Monday, December 28, 2015

Updates from Receiver (HHSG)

Staff at Heil, Heil, Smart & Golee have reached out to us and provided some updates on some pertinent issues for Cedar Run

The following information has been quoted and/or paraphrased from the correspondence that we've had with the receiver.



Snow Removal
  • In light of the precipitation on 12/28, LCM (Landscape Concepts Management) has been instructed to throw salt and to be on standby for downed trees/limbs due to high winds.

Parking

Clearly an imperfect solution but the only solution until a new board is elected.
  1. Towing has begun for specific issues (blocking dumpster, hydrants, yellow curbs).  Two cars were towed as of December 22nd.
  2. We have been calling people that had spots in 2015 but have not reregistered for 2016 to give them a final chance to renew their spot and prevent getting towed.
  3. Owners who were delinquent on their assessments were not given a parking space for 2016.
  4. Many people had special “deals” with the Sher/Shaw group, but those have not been continued.  Rules are being applied equally to all owners/residents as stated under the existing parking program.
  5. Starting December 23rd, available spots are being assigned to owners on the waiting list.
  6. Cars without stickers will start getting towed soon.
  7.  More aggressive parking patrols will begin after the 1st of Jan.
  8. The goal is not to tow cars but to apply the rules as stated and change behavior.
  9. ***UPDATE 1/11/2016*** - Towing for vehicles without proper stickers has now begun.
Financials
  1. The FR&R report (aka the Frost report) will be available in Spanish soon.
  2. The FR&R report is being used to settle outstanding balances for homeowners.
  3. Numerous owners are now entering the collection process and will be turned over to a collection attorney in early January of 2016 if they haven't made arrangements to settle up by then.
  4. ***UPDATE 1/11/2016*** - 10 day notices for delinquent owners have now expired. Delinquent owners are being turned over to an attorney for collections.
Swimming Pool for 2016
  1. The pool is scheduled to be open 28 May thru 4 September.
  2. Contracts are in place for Life guards and the opening/closing of the pool as well as weekly maintenance.
  3. Extensive pool repairs are planned for 2016 (signed contracts for the pump room and getting estimates for the pool itself)
Maintenance
  • We are working on a new sign for the Cedar Run entrance.  The sign was hit in an accident and destroyed.

Once again please understand that the above information above came directly from HHSG.  Any opinions expressed do not represent the opinions of the blog editors or contributors.

We do, however, appreciate the efforts of HHSG to reach out to directly to us  to provide this update.  Whether it's via this blog or otherwise....whether it's good news or bad news, most homeowners would agree that more communication is desired.

For an official answer to any questions or concerns about the above information, you will need to contact HHSG directly.  Posting in the comments section will not guarantee that your question/comment is received or addressed..

Wednesday, December 9, 2015

Cedar Run Accounting Report Now Available!!

SEE THE REPORT THAT THE SHER/SHAW GROUP DOESN'T WANT YOU TO SEE!!

Cedar Run homeowners recently received a letter from the receiver (HHSG), indicating that the report from the accounting firm Frost, Ruttenberg, & Rothblatt (FR&R) is now available to all homeowners.  This report (referred to in court as 'The Frost Report')contains an analysis of the Cedar Run HOC financial records going back from 2011 through early 2015.

The Sher/Shaw group has been FIGHTING DESPERATELY FOR MONTHS to keep YOU from seeing this report!
(see the 11/4/15 hearing transcript for the final stage of this battle along with judge's decision)

There are two main components to the Frost Report:

Body of the report
About 27 pages that explain and summarize FR&R's findings and methods used to come up with their findings.

Exhibits
Over 3000 pages of contracts, bank records, invoices, receipts, and all other backup material referenced in the body of the report.  It also includes reconstructed ledgers that FR&R created since the Sher/Shaw group had no real financial system in place.


How to obtain copies of the report

As stated in HHSG's letter, printed copies of the body of the report (27 pages) may be obtained at the Cedar Run clubhouse (in English only for now). Electronic copies can also be requested by emailing hsd@hhsg.net.

OR

You can view and download the English version right here on the blog.  Click HERE
(Spanish version to be posted when available)

The exhibits (3000+ pages) can be viewed in person, at the clubhouse by any homeowner.  We are still trying to get clarification on exactly how this will be handled, but we believe that it will require an appointment.


What's in the report?

We'll post a more detailed summary and analysis of the report at a later date.  But here are just a few highlights:

  • $168,920.55  paid to Robert Sher & Jack Shaw since they took over Cedar Run
    • ($103,479.98 to Robert; $65,440.57 to Jack)
  • $218,105.04 in legal fees paid out to Shaw Legal Services through February of 2015
    • (That may not include what was paid out to them after February of 2015, which is over $20,000)
  • $35,462.52 paid to board members
  • $27,395.58 in debit card transactions with NO RECEIPTS OR BACKUP DOCUMENTATION
  • $18,817.86 in reimbursement checks payable to Robert Sher with NO RECEIPTS OR BACKUP DOCUMENTATION
  • $167,905.92 in delinquent assessments that were never collected
    • (about $107,000 may now need to be written off as noncollectable, bad debt)
  • $43,833.91 paid to settle unnecessary, frivolous lawsuits with vendors.
  • $10,147.86 in loans given out to Zac's Landscaping with no evidence of it being paid back or any agreement to pay it back.
    • (plus $2000 of homeowner funds given to Zac's to purchase a snow plow with with no requirement for Zac's to pay it back)
  • Countless examples that show a clear pattern of utter incompetence, lack of organization, and irresponsible handling of the association's finances.

Stay tuned for a more in-depth breakdown of the Frost Report's findings and what these findings mean for Cedar Run. For now, please encourage your fellow homeowners to obtain their own copy of the report and read it thoroughly.

Spanish version of the report will be available soon for download/distribution to Latino homeowners.

The Frost report is the first real dose of transparency that we've seen in over THREE YEARS!


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Monday, November 16, 2015

Cedar Run Update - Receiver's Report w/ Financials Available

The receiver's most recent (sixth) report, as presented in court on 11/4 is now available.

To view or download the report, click HERE.
(Please note that although the heading of the report says it is the fifth report, it is actually the sixth)

**UPDATE**
Transcript from 11/4 hearing now available by clicking HERE
**UPDATE**

Full Audit Not Possible
Most notably, the report indicates that a certified audit of Cedar Run's financial records during the Sher/Shaw tenure (August of 2012 through February of 2015) CANNOT and WILL NOT be done (item #14).  This is due to a myriad of issues with the way the association was run under the Sher/Shaw and in part due to the legal complexities of Cedar Run at present day.

  • There was essentially NO FINANCIAL SYSTEM or accounting procedures under Sher/Shaw
  • No meeting minutes or backup documentation on MAJOR transactions
  • Multiple tax returns not filed, no financial statements or bank reconciliations
  • The list could go on forever.......
All of the above items must be available for a CPA to perform a proper and certified audit.  As mentioned in the receiver's report, "[there is] sufficient doubt about management's integrity, such that representations are not reliable" [emphasis added].   See the receiver's report for a more in-depth explanation of why an audit cannot be done (page 11) and for a list of alternative options in lieu of an audit (page 5).


Clarification
Since Cedar Run was first placed into receivership, the accounting firm Frost, Ruttenberg & Rothblatt (aka FR&R, aka 'Frost') had been been reviewing the Cedar Run HOC's financial records, en route to produce a report (which came in at around 3000 pages). During this process (from February to September of 2015), we had often referred to Frost as 'the auditors'.  This was actually an error.

While Frost was performing many tasks that one could consider to be 'auditing' the books, the report they produced (all 3000 pages of it) is NOT an audit. The over-simplified explanation is that the report is a reconstruction of the financials in order to properly determine what the HOC's assets & liabilities are, determine the correct balances for all 408 owner accounts, and put the records in order so an actual audit could then be done.  This was needed because (as mentioned previously) the Sher/Shaw group essentially had no real financial system in place.

In theory, once the Frost Report was complete, a different CPA firm would then perform an audit (Frost cannot because it would be considered a conflict).  But in reality......well, you know the rest.


Current Financial State
And now for a dose of good news.  The current financial state of the Cedar Run HOC has improved dramatically as of this report. The cash situation and near-term financial outlook for a new board (whenever we get one) is looking much better than expected despite the MAJOR expenses needed to clean up the Sher/Shaw mess.

Cash Assets as of 9/30/15
Contributing factors to this include:
  • Shaw Legal Services no longer being paid with homeowner funds (though Anne/Caryn Shaw are fighting desperately to change this)
  • Reduced rate and reduced number of hours spent by receiver and receiver's staff
  • Settling of unpaid assessments due to the HOC from owners (though there is much more that still needs to be settled)

Frost Report Available Soon
Per the judge's order on 11/4/2015, the receiver will make the Frost Report available to all Cedar Run unit owners.  We expect this report to reveal never-seen information on Cedar Run's state of disarray under the Sher/Shaw group. We expect some of the facts and figures to be quite telling and quite shocking.  You DEFINITELY WANT TO READ THIS ONE!!

The court order requires the receiver to 'publish' the report, but it is unclear how it will actually be distributed to homeowners.  If a true, correct, and verifiable copy of this report becomes available soon enough, you may just see it on the blog first.

Please stay tuned!

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Thursday, November 5, 2015

Cedar Run (brief) Legal Update

There have been some significant legal developments in Cedar Run.

Cedar Run Phase IV vs. Robert Sher
As mentioned in a previous blog post from 8/21/15, Robert Sher's phase association had taken him to court for unpaid assessments & legals fees.  Based on the amount owed, it appeared that Sher had not paid his Phase dues for over three years.

On 9/24/15, a judgement was entered against Sher, and Cedar Run Phase IV was granted an order of possession for his unit.  Facing imminent eviction, that would have happened on or around 11/24/15, Sher (begrudgingly no doubt) paid off his ENTIRE judgement.  Including legal fees & court costs, it is estimated that Sher had to pay in excess of $8000 to vacate the judgement.  On 10/21/15, the judgement was vacated and the case was dismissed.

SO.....apparently he's here to stay folks, but at least he has FINALLY paid his dues like the rest of us.

Click HERE to view the public Court Docket.
Click HERE to view our original blog post from 8/21.


Master Board (HOC) Litigation
On 11/4/15, two issues were brought before Judge Garcia by Anne Shaw

  1. Anne's request to be paid with HOC (Homeowner) funds for her legal services dating back to February (when receivership began).  Result: DENIED  **UPDATE/CORRECTION** Judge did not issue a ruling on this despite Anne Shaw's urging to grant her payment**
  2. Anne/Caryn Shaw's motion to strike the report from the accounting firm Frost, Ruttenberg & Rothblatt (aka 'the Frost report')  Result: WITHDRAWN (meaning that Anne Shaw basically gave up after realizing she has no chance of winning). **UPDATE**Anne Shaw also admitted to using false facts facts in her motion***
What we do know is the following:
  • The Frost report will now be made available for ALL Cedar Run Homeowners.
  • The Receiver will disseminate the Frost report information by publishing the 25-30 page "body"of the report.
  • The body of the report will also be translated to Spanish so Hispanic owners can understand the information.
  • All Cedar Run homeowners will also have the option of reviewing the full 3000 page Frost report at the Clubhouse office.
We'll know more about these developments once the 11/4/15 hearing transcript is available.  We will also obtain a copy of the latest receiver's report.  But for now, the order that was entered on 11/4/15 can be viewed HERE.

**UPDATE**
Transcript from 11/4 hearing now available by clicking HERE
**UPDATE**

Tuesday, October 27, 2015

Cedar Run Parking Policy and HHSG Account Statement

Cedar Run homeowners should have received a mailing from the receiver.  This mailing included two important items:
  1. The new Cedar Run Parking Policy, effective November 1st, 2015.
  2. An updated** account statement.


1.  Parking Policy

You can view the Parking Policy portion of the mailing by clicking HERE.

When read verbatim, the policy requires registration, payment and full compliance by November 1st.  Given that most homeowners likely received this notice on October 26th (only 6 days before-hand), it is highly unlikely that 187 owners will be in full compliance by the effective date.  No information has been released about possible grace periods on parking rule enforcement.

In light of the above, please direct any questions to the receiver and/or clubhouse staff.

2.  Account Statement

Statements prior to this only included balances accrued after HHSG became receiver (March 2015 to present).  This new statement now shows the 'ledger balance'.  The ledger balance includes balances/payments from BEFORE receivership (February 2015 and earlier).  The information used to generate this ledger balance came from the previously mentioned 3000 page accounting report.

**What will NOT be included in this ledger balance is any payment, made in March 2015 or later, that was sent to ANY OTHER payment address other than the one in Los Angeles, CA.  Payments sent to the Wheeling or Chicago addresses are still being reconciled, and it may take a month or two before they are reflected on account statements.


In other news, the next court hearing is on Wednesday, November 4th at 2PM.  There will be multiple issues brought before the court, and hopefully there will be time to address all of them.  The two most prevalent issues are:
  1. The Sher/Shaw motion to strike the accounting report.
  2. Determining whether or not Shaw Legal Services should be paid (with homeowner funds) for any of their efforts AFTER we were put in receivership.
This should be an interesting one........................

Tuesday, October 6, 2015

Cedar Run (Quick) Legal Update - 9/21 Transcript & Receiver's Report

As previously mentioned in the comments section of the blog, the last court hearing on 9/21 was a significant one.  The long-awaited financial report from the accounting firm is now complete, and it has been submitted to the court.

It's at least 3000 pages long!!!  

The Sher/Shaw group is objecting to the report, presumably because it contains information that they don't want Cedar Run homeowners to see.  They have filed a 'motion to strike' the report, and they are hoping to convince the judge to essentially void or invalidate it.

You can view that motion (as prepared by Ms. Caryn Shaw) by clicking HERE.

The motion includes the Table of Contents from the actual report (Exhibit B)....which should give you a general idea of what information the report contains.  They (very conveniently) make little reference to the actual contents of the report.....because referencing certain content would require them to include it as an exhibit, which would make it viewable to the public.  They are putting forth tremendous efforts to keep us from seeing this report.

We'll delve further into the details in our next blog entry, but for now:
  • You can view a transcript of the 9/21 hearing by clicking HERE
  • You can view the fifth receiver's report by clicking HERE
(note: Both include a significant development regarding the parking program - a topic that has received much discussion in this blog's comments section)

Monday, September 14, 2015

Cedar Run Legal Update - Appellate Court Issues Initial Order

The First District - First Division of the Appellate Court of Illinois has issued an order regarding the Sher/Shaw group's appeal.  The purpose of this order was to decide whether or not the appeal can proceed, and if so, what orders are or are not appealable.

The appellate court's order (complete with the legal explanations) can be read by clicking HERE

The Sher/Shaw group have tried to appeal five of Judge Garcia's orders.  More importantly (at least in the near term), they have also tried to convince the appellate court to issue a 'stay of enforcement' of Judge Garcia's orders while their appeal is being considered.  If successful, this stay of enforcement could stop all progress in Cedar Run and put the election and financial review on hold until the appellate court has issued a final ruling.

So.......................................

FIRST AND FOREMOST........on the motion to stay enforcement:


The appellate court cites precedent in the Illinois Supreme Court as a guideline. They basically say that an appellant (i.e. the Sher/Shaw group in this case) must prove that they have a good chance of winning an appeal if they wish to be granted a stay.  (see their exact words below)

(highlighting added for emphasis)

One could easily interpret the above paragraph as proof that the Sher/Shaw group has a pretty weak case.


 AND

Appeals of Judge Garcia's orders from December 17th, 2014 (stand-still order), February 9th, 2015 (T.R.O./Injunction), and March 10, 2015 (denial of motion to reconsider T.R.O./Injunction)

(Appellate court determined they are not appealable)

The short version as to why.....because they waited too long and did not file their appeal in a timely manner.  For the March 10th order (the least significant of the three orders), Sher/Shaw were one day past the deadline.  The appellate courts obviously takes these deadlines seriously.


Remaining Orders On Appeal

Certain portions and/or paragraphs from orders on March 25th, 2015 and April 3rd, 2015 are appealable according to the appellate court, but in a very limited capacity.    Basically the Sher/Shaw group can appeal judge Garcia's denial of their motions/requests to reconsider the February 9th order (T.R.O./Injunction).  They would have to prove that Judge Garcia was abusing his authority when he denied them and that he did not give them a fair chance to argue that the injunction should be modified or dissolved.

Also..........the appellate court had the following to say about Sher/Shaw's chances for winning an appeal of the above orders:

(highlighting added for emphasis)

Again, the above statements don't exactly read like a vote of confidence in Sher/Shaw's chances of succeeding with their appeal.

Other than the above, the only other thing they can appeal pertains to the letter that the receiver sent out to refute the infamous letter sent by Robert Sher to all Cedar Run owners back in March.  You'll recall that Sher's letter resulted in him being found in contempt of court.  The only thing that can be appealed is the order that instructed the receiver to send a follow-up/retraction letter.  This appeal would have no effect on the court's finding that Sher was in contempt.


Other Findings/Rulings
  • Per the appellate court, the T.R.O. (Temporary Restraining Order) from February 9th, 2015, is effectively a Injunction.  Basically, the order has lasted way longer than what the appellate court considers to be 'temporary'.
  • Caryn Shaw (rookie attorney) cited the wrong Illinois Supreme Court rules when she made her arguments for the appeal.
  • If the Sher/Shaw group are somehow successful in their appeals, it will not 'undo' any of the previous orders like the injunction. See below.

(highlighting added for emphasis)


What happens next?

If the Sher/Shaw group decide to pursue their appeals despite the above developments, it will probably be months before their case will even be heard.  Since the stay of enforcement was denied, there will be no interference with the existing case. They will have to fight this battle on their own dime, and their chances of success appear to be quite weak.

  • Will they continue fighting this appeal?
  • Will they try and escalate it to the Illinois Supreme Court?
  • Will they try the appellate court again for future orders that they find unfavorable?
We can only wait and see..........


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Wednesday, September 2, 2015

Cedar Run Legal Update - Continued to 9/15 - Sher Group Appealing

8/26 Hearing Continued
In case you haven't already read it in the comment section, the 8/26 hearing was continued to 9/15/15, supposedly at the request of the receiver.  We expect him to present his latest report on 9/15, which may contain significant information regarding the audit.

But onto bigger news......


Sher Group Appealing Court's Rulings
We have learned that the Sher/Shaw group is seeking relief from an appellate court on five of Judge Garcia's orders.  Basically, they are trying trying to vacate the T.R.O. (temporary restraining order) that removed them from power, assigned a receiver, and ordered the audit & election.  (Conspicuously absent from their appeal are any orders that granted payment of Shaw Legal Services' invoices)

Their appeal argument is basically this:

Despite Judge Garcia's repeated denials, they are STILL ARGUING that the bogus 2012 bylaws are somehow legal, valid, and in effect.  Therefore, according to them (surprise!), they never should have been removed.


Based on the above claim, they want that the T.R.O. and ALL subsequent orders to be overturned, including the receivership, the audit, and the election.......presumably putting them right back into power. Remember, it was these bylaws which were a central component in their removal.

We will have to wait and see what the appellate court judges think of their bylaws.....if the case even proceeds that far.  Much of what they are appealing is ineligible for appeal because they did not file in a timely manner.

A More Immediate Concern
What's most important now, with respect to this appeal, is that the Sher/Shaw group is trying to convince the appellate court to issue a "Stay of Enforcement" on Judge Garcia's orders.  If successful, this would mean that the orders that Sher/Shaw are appealing will not be enforced while the appeal is being considered.  Basically, it would be giving them what they want NOW and keeping it that way  unless or until their appeal is denied in a final judgement.

The Motion to Stay Enforcement (as prepared & filed by Caryn Shaw) can be viewed by clicking HERE.

How would this affect Cedar Run?
If this stay of enforcement were granted, it would mean that the election would be put on hold until the appellate court issues a final ruling on the appeal.  That could take several months, especially with all the procedural games that Caryn/Anne Shaw would certainly play.

AND............If Sher/Shaw are granted everything they have asked for in their motion, conceivably the receiver would also be removed while the appeal is being considered, and Robert & Jack would be back in charge.


Before you lose your lunch.....
While none of us who contribute content to this blog are lawyers or legal experts, we believe the Sher/Shaw group's chances of getting their stay of enforcement fall somewhere between "Not bloody likely!" and "a snowball's chance in hell". (apologies for the technical jargon)  In all seriousness, the argument posed by Caryn Shaw in her motion to stay enforcement is quite ridiculous and even insulting to one's intelligence.  See below.

Excerpted from Page 6, paragraph 1
of Motion to Stay Enforcement

What she is basically saying is that if the Cedar Run homeowners get an election and an audit of the financials, neither of which we've had in over three years.........this would somehow deprives us of our right to free speech and property......but having her family members in charge, secretly on the payroll, with no elections, supreme power, running off bylaws that we never saw nor ratified, and countless other unlawful/unethical practices.....YEP, that was okay.  One would think the appellate court would recognize what a crazy argument this is.

Bottom Line 
Whether their appeal has any merit is less important at this point (though almost everyone on the planet except  the Sher/Shaw family would find that it has NO merit whatsoever). What matters most right now is whether or not they can convince the appellate court to stay the enforcement of Judge Garcia's existing orders.  The entire appeal could effectively live or die based on this result.

We expect a ruling on the Motion to Stay Enforcement fairly soon (in a matter of days rather than weeks), so please check back for updates.


One Final Thought
$$   Who is paying for these efforts?   $$

To our knowledge, no Cedar Run homeowner money has been used to fund the Sher/Shaw group's appeal.  Appeals can become very costly, and the Shaws are usually not the type to gamble with their own money.  It would not surprise us, at this point, if they try to get HOC money to fund their appeal. But, in order to do this, they will need to request it from Judge Garcia in court.  That should make for some interesting conversation in the courtroom....


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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:

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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!

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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