Ex-Land Bank Authority manager pleads guilty to fraud, faces up to 3 1/2 years in federal prison – Chicago Tribune

A former manager at the Cook County Land Bank Authority pleaded guilty Wednesday to using straw buyers to fraudulently purchase and resell blighted properties and secretly setting up a property management company that raked in more than a million dollars in ill-gotten maintenance fees.

Mustafaa Saleh, 36, of Woodridge, entered his guilty plea to one count of wire fraud during a hearing before U.S. District Judge Andrea Wood that also served as his first court appearance. He faces up to about 3 1/2 years in prison under preliminary sentencing guidelines.

In addition to the potential prison sentence, Saleh was ordered to forfeit about $173,000 in profits the scheme pulled in. Wood set a sentencing hearing for June 22.

The plea comes nearly two years after the Tribune first reported in June 2021 that Saleh had been named in a subpoena sent by prosecutors to the Land Bank Authority asking for records as part of an ongoing criminal investigation into the program, which was formed to promote economic development in blighted communities that’s also been the subject of controversy.

Land Bank Authority employees are prohibited from purchasing a property from the agency unless it would be used for the employee’s primary residence.

Over a five-year period beginning in 2016, Saleh used straw buyers to purchase six properties from the agency on Saleh’s behalf, then redeveloped, resold or otherwise used the properties for Saleh’s financial benefit, Saleh’s plea agreement stated. The properties were in Chicago and the suburbs of Oak Lawn and Midlothian.

Saleh also admitted in the plea that he formed a property maintenance company, Evergreen Property Services, and directed another individual to pose as its owner. Over the next three years, he caused the Land Bank Authority to contract with Evergreen and pay more than $1 million for property maintenance services.

County records show Saleh left the agency in 2019.

On May 18, 2021, three days before the subpoena was issued, Saleh was interviewed by federal law enforcement agents and “falsely stated that he had never collected the proceeds from the sale of any (Land Bank) property,” his plea stated.

Saleh’s attorney, Christopher Parente, noted of the judge Wednesday that while Saleh was admitting guilt, he indeed “did all the work” described in the plea agreement. “It’s not a typical fraud scheme, in my opinion,” Parente said.

After Saleh was charged last year, the Land Bank spokeswoman issued a statement saying it “cooperated fully with the investigation” and that “the agency, board members, executive directors and other staff were victims of this crime and never the subject or target of this investigation.”

According to the biography he had on the Land Bank’s website, before working at his county post, Saleh had previously worked as a portfolio manager for Galaxy Properties “where he oversaw residential and commercial assets” and “managed property maintenance, facility projects, and new construction projects.”

When he filed for bankruptcy in 2015, however, Saleh didn’t mention any work for a Galaxy Properties. Instead, he said in the sworn paperwork that he was a sales manager at Galaxy Furniture, a discount furniture store in the 3400 block of West Montrose Avenue, where he earned about $2,600 a month.

Saleh, who said he’d previously worked as a taxi driver, listed more than $3,000 in back taxes owed to the IRS as well as tens of thousands of dollars in outstanding student loans and credit card debt. The bankruptcy was discharged several months later, records show.

The Land Bank Authority, which was established in 2015, has received plaudits for the work it does to restore properties in distressed neighborhoods by acquiring vacant, abandoned, foreclosed and tax-delinquent properties to prepare for sale to rehabbers and developers.

But it has also been the source of scrutiny and controversy. County leaders commissioned an outside audit into the Land Bank, released in 2020, that determined the agency needs to do more to avoid conflicts and ensure it’s selling land to qualified buyers.

Not long after the audit was made public, Cook County’s independent inspector general also issued a report saying the Land Bank lacked “policies and procedures designed to specifically and adequately administer” the buying and disposition of properties from the county’s scavenger sale, and had purchased so many properties that the agency was “precluded from effectively managing” them.

The land bank has also been criticized by Cook County Treasurer Maria Pappas for taking properties off the market, slowing potential development in blighted areas.

jmeisner@chicagotribune.com