Developer Donald Trump has picked prominent Chicago real estate firm U.S. Equities Realty to handle leasing for his proposed mixed-use skyscraper on the riverfront site of the Chicago Sun-Times.
The selection was announced as questions surfaced in real estate circles about alleged criminal activity by two members of a small brokerage firm that, with Trump's blessing, last fall did some marketing of the 1.3 million square feet of office space in the massive tower.
John Thomas, a partner in Chicago-based Carnegie Realty Partners, and a Carnegie employee, Louis Giordano of New York, were arrested last year in connection with an alleged fraud scheme that took place over five years in New York.
According to an affidavit by an FBI agent, the wide-ranging scheme involved credit card fraud, forgery and allegations that the defendants, while running several billboard leasing companies, defrauded restaurants such as Hard Rock Cafe and Planet Hollywood, and entertainment companies such as Motown Records and Arista Records.
Thomas allegedly took upfront lease payments for billboards in Manhattan's Times Square and along Broadway, even though he has no contracts to hang the advertising from the buildings, according to the affidavit, which was filed in U.S. District Court in Chicago in order to obtain a warrant for Thomas' arrest.
Thomas and Giordano are free on bond, according to court records. The U.S. attorney for the Eastern District of New York would not comment on the case.
They have not yet been indicted, although a formal charge is expected, said attorney Eugene E. Murphy Jr., who represents Thomas. "I look forward to defending this case," said Murphy, a partner with Chicago-based law firm Horwood Marcus & Berk. Giordano and his New York attorney could not be reached for comment.
The selection of U.S. Equities Realty to handle leasing of the office and retail space in the proposed Trump Tower Chicago isn't a surprise. The well-respected firm had advised the Sun-Times' parent company, Hollinger International Inc., in negotiations with Trump over the formation of a joint venture to construct the skyscraper on the site of the newspaper's headquarters. The current structure would be demolished to make way for the new building.
Trump's association last fall with Carnegie Realty, which was virtually unknown at the time, is an odd misstep for the high-profile project and its flamboyant developer.
And real estate experts say the delay could put the project behind in the competition among developers for large tenants looking for space in three years.
Many local real estate brokers were surprised when Thomas began calling on them, saying he was working for Trump on the Chicago project.
"It did seem strange that Trump didn't select one of the well-known local real estate firms," said tenant representative Gregory Gerber, a senior vice president with Chicago-based John Buck Co., which is also one of the companies proposing a new office tower. "But Thomas said he had all these New York relationships, and then he showed up at a meeting with Trump's people."
Charlie Reiss, a senior vice president with Trump's private company, the Trump Organization, said the company never hired Carnegie, although Trump executives did attend meetings in Chicago arranged by Thomas.
Thomas wooed the firm with boasts that he represented several potential tenants for Trump Tower Chicago that had large space needs, real estate executives say.
"A man comes up to you with a business card and a pretty good line and says he has a 300,000-square-foot client," Reiss said. "I don't know how anyone could possibly be so prescient as to look through that business card to realize the man's a fraud."
Even after Trump executives told Thomas that he wouldn't be hired, Carnegie continued to use the Trump connection when calling on potential clients.
Thomas, in an interview, declined to comment on his negotiations with Trump or address specifics of the fraud allegations. "My past is something that I'm trying to address, but no one seems to let me have a life again," he said.
He legally changed his name two years ago from Bernard Barton, and moved away from New York. "I changed it to get a fresh start in life, which is what I thought I had in Chicago," he said.
The legal problems are "not from anything I've done in this current business, that's the part that really hurts," he said.
But last summer, after his arrest, one of his billboard companies, Outdoor Solutions Inc., allegedly hung billboards advertising the Empress casino on a building in downtown Joliet, said Timothy Lambert, vice president of legal affairs for Horseshoe Gaming, which later sold the Empress. Outdoor Solutions allegedly didn't have city permits or the permission of the owner of the building, which is located near Empress' rival, Harrah's Hotel and Casino, Lambert said.
Thomas referred questions about the Joliet controversy to his attorney, who would only say that a settlement of lawsuits filed after that incident was close to being reached.Copyright © 2014, Los Angeles Times