Former Cook County Land Bank manager charged with using straw purchasers to enrich himself, defraud system meant to help blighted communities

A former manager at the Cook County Land Bank Authority has been hit with a federal charge alleging he used straw buyers to fraudulently purchase and resell blighted properties and secretly set up a property management company that raked in more than a million dollars in ill-gotten maintenance fees.

Mustafaa Saleh, 36, of Chicago, was charged in a criminal information made public Tuesday with one count of wire fraud, which carries a maximum sentence of 20 years in federal prison.

An arraignment was scheduled for Friday before U.S. District Judge Andrea Wood. Defendants charged by way of information, as opposed to a grand jury indictment, typically intend to plead guilty.

Saleh’s attorney, Damon Cheronis, said in a statement Tuesday that his client “was aware that these charges would be filed, and any comments regarding the case will be made in court.”

The charge comes nearly a year and a half after the Tribune first reported in June 2021 that Saleh had been named in a subpoena sent by prosecutors to the Land Bank Authority asking for records as part of an ongoing criminal investigation into the program, which was formed to promote economic development in blighted communities that’s also been the subject of controversy.

The investigation into other aspects of the Land Bank Authority is ongoing, a source familiar with the case said.

The subpoena sent May 21, 2021, requested records involving the sale of 24 properties by the land bank as well as emails and other records relating to Saleh, a $75,000-a-year senior asset manager for the Cook County Land Bank Authority responsible for overseeing all property acquisitions and holdings for the agency. County records show Saleh left the agency in 2019.

Land Bank Authority employees are prohibited from purchasing a property from the agency unless it would be used for the employee’s primary residence.

Over a five-year period beginning in 2016, Saleh used straw buyers to purchase six properties from the agency on Saleh’s behalf, then redeveloped, resold or otherwise used the properties for Saleh’s financial benefit, the information stated. The properties were in Chicago and the suburbs of Oak Lawn and Midlothian, the information stated.

The information also alleged Saleh formed a property maintenance company, Evergreen Property Services, and directed another individual to pose as its owner. Over the next three years, he caused the Land Bank Authority to contract with Evergreen and pay more than $1 million for property maintenance services.

On May 18, 2021, three days before the subpoena was issued, Saleh was interviewed by federal law enforcement agents and “falsely stated that he had never collected the proceeds from the sale of any (Land Bank) property,” the information stated.

A Land Bank spokeswoman, in a statement provided Tuesday, said the authority “is grateful to the U.S. Attorney’s Office for its thorough investigation of a former employee,” adding that it “cooperated fully with the investigation” and that “the agency, board members, executive directors and other staff were victims of this crime and never the subject or target of this investigation. This individual engaged in a sophisticated crime and any additional questions should be referred to the U.S. Attorney’s Office.”

At the time of the Tribune’s report on the subpoena, Cook County Commissioner Bridget Gainer, D-Chicago, who is the land bank’s chairwoman, characterized the criminal investigation as a “document request” but declined further comment. Gainer did not return phone calls on Tuesday seeking comment.

“It’s news to me,” Cook County Board President Toni Preckwinkle said then, when asked about the subpoena.

Following the revelation Tuesday of the federal charge against the former Land Bank official, a spokesman for Preckwinkle, Nick Shields, said her office was not aware of any other subpoenas, nor had anyone from her office been approached or interviewed regarding any ongoing Land Bank investigations. He otherwise deferred to the Land Bank for comment.

Records show that in September 2020, a year after Saleh left the Land Bank, he appeared at the agency’s monthly meeting to report that he had surpassed the one-year period prohibiting former employees from purchasing properties from the agency.

“You’re correct in that the county rule is one year and that’s really all we can say today,” Chairman Peter Friedman said, according to minutes of the meeting.

“I just wanted to note that for the record and what I would do naturally is I would like to move forward and I will begin applying for properties; but, again, I just wanted that on public record,” Saleh said, according to the minutes.

Meanwhile, the federal subpoena sought all documents records, memos, notes and correspondence, including but not limited to email communications, pertaining to any properties obtained and sold by the Cook County Land Bank Authority involving Saleh.

Prosecutors also sought “any and all correspondence” related to Saleh’s resignation.

In addition to Saleh, the subpoena requested records on a company called Dynamic Developers, which Saleh founded in 2016.

According to the criminal charges, Saleh used Dynamic Developers as a front to buy and sell two of the Land Bank properties on his own behalf, then had the proceeds wired directly to a bank account that he controlled.

According to the biography he had on the Land Bank’s website, before working at his county post, Saleh had previously worked as a portfolio manager for Galaxy Properties “where he oversaw residential and commercial assets” and “managed property maintenance, facility projects, and new construction projects.”

When he filed for bankruptcy in 2015, however, Saleh didn’t mention any work for a Galaxy Properties. Instead, he said in the sworn paperwork that he was a sales manager at Galaxy Furniture, a discount furniture store in the 3400 block of West Montrose Avenue, where he earned about $2,600 a month.

Saleh, who said he’d previously worked as a taxi driver, listed more than $3,000 in back taxes owed to the IRS as well as tens of thousands of dollars in outstanding student loans and credit card debt. The bankruptcy was discharged several months later, records show.

The charges against Saleh come just weeks after Preckwinkle selected Jessica Caffrey, the former deputy chief of the county’s Bureau of Asset Management, to be the new executive director of the Land Bank Authority — the third leader for the agency in the past two years.

The Land Bank Authority, which was established in 2015, has received plaudits for the work it does to restore properties in distressed neighborhoods by acquiring vacant, abandoned, foreclosed and tax-delinquent properties to prepare for sale to rehabbers and developers.

But it has also been the source of scrutiny and controversy. Preckwinkle commissioned an outside audit into the Land Bank, released in 2020, that determined the agency needs to do more to avoid conflicts and ensure it’s selling land to qualified buyers.

Not long after the audit was made public, Cook County’s independent inspector general also issued a report saying the Land Bank lacked “policies and procedures designed to specifically and adequately administer” the buying and disposition of properties from the county’s scavenger sale, and had “exceed(ed) its operational capacity” by buying too many properties during the 2015, 2017 and 2019 sales. That “precluded” the authority “from effectively managing” the properties it did purchase.

The inspector general also found the authority’s documentation was deficient, describing its “bidding, acquisition, purchase, and other documents” as “limited, inconsistent and incomplete.” The authority didn’t document how it came up with sales prices the report said, noting “instances in which properties were sold to an end buyer with no supporting documents on file.”

In its response to the inspector general report, Land Bank officials said some of its findings overlapped with the outside audit, which the agency had already addressed. But the inspector general’s office said the authority “failed to specifically respond to any of our seven specific recommendations for corrective action.”

The land bank has also been criticized by Cook County Treasurer Maria Pappas for taking properties off the market, slowing potential development in blighted areas.