Shaya Prager has drawn the ire of an Illinois circuit court judge, adding to the list of parties vexed by the embattled real estate investor.
Lake County Judge Daniel L. Jasica is overseeing lender Unify Financial Credit Union’s $106 million foreclosure suit for a suburban Chicago office debt owed by Prager’s firm Opal Holdings. The firm went on a $2 billion nationwide office buying spree amid the pandemic and has since encountered a series of bruising financial and legal obstacles.
Opal is on track to face court sanctions for failing to comply with Jasica’s orders to turn over more than $2 million to the property’s receiver, Cushman & Wakefield’s Keelee Leyden.
About $500,000 in tenant security deposits at the 697,000-square-foot office campus at 500-540 Lake Cook Road in Deerfield has not been accounted for by Opal. The firm is also accused of transferring $1 million out of an account for the property more than a month after Leyden’s appointment to manage the asset and take over its financial dealings, according to court records. More than $500,000 in other funds has also been requested by the receiver, who says they’re needed to run the property while the foreclosure lawsuit plays out, and that Opal last had access to the money.
Prager — whose firm is already facing myriad lawsuits from lenders and investors — has a final chance to come up with the cash by Oct. 2, ahead of an Oct. 10 court hearing in the Deerfield case, and potentially avoid being found in contempt of court.
Jasica hesitated to even give Prager an extended deadline, and only did so at the request of both the lender and the receiver. The lawyers and the judge all acknowledged the date as a formality, as it’s expected the receiver’s attorney will soon file a motion for “rule to show cause.” That could lead to sanctions against Prager’s company and his wife, Shulamit, who is personally named in the foreclosure lawsuit.
“They’ve already had two deadlines, and they’ve blown them. I don’t want to give a third date,” Jasica said. “I do think we’re at the rule to show cause stage.”
When Prager’s firm bought the property for $178 million in late 2021, it took out more than $100 million from Unify. Opal received a credit on the price from the seller for the tenant security deposits, it told the receiver upon her request for the return of funds.
Unify’s attorney Nathan Grzgorek, of the firm Polsinelli, demanded the borrower account for the security deposits, calling it “troubling” they haven’t been returned to the receiver, who may need to refund tenants who move out. He described the $1 million transfer as “even more troubling,” since it was made from the property’s account in mid-August — well after Leyden’s July 1 appointment as the asset’s receiver.
“I’m troubled by the fact that the receiver has no money to pay security deposits if the demand is made for the return of a security deposit,” Jasica said.
Adham Alaily, an attorney for the Opal affiliate defending the suit, encountered audio issues while calling into the hearing on Zoom from another courthouse. His partner, lawyer Julie Davis Eagan, replaced him in the hearing and said Alaily doesn’t want to force the receiver to seek sanctions against the Opal affiliate, and is “working diligently” with the company to gather materials and funds required by the receiver. Reached outside of court, Alaily declined to comment for this story, and a spokesperson for Opal didn’t return a request for comment.
If the judge does end up ordering sanctions against Opal or its affiliates involved in the case, they could require the landlord to pay tens of thousands of dollars in attorneys fees to the receiver and her lawyer, Aaron Gavant of the firm Barnes & Thornburg, among other lawyers working on the case. Attorneys and Leyden have continued to accrue fees while trying to track down the funds the receiver says are owed by Opal, and those fees are set to be charged to the property.
“This is more expenses that are being charged to this property, which does not have sufficient funds,” Gavant said in court.
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In addition to the $1.7 million in missed property tax payments Unify covered on behalf of Opal to initiate the foreclosure lawsuit late last year, the lender also paid $300,000 toward a ground lease on the property. The ground parcel is owned by frequent Opal partner Katherine Cartagena and encumbered by a $72 million mortgage she borrowed from a trust represented by Missouri-based UMB Bank, records show.
Another lender for an Opal property in Texas that fell into foreclosure raised questions about whether Prager and Cartagena misrepresented the nature of their business relationship in order to obtain larger amounts of debt on other real estate deals than they would have without a ground lease deal.