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Joseph Freed and Associates top executives face federal fraud charges

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The president and vice-president of Joseph Freed and Associates LLC were each charged with seven counts of bank fraud, one count of mail fraud, and five counts of making false statements to banks, yesterday by a federal grand jury. Top executives, Laurance H. Freed, 51, of Chicago and Caroline Walters, 53, of Palatine, alleging lied about and concealed unpaid property taxes, the double-pledging of public TIF financing notes issued by the City of Chicago in November 2002, and the company’s default on those notes so they could secure credit extensions and payments from the city at a time when they knew their firm was having serious financial difficulties.

Freed was manager of a limited liability company, formed by JFA, called Uptown Goldblatts Venture LLC, at a time when JFA was in the midst of a severe liquidity crisis that jeopardized its ability to pay operating expenses. The LLC was formed to redevelop the former Goldblatt’s department store in the 4700 block of North Broadway in the city’s Uptown neighborhood. They received a $4.3 million TIF redevelopment area note and a $2.4 million TIF project note from the city to help finance the project. It is alleged that Freed and Walters made false statement to the city and banks in order to secure funds for the project knowing that JFA would more than likely not have the funds to make required payments.

The indictment alleges three victims: the city of Chicago, Cole Taylor Bank, and a consortium of banks consisting of Bank of America (as successor to the former LaSalle Bank National Association), Associated Bank, Northern Trust, and Wachovia Bank. Both, Freed and Walters also allegedly made false statements about the Evanston Plaza and West Town Center developments, including concealing that JFA owed unpaid property taxes in April 2009 of at least $1.325 million on Evanston Plaza and at least $590,000 on West Town Center.

If convicted, both defendants could face a maximum penalty of 30 years in prison on each count and a $1 million fine, and mandatory restitution.

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