CA Ventures Affiliates Accused of More Unpaid Bills

CA Ventures and its affiliates are accused of skipping out on more bills in court papers filed this week.

A lawyer who had been defending the Chicago-based development firm in a $3 million dispute with its investors asked a judge this week to withdraw from the case because he hasn’t been paid, despite the company’s assurances. Separately, a bank wants to foreclose on vacant land in the northwest suburbs that the firm once eyed for multifamily construction.

The allegations add to the mounting legal and financial risk faced by CA Ventures and its CEO Tom Scott, as well as Jeff Krol, who has helped raise millions of dollars from investors for the firm’s multifamily developments.

The developer has taken bruising losses and been served multiple lawsuits in recent months as it tries to clean up its balance sheet and reposition itself as a real estate buyer rather than a developer, while pricing for commercial properties bottoms out amid the market downturn driven by rising interest rates.

In the latest lawsuit involving the firm, Chicago-based Signature Bank hit an affiliate of CA Ventures’ Springbank Capital Advisors with a $3.7 million foreclosure complaint on Thursday, according to Cook County court records.

The bank is seeking to collect a debt secured by vacant land at 3031 West Salt Creek Lane in Arlington Heights, a parcel that had been eyed for the development of senior housing. It’s adjacent to 3401 West Payton Place, a 263-unit apartment building that CA Ventures developed but lost to its lender, TPG RE Finance Trust, which foreclosed on the property’s $80 million loan in December.

The property’s owner, an LLC called Arlington Downs Residential II, is an affiliate of Springbank that purchased a parcel of land adjacent to the Arlington One development, a former Sheraton Hotel that was converted to apartments. Trandel had also led the conversion of the hotel along with developer Stoneleigh Companies.

According to Signature’s lawsuit, the loan that Springbank took out in 2019 was extended six times before maturing Feb. 28. Signature is suing for the full amount of the loan plus fees and interest.

The parcel was part of a planned unit development that is zoned for a variety of uses. The nearby Residences of Payton Place sprung up alongside Arlington One in 2021. The parcel that Signature foreclosed on was zoned for senior housing, however no development took hold.

Signature did not respond to requests for comment. Scott said the pandemic halted senior housing developments and referred further questions about the suit and the withdrawal of the lawyer to Krol. Krol didn’t return requests for comment.

The lawyer, David Rammelt, asked to withdraw from representing CA Ventures affiliate CA Residential in a yearslong fight between investors in several developments the firm led that have either underperformed or never got off the ground, according to allegations in court records. Rammelt claimed his law firm Benesch hasn’t been paid for its work on the case for over a year and was promised it would be by the defendants multiple times in recent months. He didn’t return a request for comment.

The investors, which include firms called Labban Real Estate and RJ Silverman Investments, as well as trusts in the names of individuals, say they poured $3 million into corporate entities that were meant to lead the development of multiple apartment complexes in Chicago and suburbs such as Winnetka, Glen Ellyn and Mundelein. They claim those projects were mismanaged. An attorney for the investors declined to comment.

Some of the properties, including one in Winnetka, also ended up facing costly foreclosure lawsuits and took on risky, high-interest debt. The investors say the development leaders failed to disclose challenges they faced and improperly concealed information, their suit claims.

Scott and the other defendants have denied wrongdoing in the suit and claimed the investors have failed to specify how the defendants breached any fiduciary duties and that they wrongly grouped all the individuals and LLCs involved with the projects together, instead of making particular claims against each.

The case was filed in 2021 and involved arbitration between the investors and CA Ventures leaders and affiliates at one point. But it remains on the Cook County court docket with a hearing scheduled for March 26.

It’s unclear how the defendants will handle their legal representation moving forward if Rammelt is allowed to withdraw from the case.

Editor’s note: This story was updated to clarify that David Trandel no longer holds an interest in Springbank.