Jay Strauss, 76, of Scottsdale, Ariz., also was ordered to pay $2 million in restitution, according to a spokesman for the U.S. Attorney in Chicago. The judge, Robert Dow Jr., noted in court that it is unlikely restitution will ever be paid.
Mr. Strauss pleaded guilty to defrauding the condo associations, made up of more than 700 individual unit owners, by falsely claiming that his property management company, Chicago-based Regent Realty Group Inc., was using association payments for property maintenance. The funds actually were being used to pay off debt on other real estate owned by Mr. Strauss and a partner.
Mr. Strauss’ sentence would be followed by two years of supervised release, with the first 18 months under home detention with electronic monitoring. Because he is 76 and has severe health problems, his lawyer asked that he be assigned to a medical facility. It was disclosed in court that Mr. Strauss has severe heart problems, prostate cancer and paralysis that confines him to a wheelchair.
Mr. Strauss has not been assigned to a specific prison but reports to the Federal Bureau of Prisons on July 10, according to the U.S. Attorney’s spokesman.
Mr. Strauss’ lawyer, Patrick Cotter of Barnes & Thornburg LLP in Chicago, did not immediately return a call Tuesday.
Mr. Strauss agreed to plead guilty to federal wire fraud charges last year, after his former Regent Realty partner, Donald Doering of Wilmette, accepted a plea agreement in which he would be available to testify against Mr. Strauss.
Both men were indicted on three counts of wire fraud by a federal grand jury in February 2011 and had remained free on bond. At the time, Mr. Strauss pleaded not guilty.
Now that the case against Mr. Strauss has been resolved, a sentencing date will be set for Mr. Doering, the spokesman says.
Mr. Doering’s lawyer, Robert Gevirtz of Gevirtz & Born in Northfield, also did not return a call Tuesday.
Federal guidelines call for a 51-month sentence as part of Mr. Doering’s plea agreement. The judge can opt to impose that sentence or reject the plea agreement at the sentencing hearing, the spokesman says.
Guidelines called for 78 to 97 months for Mr. Strauss, but judges have the leeway to decrease sentences based on factors such as failing health.
Prosecutors say the men diverted owners’ payments to their own real estate developments from 2005 until 2008. When the firm shut down, condo associations began informing authorities that their buildings’ reserve funds had been depleted, and Regent Realty was found to have tapped building funds beyond the management fees to which they were entitled.
The two disguised the misappropriations with falsified monthly financial statements, prosecutors say.
Originally published by Crain‘s.