CHICAGO — A federal judge Sept. 23 sentenced one of the five people who pleaded guilty to fraud in the Center of the Northshore case to five years in prison.
Kalliope Shaykin, 54, is the first of the group to be sentenced, and it may bode ill for the rest, who include Ed Renko, Alex Field, Gary Fishkin and Tatyana Furman.
Renko, Field and Fishkin have been painted as having larger roles than Shaykin and Furman in the fraud case that cost banks and other parties $26 million in the 2009 collapse of the project that had been planned for Dundee and Skokie Boulevard in Northbrook.
Shaykin, who owned a title company, admitted to faking title insurance policies of homes of co-defendants and others so that then-current mortgages didn’t show. They were then used to get mortgages on the homes as if the homes were free and clear. The money was mostly used to make payments on the development loan, and other loans, until it was not enough, and default ensued.
U.S. Judge Harry Leinenweber said that Shaykin was probably not closely linked to all the losses. He also noted the dozen letters sent in support of the Chicago woman, describing her unpaid assistance to those facing foreclosure on the West Side, to a veteran’s group, and to other organizations.
Still, he handed down a sentence that will likely result in about four years behind bars.
Leinenweber said the initial sentencing guidelines, indicating a term of between 5.5 years and 12 years for Shaykin, were too much, but he said he agreed with the prosecution that a serious crime had been committed.
Such fraud “doesn’t come free,” he said. “The banks have to make it up some way, usually by increased cost of products they have for sale.”
Assistant U.S. Attorney Ryan Hedges had asked for a stiffer sentence.
“By any definition this is a staggering fraud,” he told the judge. “Without her … this fraud could never have succeeded.”
The judge, after giving a five-year sentence to Shaykin, who said she is the primary caregiver for her mother and the sole support of her daughter, said it sent a big enough message that such crimes wouldn’t be tolerated.
“It’s certainly a long period of time, and certainly the type of sentence that will be understood in the financial community. It’s not a walk in the park.”
While some of her co-defendants were accused in the indictment and in succeeding court documents of wasting the mortgage money on personal expenses, Shaykin told the judge she didn’t behave that way, and lived on Chicago’s West Side among the people she helped.
“I did not use it for any lavish lifestyle. I live a modest lifestyle,” she said. “I did not wear designer clothes or expensive shoes like others in this case.
“I am not a bad person. I am a person who got involved in a bad situation,” a tearful Shaykin said.
She had apparently been paid more than $700,000 in 2006 for the phony title documents, but she said that the money was necessary to keep her company, Absolute Title Services, afloat. Leinenweber, remarking that the title business is a nearly fool-proof business, asked her why that was necessary.
She said she had improperly made loans with her Schaumburg company’s money, which she didn’t keep track of closely enough.
“I wish I had spent more time trying to manage instead of letting others make the decisions,” including Field, she said.
“There’s apparently no reason to believe she used the money for her own benefit,” Leinenweber said. “She didn’t go to Las Vegas, she didn’t go to the race track, but invested the money to try to keep her business afloat.
“Of course, a much better way to keep her business afloat would have been to operate within the law.”
The judge said one of the reasons for not handing down a stiffer sentence was the argument by her attorney, Sheldon Sorosky, that what she had done – and to an extent what her co-defendants had also done – was to generate money to forestall the inevitable. All parties, especially Shaykin, had assumed, he said, that the scheme would result in saving the loans and the project, and the money would later be recouped, and creditors would be satisfied. That turned out to be an unwarranted assumption, and one that the prosecution said would obviously occur.
But Shaykin hadn’t caused the default, she had helped stave it off, Sorosky maintained.
“That loss would have occurred even if this crime had not occurred,” he said.
Hedges noted that the loss of $6.5 million by Absolute’s underwriter, Chicago’s Stewart Title Guaranty, was a direct result of her crime, however.
“That certainly doesn’t show the right attitude toward people that helped you stay in business,” the judge told Shaykin.
Three of Shaykin’s co-defendants are scheduled to be sentenced next month, with Renko, who headed the development, coming before Leinenweber in November. Postponements adding up to several months have already been granted for all five, who were indicted in 2008, and pleaded about five years later.
Shaykin will remain free until Jan. 6, 2015.
She was ordered to pay 10 percent of any earnings this year, and during a three-year supervisory period after her release, toward $26 million in restitution. She is also to turn over current assets.
“As far as restitution goes, unless somebody wins the lottery, there’s no conceivable way even a tiny dent will be made in what is owed in this case,” the judge said.