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When it comes to padding your real estate investment profits in Chicago, sometimes all it takes is having the right connections. And that’s exactly what it looks like the mysterious (and now defunct) JJJ Properties had when it secured $625,454 in Tax Increment Financing (public aid) from the City of Chicago to assist in “site prep-related expenses” that enabled their project, the Chaville Condominiums at 5978 North Lincoln Avenue, to move forward.

But what are the “right” connections? And more importantly, why are taxpayer dollars being allocated to line real-estate developers’ pockets with guaranteed profits in exchange for selling property at below fair market value?

TIFs are public financing methods that are used to subsidize private investment for redevelopment, infrastructure, and other community-improvement projects, and they have come under scrutiny in Chicago after numerous TIFs were found to be full of conflicts of interest, wasted money, and other corruption.

In the case of the Chaville Condominiums, a shell company, a powerful lawyer, and a notorious builder now in prison are all connected to the Tax Increment Financing (TIF) deal that got the project off the ground.

Prominent lobbyist Langdon Neal and the unknown (defunct) JJJ Properties

The story starts with Langdon Neal of the law firm Neal & Leroy, a powerful figure in Chicago’s political world (who has visited the White House on more than one occasion during the Obama presidency). Neal is the chairman of the Chicago Board of Elections, where his duties include deciding who makes it on the ballot. He also lists on his resume, his connection to the radical Joyce Foundation. In a 2013 profile in the Chicago Reader, Mick Dumke wrote of Neal:

It’s not literally true that Langdon Neal and his law firm are involved in every major political deal in Chicago. But sometimes it seems that way….(H)e and his partners at Neal & Leroy aren’t bad at the political part either: they’ve made millions of dollars working for governmental bodies, then turning around and lobbying some of the same bodies for other high-paying clients.

Another Chicago Tribune article describes Neal:

…a third-generation City Hall power player who is a paid political appointee as chairman of the Chicago Board of Election Commissioners…Neal, whose law firm Neal & LeRoy specializes in eminent domain and zoning proceedings, has received nearly $7 million in city contracts since 2010, according to records. He also lobbies the city on behalf of business and development interests and has worked on previous eminent domain and land acquisition efforts for McPier.

Neal’s firm in 2002 registered to become the lobbyist for developer JJJ Properties, which bid on a TIF for up to $1.1 million for the Lincoln Avenue property just after incorporating. In September 2003, JJJ won the contract to build for $5.2 million. In order to qualify for the TIF, JJJ Properties agreed to sell five of the 21 condominiums at below market value, from $136,000 to $156,000, according to the Chicago Tribune article.

Why was someone as powerful and influential as Langdon Neal representing JJJ Properties? 

Langdon Neal’s firm must have seen the same promise that the 40th Ward Alderman Patrick O’Connor did when, in June 2004, the development first won approval from the City Council and O’Connor suggested it was the start of a long working relationship:

We would like to see this developer [JJJ Properties] build on the remainder of this block, from [Peterson Park] southeast to the corner where the Christian Science Building would remain standing….In that second construction phase, we would like to see lower level, lower density type of homes built so that we would have a mixed block there.

There is no record of JJJ Properties ever doing anything besides their role in this Lincoln Avenue building, and the company listed a post office box as its business address on a disclosure and affidavit statement to the city of Chicago.

JJJ Properties has two proprietors, according to public record: Yong Wha Kim and Jane Kim, both well known in Chicago’s Korean community for running the newspaper Korea Time Chicago. Neither appear to have any building experience.

Langdon Neal’s interest in representing–and O’Connor zeal for–the newly formed company remains murky.

The property’s main subcontractor goes to federal prison

The main subcontractor on the Lincoln Avenue building in Patrick O’Connor’s 40th Ward, according to public records, was Kiferbaum Construction, which received work according to the initial terms for $5.1 million. Jacob Kiferbaum was for years a notorious insider, who was indicted on the same 28-count indictment as Stuart Levine and Nicholas Hurtgen. Levine is an even more notorious insider whose cooperation helped lead to the indictment and conviction of former Illinois Governor Rod Blagojevich.

According to the 2005 indictment, all three (Kiferbaum, Levine and Hurtgen) were “allegedly engaging in insider dealing, influence-peddling, kickbacks, and corruption” and they also participated in a “fraud scheme to obtain multi-million dollar contracts for their businesses through construction kickbacks and other fraudulent deals.”

The Lincoln Avenue building was completed at an end cost of $8,621,372 shortly after Kiferbaum’s indictment back on June 6, 2005, when Kiferbaum agreed to cooperate with federal authorities and accepted a guilty plea of attempted extortion.

Kiferbaum was sent to federal prison to begin serving his 27-month sentence in October 2013 after a long legal process, beginning with his indictment on May 9, 2005 and ending with his scheduled release date of March 29, 2015. Kiferbaum Construction is now extinct.

Daley sees that JJJ gets paid, Rahm gives it the stamp of approval

Though the TIF had been approved and the project completed, the Daley administration waited until February 10, 2010–almost five years later, when Kiferbaum’s name was no longer in the news–to cut a check for $625,454 for the project, according to public records.

JJJ Properties was subsequently dissolved on January 14, 2011.

An audit done by the administration of current Chicago Mayor Rahm Emanuel was completed and signed off on June 23, 2011. Peter Strazzabosco, the Deputy Commissioner for Communications for the city of Chicago’s Department of Planning and Development said the TIF was used to help finish the project. “The assistance was provided for a specific purpose: Site prep-related expenses that enabled the project to move forward.”

There was $1.7 billion in TIF accounts in the City of Chicago as of January 1, 2014, according to Tom Tresser of the Civic Labs, a watchdog group which has taken a keen interest in the Chicago TIF scheme.

Not checking voicemail?

A voicemail to a phone number listed to JJJ’s Yong Kim on a public document was left unreturned to RebelPundit. The law firm representing JJJ Properties, according to filings with the City of Chicago, was listed as the Chicago area law firm Smith, Kruse, and Nicolau; a phone call from RebelPundit was left unreturned.

The office of Alderman O’Connor said he was out of town and the office didn’t provide a statement to RebelPundit as of publication. An email to former Mayor Richard Daley at his current employer, at the Chicago law firm Katten, Muchin, and Rosenman, was left unreturned. Neal did not respond to a phone call at his work phone number from RebelPundit.

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