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Developer Behind Block 37, Uptown Goldblatt's Building, Convicted of Fraud

By  Alex Nitkin and Ted Cox | February 24, 2016 9:27pm 

 The developer of the Uptown Goldblatt's building, which previously housed Borders and will soon be home to First Ascent, was convicted of charges together carrying a maximum sentence of 230 years in prison.
The developer of the Uptown Goldblatt's building, which previously housed Borders and will soon be home to First Ascent, was convicted of charges together carrying a maximum sentence of 230 years in prison.
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DNAinfo/Adeshina Emmanuel

CHICAGO — A Chicago real estate developer was convicted for, among other crimes, "fraudulently obtain[ing] millions of dollars in publicly funded loans" from the city of Chicago, U.S. attorneys announced in a Wednesday news release.

Laurance H. Freed, the president of Joseph Freed & Associates LLC, who also stole millions of dollars from his business partner, lied to financial institutions and the city of Chicago in efforts to obtain $6.7 million in Tax Increment Finance money and a $105 million line of credit for city and suburban properties including the former Goldblatt's Department Store in Uptown, federal attorneys said.

After a two-week trial, Freed, 53, of Chicago, was convicted on three counts of bank fraud, one count of mail fraud and four counts of making a false statement to a financial institution.  The conviction carries a combined maximum sentence of 230 years in prison. Freed will appear in court for a status hearing March 24, and a sentencing date has not yet been scheduled.

According to a federal complaint filed in 2013, the Freed and his co-executive, Caroline Walters, made a deal to develop the Uptown Goldblatt's building in 2002, receiving commitments from the city for $6.7 million in Tax Increment Finance funding, and mortgaged it to the Cole Taylor Bank for a loan originally set at $15 million and later lowered to $9 million. The deals specified that, if the firm defaulted, city payments would stop, and the bank would get the building.

The complaint charged that, later in the decade, the firm "was in the middle of a severe liquidity crisis that jeopardized its ability to pay operating expenses. Freed and Walters were aware of JFA's need for cash and the possibility that JFA's inability to make required payments threatened the company's future."

The complaint went on to charge that, from March 2008 to "at least" February 2011, Freed and Walters defrauded banks and the city, in part by citing the Goldblatt's building as collateral with a consortium of other banks led by Bank of America in an attempt to open a $105 million line of credit that would provide the firm with instant liquidity.

They were also charged with filing false affidavits to the city to collect $1.7 million in TIF funds to establish liquidity, money that, like the building, was technically committed to Cole Taylor Bank.

Walters pleaded guilty earlier this month to one count of making a false statement to a financial institution. Her conviction carries a maximum sentence of 30 years in prison. Walters is scheduled to be sentenced by Judge Dow on June 10.

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