KENWOOD — A judge has seized control of a Kenwood affordable apartment tower after years of owner mismanagement — and after judges gave the landlord numerous chances to fix filthy, hazardous conditions in the building.
Apex Chicago IL, owner of the Ellis Lakeview apartments at 4624 S. Ellis Ave., must give up its management powers to a court-appointed receiver, Cook County Circuit Court Judge Lloyd Brooks ruled Friday.
Brooks appointed real estate firm Trigild IVL to oversee the 105-unit building, where residents have complained of plumbing issues, pest infestations, security breaches, broken elevators and a host of other problems since at least September 2020.
5T Management is expected to remain as property manager. The company took over day-to-day management at Ellis Lakeview in 2022 when a county judge forced Apex to replace its handpicked management company.
Apex’s attorneys, Joshua Kahane and Carrie Dolan, did not contest the receivership request Friday and resigned from the case shortly after Brooks’ ruling.
Ellis Lakeview residents, including Laprena Brown, celebrated the decision. Brown is among the initial group of residents who submitted complaints to federal housing officials in 2020.
“We worked too long, too hard; we’ve been through too much, and we just throw our hands up [in celebration],” said Brown, who has lived at Ellis Lakeview for 14 years.
“Fight the power. We did it.”
The ruling comes as the Federal Home Loan Mortgage Corporation, or Freddie Mac, has pushed to foreclose on the property.
Various attempts to force repairs, take control of the property from Apex and foreclose on the building have dragged on for more than three years with few consequences for the company prior to this week.
But in recent weeks, the owners “effectively abandoned the property,” said Erin Gard, attorney for the U.S. Department of Housing and Development.
Apex agreed in 2022 to maintain a repair fund for the building at $350,000, an agreement which helped the company stave off a prior push for receivership. That fund has been well short for the last several months, as it’s hovered around $42,000, Freddie Mac attorney Shannon Condon said Friday.
Apex continued to receive federal housing subsidies late last year, but opted to withhold payments to 5T Management, Condon said. Apex instead spent some of the subsidies on its own affiliate companies and legal fees, she said.
The feds paid Apex more than $120,000 per month in November and December to operate the building, but 5T only saw a fraction of these funds, Condon said.
“Eventually, some portion of those [subsidies] did get transferred to [5T], but that was after Mr. Kahane’s firm was paid, after Ms. Dolan’s firm was paid” and after Apex affiliate Ephraim Diamond paid $30,000 to his own company, Arbel Capital Advisors, Condon said.
Freddie Mac stepped in earlier this month and paid 5T Management out of pocket, as the company threatened to walk off the job due to Apex’s nonpayment, Condon said. That could have left Ellis Lakeview without anyone to oversee the property’s daily operations.
Apex also failed to keep up with Ellis Lakeview’s insurance and security bills, so Freddie Mac had to cover those as well, Condon said.
Amid Apex’s neglect, residents complained this week of heating issues as a winter storm hit the city and dangerous cold will follow. The building’s boilers are not at full strength, and old, drafty windows have not been replaced, they said.
After years of fighting for a safer home and waiting on the courts to take action, residents are cautiously optimistic the heating, elevator, security and other ongoing issues will soon improve under Trigild IVL’s watch, they said.
“If the proper repairs get done, and the proper people get in this building and do it right like it’s supposed to be done, then we’ll be satisfied; we will be living comfortably,” Brown said. “But right now, we’re not.”
Apex Has Faced Repeated Legal Trouble
Friday’s receivership decision comes amid a prolonged period of turmoil for Apex and its affiliates.
Boruch “Barry” Drillman, who said in an affidavit amid the city’s 2022 receivership push that he was Apex’s manager, pleaded guilty last month to a $165 million mortgage fraud conspiracy. Drillman faces up to five years in prison and is scheduled to be sentenced April 16.
Apex has also claimed that Diamond — who paid his Arbel Capital Advisors company using Ellis Lakeview’s federal subsidies — took control of Apex in June, Freddie Mac administrator Ted Merkle said this week.
Apex never told Freddie Mac about Diamond’s supposed takeover, nor did the landlord ask Freddie Mac’s permission to do so as required in the Ellis Lakeview loan agreement, Merkle said in an affidavit.
Despite Apex’s claims, Oron Zarum is still listed in state records as the landlord’s manager. Zarum also confirmed he was still Apex’s manager in an August affidavit — two months after Diamond is purported to have taken control of the company, Merkle said.
Zarum was president of JPC Affordable Housing Foundation as of September 2022, when the corporation was hit with a seven-year ban from owning and managing apartment complexes in Indiana.
Kahane and Dolan asked Brooks last month to withdraw as Apex’s attorneys, a move the judge approved after appointing the receiver. Kahane also represented Zarum in the case that led to JPC’s ban in Indiana, according to the Indianapolis Star.
“Ms. Dolan and I, based on facts that have come out over the past several weeks … find that we have an irreconcilable conflict in continuing to move forward” in representing Apex and Zarum in the foreclosure case, Kahane said Friday.
Freddie Mac’s foreclosure push will continue following the receivership ruling. Several housing experts told Injustice Watch in August they knew of no other instance in which the mortgage giant has tried to foreclose on a building over poor living conditions.
The city’s separate lawsuit against Apex over code violations at Ellis Lakeview, which started in March 2021, also continues. The next hearing is set for Jan. 25.
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