A waterfront mansion, the most valuable asset linked to those accused of defrauding the Chicago Housing Authority of millions of dollars, seems to be beyond the reach of federal authorities.
In the scramble to locate missing CHA funds, authorities have traced assets from Chicago to Europe to Florida. The efforts led them to the luxurious Spanish-style residence of Joseph Polichemi, a key figure in the suspected scam.
But it appears that trail has reached a dead end: Polichemi doesn’t own the home.
Federal agents had testified that the house was owned by a company associated with Polichemi. If so, proceeds from a sale of the house might be used to pay back the CHA.
But public records show that the deed to the mansion is held by an apparently unrelated corporation. Last week, that company put the house up for sale for $7.2 million.
A four-page color sales brochure describes the house as a “residential work of art” with imported chandeliers, marble and granite floors, and gold bathroom fixtures with pewter sinks.
The 13,849-square-foot house, with a 1994 assessed value of $5.2 million and an annual tax bill of $143,000, is the third most expensive residence in Broward County. Neighbors call it “the pink monster.”
Polichemi, 62, hasn’t lived in the house since Aug. 22, when Federal Bureau of Investigation agents arrested him on wire fraud charges involving the CHA matter. Polichemi was ordered held without bond pending his trial and is being transported to Chicago by federal marshals.
Polichemi was charged with scheming to defraud the CHA’s pension fund of more than $12 million by selling bogus investments in 1993 to John Lauer, the authority’s former director of risk management and benefits. About $4 million of the money was allegedly paid to an investment firm controlled by Lauer, leaving more than $8 million of the CHA’s money unaccounted.
In June, a federal judge in Chicago froze Polichemi’s assets at the request of the Securities and Exchange Commission, which is pursuing a civil complaint related to the CHA matter. U.S. District Judge Wayne Andersen ordered that Polichemi and his British Virgin Islands company, Copol Investments Ltd., pay back illicit profits, but he hasn’t set an amount.
Federal authorities have been investigating whether some of the disputed money may have been used by Polichemi to purchase the house.
At Polichemi’s bond hearing last month in Ft. Lauderdale, a Chicago FBI agent testified that a company called Doanjo Ltd. bought the house in August 1993 for $325,000. Polichemi controls Doanjo, according to court records.
However, Doanjo actually bought a smaller piece of property adjacent to the mansion, according to public records. The house on that property was subsequently demolished.
The SEC moved this week to block any sale of that property by filing a notice in Broward County Circuit Court that the lot may be the subject of litigation.
Polichemi’s attorneys said the self-described international financier and his family have lived in the mansion since the fall of 1993. Polichemi also maintains an apartment in London.
Records show that Polichemi never owned the mansion but lived in it and held a contract to buy it. According to a 1992 deed, the house is owned by Idlewylde Properties Inc. of Boca Raton, Fla. Alan Werksman, an attorney for Idlewylde Properties, said Polichemi has no ownership interest in the house.
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Werksman said Polichemi, through Doanjo, agreed to purchase the house in July 1993 for $6.2 million. The deal, scheduled to close on Sept. 1, 1993, was postponed and never closed, Werksman said.
Polichemi and his family moved in anyway. The arrangement raised eyebrows among Ft. Lauderdale real estate agents and well-heeled neighbors on exclusive Idlewyld Island who were expecting a multimillion-dollar sale. Werksman said Polichemi moved in after reaching a private understanding with Robert L. Simmons, the sole officer of Idlewylde Properties.
An office assistant said Simmons was traveling and could not be reached for comment. “It was simply an arrangement under which they would have occupancy,” Werksman said. “I was not a party to it.” He declined to disclose the terms.
Steven Squire, a Ft. Lauderdale attorney for Doanjo, also declined to discuss the terms of the occupancy arrangement.