Cedar Run Concerned Homeowners

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.

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!

We'd love to hear your feedback!

restoreCR@gmail.com

(224) 544-9058

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!

We'd love to hear from you!

restoreCR@gmail.com

(224) 544-9058

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

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**
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:

The new Cedar Run Parking Policy, effective November 1st, 2015.
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:

The Sher/Shaw motion to strike the accounting report.
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..........

We'd love to hear from you!

restoreCR@gmail.com

(224) 544-9058

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....

We'd love to hear from you!

restoreCR@gmail.com

(224) 544-9058