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The Watchdogs: Michael Scott was under financial pressure before death

Updated: September 24, 2012 6:25AM

More than a year after he took his own life, new details are emerging that show former Chicago School Board President Michael W. Scott had been under growing financial pressure.

Scott — a developer, close friend of Mayor Daley and onetime Chicago 2016 Olympic organizing committee member — was found dead of a self-inflicted gunshot wound on Nov. 16, 2009, in the Chicago River west of the Apparel Center. He was 60.

† About two weeks before Scott’s suicide, a development company that had been paying him $10,000 a month “for consultation in regards to future projects involving the possible Olympic Games in Chicago” canceled his contract, according to new details from the Chicago Police Department that officials previously had refused to release. Scott lost that lucrative part-time job because the city failed to land the 2016 Games, according to an unredacted police report on his suicide obtained by the Better Government Association.

† Two downtown fast-food restaurants Scott co-owned — part of a franchise called Salad Creations — had gone out of business shortly before his death, and a third closed shortly thereafter, according to Phil Gershman, Scott’s partner in those eateries. Scott had been negotiating to build a fourth Salad Creations, this one at Midway Airport, but that deal didn’t materialize, Gershman says.

† Lenders are now seeking a total of about $1.2 million from Scott’s estate, probate records show. Nearly $1 million of that stems from a pair of loans that Scott and Gershman obtained for their restaurants in 2007 from First Chicago Bank & Trust. First Chicago also wants $182,025 from the estate to pay off a loan it gave Scott in 2005. American Express also has gone to probate court seeking $46,633 — the apparent unpaid balance on a Scott credit card.

The new information about Scott’s consulting contract appears to contradict statements that had been made by Scott and Mayor Daley that Scott wasn’t planning to cash in on his dual roles as an Olympic organizer and a real estate developer.

In January, when the Police Department initially released the reports of its investigation of Scott’s death in response to a Chicago Sun-Times request under the Illinois Freedom of Information Act, it blacked out much of the documents — including the previously undisclosed details of Scott’s consulting deal.

The BGA later obtained the same heavily redacted police reports. It argued that leaving out so much of the police findings violated state law, and the police ultimately agreed to release some of the previously withheld information.

Scott had a rent-free office in the South Loop at Fogelson Properties, which is owned by developer Gerald Fogelson. About two weeks before his death, Scott went there and “was inquiring in regards to his monthly payment of $10,000, which he had not received,” according to police.

Referring to a Fogelson executive, investigators wrote: “Timothy Desmond stated that he explained to Michael Scott that the terms of the contract . . . were if the Olympics were not to be in Chicago their contract would be void. Scott appeared surprised but later contacted him and apologized for the misunderstanding.”

Fogelson and Desmond did not return calls seeking comment. Lawyers for Scott’s family declined to respond to calls and written questions.

Around the same time that Scott’s consulting deal evaporated, his restaurant business was imploding.

Loan documents in Scott’s probate case show First Chicago renegotiated an $875,000 loan to Scott and Gershman in March 2009. That was apparently based in part on their plans to open a Salad Creations restaurant at Midway Airport.

Scott and Gershman, according to the loan, had a “commercial pledge agreement by” Midway Airport Concessionaires, which is owned by businessmen Timothy Rand and Everett Rand and has a city contract to lease restaurant space at Midway.

But Salad Creations never opened at Midway. The Rands and their attorney didn’t return calls seeking comment.

Chris Fusco and Tim Novak, with the Better Government Association

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