Failed Broadway Bank’s money wasted on Internet poker, drugs
BY FRANK MAIN, STEVE WARMBIR and DAN MIHALOPOULOS Staff Reporters July 17, 2012 12:37AM
Rendering of Theater District Lofts proposed for 4750 N. Winthrop, Chicago.
Updated: August 18, 2012 6:06AM
Two North Side businessmen have recently been sent to prison in a scam that involved a bad loan by the failed bank of Democratic politician Alexi Giannoulias’ family.
The federal government lists the $2.9 million loan for a condo project in the Uptown neighborhood among 17 suspect deals Broadway Bank made before the Federal Deposit Insurance Corp. shut it down in 2010.
Loan recipients James Gouskos and Alexander Dobroveanu were convicted of crimes related to the proposed Uptown development after the FDIC sued Broadway board members and executives in March.
That suit alleges the board was “grossly inattentive” — and the FDIC is trying to recover $104 million lost in the Uptown deal and the other bad loans.
At the center of the criminal cases against Gouskos and Dobroveanu was a plan to develop a vacant lot at 4750 N. Winthrop into the “Theatre District Lofts.”
They advertised the project on a website, saying the project would include theaters on the lower floors and more than 100 condominiums on floors five through 21.
But the project was never built.
Broadway Bank suffered a $1.4 million loss because of the loan, which the partners obtained by overstating their income, prosecutors said.
More than 25 people who made down payments on the condos never got their money back when the project died. Those victims, including a current Chicago cop and a retired one, lost more than $500,000.
On July 10, Gouskos, 41, was sentenced in Cook County Criminal Court to 18 years in prison.
He was convicted in April on charges of continuing a financial crimes enterprise and on multiple counts of theft of less than $100,000 between 2005 and 2006, court records show.
His sentence — handed down by Cook County Judge Timothy Joyce — was three years longer than the 15-year term prosecutors recommended.
Gouskos told authorities he gambled away some of the money on Internet poker and had a $100-a-day drug habit which he developed after taking Vicodin for a hockey injury he suffered as a teenager.
Gouskos is a longtime associate of Chicago organized crime figures, according to a source familiar with the matter. He routinely dropped names of well-known mobsters, including top Outfit leader Joseph “The Clown” Lombardo, who was sentenced to life in prison in 2009 in the Family Secrets trial, the source said.
In 2002, Gouskos was sentenced to 33 months’ probation for theft of stolen property, and he was convicted of aggravated assault in 1995 and theft in 1988.
Gouskos and Dobroveanu also were partners in the Kinetic Playground, a tavern at 1113 W. Lawrence, officials said. The bar was embroiled in controversy in 2010 after booking a reggae performer known for his anti-gay lyrics.
Before Gouskos’ sentencing, former Ald. Helen Shiller (46th) wrote a letter to the judge on his behalf, saying she knew him as a small-business owner and a developer.
“It was always my impression that he was sincere with his efforts, that he believed in his vision for this project,” wrote Shiller, who retired in 2011 from the City Council and received $2,750 in campaign contributions from Gouskos and Dobroveanu’s real estate company between 2003 and 2005.
“If anything, he was naive about the hurdles doing [a] development of this size and complexity in Chicago,” she said of Gouskos. “It was my impression that if anything, he might have been over his head, especially since we know now an economic collapse was brewing that caught many more experienced developers in its clutches.”
But Arlene Gitles — who lost the $12,500 she put down in 2005 to buy a condo for her daughter in the never-completed project — said she thinks Gouskos knew exactly what he was doing.
Gitles said she went to one law enforcement agency after another about her financial loss and didn’t give up until someone listened.
“It was beyond my comprehension that someone could get away with it. I was really mad,” the senior citizen said.
Gitles testified against Gouskos at his trial. She had mixed feelings when she learned of his prison sentence.
“My initial reaction was thank goodness,” she said. “But having gone through this, there was a sick feeling with this . . . . The way that he screwed us is truly reprehensible. It is beyond words.”
Before Gouskos stole investors’ money, they were happy, believing they were getting their little piece of the American dream, Gitles said.
“People were excited, people were thrilled,” she said. “This blankety-blank took advantage of everyone.”
Dobroveanu, a 57-year-old Romanian immigrant, was sentenced in April in federal court to 20 months in prison. He was convicted of fraudulently obtaining the loan for the Theatre District Lofts deal and of failing to report $425,000 from the sale of rights to a parking lot that catered to patrons of the Aragon Ballroom.
Dobroveanu also was sentenced in April in Cook County Criminal Court to four years in prison. He will serve a combined four years in prison for the state and federal convictions. He’s now in the federal lockup in Duluth, Minn., according to the U.S. Bureau of Prisons.
Dobroveanu told the federal court he was born in communist Romania and grew up watching American Westerns. He was 16 when his father died and came to the United States looking for opportunity, which he got “the back-breaking way,” in construction.
He admitted making a mistake in the way he sought the financing for the Theatre District Lofts project.
“I thought that buying a little more time with more financing would solve anything,” Dobroveanu said. . . . I should have been more forthcoming with the bank.”
As for Broadway Bank officials — including former Chicago Bears quarterback Jim McMahon and two Giannoulias brothers — the FDIC alleges they approved the loan to Gouskos and Dobroveanu “without proper underwriting.” Those Broadway officials are seeking to have the FDIC case dismissed.
A lawyer for McMahon declined to comment, and the lawyer for most of the other defendants in the FDIC case didn’t return calls.
Contributing: Rummana Hussain