Suit alleges fraud, bribe demands in $2.75 million Broadview property deal

By Jean Lotus Staff Reporter

Village of Broadview Building Commissioner David Upshaw (Photo courtesy of Village of Broadview)

Fraud and an alleged bribery shakedown from Village of Broadview officials scared off a potential buyer in a $2.75 million commercial property sale, said a lawsuit filed May 28 by the building’s former owner.

The suit alleges that in 2014 the village thwarted attempts by the seller to renew a Cook County tax rebate and then gave the designation to a buyer who didn’t even own the building. A village official allegedly offered to grease the skids — for a price, the suit alleges. The building later sold to a different buyer for $400,000 less, the suit said.

Jim Pearson, former owner of a building at 2601 S. 25th Ave., filed the suit in Cook County Circuit Court. Pearson seeks $400,000 in actual damages and $400,000 in punitive damages.

“This is an unfortunate situation in which a lot of businesses have been hurt by the Village of Broadview, but they’re afraid to step up because of potential ramifications,” Pearson said. “I’m no longer there. I’m not doing any business in that town and I don’t care what my reputation is.”

The problems began when Pearson attempted to renew a Cook County 6B tax status on a 4¼-acre parcel in 2014. The 6B tax status lowers the Cook County property tax by assessing the property at 10 percent of market value for the first 10 years. The classification is awarded by the County Assessor’s office, but it must be approved by the local municipality.

But when Pearson attempted to renew the status, after the county had approved his application, the village informed him they “no longer issued 6B classifications” he said. The suit alleges Broadview Building Commissioner David Upshaw said to the new buyer and his real-estate agent, “A $50,000 campaign donation would make the process go much smoother.”

Pearson said that spooked the buyer, the owner of a beauty supply company, who had already made a confirmed offer for the property.

“They basically said this is illegal and we don’t want anything to do with this crooked city, and they walked away,” Pearson said. “I was a longtime real estate holder and I was cut off at the knees and forced to sell [at a discount]. I took a huge hit.”

Upshaw did not return calls and texts for comment. Village of Broadview Mayor Katrina Thompson did not respond to requests for comment or indicate whether Upshaw was under investigation. Thompson was elected mayor in the April 2017 election. Her predecessor, Village Trustee Sherman Jones, served as mayor during the timeframe of the lawsuit.

Upshaw is mentioned in another lawsuit filed in 2015 by the Broadview Public Library against the village in Cook County Chancery Court. The library suit alleges that Upshaw, who is a member of the library board, used his position as building commissioner to “sabotage and delay” the construction of a 5,000 square-foot library addition. The judge in that case granted the library’s request to appoint a proxy to handle Upshaw’s duties as building commissioner during the construction of the addition.

“I have a hard time believing this [fraud] is an isolated incident,” said Don Perry, Pearson’s lawyer. He called the alleged shakedown attempt a case of “greed and stupidity.”

After the first buyer cancelled the contract, Pearson sold the building in May, 2016 for $2.35 million to Chicago-based Graymills Corp., a manufacturer of industrial pumps, pumping systems and cleaners.

But before the property had been transferred, on Feb. 16, 2016, the village granted a Class 6B designation to Graymills. Pearson complained that the village could not grant a designation to a party that didn’t even own the property, without renewing his designation first.

“You can’t grant someone the resolution for 6B status on a piece of property they don’t own,” Perry said.

Pearson said the 6B status cut property taxes on the parcel roughly in half, and generated about $1 million in value for 10 years between 2005 and 2014.

“I passed that on to the tenants, Central Beverage Co., because they paid the property taxes.”

The 6B process was a “success story” for the Village of Broadview and Central Beverage, said Pearson. Over 10 years, Central Beverage was able to expand the operation from 35,000 square feet to 125,000 square feet and expand from 25 employees to more than 100 employees — some members of the local Teamsters union — with an average income of $60,000, according to a 2014 letter from Central Beverage president Donna Spagnola.

“Employees are ethnically and gender diverse and many reside in the immediate local area,” she wrote. Pearson said the company put money in the Broadview economy by buying gasoline and other supplies locally.

That all dissolved when Pearson was unable to secure the tax rebate. Central Beverage was sold to a competitor and closed the business.

The Village of Broadview has an inspection process for sale of any property, which requires a transfer document called a “Title 13 Compliance stamp.” Before sale, the property must be inspected for potential code violations. Sometimes the buyer pays the construction costs to correct code violations. With a 6B designation, the buyer must present a plan showing how a building is to be renovated. According to Title 13 documents, a buyer cannot use the property until the village is paid an unspecified escrow amount, which is held until code violations are resolved. The escrow is returned at the village’s discretion and can be forfeited, according to the documents.

“Evidently the town figured out the 6B was valuable to somebody,” Pearson said.

“Over the year it took to sell the building all this dishonesty came up. I took a financial beating and I wasn’t treated the way any human being should be treated … a municipality should be helping the people who work hard and generate income that helps the whole community.”

The next court hearing in the case is scheduled for July 12.

 

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