A Case Study in Institutional Corruption

  • Posted: September 21, 2014

The 111 East Chestnut Condominium Insider A Case Study in Institutional Corruption  This says it all. It’s the story of a cover-up. Maybe minor to some but as with all coverups, the underling issues are not. The following is a veritable case study in institutional corruption. And as this website regrettably attests, it’s just not an isolated incident.

Bottom line: We – YOU – pay for attorneys and a management company to help us, an association, stay true to a construct that provides for mutual benefit and enjoyment. The following chronicles how instead they provide special accommodation for our elite ruling class and how that breeds ill will, a lack of trust, and even danger.

First, a few preliminary givens:

Given that our governing documents, namely our Construction Rules Category B, specify that “written board approval” and “building permits” need to be secured “before work commences.”

Given the law, i.e. a building permit is required for new construction, major repairs, alterations, additions, renovations, and demolitions. Section 13-32-020 of Chicago’s Municipal Code defines all the specific circumstances where a permit is required. The property owner is responsible for obtaining a building permit. The building permit must be obtained prior to the start of any work.

And given that the definition of “Institutional Corruption ” is “the consequence of an influence that illegitimately weakens the effectiveness of an institution especially by weakening the public trust of that institution.” Lawrence Lessig, Director of the Edmond J. Safra Center for Ethics at Harvard University and Professor of Law

With that in mind, here’s a chronology of a coverup:

– On August 11, 2014, the management office (Sudler) issued a Noise Notice to homeowners. The Notice said that “construction [was] to begin” on unit 34B.  That unit is owned by Board Director, Diana Shay. Note: the Notice indicated that construction was to last approximately a month.

– By way of background, on around December 18, 2013, the management office issued a Noise Notice for construction on 31H.  That unit is owned by Diana’s twin sister, Monica.

At that time, property manager Sara Rudnik assured the Chicago Building Commissioner: “After reviewing the permits cataloged on the City’s Building Department website, I can assure you that our management office is well aware of any ongoing renovation work in the units that are listed amongst the projects at our address. As other projects are presented to the management office for review, we typically confirm that contractors working on these have obtained whatever permits are necessary. Our building engineers regularly inspect any construction work in progress and routinely alert the management office if they observe a unit in which un-permitted work is occurring. We will halt any work in progress that does not have a requisite permit.”

– On around January 28, 2014, a Stop Work Order was issued by the City for 31H not having permits. As a result of the SWO, Ms. Shay was fined $350 by the City.  After the SWO, Shay applied for permit #100525484.

– Fast forward… On August 14, 2014, twin sister Diana Shay became Board Treasurer, i.e. an officer of the Association. (Two of notes: Reliable sources say our Treasurer appears to be dating our Board President.  And also, per City records, Mr. Milazzo also did not secure building permits in his remodel of unit 51A.)

– On August 21, two homwowners witnessed and reported that 34B was gutted. When they asked the GC on site to see the building permits, the contractor responded, “Ask the owner, Diana Shay.”

– On August 22, the Building Department reported that there were no permits for unit 34B.  That same day, Property Manager Rudnik (who reports to Milazzo) told a Board member that the permits for 34B were in order.

– On August 25, at the Board Committees Meeting, Director Shay acknowledged that there was “confusion” regarding her permits, i.e. “ the clerk left my unit number off therefore it has the address as 111 East Chestnut.”

– On August 27, an electrical permit was issued (permit #100557724, i.e. “CHANGE 12-SPACE MAIN LUG PANEL TO A 20-SPACE (100AMP) PANEL”).  According to KSN attorney Diane Silverberg: “Ms. Shay’s electrical permit was issued on August 27th and has been on file in the management office since that date.”

– On September 17, over a month after management gave Notice that the anticipated month-long construction was to begin, permit #100561051 was applied for and issued, i.e. “REMODEL KITCHEN AND BATHROOM IN UNIT 34B. ELECTRICAL ON SEPARATE PERMIT.”

– On September 18, attorney Diane Silverberg wrote: “No plumbing work has been done in Ms. Shay’s unit precisely because there had been a delay in the issuance of her plumbing permit.”

– On September 19, John Flynn, Head of Plumbing for the Chicago Dept. of Buildings confirmed  Silverberg’s claim regarding a “delay.”  However, according to Flynn, the delay was only 3 hours.  “The permit for remodeling the kitchen and bath for unit 34B was applied for 9/17, and issued 9/17.”

Again, our Association rules mandate that “written board approval” and “building permits,” need to be secured “before work commences.” That did not happen. And management subsequently intentionally dropped the ball.  No board approval aside, obviously Ms. Shay, an Association Officer, knowingly misled the Board (at the very least by omission), and broke the Association’s Rules. Consequences? Forgetaboutit. Instead of per our Rules her infraction coming with a fine, YOU get fined.  That is, WE as an Association paid our attorneys to participate in a coverup.

Legal cost aside, the real consequence of corruption here is danger and the spread of animosity.  Permits are about safety. Privilege in a community breads resentment.  Add to that that exceptions to rules never travel alone, i.e. degradation of management effects us all variously and continuously.

BUT rather that even the hint of outrage, we as an Association seem comfortable.  To quote well-meaning “Concerned Homeowner” organizer Vince Scott: “Are the committees perfect? Not by a long shot but through their inception and involvement in how the decisions are made that are actionable, overtime can become so.”  Translation: At 111, corruption is okay as long as the select few get theirs.  Look away.

And apparently, except for a few of us, we do.

So who’s to blame?  More important question: Who can you trust to guard your investment here?

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