I’m pleased to report that notorious Rogers Park slumlord Michael Kakvand pleaded guilty yesterday in federal court to fraud stemming from a series of fraudulent condominium conversions involving 30 Chicagoapartment buildings, including 12 buildings in the 49th Ward. The successful conclusion of the Kakvand saga is powerful testament to the fortitude of our neighborhood and the strength of community policing.
A Chicago Sun-Times account of the guilty plea is below. The story highlights the fraudulent activity, which consisted of setting up phony condo conversions, selling the “converted” condominiums to “straw” buyers, and then defrauding banks of mortgage loans.
Kakvand exercised no tenant screening and did little to upkeep the buildings. The buildings became some of the worse sources of crime in the neighborhood. Tenants were victimized by the poor conditions and many were forced to leave their homes when lenders foreclosed on their units.
Other Kakvand buildings remained vacant and began to fall into disrepair, with broken windows and entry locks, overgrown grass and shrubbery and accumulating trash. Many became home to squatters, creating a serious public safety concern for the neighborhood.
Kakvand’s scheme was first uncovered in 1999 by Mary Jane Haggerty at the Rogers Park Community Council, who noticed that units in several of Kakvand’s buildings had changed hands multiple times in a very short time period, and that the same individuals were purchasing numerous units at his various buildings.
Mary Jane contacted my office, and together we began to look more closely at Kakvand’s buildings. It soon became apparent that some fraudulent scheme was at work.
My office notified the authorities, and I immediately convened a task force of neighborhood residents, community organizations and city officials to explore the extent of the looming problem, and arrive at solutions. The group consisted of my Chief-of-staff Kevin Cosgrove, Police District police officers, representatives from the Community Policing Office, the 49th Mary Jane Haggerty, attorneys form the Gang and Drug House Division of the City’s Law Department, 24th Ward Streets and Sanitation Ward Superintendent, representatives of block clubs, and several 49th Ward residents.
Eventually, the Task Force expanded to include the Community Investment Corporation, representatives from Banks that held mortgages on these properties, responsible developers and landlords, and outside attorneys with expertise in condominium and property transfer law. At my behest, the Chicago Law Department initiated cases against Kakvand and his partners. We also shared information about Kakvand’s fraudulent practices with State and Federal authorities.
City attorneys obtained court orders to vacate and board up properties that were illegally occupied and not properly secured. The Department of Streets and Sanitation devoted extra resources to keeping the areas around these properties from becoming eyesores, and members of the 24th Police District devoted extra personnel to ensure that the community was protected from criminal activities.The case was complicated by the fact that it involved 153 individual apartment units with mortgages spread throughout the country. In order to secure these properties it was necessary to control at least half of the units in each of the properties.
The task force worked with representatives of the various banks, and with responsible developers. The banks were very cooperative with my task force once they realized what had occurred. Over the course of one year, we made sure the buildings were acquired by responsible landlords and developers, and now all of Kakvand’s former buildings are neighborhood assets.One prominent real estate attorney who donated time to work with my task force estimated it might take up to three years to properly secure the properties. We accomplished that goal in under a year.
Mr. Kakvand and his associates were forced to spend several weeks in jail, pay tens of thousands of dollars in fines, and perform community service work clearing garbage with employees of the Department of Streets and Sanitation.
After the task force disbanded, I continued to work with the U.S. Attorney’s Office and with the FBI to ensure that Kakvand and his associates were charged with federal crimes.
Thanks to those efforts, Kakvand now faces the possibility of serving as much as 30 years in prison.
Our successful effort against Kakvand is a prime example of community policing at its best, with all branches of government and community residents and organizations working together. We rid our neighborhood of a notorious slumlord and brought him to justice.
Congratulations to everyone involved!
Guilty plea in mortgage scam
February 13, 2007
BY MARY WISNIEWSKI Business Reporter
Mohammad “Mike” Taghie Kakvand, the ringleader in a mortgage scheme that resulted in abandonedChicago apartment buildings, pleaded guilty in federal court Monday.
Kakvand bought 33 apartment buildings in Rogers Park and on Chicago’s South Side, but didn’t renovate them, according to the indictment. Units were sold as rehabbed condos at inflated prices, using straw buyers who defaulted on $29 million in loans. The plot displaced renters and left decaying, crime-plagued buildings, according to community leaders.
“There is no punishment too severe for Michael Kakvand,” said Ald. Joe A. Moore (49th). “He preyed on our neighborhood, he took advantage of people, and the damage he did took years to unravel.”
Kakvand, 54, of Park Ridge, wore an orange prison uniform as he entered a plea of guilty to one count of wire fraud before U.S. District Judge William Hibbler. He has been in custody since late 2005, when he was arrested in Canada after being on the run for more than a year.
Also charged were Syed Ali Mohammed Razvi, a fugitive, and real estate appraisers Thomas M. Groh, Eric L. Dorsey and Britt J. Pierre, who have already pleaded guilty.
The scheme took place between 1997 and 2004. According to the government, Kakvand would buy apartment buildings with the stated intention of converting them to condos. Then he and others recruited individuals to buy condos in the buildings.
The buyers were promised they would not have to use their own money, and were offered at least $1,000 for each condo they agreed to buy.
Kakvand and others prepared false mortgage applications, listing incorrect job titles and incomes for the applicants, according to the government. False appraisals misrepresented the condition of the condos, making it seem they had been rehabbed.
Relying on the false documents, lenders such as Washington Mutual and Wells Fargo issued loans on the condos. The money went to the defendants. Meanwhile the “buyers” defaulted, and the buildings became vacant.
People who had rented apartments in the buildings suddenly found no one was collecting their rents, and they had to leave when lenders foreclosed on the units, according to Mary Jane Haggerty, housing action program director at the Rogers Park Community Council. She started taking calls from angry renters in 1999, and the council became suspicious when it found that the same names bought up so many condos in troubled buildings.
“You could go and look at these buildings and know that no person in their right mind would have paid condo prices,” according to Haggerty, who said the units were being sold for up to $175,000.
Moore said a building in the 7600 block of Greenview was the scene of “open and notorious” criminal activity.
“It was a complete and total mess,” Moore said. He said his office worked with community groups and the city to identify the lenders who owned the units and find legitimate developers to return the buildings to use.
Haggerty said one of the continuing legacies of the scheme was the artificial inflation of home prices in Rogers Park and the related increase in property taxes. The scheme also decreased the amount of rental housing available.
Kakvand has not yet worked out a sentencing agreement with the government. The maximum sentence is 30 years in prison, plus fines and restitution. He will be sentenced May 9.
© Copyright 2007 Sun-Times News Group