Hamptons of Hinsdale To Move Forward Again

The Hinsdale Village Board this month transferred agreements related to the Hamptons of Hinsdale residential development to the project’s new owner, Inland Real Estate Group of Oak Brook. The action will make it possible for work to resume on the development, which has been stalled since 2008 by federal court action.

The condominium and townhouse development is located on 12.4 acres of land near the intersection of Grant and 57th streets, formerly the site of the L’Marquis apartment complex. In 2002, according to federal court documents, Wextrust Development Group of Norfolk, Va., purchased the property for $18 million. Three years later, the company began raising about $13.5 million to finance the Hamptons of Hinsdale.

Wextrust planned to construct 12 buildings on the Hinsdale site. Seven buildings would contain 23 luxury townhouses and five larger structures would house 93 condominium apartments. Prices were to range from $339,000 to $697,900 for the condos and $695,000 to $940,000 for the townhouses.

At one point in 2008, according to the court documents, site work including streets, drainage, and utilities was substantially completed and one townhouse building was nearly completed. One of the residences in the townhouse building was sold for just over $1 million and was occupied.

But work on the project halted that year when Wextrust CEO Steven Byers and COO Joseph Shereshevsky were indicted by a federal grand jury for involvement in a $255 million Ponzi scheme.

Wextrust officials plead guilty

According to the Wall Street Journal, Shereshevsky pled guilty in February to securities fraud, conspiracy, and mail fraud. Byers, 48, pled guilty to securities fraud and conspiracy charges last year. He was sentenced last week to 13 years in prison.

According to the New York Daily News, Byers tearfully apologized at the sentencing hearing in a New York City federal courtroom.

“The last two years were a living hell, but I deserve more,” Byers said. “It didn't seem like that much money—$50,000 here, $100,000 there. It didn't seem a huge amount.”

“I don't think you realize what a living hell is,” responded Patricia Robertson, who lost $600,000 in the scheme.

Federal prosecutors alleged that Shereshevsky and Byers conspired from 2003 to 2008 to defraud about 1,200 investors, many of them Orthodox Jews. The investors reportedly were led to believe they were investing in commercial properties under lease to the federal government. However, Wextrust never purchased the properties and the funds were diverted to other projects without the knowledge and consent of the investors.

In court, Byers admitted that in 2005, he and other unnamed conspirators “met and devised a plan to raise money for properties that had leases to the GSA [General Services Administration]. Sometime in 2006, we continued to raise money for that property even though we didn't own it and didn't close it. In addition, I made up certain documents that were untrue, that were false, and either sent them or caused them to be sent to investors.”

Byers admitted that some of the communications directed to investors originated in Chicago. Federal prosecutors alleged that Byers and others sent statements to investors showing income being generated by the GSA properties, even though Wextrust didn’t own them.

Property under receivership

In August 2008, Wextrust’s assets were placed in receivership by a federal court judge. Timothy Coleman was appointed receiver with the authority to manage the Wextrust group of companies. In July 2010, he authorized the sale of the Hamptons of Hinsdale property to First Bank.

Last month, Hinsdale village officials were notified that First Bank had signed a purchase agreement with Citizens Bank, which had an agreement with Inland Real Estate to complete the project.

Inland is expected to complete the development essentially as it was originally planned, according to village officials. A company spokesperson said the firm did not have any information to share with the public at this time.

Empty Buildings A Draw For Vandalism

Over the years, the Hinsdale Police Department has received several reports of vandalism to the site, including broken windows and paint being thrown on the buildings' exteriors.

As of Monday afternoon, construction work had not resumed at the site, but broken windows in the nearly completed townhouse building have been boarded over in recent days.