Kenneth J. Conner Qui Tam whistleblower lawsuit unsealed, Mutual Bank officers, Amrish Mahajan, Rezkos lot purchase, Adams Valuation corp, False statements and omissions
“Why did Mutual Bank fire whistleblower Kenneth J Connor after he
challenged the appraisal on the land purchased by Rita Rezko, just
prior to the land sale to Obama?”…Citizen Wells
“Why did the Rezkos enter into an agreement to purchase the lot next to the Obama house and pay the asking price of $ 625,000 at a time when they were broke and heavily in debt?”…Citizen Wells
“I believe I’m more pristine on Rezko than him.”…Rod Blagojevich
This is a Citizen Wells exclusive.
I have been in regular contact with Kenneth J. Conner since he filed his original whistleblower lawsuit in 2008. As you may recall, Conner, a former employee of Mutual Bank of Harvey, was asked to do an appraisal review of the lot the Rezkos purchased in June 2005 for the full asking price of $ 625,000. Adams Valuation Corp. had appraised the lot earlier for $ 625,000. After review, Kenneth J. Conner concluded, based on comparable properties, that the lot was worth $ 500,000. An appraisal requested by Barack Obama by Howard B. Richter & Associates on November 21, 2005, near the time of Conner’s evaluation, determined the value of the lot to be $ 490,860. The Obama’s purchased one sixth of the lot in 2006.
From Citizen Wells October 31, 2011.
“9. In June, 2005, Mutual Bank President and CEO Amrish Mahajan and
other Mutual Bank officers approved a loan to Rita Malki Rezko (Rita
Rezko) which was guaranteed by Antonin Rezko so that Rita Rezko could
purchase a 9,090 square foot vacant parcel of real estate at 5050 S.
Greenwood Avenue, Chicago. As part of the Mutual Bank loan
underwriting process, Mutual Bank obtained a real estate appraisal
from Adams Valuation Corporation (Adams Appraisal) which purported to
provide an opinion of value of the subject 5050 S. Greenwood real
estate (the collateral for the Rezko loan) at $ 68.76 per square foot.
A copy of the Adams Appraisal is attached as Exhibit C. In June, 2005,
Rita Rezko closed on the purchase of the 5050 S. Greenwood property at
a purchase price of $ 625,000.00 along with the loan from Mutual Bank
in the amount of $ 500,000.00 with Mutual bank obtaining a first
mortgage lien position on the Greenwood vacant parcel.”
“10. On or about January 4, 2006, Rita Rezko entered into an
agreement with Senator Barack and Michelle Obama (Obamas) to sell a
ten-foot strip of the 5050 S. Greenwood property to the Obamas. A copy
of the Obama/Rita Rezko contract is attached as Exhibit D. As a result
of that transaction, the Rezkos requested that Mutual Bank release
it’s first collateral position to the ten-foot strip parcel
transferred to the Obamas. In that same general time frame, Richard
Barth, Mutual Bank Senior VP of construction lending and James Murphy,
Mutual Bank Senior VP Internal Auditor/Risk Manager, requested that
Conner perform an appraisal review of the Adams Appraisal attached
hereto as Exhibit C.”
“11. In late 2005 or early 2006, Conner performed an appraisal review
of the Adams Appraisal (Exhibit C) per the directive of Richard Barth
and James Murphy. Conner prepared a written Appraisal Review report
(ARR) opining that the Adams Appraisal overvalued the Greenwood lot by
a minimum of $ 125,000.00 and that a reasonable and fair valuation for
Mutual Banks’s underwriting purposes should be no greater than $
500,000.00 for the entire 5050 S. Greenwood parcel as originally
purchased by Rita Rezko. In that same general time frame an appraisal
was performed for the 5050 S. Greenwood property by Howard B. Richter,
MAI which valued the 5050 S. Greenwood property at $ 54.00 per square
foot but then discounted the ten-foot strip being transferred by Rita
Rezko to the Obamas by fifty percent, as the ten-foot strip was
unbuildable standing alone…The valuation by the Richter Appraisal for
the 5050 S. Greenwood lot was substantially to Conner’s ARR
“12. Conner notified Richard Barth and James Murphy orally of his ARR
findings and Conner’s ARR was filed in the “Rezko 5050 Greenwood” loan
file at Mutual Bank.”
“13. In addition to Conner’s ARR stating that the Adams Appraisal
overvalued the 5050 S. Greenwood property, Conner had reported on
other occasions that Adams Valuation Corporation had overvalued real
estate subject to Mutual Bank loan underwriting valuation.”
“14. On or about October 19, 2006, Mutual Bank received a Grand Jury
Subpoena (GJS) requiring Mutual Bank to produce the Rezko 5050
Greenwood loan file, as well as a Rita Rezko Riverside District
Development LLC checking account and loan file. Electronic mail
(email) communications about the subpoena were circulated to Mutual
Bank officers and attorneys, including Amrish Mahajan, James Murphy
and Conner. A copy of an October 19, 2006 email string pertaining to
the Rezko GJS is attached as Exhibit F. On information and belief,
Conner’s ARR was removed from the Rezko 5050 Greenwood loan file prior
to the submission of that file pursuant to the GJS, and in it’s place
Mutual bank submitted an appraisal checklist which was purportedly
dated “06/15/05″ from Senior VP James P. Murphy (Murphy Checklist). A
copy of the Murphy Checklist is attached as Exhibit G.”
“16. In 2007, Conner observed that his ARR of the 5050 S. Greenwood
property was not in the Rezko 5050 Greenwood loan file and in it’s
place was the Murphy Checklist purportedly dated “06/15/2005.”…On June
18, 2007, Conner sent an email to James Murphy which provides, in
part, “I spent time trying to track down work of mine that should be
in a particular high profile loan file, though it is not–having been
replaced by a checklist.””
“17. In October, 2007, Conner had various communications with Mutual
Bank’s Human Resources Department representative, Lana Schlabach. In
an email communication of October 15, 2007, Conner directly referenced
“Resentment over my mentioned discovery of the removal/replacement of
an appraisal review that I conducted. That appraisal review contained
substantial observations and suggestions. The transaction and parties
involved were high profile in the media.I am under the impression that
the FBI has since looked at the file.””
“18. On October 23, 2007, eight days after Conner’s October 15, 2007
email to Schlabach attached as Exhibit J, Mutual Bank terminated
Conner’s employment for pretextual reasons.”
On October 25, 2011 the FDIC initiated a lawsuit against Mutual Bank officers, directors and the bank lawyer.
From Citizen Wells October 31, 2011.
From the lawsuit:
“5. Collectively, the Director Defendants and Officer Defendants (“Director and Officer Defendants”) (a) recklessly implemented a strategy of rapid asset growth through approving a high concentration of risky CRE, ADC and out-of-area loans to a small concentration of high-volume borrowers; (b) failed to implement appropriate underwriting and credit administration practices; (c) ignored the Bank’s loan policies; (d) ignored federal lending regulations; and (e) disregarded warnings from the Bank’s regulators regarding the Bank’s lending activities.”
The Kenneth J. Conner Qui Tam lawsuit includes the Rezko lot purchase along with other transactions as part of an ongoing pattern of deception.
The lawsuit begins:
“This action, brought on behalf of the United States, concerns various knowing false statements and omissions caused by certain officers, directors and employees of Mutual Bank of Harvey (collectively, “Mutual Bank”) to the Federal deposit Insurance Corporation (“FDIC”) in part in order to reduce deposit insurance premiums due to the FDIC and otherwise conceal risk.”
Qui Tam lawsuits defined.
“Qui tam is a law passed by Congress that allows a private individual with knowledge of fraud committed against the federal government to act as a government whistleblower and bring about a qui tam lawsuit on behalf of the US. Any situation where a company or individual has defrauded the government comes under the False Claims Act, including Medicare fraud and pharmaceutical fraud.”
“Qui tam is a provision of the False Claims Act that allows a whistle blower to bring a lawsuit on behalf of the US government for a fraud committed against the United States. A government whistleblower who successfully files a qui tam lawsuit is entitled to receive between 15 percent and 30 percent of the lawsuit settlement funds recovered for the government.
A considerable amount (estimates are as high as 10 percent) of the US annual budget is paid to companies or individuals who defraud the government, usually by overcharging, submitting bills for services never performed, or over-billing for services provided. Qui tam whistleblower lawsuits include government contract fraud, defense contractor fraud, Medicare fraud, Medicaid fraud, pharmaceutical fraud and other public benefit fraud.
Qui tam Lawsuits and Settlements
Over one thousand qui tam lawsuits were filed between 1987 and 1995 and from 1988 to 1995 over $1 billion was recovered by qui tam lawyers, either in settlements or lawsuit verdicts filed by government whistleblowers. Since 1986, the government has recovered over $2 billion as a result of these lawsuits, of which almost $340 million has been paid to whistleblowers, also known as “relators”.
Typically, fraud cases are related to where the government is spending the most money. For instance, in the late 1980s, many qui tam lawsuits involved the defense industry. Recently, health care and pharmaceutical cases have been foremost.”
“Congress added Whistleblower protections to the False Claims Act in 1986, which entitles the whistleblower to reinstatement with seniority, double back pay, interest, special damages sustained as a result of discriminatory treatment, and attorneys fees and costs, even if the case is never filed, as long as the whistle blower’s allegations could legitimately support a False Claims Act case.
The False Claims Act also protects qui tam plaintiffs who are “demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment” for acts done in furtherance of filing a claim under the Act.”
I was just given the ok to present this.
More to come.