Palatine Woman Indicted on Federal Fraud Charges

A Palatine woman was one of two executives of a prominent Chicago real estate development company to be indicted Thursday on federal bank fraud charges, according to a press release from the U.S. Attorney's Office.

Caroline Walters, 53, of Palatine, along with Laurance H. Freed, 51, of Chicago, are the vie president/treasurer and president of Joseph Freed and Associates LLC (JFA), best known for its role in the development of Block 37 in Chicago’s Loop.

The indictment alleges Walter and Freed lied about and concealed unpaid property taxes, double-pledged public financing notes issued by the City of Chicago and defaulted 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, according to the press release.

The charges involve, in part, two Tax Increment Financing (TIF) notes that the City of Chicago agreed to issue in Nov. 2002, to finance redevelopment of the former Goldblatt’s department store in the 4700 block of North Broadway in the city’s Uptown neighborhood.

Freed was manager of a limited liability company, formed by JFA, called Uptown Goldblatts Venture LLC, which 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.

Walters and Freed were each charged with seven counts of bank fraud, one count of mail fraud, and five counts of making false statements to banks in a 14-count indictment returned Thursday by a federal grand jury. The indictment also seeks forfeiture of $2.9 million in alleged fraud proceeds from both defendants, who will be arraigned at a later date in U.S. District Court.

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.

According to the indictment, between March 2008 and February 2011 ― when JFA was in the midst of a severe liquidity crisis that jeopardized its ability to pay operating expenses and Freed and Walters knew the possibility that JFA’s inability to make required payments threatened the company’s future ― both defendants made false statements to the city and the banks to obtain funds, according to the press release.

Read the full story here.

Submitted by the U.S. Attorney's Office