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 FINALLY provided SOME documentation.  However the documents provided are vague, and we do not know if the auditors' requirements have been met.


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

We'd love to hear from you!
(224) 544-9058


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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.

We'd love to hear from you!
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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!

Wednesday, April 1, 2015

Cedar Run Legal Update - 3/25/15 Transcript Available

Dear Cedar Run homeowners,

We have now obtained the court transcript from the Rule to Show Cause hearing against Robert Sher.  It is quite long, but it contains some very telling information, including a sworn testimony from Robert Sher himself.

You can read the transcript by clicking HERE.

***UPDATE***
COPY OF COURT ORDER NOW AVAILABLE
CLICK HERE
**************

For now, here are some highlights:


CONTEMPT OF COURT
Judge Garcia did rule that a letter sent by Robert Sher in early March DID VIOLATE the TRO order (and/or the stand still order).  Therefore, Robert Sher was found in contempt of court.

The Judge stated that Sher's letter, despite a small disclaimer, was still an attempt to communicate with homeowners in an official manner (page 47, line 14).  The large headlines about assessment reductions, the countless references to his actions while on the oversight committee, and even the return address on the envelope claiming to be from "Cedar Run" (see below), were enough to convince the Judge that Sher was simply trying 'get around the order' but still communicate with homeowners in an official capacity.

Return address from Sher's March 2015 mailing


SHER'S TESTIMONY


Robert Sher insisted that he has done "nothing but good" for the Cedar Run community.  That's right, folks...NOTHING BUT GOOD!  He says it at least twice during his testimony (page 14, line 12; page 15, line 17) .  We won't even touch this one right now.  We find the truth to be quite self-evident on this topic.

The blog continues to gain notoriety.  Robert Sher says the word 'blog' (referring to THIS blog) at least 10 times during his testimony.  He tries to argue that the information we disseminate on this blog is false and that he was entitled to issue his letter (as an individual) and defend his name.

Our response:  The information on this blog is not only TRUE, but we back it up by posting documents and evidence that PROVE IT IS TRUE.  When this information is not favorable for the Sher/Shaw cause, Robert Sher resorts to measures like telling owners that the court transcripts we've posted are fake.  The truth has almost always been against the Sher/Shaw group's interests, and Sher will go through great lengths to suppress any facts that aren't favorable to him.

That said, we'd like to thank Robert Sher and the entire Shaw clan (Barbara, Jack, Anne, and Caryn) for reading and following our blog.  Many thanks as well for providing the feedback (in court) that proves that this blog has made a difference.  Your feedback tells us that this blog has provided Cedar Run homeowners with the badly needed counterpoint to a narrative that the HOC (under the direction of Robert, Barb, & Jack) has created via their slanderous, self-aggrandizing, so-called 'Newsletters', and the (even more slanderous and self-aggrandizing) clubhouse presentations.



Anne Shaw Removed From Courtroom


After interjecting multiple times and trying to object to other arguments made in court, Anne Shaw was told by the Judge to leave the courtroom (page 34, line 20).  Apparently the Judge would only allow one Shaw sister to speak or object on behalf of Robert Sher, and the Judge decided it should be Caryn Shaw.  Anne apparently did not respect this, so OUT THE DOOR SHE WENT!!

While this incident may be quite embarrassing for Anne Shaw professionally, it really had no bearing on the Judge's ruling.

Consequences

While it is still not clear what type of sanctions there will be for Robert Sher (if any), we do know that a letter will be issued and sent to homeowners by the receiver.  This letter will address all of the major points and falsehoods in Sher's letter, in an effort to clear up any confusion it spurred.  Timeline of this letter is still not clear.

****UPDATE****
The letter that will be sent by the receiver will "purge the civil contempt", meaning that there will be no further sanctions against Robert Sher. (page 3, paragraph 3 of the court order) so long as this letter addresses all concerns raised from Sher's letter.

The Judge will be reviewing drafts of the receiver's letter in court on April 13th, 2015, and he will hopefully make a ruling as to its contents.  That said, the earliest we would see this letter in our mailboxes would be the 3rd week of April.
****************

What we must also clearly state is that the order against Robert Sher for contempt of court is NOT any kind of CRIMINAL verdict.  The Cook County Chancery Division is a CIVIL Court.  Based on some of the reader comments on previous blog entries, we feel it is important to make this distinction.

Still Unresolved

One significant issue that the Judge decided not to address at this hearing was Sher's handling of documents that should have been turned over to the receiver.  To recap, on March 10, 2015, the receiver's report stated that certain expense records had not been turned over by Robert Sher.  This was supposed to be addressed at the 3/25 Rule to Show Cause hearing.

The Judge decided not to address this on 3/25, because he had received a written reply from Shaw Legal Services that appeared to be satisfactory.  However, based on comments made in court by David Bloomberg, the receiver and accountants may not totally concur the reply from Shaw Legal Services.  This issue may very well come up at a future court date.

Check back regularly for more info!
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Wednesday, March 25, 2015

Cedar Run Legal Update - Special Hearing Today

At the last court hearing on March 10th, the receiver presented his first report to Judge Garcia.  There were a myriad of issues that the receiver had already discovered after only 3 weeks of managing Cedar Run. We will provide a more detailed summary of them later.

Receiver's report can be found HERE
A transcript of the 3/10/15 hearing can be found HERE.

Two issues that stood out to the Judge specifically involved Robert Sher's actions and his failure to obey the Judge's orders.

  • The letter that Sher sent to all Cedar Run unit owners
    • The letter proclaimed that Sher would have lowered the assessment fee to $65
    • It also encouraged homeowners to take action before the May elections

  • The receiver's comment that Sher was obstructing their efforts to access HOC expense records
    • These records were stored online with Robert Sher controlling access.
    • Sher first restricted access, then eventually removed them.

The Judge was very displeased  after learning of the above actions by Sher. In response to this, he issued a "rule to show cause" against Robert Sher, with a hearing date of 3/25/15 at 2PM.  The purpose of this hearing is to determine if Robert Sher did directly violate the Judge's orders (T.R.O. and stand-still order).  And if so, what the "remedy" (presumably punishment, penalty, or restriction) will be for such violations.


    We will update the blog with any new information we learn from today's hearing. Feel free to subscribe to this blog (see below), and you will get updates right in your inbox.

    ***UPDATE*** 
    Robert Sher in contempt of court!  See comments section.
    ************

    Please stay tuned!!

    restoreCR@gmail.com
    (224) 544-9058



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