Ruben Espinoza Faces More Lawsuits from Lenders, State Senator

Chicago landlord Ruben Espinoza has drawn the ire of multiple lenders and business partners over the past year.

After fumbling the Loop office building at 19 South LaSalle Street into foreclosure, Espinoza’s commercial real estate ventures are now being pursued for at least $77.6 million by lenders through foreclosure, and he’s facing another $2.5 million in mechanic’s liens from contractors who claim they’ve gone unpaid for work on his buildings, public records show.

The foreclosure lawsuits stem from $68 million in mortgage debts he took on for commercial complexes on Chicago’s Southwest Side, with more than $43 million, including interest and fees, owed for the so-called Chicago Business Center, a 661,000-square-foot mixed-use building with office space and a distribution facility at 2600 West 35th Street, and another $24 million owed for the 110,000-square-foot distribution center just across the Chicago River to the northwest, at 2455 South Damen Avenue. Espinoza is also facing a foreclosure lawsuit for a $9.6 million loan he took on for a set of River North loft office buildings at 215-223 West Ohio Street.

K-Star Asset Management, the special servicer for the commercial mortgage-backed security debts tied to the Southwest Side properties, filed to foreclose on those buildings earlier this month, while Rialto Capital, the special servicer on the Ohio Street debt, started its takeaway process last year.

Meanwhile, Espinoza is still grappling in Cook County court with partner Igor Gabal over a $6.2 million insurance payout received by their joint venture that bought the Loop’s 300 West Adams Street office building at an eye-popping discount amid the pandemic-induced commercial property downturn.

Now, Espinoza has an Illinois state senator on his tail, as well.

Sen. Robert F. Martwick Jr., who represents Illinois’ 10th Senate District that includes a stretch of Chicago’s Northwest Side and borders O’Hare International Airport, is going after Espinoza for failing to pay Martwick’s law firm, Finkel, Martwick & Colson. It was co-founded by the politician’s father.

Finkel has specialized in property tax appeals, and Martwick has previously come under scrutiny for the firm’s work due to his government connections and the potential for conflicts of interests to arise, similar to concerns that dogged Michael Madigan and Ed Burke’s law practices for years before their recent downfalls in criminal trials.

Martwick’s firm claims it is owed more than $1 million by Espinoza and his real estate ventures, after going unpaid for netting property tax savings for the landlord at big Chicago buildings, all of which are now subject to foreclosure proceedings. Finkel’s contracts with Espinoza, which were signed by Martwick, pertain to its tax work for each of the last four years, according to the complaint filed in Cook County court on July 22.

Espinoza didn’t return a request for comment. An attorney for K-Star didn’t return a request for comment, and a lawyer for Finkel, Martwick & Colson declined to comment, citing pending litigation.

As part of its retainer agreement with Espinoza for tax work on his real estate portfolio, Finkel was supposed to be paid 37.5 percent of any of the savings it achieved for the landlord over the four-year period, or 12.5 percent annually, its complaint says.

The biggest bill to Finkel is owed for the 2600 West 35th Street property, where the law firm claims it is owed over $587,000 for its work. The Damen Avenue property as well as 215 West Ohio are also subject to Finkel’s lawsuit, as is 19 South LaSalle, a 16-story building that Espinoza owned before losing it amid a $21 million foreclosure lawsuit. The LaSalle property is now set to undergo a conversion into housing led by Chicago-based development firm Envoi Partners, but Finkel claims it’s owed over $250,000 for property tax savings it won for the building under Espinoza’s ownership.

Espinoza appears to have resolved at least some of his legal woe in recent months. A Chicago-based lender in April dropped a lawsuit it filed over a $3.5 million loan that Espinoza and his partner Robert Habeeb took on for a potential revival of the 300-room hotel at the Indian Lakes golf course property in suburban Bloomingdale, records show. The suit was dropped after the lender took control of the property and sold it for $5 million to the Village of Bloomingdale, public records show. It’s unclear how the proceeds of the sale were split between the lender, Espinoza and Habeeb.