On Monday, August 21, 2017, a Chicago real estate developer was sentenced to three years in prison for his involvement in a fraud scheme. The scheme was linked to a $105 million line of credit secured by city and suburban properties. At the time of the fraud, Laurance H. Freed worked as the president of Joseph Freed & Associates LLC. He was also involved in stealing millions from his business partner, Kimco Realty Corp.
Freed was also sentenced for fraudulently acquiring more than $575,000 in publicly funded loans from the city of Chicago and attempting to acquire an additional $1 million through fraudulent means. 54-year-old Freed of Chicago was convicted by a federal jury last year on the following counts.
- Three counts of bank fraud
- One count of mail fraud
- Four counts of making false statement to a financial institution
In addition to the 3-year prison sentence, Freed has also been ordered to pay a $250,000 fine and $575.759 in restitution to a victim bank. The same investigation also led to the conviction of JFA’s vice president, Caroline Walters. Walters of Palatine pleaded guilty to one count of making a false statement to a financial institution last year.
Walters was sentenced to six months in prison. According to evidence presented in Freed’s trial, Chicago issued two Tax Increment Financing notes to Uptown Goldblatts Venture LLV in 2002. Uptown Goldblatts Venture was formed by JFA to redevelop the former Goldblatt’s store in the Uptown area of Chicago. The notes had a total principal of $6.7 million. Freed subsequently pledged one of the notes to Cole Taylor Bank as collateral.
Four years later, entities linked to JFA entered into agreements with a bank consortium for a revolving line of credit up to $105 million. Uptown Goldblatts proceeded to enter into a new deal with LaSalle Bank. This resulted in Uptown becoming a borrower under the JFA-affiliated loan agreement. Through the LaSalle deal, Uptown pledged the two TIF notes as collateral. They also suggested that the notes were owned free of other secured interested. Nothing was mentioned of the note already pledged to Cole Taylor.
Evidence also suggested that Freed attempted to sign and submit false affidavits in 2009 and 2010 to acquire more than $1.5 million in TIF payments from Chicago, despite knowing he was not entitled to those payments. When Freed experienced financial difficulties, he withdrew more than $7 million from the account of the Streets of Woodfield partnership without the knowledge of then partner Kimco, which owned 45% of the business venture.
The money was fraudulently recorded as “loans”. Laurance H. Freed has been sentenced to 36-months in prison for the scheme.