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Loop North News
By Steven Dahlman
10 October 2016

A condo association that allegedly did not allow a unit owner to inspect tax returns and other financial documents has received three citations from the city.

Notices of ordinance violations have been sent by the Department of Business Affairs and Consumer Protection to The State Parkway Condominium Association, a 160-unit residence near the north end of State Street and about one block from Lake Shore Drive.

Michael Novak says over the past year he has asked in writing to see his association’s federal and state tax returns for 2004, 2005, and 2006, along with a property manager’s financial report and financial statements, but has received just three federal returns.

The association can also be fined by the city. Repeated offenses can land condo board members and property managers in jail for up to 180 days.

By city ordinance, homeowner associations have 30 days after a written request to make financial books and records available to unit owners at no charge. After 30 days, a unit owner may sue to enforce compliance and, if successful, recover damages and attorney’s fees. The association can also be fined by the city. Repeated offenses can land condo board members and property managers in jail for up to 180 days.

A hearing is scheduled for Wednesday to address two of the complaints, and on November 2 regarding the third complaint.

confirmed the presence of massive federal income tax evasion

Michael Novak, a former CPA with an MBA in Finance, says the tax returns he did see, in August after the city started looking into his complaints, “confirmed the presence of massive federal income tax evasion via the claiming of hundreds of thousands of dollars of falsely inflated deductions.”

Novak also says his condo board recently passed a 12 percent assessment increase, on top of a seven percent increase last year, but refused to answer his questions about garage operations.

“They say I’ll find out when other unit owners find out,” says Novak, but the details he seeks are “buried” in a general “repairs and maintenance” category.

State Parkway expenses and liabilities are sometimes understated, he claims, because invoices for “tens of thousands of dollars” are intentionally unrecorded.

Just a question
If this owner found evidence of massive federal income tax evasion, what did the condo's auditor find?   editor  CondoMadness


Gold Coast condo backs away from threat to fine owner over door-dropped letter
North Loop News
By Steven Dahlman
25 March 2017

A fine for sending a letter urging fellow unit owners to attend an annual condo association meeting has not materialized as threatened more than three months ago.

Michael Novak said last December he had been threatened with a fine of $50 to $500 by State Parkway Condominium Association for dropping the letter in person to each door in violation of one of the association’s rules. The one-page letter, dated September 26, 2016, also urged unit owners to vote against the incumbent board of directors. He says they are responsible for a $10 million shortfall that owners must make up through increased assessments. Depending on ownership percentage, the amount each owner could owe, says Novak, is between $32,500 and $258,400.

Novak says he hand-delivered the letter only because the condo association refused his request for a list of unit owners and their addresses. He suspects the policy was added so he could not distribute written materials at board meetings—necessary, he says, because he is deaf and some people cannot understand him when he speaks.

In its November 23, 2016, letter to Novak, State Parkway Condominium Association, managed by Lieberman Management Services, told Novak he was charged with violating association rules concerning deliveries. The letter gave instructions on how to contest the violation notice and request a hearing, which Novak says he did.

“This violation notice didn’t cost me any money, but it did cause a lot of grief for my family and I,” said Novak.

He believes he was not fined because State Parkway realized it had not followed procedure as defined in the condo association’s rules and regulations.

“State Parkway knew there wasn’t strict compliance, especially since Lieberman Management employees often do door drops from time to time, including solicitations for holiday contributions.”

State Parkway’s property manager, William Southall, did not respond to a request by email for comment.

City cited condo association over records requests
Novak has filed 13 complaints against State Parkway with the city’s Business Affairs and Consumer Protection department over document requests. Although State Parkway has complied with some of his requests, Novak says he is still waiting for tax worksheets from ten tax years and audit work papers from two years, plus other tax returns, reports, and information.

He says his condo association’s certified public accountants, CondoCPA of Elmhurst and Picker & Associates of Buffalo Grove, “are clearly not cooperating with the records inspection.”

He says Picker & Associates, which prepared tax returns for State Parkway for 2014 and 2015, under-reported gross income both years by “several hundreds of thousands of dollars” but offered to let him inspect tax worksheets if he paid a $600 fee. He believes the tax worksheets are being withheld “due to massive criminal federal and state tax evasion.”

After the city completed what it called “an exhaustive investigation” of the complaints, State Parkway was cited for failing to allow Novak to inspect 2004, 2005, and 2006 tax returns per his request on December 11, 2015, the association’s 2015 variance report requested on April 1, 2016, and item stratification reports from January 2008 through May 2015.


Law firm allegedly sends ‘anonymous’ email to condo owner...apparently forgets IP address was recorded
North Loop News
By Steven Dahlman
03-May 2017

A unit owner who is accusing his Gold Coast condominium association of “massive fraud” says an “anonymous” email he received, urging him to back off – and threatening him with a lawsuit if he does not – came from a Chicago law firm and he has the IP address to prove it.

Michael Novak says State Parkway Condominium Association is responsible for a $10 million shortfall that unit owners will have to make up for through increased assessments. He wants a court-appointed custodian to manage State Parkway’s affairs and says the 197-page memorandum of law he has filed in state court details “massive fraud, including criminal federal and state tax evasion, oppression, and misapplication or wasting of assets” of the condo association.

His complaints to the Department of Business Affairs and Consumer Protection resulted in three citations from the city against the condo association, as documented in his WordPress blog, Bullied By The State Parkway Condominium Association Board.

On April 7, someone went to the Contact page of the blog and sent the following comment...

Mr. Novak,
I live in the building but I don’t believe we’ve ever met. So I have done nothing to you. Yet you are going to cost me thousands in a special assessment along with the other 159 owners? That is not fair, neighborly or decent. I have done nothing to you. Why are you doing this to me? If this building is as bad as you say it is, then why not take the $400k they offered you and run? Go get a condo in a better building where you can focus on happiness! Why stay here just to be miserable and make everyone else miserable?

I can’t afford a special assessment – it’s going to break me. You are going to cause me to lose my home. And again, I have done nothing to you. Maybe you need to think about someone other than yourself and realize the impact your actions are having directly on the rest of us. Let all of this go, or know that the day we get the special assessment, I will be suing you for that money and I’m sure the rest of the bldg will follow. Stop being so selfish or you’ll force me to do the same.

When the comment was submitted, the unique network location of the sender, called an IP address, was recorded, Checking a whois database multiple ways, the IP address consistently corresponds to a server host named “NETBLK-SIDLEY” belonging to Sidley Austin LLP, a law firm at One South Dearborn in Chicago.

Novak knows of no connection between Sidley Austin and his condo association. He suspects the sender is a State Parkway unit owner who works at the law firm. He says he will try to obtain a court order to find out who sent the email.

To make sure the form was working correctly, he asked his daughter to send a message and the IP address received correctly corresponded to the college she attends.

Timothy Bergen, executive director of Sidley Austin’s Chicago office, did not respond to an email from Loop North seeking comment.