Mike Reschke, Ted Koenig Sue David Trandel Alleging Fraud

Veteran Chicago developer Mike Reschke and investor Theodore Koenig are taking their former partner to court, accusing David Trandel of defrauding them in a residential investment gone wrong.

In a complaint filed in Cook County Circuit Court on Feb. 13, Reschke, CEO of Prime Group, and Koenig, CEO of Monroe Capital, accuse Trandel of effectively stealing a Wisconsin residential development site after Reschke and Koenig invested in its purchase. The complaint also accuses Trandel of misappropriating up to $2 million in funds and misleading investors about where the money was going.

Reschke, Koenig and Trandel founded Primestone Residential in 2022 to identify and purchase vacant land, rezone it for residential use and sell it to homebuilders, according to the lawsuit. Trandel was the day-to-day manager of Primestone, while Reschke and Koenig provided capital, the lawsuit says.

Trandel is a longtime associate of Reschke, having served as COO of Reschke’s Prime Group from 2003 to 2011.

Reschke told The Real Deal that he’s hoping for a quick settlement of the dispute.

“How it ended up is disheartening, based on our very long relationship that we had together,” he said. “I’m just sort of shocked at what happened here, and dismayed.”

Trandel did not respond to requests for comment.

The investors are asking a court to force Trandel to hand the disputed property back to the company. They’re also demanding he return their $2 million investment, pay back the management fees he collected and provide a full record of the company’s accounting.

The fallout centers on the plan to purchase a 34-acre property in Mount Pleasant, Wisconsin. The lot, which Trandel contracted to purchase in 2022, was the first successful purchase after Trandel unsuccessfully tried to buy other parcels, the lawsuit says.

The funding

During the three years after the site went under contract in 2022, Reshke and Koenig provided hundreds of thousands of dollars to fund Primestone’s development costs for the parcel, according to the lawsuit. In January 2025, Trandel requested an additional $75,000 to continue working on the deal.

In May, Trandel said he had secured a deal to sell the site to Lennar Corporation for $3.2 million, calling it “an important first [win] for Primestone Residential.” He requested additional funding, which included a $25,000 fee to himself. Later in May, Trandel requested another $25,000 from Koenig, which he said was “needed today to facilitate the Mount Pleasant land sale to Lennar,” according to the suit.

After Trandel made an additional $68,000 request in July, Koenig replied asking about the purpose of the $25,000 payment and questioned where the funds were going, the suit says.

“I know you are stretched for money these days, and I am sympathetic to that, but we have paid over $1.2mm already in direct payments to you,” Koenig said in an email included in court documents. “That was not what we all signed up for, our last discussion was that this was supposed to stop.”

In a reply included in court documents, Trandel said the fee “is for me personally … to live … it is my means.”

After the dispute, Reschke and Koenig agreed to lower Trandel’s monthly fee to $12,500, according to the complaint.

The purchase

In September, Trandel emailed Reschke and Koenig that he had formed a new LLC, SST Old Green Bay Road, to handle the purchase of the Mount Pleasant site. When Reschke questioned why Trandel was the sole member of that LLC, Trandel asked Primestone’s attorney, Ed Gausselin, to change the member to Primestone, according to communications attached to the lawsuit.

After Koenig and Reschke approved more funding, they allege Trandel stopped communicating with them altogether last fall. In December, the suit says, Trandel closed on the deal with the LLC that was still solely in his name, despite his earlier agreement to put the LLC under the Primestone company’s name.

The purchase, according to the lawsuit, was a “gross usurpation of a company opportunity” and “tantamount to theft.”

The mortgage

The lawsuit also alleges that Trandel took out a $1.5 million mortgage on the property, without Koenig and Reschke’s knowledge, from an entity managed by Lowell Kraff, a Miami-based investor described as Trandel’s friend.

The loan amount was “commercially unreasonable” because it was far higher than the $925,000 purchase price of the parcel, the lawsuit claims. The lawsuit also argues Kraff knew Trandel was working with Reschke and Koenig and should have inquired about the source of his funds, including the earnest money deposits that were made by Primestone.

Kraff and his entity are named as respondents in discovery in the lawsuit. Kraff did not respond to a request for comment.

The site is still under contract to sell to Lennar, and the lawsuit says the plaintiffs believe its sale “may be imminent, which would cause plaintiffs irreparable harm.”