They must dream big to bring to life complex, costly projects such as the 112-story tower Toberman wanted to build at 7 S. Dearborn St. At the same time, they need to take care that their fantasies don't outstrip their finances.
To the surprise of some developers who knew Toberman as a respectable midsize player in the industry, he allegedly overstepped the boundary into the realm of fraud, according to a 10-count indictment announced Wednesday by the U.S. attorney in Chicago. Toberman, 51, has been charged with stealing more than $3 million from owners and tenants of commercial properties that his firm, European American Realty Ltd., managed from 2001 through 2005, according to the indictment announced by Patrick J. Fitzgerald, U.S. attorney for the Northern District of Illinois.
Toberman could face as many as 20 years in prison and a hefty fine if convicted, according to the indictment.
Undertaking the development of a trophy tower in Chicago's world-class skyline is daunting, said John Murphy, a principal at Ricker Murphy Development LLC, a Chicago-based residential developer.
While he declined to discuss Toberman, his indictment, or projects, Murphy talked about the pitfalls of attempting mega-projects.
"Big projects are very capital intensive," Murphy said. "As you plan, you pay fees to lawyers, architects, builders and engineers. You pedal down the road, then all of a sudden you're staring into the barrel of millions in expenses that can go to waste if you aren't successful."
The indictment alleges Toberman used the funds to pay fees to an architect, engineer, construction consultant and others he hired to help plan 7 S. Dearborn, slated as a mix of residences and offices. He also used the money to support a lavish lifestyle that included buying a boat and expensive wine, the indictment alleges.
And the timing for such a grandiose plan was disastrous. In 1999 and 2000, when he tried to launch the tower designed by Skidmore Owings & Merrill LLP, the real estate industry went through a lurching downturn. Many technology firms that were paying record rents to fill offices throughout the Chicago region floundered, sending vacancy rates soaring and rents tumbling.
According to the indictment, Toberman's firm managed commercial properties at 11 S. LaSalle St., 250 S. Wacker Drive and 18-28 S. Michigan Ave. in Chicago, as well as several office buildings in Georgia, Virginia and Ohio.
The firm collected tenant rents and other funds for landlords, but instead of depositing the money into the building owners' accounts, Toberman knowingly "divert[ed] a substantial portion of the funds for his own personal benefit," the indictment alleges.
Toberman, who lives in the Atlanta area, plans to appear in federal court in Chicago "for an arraignment in the next seven to 10 days," said John L. Sullivan, his Winnetka-based criminal-defense attorney.
Sullivan declined to comment further on the charges Toberman faces.
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