Cook County Land Bank Authority sold vacant lots to a drug dealer

The county agency says it didn’t know Obed Ornelas was a convicted dealer or that he was free on bail on a charge of intent to distribute a kilo of cocaine. It didn’t check.

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The lots at 645 and 647 N. Cicero Ave. that Obed Ornelas bought from the Cook County Land Bank Authority.

The lots at 645 and 647 N. Cicero Ave. that Obed Ornelas bought from the Cook County Land Bank Authority.

Tyler LaRiviere/Sun-Times

Two years ago, the Cook County Land Bank Authority sold two West Side lots to a convicted drug dealer who at the time was free on bail and required to wear an electronic monitoring bracelet while awaiting trial in another drug case for intent to distribute a kilo of cocaine.  

Obed Eli Ornelas paid $22,602 for the adjacent lots in the 600 block of North Cicero Avenue in West Garfield Park, less than the length of a football field north of his existing used-car business, Xclusive Automotive LLC.

Together, the vacant lots had amassed nearly $10,000 in unpaid taxes when Ornelas signed a deal with the county agency in August 2017 to buy the properties, with plans of expanding the business he shared with a partner to now also sell secondhand luxury cars — BMWs, Infinitis and Mercedes-Benzes, he told state regulators. 

The land bank is under scrutiny by Cook County’s inspector general, who opened an investigation of the agency after the Chicago Sun-Times reported in November that Chester Wilson, chief of staff to Ald. Carrie Austin (34th), donated a dilapidated building to the land bank. That wiped out Wilson’s debt for unpaid property taxes, penalties and interest totaling more than $200,000. At Wilson’s recommendation, the land bank then sold the building to his onetime business partner.

Following the Sun-Times report, Cook County Board President Toni Preckwinkle ordered an audit by an outside firm of the agency created in 2011 by Cook County Commissioner Bridget Gainer to redevelop abandoned buildings in distressed neighborhoods. The auditors’ recommendations included requiring the land bank to document its research of potential buyers of properties it has bought or seized.

At the time Ornelas took the first steps to buy the vacant lots from the land bank, he was on parole after being convicted of possession of marijuana with intent to distribute in a case in which the police raided his Gary home after his electric bills skyrocketed in 2010 and found almost 500 marijuana plants growing inside.

Ornelas and the land bank were in the process of finalizing his purchase of the vacant lots in June 2018 when federal agents arrested him and 56 others in part of a massive drug bust. Federal authorities said he had bought a kilo of cocaine from a co-defendant in a deal that took place in his Ford Mustang a few months earlier. When officers tried to pull him over, they said he tossed the cocaine out of the driver’s-side window of the car.

Obed Ornelas, a convicted drug dealer, was free on bail in a bigger drug case when he made a deal with the Cook County Land Bank Authority to pay $22,602 to buy two West Garfield Park vacant lots, newly freed of their unpaid property-tax burden of nearly $10,000.

Obed Ornelas

Arrest photos

Released on bail, Ornelas was ordered confined to his home on an electronic monitoring device.

On Nov. 20, 2018, while he was on home confinement, the land bank wiped out the $10,084 in taxes unpaid since 2011 on the lots at 645 N. Cicero Ave. and 647 N. Cicero Ave. and finalized the sale, turning over the properties to Ornelas free of the tax debt.

Under the terms of sale, the land bank also gave Ornelas a $2,000 loan, which he won’t be required to repay as long as he maintains the properties up to code.

At Ornelas’ real estate lawyer’s request, the closing on the land was handled via email so Ornelas, unable to leave his home while on bail, didn’t have to be there in person. 

On Jan. 10, Ornelas, 38, pleaded guilty to the cocaine charge. He faces a maximum possible 40-year prison term when he’s scheduled to be sentenced Aug. 27.

He no longer operates the car lot, according to his criminal defense lawyer Robert Rascia, who says Xclusive Automotive is “not an active business.”

Land bank officials say they don’t do background checks on buyers and didn’t know Ornelas was a drug dealer.

Robert Rose is leaving his $225,000-a-year job as executive director of the Cook County Land Bank Authority.

Robert Rose, executive director of the Cook County Land Bank Authority on Obed Ornelas’ deals: “Nothing revealed that would have — or should have — prevented [the land bank] from working with” the convicted drug dealer, who has pleaded guilty to a charge of intent to distribute a kilo of cocaine and is cooperating with federal authorities.

Rich Hein / Sun-Times file

Robert Rose, the land bank’s executive director, also says: “While the land bank considers various factors in our selection process, excluding people based on a prior conviction is not one of them. Why wouldn’t we award the vacant lots to an existing, adjacent licensed business in good standing?”

After Ornelas was arrested on the cocaine charge, he was sued by his landlord Ahmad Daoud, who said he failed to pay more than $7,000 in rent on the property Xclusive Automotive began leasing in 2015. 

Daoud had sold used cars on the property for more than two decades, doing business as Cairo Auto Wholesaler Inc. His son Adel Daoud is serving a 16-year prison sentence, convicted in an FBI terrorism sting of attempting to blow up a liquor store in the South Loop in 2012.

Federal authorities won’t comment about Ornelas, who has agreed to cooperate with them. His lawyer says that’s “strictly limited to the drug deal.”

Asked about Cook County doing business with a convicted drug dealer who was awaiting trial in a more serious drug case, Rose, in an email, says:

“To be crystal clear, you have not explained the relevance of his background to our decision to sell vacant lots to Xclusive Automotive LLC.

“Obed Ornelas was released on bond in August 2018, so he was not in custody at the time of the purchase. At the time of the sale, he had not been convicted and currently still awaits sentencing. The upshot from this information is that there is nothing revealed that would have — or should have — prevented [the land bank] from working with Xclusive Automotive LLC.”

Cook County Land Bank Authority has erased $19 million in long-overdue property taxes
Cook County Commissioner Bridget Gainer, who helped create the Cook County Land Bank Authority and heads its board.

Cook County Commissioner Bridget Gainer says wiping away $19 million in years-overdue property taxes was a good move because it made reselling and redeveloping those properties a more attractive prospect to potential rehabbers.

Ashlee Rezin / Sun-Times

Cook County Land Bank has erased $19 million in property taxes, aiming to turn around neighborhoods

Over the past five years, the Cook County Land Bank Authority has erased $19 million of real estate taxes that were years overdue on a total of more than 600 properties it has acquired and flipped to rehabbers, records show.

And that’s a good thing, according to Cook County Commissioner Bridget Gainer, who spearheaded the creation of the land bank.

That’s because erasing the long-unpaid tax debts helps make it possible the land will be redeveloped — and start bringing in taxes.

“The $19 million in taxes were bad debt,” Gainer says, “not being paid by anyone, likely for over a decade. That’s because they fall in that bucket where the taxes were higher than the property value. If we didn’t redevelop the property, it would still be sitting there, not paying taxes. Now, it’s occupied, not a safety risk, and paying taxes.”

The county’s aim with the properties the land bank buys or seizes is to help turn around those eyesores, resume the flow of property taxes and improve the neighborhoods.

That’s the plan, for instance, for a long-vacant funeral home in Maywood that had a decade’s worth of unpaid property taxes when it was seized by the land bank in 2018. Aiming to make the property more attractive to a potential buyer, the county agency wiped out the tax debts — nearly $1.5 million. Gerald Cannon then bought it for $100,000 and says he plans to open a new funeral home there this summer.

“We’re currently in construction,” Cannon says. “This would be our very first funeral home. We have been leasing funeral homes.”

The Maywood property had the biggest unpaid tax debt erased by the land bank.

This long-vacant funeral home at 1001 Madison St in Maywood had nearly $1.5 million in unpaid property taxes erased by the Cook County Land Bank Authority to make the property more attractive to a new buyer who plans to operate a funeral home there.

This long-vacant funeral home at 1001 Madison St in Maywood had nearly $1.5 million in unpaid property taxes erased by the Cook County Land Bank Authority to make the property more attractive to a new buyer who plans to operate a funeral home there.

Anthony Vazquez / Sun-Times

Second is a former Wickes furniture store in Calumet City. Nearly $1.4 million was owed in property taxes when the store site was surrendered to the land bank three years ago. The land bank then sold the building, now free of the tax debt, to Homewood Furniture Co. for $185,000.

Asked how they determined the sale prices for those and other properties, land bank officials offered no documentation or appraisals.

The land bank’s rules on determining sale prices call for “good and valuable consideration in an amount not less than the lower of the fair market value of the property as determined by the” Cook County Land Bank Authority.

But, in June, outside auditors Cook County Board President Toni Preckwinkle brought in following a Chicago Sun-Times investigation reported that the way the land bank determined its sales prices “was not sufficiently documented” for sales they examined.

“Management represented . . . that the team looks at MLS listings, real estate websites, their own pricing matrices and similar information in determining each sales price, however they do not currently document this information as it is accumulated,” the auditors wrote.

— Tim Novak, Lauren FitzPatrick

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