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A Fine Mess

Last year housing court judge Arthur Rosenblum fined landlords and property managers $1,291,306. Not one penny was collected. This year he's trying something new.



"What happens," Judge Arthur Rosenblum said, "is that lawyers tell their clients 'Don't worry about the fine' and they just leave it alone and years go by and the fines are never paid and everybody knows that the judicial penalties are a farce. The lawyers who practice in the housing field know that the fines will never be enforced. And if somebody does bring it up again, they'll fight it again, but if it's there, it's there, so what? They tell their client don't worry about it, someday we'll sell it off and let that sucker come in and tell the judge it's all fixed up and that $20,000 in fines is excessive, maybe it was reasonable at the time, but look at these bills I paid to fix it up, so why not wipe it out, judge? And in the past it probably would have been wiped out."

Rosenblum, an associate judge of Cook County Circuit Court, hears housing cases. In 1986, he fined landlords and property managers $1,291,306. Of that, not one penny was collected.

This situation disturbed not only Judge Rosenblum but the city corporation counsel's office. In February, Rosenblum began a special court call twice a month to try to collect some of the millions of dollars in judgments owed the city for violations of the housing code. The beginning was not auspicious.

February 3. The first session of the collection court call is well attended--by print reporters and television cameras. Judge Rosenblum has hyped the new procedure to the media, and reporters have responded. The defendants have not been so obliging: of the first three cases called, not one of the summonses has been served. No service, no defendant. Rosenblum is a little irritated; city prosecutor Mark Limanni is a little embarrassed. Finally they get a live one: Bernard Bergman, who owes a judgment for fines on a five-flat on West Cullerton (a judgment is the official assessment of a fine--it usually occurs 30 days after the judge levies the fine). Bergman claims he doesn't own the building, it's bound up in his mother-in-law's estate, and the fine is excessive anyway. He is not represented by a lawyer, and he has no papers with him.

"Your name is on this citation," Rosenblum tells him. "Do you have anything in writing that says you don't own the building?" Bergman says he doesn't.

"Well you can't just walk in here and say you don't own it or the fine's too much. Give me something in writing. The only thing I've got before me is a paper that says you owe me $3,400. I think you better get yourself a lawyer."

Bergman gulps. "I think you're right," he says. Rosenblum continues the case for a month.

After two more no-shows, James Battles, who owes $3,600 on a south-side three-flat, is called. A husky man in a leisure suit, Battles also claims that he doesn't actually own the building, and even if he did he couldn't pay the fine because he's unemployed.

Rosenblum asks if he has a car and a savings account. Battles says he has both. Rosenblum orders him to fill out a form disclosing his assets. Battles balks, then agrees. He goes into an antechamber to fill out the form. Later, he will emerge and sulkily agree to come back and pay what he can next month.

Between the last two no-shows is a girl, apparently about 14. She's here to represent her mother, who she says is on social security disability and currently in a hospital. The mother owns a three-flat on East Marquette, and they live in the building. Rosenblum tells her the fine is vacated; as she leaves the courtroom, Rosenblum looks at Limanni. "When we started this program we weren't going to go after small buildings with less than $2,000 in judgments," he says disgustedly. "We've got enough slum landlords in Chicago without going after unemployed sick women with three-flats." Court is adjourned.

"We've had a whole series of problems, but we've nailed most of them down," Mark Limanni said early in July. "The first problem was administrative. We had to create a whole new docket and get it hooked into both the city and county computers. We had a problem with case files being missing when the call was held."

The second problem was with service. "We [the corporation counsel's office] do our own process serving, and the corporation counsel figured that after the heating season we wouldn't need so many servers for housing courts. They failed to allow for this whole new docket, which is aimed at 20 cases every two weeks.

"And we had to formalize our guidelines for what cases to pursue at collection call. We decided on $2,000 for a single violation, or, for multiple offenders, $2,000 in toto. The building also has to be three or more units, unless the landlord has a lot of buildings. We're not after ma and pa--we want people who are in the housing business. And we're looking for repeat offenders--we can track this now through the computer. Finally, the human factor is also considered. If a guy says he won't comply because he doesn't give a damn, there's a principle involved."

If Limanni gets upset over landlords who thumb their noses at fines, Rosenblum gets almost livid when he talks of slumlords and their methods. "The whole thing starts," he said, "when one of these guys takes over a building and starts milking it. They do as little as they can, charge as much as they can, take in tenants who are undesirable. In many cases there are gangs that move one tenant in and the whole gang follows, or a couple will rent an apartment and move in ten people, and in some cases they even have a barbecue roast on the living room floor.

"Then they hang around the front of the building--one of the buildings I dealt with was on Belmont, across the street from a Catholic church and a Catholic school. The landlord didn't want to spend anything to keep up the building, he took in anyone who had the rent. There were pimps, prostitutes, drug pushers--they would hang around drinking beer in the front and accosting passersby and the children. I vacated that building.

"What happens then is that one of the neighbors or a community group complains. It goes to Inspectional Services, they go out and inspect the building, try to get the landlord to fix it. When they don't fix it, it goes to the corporation counsel, who institutes a suit. The inspectors go back out again--they may have to go into a building with porches falling down, terrible buildings, and 99 percent of them do their job conscientiously. The corporation counsel people work their tails off preparing the case, and the neighborhood groups and adjacent owners come in and tell the court that their property is being depreciated, their wives and womenfolk are afraid to walk down the street, beer cans and mattresses are being thrown out the windows, garbage and broken windows and what have you, and the judge strokes his beard, scratches his head, and enters a finding of guilty. When the landlord doesn't pay up, the judge may enter a "rule,' which is a high-class legalism for an order ordering him to show cause why he shouldn't be held in contempt of court for not obeying the court's order to fix the property. The court, of course, has no right to tell them who to rent to. Finally, the judge may issue a fine, which becomes a lien against the property. Then nothing else happens--the fine is never collected. Never collected."

As if this process isn't futile enough, Rosenblum said, there is a way to avoid even that much trouble. "Many owners put the building in a naked trust--then you don't know who owns the building. If you go to the bank and say "Who are the owners?' they say "I won't tell you, but if you write a letter I'll forward it to the beneficiary of the trust.'

"There are several reasons why they put property in a naked trust. One is that they don't want anybody to know they own it. The next reason is that if they want to get a loan or a mortgage they don't want to sign a personal obligation, so they direct the trust to sign it. The third is that it makes it easy to convey property because they don't have to mess around with a deed. All they have to do is give an assignment of the trust.

"What you see then is some of these big operators getting some guy to buy a property for $200,000 with $5,000 down. Some poor guy would say "I can buy a 36-unit building for $5,000 down--terrific!' Now the articles of agreement he signs to get the property provide that he not violate the city ordinances and that he maintain the property. Then, of course, he's so busy paying off the mortgage that he has no money to maintain the building and he turns the building back over to the owner. Then the owner does it over again with another fool. And they sell it again and again and again and the fines are never paid because it's arranged so that the fines attach to the real estate, not the title. There's no conveyance of title--the agreement says "I will convey the property to you when you make the last payment.' And the last payment is never made because the buyers go broke, and the building just goes downhill, and the successive deals go on and on and the fines are never paid."

One of the things the new court call is designed to do, Rosenblum said, is to tear away the veil of secrecy. "We can enter a mandatory order against the bank or trust company and require it to disclose who the beneficiaries of the trust are and their addresses. If the bank doesn't disclose, the officers can be held in contempt of court. And once we know who holds the trust, we can force them to disclose all their assets."

March 24. Battles is back, pugnacious in blue jeans. Limanni has a document showing that he's half owner of the building in question. Battles first claims he's only the prospective beneficiary in a will. Under questioning he admits he's an owner, but not the controlling owner, and he's not about to pay. "I don't have the say-so, and the controlling interest has the say-so, isn't that right, judge? I'm just here in court for her."

Rosenblum is having none of this. "You came to court for both of you. You're stuck for $3,600 and costs."

Battles claims his lawyer told him he can't sell the building to pay the judgment. But his lawyer won't come to court with him, he only talks to him on the phone. Judge Rosenblum concludes: "You owe it. The corporation counsel has a right to ask you what you own."

Limanni wants the proceeds from the sale of the building to pay the judgment, but Battles doesn't want to sell. Rosenblum tells him to find a buyer and be back in court May 5.

Bergman is back, pale but with a lawyer in tow. Again he claims he's not the owner, but only some kind of agent. He, at least, is willing, even eager, to sell, and a potential purchaser is in court with him. But he doesn't want to pay the fine--says the proceeds from the sale will go to pay off a $3,500 water bill. Legal obfuscation breaks out en masse. Rosenblum says "Let's not jump in--this isn't the town meeting of the air." Nobody seems to know what's going on. Case continued.

The process servers have turned up more live ones today: a hulking man named Bronko wants to know what his fine is for; he complains that Limanni wouldn't tell him over the phone. "This is your court, but it isn't a school," Rosenblum tells him. "I can't be responsible for what Mr. Limanni says and doesn't say."

When Bronko claims he's not a proper defendant, Rosenblum says if he's not a defendant and not a lawyer, he can't speak. "I don't have to be a lawyer," Bronko says, glowering.

Rosenblum backs down a little. "Usually I let everyone talk in my court, but you're not a lawyer and you say you're representing your cousin in Florida. Well, I'm not allowed to give advice, but I suggest that you make a deal with the corporation counsel to pay part of this." The judgment is for $3,225. Limanni asks for $2,000, Rosenblum says "How about $1,500," Bronko suggests $1,000, the spectators laugh. Rosenblum says "How much am I bid, will the city settle for $1,500?" Limanni and Bronko agree on $1,500. Bronko is grateful. He looks at the judge. "I come to this country with one year school. I learn something today."

Service is still hit-and-miss, and most of the defendants who do appear claim they don't own the buildings and shouldn't have to pay the fines. Rosenblum tells them "It's your court" and lets them have their say. One landlord is protesting the fees that a receiver has charged him; he doesn't think he should pay fines as well; his lawyer dis- avows the work of his previous lawyer. When one last defendant has not been found, Rosenblum mutters "They're not serving them."

"One of the best effects of this collection call," Limanni said, "is that all the housing lawyers are talking about it. They know they'll have to defend their clients much more vigorously. They ask me on the elevator 'What's going to happen to my client?' I tell them to come in early and settle--don't wait for the collection call or you're going to get stung."

Limanni, a stoutly built young man who frequently looks harried in court, has been with the corporation counsel's office for five years. "It's ridiculous to have five years and be senior in the office," he said.

But the corporation counsel's office, once a haven for patronage hacks, is still beset by rapid turnover--attorneys sign on to learn their trade and leave as soon as they're competent enough to earn the big bucks in private practice. With their eye on the future, attorneys had little incentive to offend landlords by aggressively seeking to collect fines. And the workload is brutal--Limanni handles toxic poisoning cases, lead paint cases, and asbestos cases as well as routine housing violations.

All that has been changing, Limanni said, since the programs came under the direction of Nilda Soler, chief assistant corporation counsel since July of 1986. "She's the unsung hero of this program," he said. Soler has told him not to settle with repeat offenders for reduced fines. She wants to have a threat hanging over them, so she doesn't want judgments reduced in court. The lawyers for the big landlords will fight all the way if they know that even if they lose they'll be able to settle for a reduced amount in court, he said; but he conceded that when Rosenblum reduces a fine, which is then paid, that's better than the nothing that was being collected before the program began.

Limanni said that the amount that can be collected is less than the million dollars a year Judge Rosenblum likes to cite, because up to 80 percent of all housing fines are eventually vacated when the landlord complies with the building code. It's the 15 or 20 percent that are ignored, even after the two-year limit for contesting the judgment has passed, that he is hoping to collect. Even that amount, he said, is serious money, and besides, "It's important to keep the mechanism running. They have to answer our citations and reveal their assets and all sources of income. It's a beneficial shock. And bringing them in has a good side effect, even if their lawyers stall or we can't collect--it costs them money and time. And a guy who's nicked for some money here will be more responsive the next time he's cited for a code violation."

June 2. Things are still not going smoothly. One of the cases called is less than two years old, opening the door for a lawyer to make what's called a collateral attack on its validity. Judge Rosenblum has to tell the clerk how to fill out docket sheets in his court; circuit court clerk Morgan Finley's office has refused to provide a clerk well versed in collection procedures, even for the necessary two days a month. And service is still sporadic.

One defendant who hasn't been served is in court anyway. He protests the $2,000 fine. Rosenblum says "That was a housing court case and somebody was trying to make Chicago a better place." The defendant agrees to pay.

Battles is back. He's reached an agreement to settle for $250. Limanni winces at the amount, but Battles is unemployed.

Rosenblum tells a woman to raise her right hand. She raises her left. The spectators laugh. The woman laughs. Rosenblum tells her it's her court. The case is continued.

A landlady named Jenkins is in court for fines on two south-side buildings. She wants the cases consolidated, and Rosenblum agrees. A haughty white-haired woman in a kerchief, she makes a motion to dismiss, citing three grounds: she's not in possession; the building is in substantial compliance; and the combined $3,000 fines are unconstitutional as an ex post facto law.

"How do you know it's in compliance if you don't own it?" Rosenblum asks her. She's stumped, but then says she's a real estate broker. He explains that an ex post facto law has nothing to do with this situation and denies her motion.

She claims the city has harassed her for 21 years. Limanni says she has a record of housing violations as long as her arm. She still claims she doesn't own one of the buildings, but admits she has collected rents for it. "You just keep operating property and you don't fix anything, do you?" Rosenblum asks. She replies "I do not feel these fines are just and I don't have the money. The city will have to take it out of my death benefits."

Rosenblum orders her to pay. "So everybody's wrong but you--the court's wrong in all three cases and the Constitution's wrong as well." She says "I just feel it's unjust."

When the collection call began in February, Nilda Soler admitted, "there was little coordination. There was no procedure to take these cases step-by-step. The clerk's office has its own problems, I won't go into that, but many of the judgments weren't in the computers, the way they were entered wasn't consistent, records were missing." And Judge Rosenblum kicked off the program before her office was prepared.

Now, she said, the corporation counsel's office is working to clean up a massive volume of old cases, not only those that qualify for collection court but those that are uncollectible. "It's foolish to have a lot of uncollected fines--we're running out of space for the records," she said. "If it's uncollectible, if they've gone to Mexico or Poland or somewhere, we'll get rid of them. We'll send out collection letters, and if we can't find them we'll get rid of the files. The good thing about collecting these judgments that are over two years old is that they're hard to attack collaterally; the bad thing is that the farther you get away from the judgment, the harder the defendants are to find."

Soler, like Limanni, said that fine money has begun flowing in because word is out on the street that they are serious about collecting the old judgments. And a lot of lawyers and defendants are asking that fines be vacated or reduced. In the case of repeat offenders, she said, "We think that [reducing the judgments] is very bad policy. And I don't see how you can make a decision on how much they can afford to pay on the basis of one court hearing. Raymond Heinrich [a landlord who paid $2,000 on July 7] represented himself as illiquid, but he owns a lot of buildings--maybe that's why he has no liquidity, he's got more than he can handle. Others may not reveal everything on the asset discovery forms--you're taking their word for it. People do lie. My experience at the IRS is that people don't want to pay--I tell them I don't like to pay either, but if you don't make them pay it many of them just want to get the building into substantial compliance so they can let it fall apart again. The IRS was good for me that way--it taught me to be tough. I used to take sob stories--no longer."

Soler echoed a sentiment Judge Rosenblum frequently voices, both in and out of court: "We're not so interested in collecting money as we are in making owners bring the building into compliance. It's a legal remedy versus an equitable remedy, and if it costs $3,000 to fix the building up and they can choose that or a $5,000 fine, maybe they'll fix the building up."

Rosenblum, who claims to have narrowly missed changing the course of Chicago (and even American) political history when he lost to Bill Singer in Singer's first aldermanic campaign ("He wouldn't have been there to kick Mayor Daley out of the convention" in 1972, when the anti-Daley forces helped nominate George McGovern), would like to see the collection call make at least a small contribution to Chicago social history.

"So far," he said, "we're still in something of a dry run. But we're on the right track, and what we're doing has never been done before in Chicago. If we can, in a small way, restore our available housing, and in the process restore some of the people's faith in the justice and efficacy of our courts, we can make Chicago a better place to live. And we might even be the inspiration for other cities to do the same."

Slumlords, beware.

Art accompanying story in printed newspaper (not available in this archive): photos/Mike Tappin.

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