Friday, August 21, 2015

Cedar Run Phase IV vs Robert Sher

According to court dockets and public records on file with the Cook County Recorder of Deeds, Robert Sher appears to owe a large sum of money in delinquent assessments to his phase association.

On 7/24/2015, Cedar Run Phase IV Condo Association placed a lien on Robert Sher's unit, citing moneys owed by Sher for a sum of $6774.53 plus costs and attorney fees.



On 7/31/2015, Cedar Run Phase IV Condo Association then filed a collection lawsuit against Sher.  The lawsuit is currently seeking an amount of $7579.28. Click HERE to view the court docket.

What does this mean?
Many have suspected that Robert Sher has not paid his phase dues in well over THREE YEARS!!  These numbers are very consistent with that estimate. So, despite being flush with cash while earning nearly $4K per month as "Oversight Committee Chair", Mr. Sher apparently still didn't pay his dues.

If you'll recall back in spring/summer of 2012.........many homeowners, at the urging (or arguably coercion) of Robert Sher, stopped paying dues to their respective phase associations.  Despite Sher's insistence that there would be no repercussions for doing this,  these homeowners eventually had to pay up.  A good many of them went on payment plans to catch up on their phase dues.  Some were taken to court and nearly faced eviction from their units.  A few actually did get evicted for non-payment.  What most of them had in common is that they could not understand why they were being pursued for this debt after simply doing what they were told by Sher.

What we can see from this lien and lawsuit is that Sher appears to have followed his own foolish advice regarding phase dues (i.e. NOT paying them!).  But somehow, unlike everyone else, Sher has been able to game the system, remain in his unit, and avoid being taken to court for a very long time.  Having an attorney in the family probably has something to do with it.  But maybe Mr. Sher's teflon coating has finally eroded away. We will have to let the courts determine that.  It will be quite interesting to see what Anne or Caryn Shaw will muster up as a defense for their beloved brother-in-law.


Interesting fact
Barbara Shaw is also named in the lien and as a defendant in the lawsuit.  We've discovered  an interesting side-story about Barbara and her ownership stake in their condo unit.

Background
Back in May of 2012, Barbara was elected to the Cedar Run HOC Master Board at the annual meeting (oddly enough, the last time we had an annual meeting).  Within the next month, conflict had escalated over who controlled the board.  After pool lifeguards were harassed and run off the property, contractors told by Robert/Barbara that they were "fired", and owners directed to drop their assessment payments off at Sher/Shaw's unit......The dispute made its way to the courts.

During the court proceedings, it was discovered that Barbara Shaw's name was NOT on the deed for the Sher/Shaw unit.  This meant that she was ineligible to serve as a director for the HOC board, since she was not an owner of record.

In response to this, Robert Sher filed papers to put her name on the deed on 6/25/12 (see below), claiming that the eligibility issue was then moot.  Arguably, this issue was NOT moot because Barbara had misrepresented herself at the time of her election.  Despite this, the issue was basically left alone after that.




Fast Forward to June of 2015

Now Sher has REMOVED Barbara's name from the deed.  This is almost exactly three years after he added her name to the deed.

One can only speculate as to why Barbara's name was suddenly removed.  We won't even go there at this point.  What we do know is that Barabara Shaw is no longer an owner of record in Cedar Run.



We will certainly keep a close eye on the case of Cedar Run IV vs Robert Sher, and we'll be sure to post any new info on the blog.

Other than that, we'd love to hear your feedback on this or any of our articles. Email, call, or text at:

(224) 544-9058

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Tuesday, August 4, 2015

Cedar Run Update - Addendum 1

Bank Litigation 

At the time of the fourth receiver's report, the receiver's attorney had been working with Barrington and Itasca banks, as well as Chubb Insurance to come up with a possible settlement in the bank litigation.

Ending this COSTLY lawsuit will be a HUGE STEP FORWARD for Cedar Run, especially for those looking to sell or refinance their units.

In nearly three years since this lawsuit began, the Sher/Shaw group has made NO EFFORT TO SETTLE the case and EVERY EFFORT TO ESCALATE IT.  In fact, Itasca Bank made a settlement offer over two years ago that wasn't very costly to the HOC and basically required the following:
  1. Sher/Shaw/HOC group must return and account for all Phase Association dues it had collected (to date only about 40% has been returned).
  2. Sher/Shaw/HOC group must issue a letter to all Cedar Run Homeowner that retracts all previous statements that the loans were illegal.
Item # 2 was the toughest one for Sher to swallow after several months of encouraging homeowners to NOT pay their phase dues, claiming that no owner should pay these dues until his allegations are disproven.  Instead, Sher & company decided to battle on rather than eat their own words.

Fast-forward to today........There have been a lot more damages and costs associated with this litigation over after two more years.  Those damages are currently being tallied and evaluated.  

How does this relate to selling/refinancing?
For quite some time, homeowners trying to sell their properties have not been able to sell to anyone except cash buyers (and usually for a cut-rate price).  Mortgage lenders require disclosure forms from associations that state, among other things, whether or not the association is involved in litigation.  This bank case has been a huge red flag, and has caused many real estate deals to die in Cedar Run.  The mortgage lenders would back out, and nobody could secure a loan.

As of the last year or so, mortgage lenders have started making similar requirements when refinancing existing mortgages.  We know of at least four cases where an owner was turned down on a refi due to lack of proper disclosures or impending litigation.

Ending the bank lawsuit will have an immediate effect on the phases.   The phases will no longer be parties to a lawsuit.  They will be able to check 'NO' next to the litigation question on the 22.1 disclosure form.  As for the HOC (Master Board), it will be one step closer to checking that 'NO' box if this lawsuit is settled.  The only other lawsuit would be the one that put us into receivership......which will end shortly after the upcoming election.

Opening up Cedar Run properties to mortgagees will bring us an INCREASE in property values, and we will likely start seeing more buyers as owner-occupants rather than off-site rental investors.  It will also be easier for existing owners to stay in their homes if they have the option of refinancing.

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Thursday, July 30, 2015

Cedar Run Update

Receiver's reports
The third and fourth receiver's reports are now available.
The third report, filed June 12, 2015, can be found by clicking HERE.
The fourth report, filed July 10, 2015, can be found by clicking HERE.

We strongly recommend reading these in their entirety, as they have a lot of information about the state of Cedar Run.

Just a few highlights......................


Accountant-gate
As mentioned in the previous blog's comment section, the receiver has been trying to get information from James Barr, the accountant hired by the Sher/Shaw group to file tax returns, who has not cooperated.  The auditors need copies of the tax returns and any supporting documentation used in the filing of these tax returns.  This is supposedly the last bit of information needed to complete the audit.

At the time of the court hearing on 7/13, Mr. Barr was still refusing to cooperate and still withholding the documents.  The judge then signed an order that required Mr. Barr to comply or face contempt of court on 8/6.  As of the writing of this blog entry, James Barr has supposedly provided SOME documentation.  However, we do not know if the auditors' requirements have been met.  We will wait for the results of the 8/6 hearing to learn more.


Phase 10
This phase association was taken over by Robert Sher in late 2012 with the cooperation of the board at that time.  Since then, Sher and Shaw had managed this phase association and kept its directors completely in the dark about its operations & financials.

Once Sher was out of the picture, the directors on the Phase 10 board had learned how dire their financial situation was (and still is).  Their delinquency rate was/is extremely high, and little or no efforts had been made to collect from non-paying owners.  The buildings were grossly under-insured, and their was no liability (D & O) insurance for the board.  There were past due water bills and almost no money in the bank to pay them.

Assessments for this phase were never increased under Sher/Shaw's tenure, but there was literally  no money to even operate, let alone build any cash reserves.  During the nearly three years that Sher/Shaw controlled Phase 10, we know of at least two instances where the MASTER BOARD paid their water bills and insurance.  There may be many more, but we will wait for the audit report to confirm.

What does this mean?  It means that money paid by ALL Cedar Run owners (most being outside of phase 10) was used to prop up Phase 10 and mask their financial insolvency by subsidizing them with HOC funds.  HOC funds are to be used exclusively on the COMMON GROUNDS of the property.

Today, Phase 10 is now being managed by HHSG (same company acting as receiver for the Master Board).  As of July 10, Phase 10 had over $9000 in past due water bills with the Village of Wheeling.  The water was literally about to be shut off in a matter of days.

The receiver appeared in court on July 13 and asked the judge if the HOC (aka Master Board) can provide a zero interest loan to Phase 10 to pay these bills and keep the water on.  The judge approved.  The terms and conditions of this loan are not known at this time.

Very soon, Phase 10 will likely levy a special assessment to help bring its finances in order.  This is an awful outcome for all the paying owners of Phase 10, but it is a necessary step to bring them back to financial solvency.

This unfortunate circumstance is purely a result of three years of IRRESPONSIBLE MANAGEMENT.

Inadequate income
+
Rising operating costs
+
No incremental assessment increases
+
Outrageously high delinquency rate (with no efforts to collect)
=
Special Assessment


On a related note
Phase 5 was in a similar situation as Phase 10.  They were also managed by Sher/Shaw (starting about 7 months later than Phase 10). They too were left with virtually nothing in the bank and unpaid water bills.

Phase 5's board has not opted for professional management, and it is unclear what their long-term plans are.  They did have a meeting with owners to discuss their future on Wednesday, 7/29.  Results of this meeting are not yet known.


Balance Letters from HHSG
Every month, the receiver sends account statements to all Cedar Run homeowners.  Many owners have complained about these statements showing inaccurate balances. A few things to note:

  • Any payments sent to previous payment addresses (in Wheeling or Chicago) will NOT be reflected in these statements
  • Payments sent to the correct address (Los Angeles, CA) sometimes post after these statements are created and may not always show up on the statement
  • The audit results should account for any payments sent to the previous addresses and all payments made BEFORE the receivership began.
  • If you owed anything BEFORE the receivership began, you won't see it on the statement until the audit is finished.
If your statement shows you missing payments that you know you have made:
  • DON'T PANIC!
  • Wait for an updated statement AFTER the audit is complete
  • If it still shows an incorrect balance, contact HHSG and be prepared to show proof of payment



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Thursday, June 11, 2015

Cedar Run Legal Update - Next Court Hearing 6/15/2015

On Monday 6/15, the receiver will appear in court and present the next receiver's report.  We do not know what the report will contain or what will be discussed.  We are hoping that there will be some answers to the following questions.
  1. When will the audit be complete?
  2. When and how will the audit results be disseminated to the homeowners?
  3. What is the time-frame of the upcoming election?
While there certainly are many more questions that homeowners have for the receiver regarding maintenance and rule enforcement (and we'd certainly like answers on those too), the above questions relate directly to the Judge's orders and to the conditions that will end receivership.

Judge Garcia had indicated a strong preference to have the election completed in the month of May.  Due to extreme difficulties in sorting through the HOC's records, the audit has taken considerably longer than expected.  We will remain in receivership (which is very costly) until the audit and election are complete.

We can only hope that the receiver's report and court hearing on 6/15 will provide some definitive answers.

Recap of previous court hearings

(See also blog entry from 5/15)

On 4/22, the receiver presented his last report to the court.  This report included the (now infamous) Sher/Shaw 'Invoice' for $17.6K plus ongoing payments of $5.9K per month.  The invoice also referred to a contract that allegedly spelled out the terms of payment.

You can view that report by clicking HERE.
To view the just the invoice, click HERE.
To view the contract, click HERE.

After reviewing the invoice and hearing arguments from the Shaw sisters, Judge Garcia scheduled a special hearing on 5/5/15, specifically to address the Sher/Shaw invoice.  At this hearing, the contract was presented as evidence, and Jack Shaw took the stand to make his argument about why he & Robert should be paid.

To view the transcript of the 5/5 hearing (including Jack Shaw's testimony), click HERE.

Jack Shaw tried to explain what he did for Cedar Run and how he is entitled to payment for all the money he has 'saved' for the association and for the homeowners.  To add insult to injury, he also claimed that he was giving us a discounted rate from what he would normally charge a business or association to consult for them and 'revive' them from financial ruin.

Despite the contract and Jack Shaw's long speech about everything from goose droppings to financial audits, the judge was not convinced, and Sher's/Shaw's payment request was denied.

Shaw Legal Services Billing Discrepancies

Also notable was the discussion between Judge Garcia and Anne Shaw about certain invoices that she sent to the receiver, requesting payment.  To Anne's own admission, she had double-billed for $1860.  But from there, it gets even more interesting.....

Judge Garcia had actually gone line-by-line through another Shaw Legal Services invoice (totaling about $12,000) and spotted charges that he felt were redundant and unnecessary.  An example of this would be when two attorneys from Anne's firm had both billed time for what appeared to be the same task.  Another would be when an outside attorney was brought into the case, and Shaw Legal Services billed Cedar Run for the time it took to brief this attorney on the case.

After all was said and done, Judge Garcia rejected $7,560 in charges from Shaw Legal Services.

Another Raw Deal for Cedar Run Homeowners

What was also uncovered in the review and questioning of Anne Shaw's invoices was the issue of how her fees were being paid for the bank litigation.

The former HOC board had filed a claim with Chubb Insurance to cover their legal costs in the bank litigation.  When this happens, normally the attorney would submit their bills directly to the insurance company for payment.  However, Anne Shaw has opted to do it a bit differently.

She has been submitting her bills directly to the association (Cedar Run HOC), collecting payment for those bills, and then leaving it up to the board to request reimbursement from Chubb.  Why is this a concern?  Because, as Anne Shaw admitted herself, legal bills submitted to Chubb are "strictly scrutinized", and Chubb will deny portions if they don't agree with them.

Why is this a big deal?
Because Shaw Legal Services is being paid UP-FRONT with Cedar Run homeowner funds before the bills are submitted to and "strictly scrutinized" by Chubb.  If certain portions are denied, it makes no difference to Anne Shaw.......She's already been paid in full!! The Cedar Run homeowners are on the hook for any portion that Chubb denies....unless Anne Shaw credits this money back to the HOC.  Has she ever done this??  Doubtful, but we will have to wait for the audit to find out.

******UPDATE******
We have learned that to date, NONE of Shaw Legal Services' bills have been submitted to Chubb. This is on a lawsuit that has been going on since December of 2012!!  We don't know if any of it will be reimbursed.  We will have to wait for the audit results to determine how much we have paid to Anne Shaw's firm for this litigation.
******UPDATE******

We have reason to believe that there may be a considerable amount that Chubb would deny. Much of Anne's efforts in the bank litigation have been outside the realm of defending the HOC board and much more in the realm of offensively attacking the banks and phase associations. Chubb will only cover legal costs that they believes are necessary to defend the board.

There may not be anything illegal about this billing practice.  It is just irregular, unorthodox, unethical, and very unfair to the Cedar Run homeowners.

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Friday, May 15, 2015

Cedar Run Legal Update - Sher Invoice & Contract Now Available

In our last blog post on 4/24, we described an invoice that Robert Sher and Jack Shaw submitted to the receiver.  They demanded immediate payment of $17,654.64 plus ongoing monthly payments of $5881.88 until the year 2020.

We now have a copy of this invoice available for all to read.  Click HERE to view it.

Same Old, Same Old
In full accordance with the Robert Sher playbook, this 2.5 page 'invoice' contains about 2.4 pages of self-aggrandizing rhetoric (complete with atrocious grammatical errors) and just a few lines that (poorly and vaguely) describe what services are being billed.

Among this rhetoric, you'll find the following:

  • Sher still blames everything on his predecessors (Alma and previous board).  Here we go again....
  • Claiming $600,000 in savings.  Questionable math, including $161,000 in SPENDING is listed as a 'savings'.
  • Still blames the attorney (Bloomberg) for his ouster.  Complete denial that he has done anything unlawful or improper to cause the court to take action.
  • Still touting conspiracy theories about the financing of the legal case against him.  We're surprised he mentioned nothing about Germans being involved.
  • Still clambering on about his supposed $65/month assessment plan.  Chastises the receiver for not implementing it.

The Worst of it All
The most disturbing thing in this entire letter is the mention of an agreement.  This agreement allegedly binds the Cedar Run HOC (aka 'Master Board') to keep Robert Sher and Jack Shaw on the payroll for a total of  8 years!  This 8 year agreement/contract was presented in court on 5/5 as evidence, and it is now a public document.

Click HERE to view it.  We STRONGLY encourage you to read this agreement in its entirety.
 



On 5/5/2015, the judge held a special hearing to determine if  Sher/Shaw were entitled to payment.  Jack Shaw made a personal appearance in court, hoping to justify his demand for payment.   After reviewing the contract, the judge denied Sher's/Shaw's request for $17,654.64 in payment.  He also expressed doubt in the enforceability of such an agreement.  We will provide more details on the judge's remarks after the court transcript becomes available.



Analysis

The are so many things wrong with this agreement----so many that we will devote an entire future blog post to them.  Arguably, this agreement is even more outrageous than the bogus Bylaws that led to Sher's ouster. 

It's a completely on-sided contract, signed only by members of the Sher/Shaw clan, that ties our association into an unbreakable agreement with Robert Sher & Jack Shaw.


nepotism
noun nep·o·tism \ˈne-pə-ˌti-zəm\
: the unfair practice by a powerful person of giving jobs and other favors to relatives

The only signature on this contract representing the HOC board is that of Barbara Shaw.  It is doubtful that any of the other board members knew about or had any say in the decision to enter the association into such a one-sided, unbreakable agreement.  Even the Bogus Bylaws have four signatures on them (still not a quorum of board members, but better than just one who happens to be a FAMILY MEMBER of the other party).



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Friday, April 24, 2015

Cedar Run Legal Update - Robert Sher Demands Payment of $17K+



In an invoice/letter dated 3/9/15 that Robert Sher sent to HHSG (the receiver), Sher has demanded that he and Jack Shaw be paid an immediate sum of $17,645.64.  This is allegedly 'owed' to them for their 'services'  from December of 2014 through February of 2015.

Furthermore, Sher's letter also states that he and Jack must be paid a total sum of $5,881.88 EVERY MONTH going forward until the YEAR 2020!!


In the letter, Sher claims that the (now ousted) master board had made an agreement with the 'oversight committee' (Robert & Jack) to pay them every month for five years with an optional three year extension (total of eight years - i.e through 2020).  Sher claims that he and Jack are owed this money because of the 'savings' they created for Cedar Run.

This letter was presented in court by the receiver on 4/22.  The receiver HAS NOT paid anything to Robert or Jack, and in the receiver's own report, he "[does] not recommend payment based on previous court decisions...."  In other words, he will not make this payment unless told by the court to do so.


Next Hearing 5/5/15
There will be a hearing on 5/5 to discuss this issue and to decide whether or not Sher/Shaw have the right to be paid.

We will not speculate on how the judge will rule on this matter.  We will let him speak for himself at the 5/5 hearing.

But keep the following things in mind.

  1. Sher's letter claims that there is an 'agreement' with the Master Board, but it stops short of using the word 'contract'.  This may indicate that there was never any kind of written agreement or obligation for the board to pay him indefinitely.
  2. The board that supposedly made this agreement likely had no legal right to make such an agreement.  This is primarily due to the fact that they were operating under a bogus set of Bylaws.  Also, they almost certainly did not have enough directors to make up a quorum as defined by our true governing docs.
That said, we expect the Sher/Shaw clan to have quite an uphill battle if they expect to prove that they are entitled to any payment from HOC funds.   We are looking forward to hearing what type of argument that the Shaw sisters will cook up and present in court in hopes of getting their father and brother-in-law paid.  Stay Tuned!

8 Year Agreement

To give an idea of how ridiculous the terms are of Sher's so-called 'agreement', we thought we'd show an excerpt from a typical, professional condo property management contract.

TERMINATION OF AGREEMENT
The Agreement may be terminated by either party with or without cause, upon sixty (60) days  prior written notice.


What does this mean??  It means that a board of directors has the right to fire their property management at any time and for any reason, as long as they provide sixty days notice.


Conversely,  in the case of Robert Sher.....


He first tried to adopt Bylaws that make him (and Jack) virtually impossible to fire.  Now, he claims that there was a five year agreement to have them both paid -AND- a three year 'optional' extension that is somehow already in effect (even though the first five years has not yet elapsed).  And even though both he and Jack have been ousted from any management role on the property, Sher still claims that the agreement entitles him to payment.


In Closing

While we must wait patiently for the completion of the financial audit results and election announcement, we ask all Cedar Run homeowners to keep the following in mind:

When Sher campaigned for your vote in the summer of 2012, did he mention anything about putting himself (or Jack) on the payroll for almost 6 grand per month?  NO!

Did he mention anything about abolishing elections, scrapping the bylaws, or signing himself to an 8 year contract and no possibility of being fired or removed?  NO again!

Had you known these were his plans, would you have voted for him?  We hope NOT.

.....And we hope that the past two years will serve as a lesson to all homeowners when making their decision in the upcoming election as well as their phase elections.


Check back regularly for more info.
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Tuesday, April 21, 2015

Cedar Run Legal Update - Receiver to Appear in Court 4/22/15

On Wednesday, 4/22, Al Schroeder from Heil, Heil, Smart & Golee will appear before Judge Garcia and present his second report on the status of Cedar Run.

As soon as the report becomes available, we will post it on the blog so homeowners can read it in its entirety.  For now, we encourage you to read the last report which can be found HERE.

The transcript for the hearing where this report was presented can be found HERE.

We are quite interested in seeing what this second report has to say, as there were many unresolved issues when the last report was presented.  Some of those issues included the disposition of certain documents that should have been turned over to the receiver, the status of the association's insurance coverage (workers' comp, liability), and a handful of others.  We hope to find out if there has been any progress on any of these  issues.

Stay Tuned!