****(Source : llinoisanswers.org) The property at 6956 S. Wallace in the Englewood neighborhood is one of hundreds the city of Chicago contends is part of a network of neglected and hazardous vacant lots throughout the city. (Credit: City of Chicago court filing)
‘Empire of Neglected And Hazardous Vacant Lots’ Declares Bankruptcy, But City of Chicago Cries Fraud
The city of Chicago is accusing a North Shore business woman and her sister of fraud after their companies filed for bankruptcy while facing millions of dollars in unpaid municipal tickets and potentially millions more in legal judgments tied to their “empire of neglected and hazardous vacant lots” on the South and West sides.
City attorneys accuse Northbrook-resident Suzie B. Wilson and her sister, Swedlana Dass, of concealing their wealth by transferring their local properties “around like candy” to businesses based in South Dakota, leaving the Illinois’ companies that owe the city millions of dollars “completely insolvent.” The transfers started after Illinois Answers Project and Block Club Chicago first revealed that their businesses owed the city more than $15 million in unpaid tickets for such violations as overgrown weeds and garbage on vacant lots the businesses owned.
Whenever properties were sold, the city alleges, Wilson and Dass would write checks to themselves out of their shell companies as “fake loans,” stating in the memo line: “Will pay back funds when available.”
“But on what terms and when?” the city asks in its filing. “The answer was whenever they wanted to, which was never.”
The network of about 20 companies owned by Wilson and Dass filed the motions in federal court last month to restructure or wipe away their debt while they seek a $4 million loan to prep some of their properties for sale, according to a court filing by the sisters’ companies.
As the largest debtor, the city agreed to the loan after negotiating to receive $700,000 up front and received another $454,000 from sales of Wilson-owned properties that the Chicago Transit Authority needs to buy as part of its $3.6 billion Red Line extension project.
The sale of their “top 150 to 200 properties,” could raise more than $12 million and help settle their city debts, according to Wilson’s filing.
Mary Richardson-Lowry, Chicago’s corporation counsel, said the legal effort against Wilson’s businesses is the first step in a larger effort to target the city’s largest debtors. Her office formed a “special collections unit” and hired three attorneys to litigate cases against 10 other significant debtors, who owe $26.3 million in unpaid fines to the city.
She said the preliminary proceeds from Wilson’s case is expected to more than pay for the new employees’ salaries, with additional revenue anticipated from the city’s biggest scofflaws.
“We are looking for them and plan to hold them to account,” Richardson-Lowry said. “We decided to begin this pursuit with the worst of the known offenders. These others will also begin to feel the impact of their existence.”
Before the bankruptcy filings, Wilson’s and Dass’ businesses transferred their assets from their Illinois companies to newly created companies in South Dakota, which does not require ownership to be disclosed in corporate filings, as previously reported by Illinois Answers.
“These grantors owed the city millions, and these transfers left these entities with just about nothing,” the filing states. “Ultimately, by either transferring the properties directly to newly created South Dakota entities or by transferring the ownership of the entities to newly created South Dakota entities, all or nearly all properties were now owned by these new entities. The fraud could not be clearer.”
The city made the fraud allegations in the bankruptcy case in a request to examine the finances of Wilson, Dass and their real estate companies.
City attorneys argue Wilson’s and Dass’ businesses have refused to turn over their corporate books, records and tax filings and have “failed to produce even the most basic documents regarding” their affairs.
“Tax documents are the most basic financial documents the creditors and the bankruptcy court are entitled to, but the debtors and their handlers refuse to give even a single page,” the city argues in its filing.
The filing also notes that the city obtained financial records from BMO Bank indicating that Wilson and Dass frequently transferred money from property sales to the companies, and then directly to themselves, leaving the companies “completely insolvent” due to “avoidable fraudulent transfers.”
“In short, these entities were used to help take all of the funds out of the debtors while leaving them with millions of dollars in debts to the city,” the filing states.
Separately, the filing alleges that Wilson and Dass had bank accounts at Chase Bank where “significant sums of money were transferred from the debtors’ accounts without any legitimate reason.”
The allegations contain the sharpest criticisms yet levied against Wilson and her business, which previously sued the city in federal court, alleging that it didn’t have the right to fine them for not cutting the grass. They lost the case.
As part of the bankruptcy filings, Wilson filed a statement where she lays out the history of her business, which she founded in 1987 with her sister. Two years later, Suzie’s husband, Michael Wilson, a tax attorney, who has since died, helped the family acquire properties through Cook County’s tax and scavenger sales, which allow people to take control of properties by buying the unpaid property taxes that have been delinquent for two years.
The business has been lucrative. With bids on the lots beginning at $250 per lot, the family has acquired 812 parcels with an estimated market value of $17.8 million, according to an appraisal filed in the case. Most of the properties are in Chicago, but several are in struggling south suburbs such as Dolton, Harvey and Robbins, which have some of the highest property tax rates in Cook County.
Although most of the properties are empty lots in distressed neighborhoods, the portfolio includes a small selection of rental properties that generate about $290,000 annually as well some now valuable properties in the path of the CTA Red Line extension and near Jackson Park, the home of the Barack Obama Presidential Library.
The plan was to sell the properties more than 15 years ago, but that strategy was upended in 2008 by the Great Recession, according to Wilson’s filing. She complains that the city exacerbated their hardship by fining them up to $1,200 per ticket for “failure to maintain the vacant lots.”
Richardson-Lowry called Wilson’s arguments a “series of excuses and rationales for her bad behavior.”
“We’re supposed to do what?” Richardson-Lowry said. “Clean it for her? Are we supposed to clean up the trash for her?”
Separately, the City of Chicago is suing Wilson in Cook County for $28.7 million for allegedly failing to clean “an open dump of junk vehicles, propane tanks and flammable materials” in Englewood and a hazardous tire dump in West Englewood.
Another city lawsuit accuses Wilson’s son, Matthew, of working “under his mother’s apparent tutelage” to purchase about a dozen properties through the county’s scavenger sales. The lawsuit is seeking $1.1 million for alleged violations at four properties in Austin, Englewood, Roseland and Washington Heights.
“Matthew neglects the properties so that they become eyesores at best and open dumps of toxic waste at worst,” the lawsuit states. “Therefore, the city seeks the court’s help in stymieing the infectious spread of the Wilson family’s neglect, which threatens Chicagoans’ public health and safety.”
Multiple messages left for Wilson and Dass, and Wilson’s son, and their attorneys were not returned.
Richard A. Saldinger, an attorney for Suzie Wilson, wrote in a court filing that the city was overreaching in its pursuit of Matthew.
“The city’s deep-seeded hatred and resentment for Suzie Wilson, who is a current client of Mr. Saldinger, has no place in any litigation proceedings,” Saldinger wrote. “However … the city’s vitriol towards Ms. Wilson has now been extended to Ms. Wilson’s 27 year-old son, Matthew.”
Saldinger asked Cook County Circuit Court Judge Eve M. Reilly to sanction the city and award Saldinger $1,125 for the time two-and-a-half hours he spent responding to city requests on behalf of Matthew, whom he wasn’t representing.
Reilly denied the motion.
This article first appeared on Illinois Answers Project and is republished here under a Creative Commons license.
