EquityBuild Scheme Participant Tyler DeRoo Facing Lawsuits

Tyler DeRoo saw an opportunity around 2020 to revive his checkered real estate career on the South Side of Chicago.

He began buying swaths of multifamily property with several partners, but his reemergence from legal peril and troubled real estate deals soon turned out to be short-lived.

Over the past few years, a dramatic fallout between him and fellow investors has highlighted the fragility of a multifamily submarket that drew an influx of capital from over-confident investors and lenders when interest rates were at historic lows.

Now, one of DeRoo’s main financial backers, West Palm Beach, Florida-based investor Andy Oshay, is questioning whether he was naive to give DeRoo a second chance.

DeRoo was one of several people who had been accused of helping facilitate a $135 million Ponzi scheme known as EquityBuild centered on Chicago real estate that collapsed in 2018. He later came to a settlement with a receiver appointed by the Securities and Exchange Commission that required him to pay $325,000 for his role in the scandal.

DeRoo claims that his position at the company was minor.

“I had no ownership stake, I had no control. I was just an employee,” he said.

Oshay said he believed that explanation when he went into business with DeRoo after the EquityBuild fallout. The pair formed a joint venture around 2020 with partners including Stephen Lee and began assembling a portfolio of about 400 apartment units across multiple properties purchased for tens of millions of dollars — they poured at least $32 million into Chicago real estate, The Real Deal previously reported.

Yet since 2022, DeRoo and his partners in those properties have been involved in dozens of lawsuits totaling about $38 million in disputed funds.

Multifamily properties where DeRoo, Oshay and Lee invested

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Oshay alleges that DeRoo had nefarious intentions from the beginning.

“Every piece of information that we gathered, in particular the bank statements, the entire way through show that [DeRoo] set out to defraud us before we even started,” Oshay said.

He concedes that their properties are far from the only distressed portfolios on the South Side.

“There are countless groups that are just dead on the side of the road because they overbought properties that will just never work out… It creates comps that are higher than what they should be because they’re buying properties with incorrect underwriting,” Oshay said.

But he alleges that many of the financial issues facing real estate players in the area stem from malice rather than incompetence.

“It’s just an incredibly difficult market to operate in, in which it gets presented to out-of-state investors that it’s much easier to operate,” Oshay said.

From DeRoo’s perspective, he pursued his redemption plan in the wrong place at the wrong time — and with the wrong people.

“This just solidifies a pattern of behavior whereby Andy says he will contribute and helps to get something started, doesn’t fulfill his promises, and then when things go bad because he doesn’t hold up his end of the bargain, he proceeds to set fire to the proverbial building, and blame others for the damage,” DeRoo told The Real Deal.

DeRoo claims he simply fell into a trap that similarly ensnared many investors since the pandemic. When interest rates plunged, capital quickly flowed into precarious deals, and when rates began to rise in 2022, many properties couldn’t overcome the hit to their bottom line.

“There was no quick exit. Rates were up. Everything was just kind of tough,” DeRoo said.

The latest disputes come after DeRoo and fellow investors racked up a slew of legal issues first reported by The Real Deal in 2024, including an allegation that DeRoo owed the last $125,000 installment of the settlement related to the EquityBuild case. (DeRoo has since paid the settlement, court records show.)

Tensions first escalated when Oshay filed a lawsuit against DeRoo and Lee alleging that they were co-mingling funds from the various entities set up to operate their properties and siphoning money away to companies solely controlled by DeRoo and Lee.

When the lawsuit was settled in May 2023, an agreement allowed Oshay’s investment platform, Alpine Hill Capital, to boot DeRoo and Lee’s property management companies DeLee Development and Catalyst Realty from operating key assets in their shared portfolio.

DeRoo said the allegations were baseless because Oshay oversaw the portfolio’s quarterly reports and hired an accountant that Oshay personally recommended to track their finances.

DeRoo’s firm Catalyst responded by filing hundreds of thousands of dollars worth of mechanic’s liens on the properties Alpine invested in, claiming his property management company had gone unpaid by Oshay for work on the buildings. The disputes raised red flags for lenders and insurers, making turnaround efforts at the properties nearly impossible, DeRoo claimed.

Several of the properties have accumulated building code violations and in some cases had court-appointed receivers put in place.

Now, DeRoo, Lee and Oshay are all named in multiple foreclosure lawsuits, despite the shifting ownership structures of the properties. In some foreclosures, DeRoo claims he remained on loan documents for properties he no longer controlled.

An operating agreement and other property records show Oshay brought on investor Chikoo Patel as a manager of an LLC tied to some of the properties. At least one foreclosure was filed specifically because Oshay brought on a new manager without informing the lender, a letter of default shows. DeRoo alleges that poor management by Patel, who is facing separate allegations of property and financial mismanagement of his own, led to some of the foreclosures.

DeRoo and Lee aren’t going down without a fight. The investors have filed motions to dismiss and counterclaims in many of the lawsuits. Plus, DeRoo said he is working with lenders in the foreclosure cases for properties he still has authority over. Attorneys for Lee didn’t return requests for comment, and attempts to reach him weren’t successful.

The largest judgement handed down in the latest batch of legal filings was a $194,000 payment that a court ordered DeRoo’s Catalyst Realty to make for failing to pay a construction materials supplier represented by Oshay’s attorney, Andrew Porter. DeRoo claims he settled for a lesser amount. Still, millions of dollars worth of legal disputes have yet to come to a resolution.

DeRoo’s more personal disputes range from $1,600 in unpaid dues owed to his suburban Chicago country club to a $2 million foreclosure filed last year against his personal suburban Chicago home.

“The walls are caving in on him,” Porter said.

DeRoo is fighting the foreclosure filed in Lake County against his 8,000-square-foot residence in Bannockburn.

Wilmington Trust, on behalf of bondholders in securitized debt, alleges DeRoo stopped making payments toward his $2.1 million mortgage in November 2024, the same time that he was battling a barrage of other legal issues.

The court filing also reveals that in 2022, about a year after he took out the home loan, DeRoo secured a junior mortgage against the house from Coastal Community Bank for $250,000. He then took out an additional junior mortgage in 2024 from PK2 for $100,000.

The house is also subject to a $1,400 tax lien placed by the state of Illinois, the original complaint showed.

Tracking down DeRoo hasn’t been easy for some of his creditors and opponents. Photos of him aren’t readily accessible online. In a prior case, Oshay’s attorney failed to serve DeRoo court papers for months, in what Oshay alleged was an active effort to evade the court system. In the newer batch of lawsuits, the Royal Melbourne Country Club in Long Grove voluntarily dismissed its suit against DeRoo after failing to serve him several times, records show.

DeRoo, however, claims he isn’t dodging service and is open to communicating with process servers. Rather, he says process servers have tried to reach him at old addresses, around holidays and during work hours while failing to reach him by other means.

Now, he’s trying to work through the legal matters at hand.

“As far as what’s next, I don’t know,” he said. “I’ve had to try to figure out how to put some of this behind me.”