Five defendants indicted in North Shore development mortgage fraud scheme

• Reprints

Updated: August 4, 2011 4:20PM

It’s been two years since the precarious financing of Ed Renko’s giant failed development collapsed, but the machinations behind the 400,000 square-foot dream have now landed him in jail, along with several colleagues.

Renko, 49, of Glenview; Gary Fishkin, 54, of Glencoe; Alexander Field, 42, of Northbrook; Kalliope Shaykin, 51, of Chicago; and Tatyana Furman, 41, of Northbrook were all involved to one degree or another with the Center of the Northshore development that never got beyond a hole in the ground on the northwest corner of Dundee Road and Skokie Boulevard in Northbrook.

Thursday, all but Shaykin were in Chicago’s Metropolitan Correctional Center. All five have been arraigned on multiple federal counts of financial crime.

Renko, the chief operating officer of the defunct EAG Capital Holdings, was charged in a federal indictment with bank fraud, making a false statement to influence the action of a bank and two counts of wire fraud.

EAG is the company that Renko, a relatively small home builder, used to try to build the controversial, $100 million-plus Northbrook commercial and residential development.

Fishkin, former EAG chief operating officer, was charged the same as Renko.

Field, former EAG president, was charged the same as Renko and Fishkin, with one extra count of wire fraud.

Furman, formerly a loan officer and mortgage broker at American United Mortgage Co. — in the same Northbrook building as EAG, which owned 50 percent of the firm — was charged with seven counts of wire fraud.

 Shaykin, former president of Absolute Title Services, Inc., of Schaumburg, was also charged with lying to a bank, and seven counts of wire fraud. She was released on her own recognizance, but will have to show up with the others for a status hearing before U.S. Judge Harry Lienenweber June 30. Federal court spokesman Randall Samborn refused to say Friday why she wasn’t jailed like the others.

The other four arrestees were due for a detention hearing Tuesday.

The charges against the three EAG principals were linked to allegedly seeking and receiving loan after loan on three home properties they owned on Greenwood Road in Northbrook, without telling successive banks that the properties were already mortgaged.

The loans were reportedly sought as refinancing, but the money was allegedly really used to keep alive the $26.2 million loan used to buy the 14 acres for the big project, for expenses for the principals and to quiet banks that were clamoring for payments of earlier loans on the same properties.

Shaykin stands accused of writing fake title insurance policies that intentionally omitted earlier mortgages and liens on the properties.

The indictment alleges that the EAG principles funneled $720,000 to Shaykin and $240,000 to Furman.

It also claims that between June 2006 and November 2007, the three men fraudulently borrowed as much as $15.8 million, with banks and title companies losing at least $8.5 million. The indictment seeks forfeiture of about $10.5 million from all five defendants.

Each bank law count could bring up to 30 years in prison and a $1 million fine. Wire fraud can bring up to 20 years and $250,000.

The indictment noted that “as an alternative, the court may impose a maximum fine totaling twice the loss to any victim or twice the gain to any defendant, whichever is greater, and restitution is mandatory.”

The indictments were returned by a grand jury May 26, but not unsealed until federal agents began arresting the defendants Thursday.

The arrests were announced Friday by U.S. Attorney Patrick J. Fitzgerald of Illinois’ northern district; Thomas A. Kelly, special agent-in-charge of the U.S. Secret Service in Chicago; and Robert D. Grant, head of the Chicago office of the FBI.

Former Northbrook Trustee Sandy Frum questioned the financing of the Center of the Northshore project almost from its beginnings in 2005, while Village President Gene Marks championed the project, even after it slipped into foreclosure proceedings in late 2008.

The property, vacant for decades, was eventually foreclosed, and is expected to be available again this summer.

The development was a key issue in Northbrook’s April 2009 village president campaign, in which Frum beat Marks as he sought re-election.

Frum wouldn’t comment on the indictment Friday, and Marks could not be reached for comment.

Local taxing districts in 2006 refused to grant more than $5 million in Tax Increment Financing seed money to Renko, who wanted $20 million. And they wouldn’t give it up until the village of Northbrook was satisfied Renko had enough cash to do the giant condominium, hotel, movie theater and shopping center development project. He never did.

The cracks in the project effort became obvious in the spring of 2008, when the Pioneer Press revealed that Renko was $66,000 behind in property taxes on the Skokie Boulevard property, which he paid upon exposure.

The center was sued for foreclosure in October of that year, with the first court date to come the following March.

Then, a Pioneer report in December 2008 found that another $61,000 in taxes had gone unpaid — plus $19,000 on Renko’s Greenwood Road house.

Renko excused himself, insisting, “We are fulfilling the responsibilities that we can under the circumstances.

“I don’t see why we should be singled out.

“It’s just the fact that the banking industry is not lending money.

“We’re just like everybody else.”

Renko and EAG were evicted from their Northbrook office in January 2009, for non-payment of rent. But Renko was still trying to save the project in March 2009, unsuccessfully begging Northbrook trustees not to cancel his building permits.

“We ... ask you to not take action tonight,” he said. “What’s the rush? Please act responsibly and decently.”