitan Tenants Organization and the Lawyers Committee for Better Housing.
They say they did not receive advance notice that their apartments would be turned into condos, which is required under Chicago law.
Tenants are also entitled to the first right of refusal to purchase the unit, says John Bartlett, executive director of the Metropolitan Tenants Organization.
In total, six different buyers of condos at the Washington Street building were able to obtain almost $1.7 million worth of mortgages from at least six different mortgage companies, according to real estate records. Their monthly payments equated to twice the cost of what the tenants paid for monthly rent.
The tenants say they want to use the city’s Troubled Building Initiative program to turn their building into a non-profit cooperative.
“We’ve kept this building going as smoothly as possible,” says Mulvey. “Every ‘i’ is dotted; every ‘t’ is crossed.”
The state Department of Financial and Professional Regulation became aware of the matter when a Daily News reporter interviewed one of the department's mortgage fraud experts about transactions involving the building.
The department's mortgage fraud task force is investigating, an official in the department confirmed yesterday.
"Obviously, something's fishy," says Saldana. "It appears there's multiple owners, not just one. It's a mess."