THE WATCHDOGS: Quinn grant would have benefited ex-con who stiffed state for millions
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When Cinespace Chicago Film Studios was handed a $10 million grant in December by outgoing Gov. Pat Quinn’s administration, the studio said it planned to spend more than half of the taxpayer money to buy four buildings near its North Lawndale campus.
Now, records obtained by the Chicago Sun-Times show one of the owners of those buildings is an ex-con who never paid off nearly $4 million in state and federal taxes and fines — including $450,000 resulting from his conviction in a bribery scheme involving a multimillion-dollar CTA fuel contract in the late 1980s.
If Cinespace had followed through on its plans, $5.4 million of the grant money would have gone to 1600 Western Venture LLC, owned by ex-con Brian Flisk — who went to prison for three years in the bribery scheme that also ensnared former CTA board member Howard Medley — and Flisk’s family. That’s according to the grant application the studio filed a week after Quinn lost the November election to Gov. Bruce Rauner.
The deal with Cinespace never went through. First, negotiations bogged down. Then, studio president Alex Pissios returned the $10 million grant last month in the wake of a Sun-Times investigation that found the owners of six of the seven properties Cinespace had told state officials it wanted to buy with the grant money weren’t interested in selling. That prompted Rauner to demand Cinespace give back the money.
Pissios was unaware of Flisk’s criminal background and government debts, according to a spokesman for the studio.
“The Flisk property sits next to Cinespace,” spokesman Eric Herman said. “Conversations about a land purchase have been going on informally for years. In the summer of 2014, Cinespace commissioned an appraisal of the Flisk properties. . . . In the end, Cinespace and the Flisks could not agree on a price, so the transaction did not occur.”
Herman said the negotiations fizzled in December — the same month the state wrote Cinespace the $10 million check.
Flisk, now 70, was chief executive officer of the Metropolitan Petroleum Company when he was indicted in 1988 after making a $25,000 payment to Medley, who’d been a close ally of the late Mayor Harold Washington.
The payment came as CTA auditors were trying to cancel the $38 million fuel deal with Flisk’s company, which was represented by attorney John J. Cullerton, a Democratic state representative then who is now president of the Illinois Senate. The CTA claimed Metropolitan Petroleum was providing poor quality fuel and overbilling the agency hundreds of thousands of dollars.
But Medley persuaded the CTA to keep the contract. That was after Flisk agreed to buy a South Side warehouse owned by Medley associates who’d promised Medley a commission on the sale. Federal prosecutors charged the $25,000 commission amounted to a bribe. Both Flisk and Medley ended up going to prison.
Flisk also was ordered to forfeit $450,000 to the federal government. He has paid just $300 of that, according to the U.S. attorney’s office. Prosecutors say that debt remains on the books and collectible until it’s fully repaid.
The 1989 forfeiture judgment resulted in one of a dozen liens government agencies have filed against Flisk in efforts to collect millions of dollars in taxes and fines dating to 1985, according to records filed with the Cook County recorder of deeds. No paperwork has been filed to indicate Flisk has paid off any of those liens.
Flisk owed $421,582 in federal income taxes and penalties, according to three liens filed by the Internal Revenue Service between 1990 and 1993.
The Illinois Department of Revenue filed eight liens against Flisk regarding more than $3.1 million in personal income taxes and sales taxes he owed the state, much of that tied to his defunct fuel company.
Now, it might be too late for the state to collect most of what Flisk owed. Seven liens were filed more than 20 years ago — state tax liens expire after 20 years, according to the state revenue department.
Based on that, the eighth lien, which seeks $294.63 in income taxes, is set to expire on May 22 — the 20th anniversary of when it was filed, records show.
Terry Horstman, a revenue department spokesman, said state officials can’t comment on whether “Brian Flisk did or did not pay on the $3.1 million in liens.”
“Those liens, at this point, are unenforceable,” said Flisk’s attorney, Robert Habib, who says he doesn’t know whether Flisk ever repaid any of the money. “They’re no longer an issue.”
Flisk heads 1600 Western Venture LLC with his son Sean, daughter Dorothy and twin brother, the Rev. Louden Flisk, a retired Catholic priest, records show. The company owns four of the seven commercial properties that Cinespace had told state officials it wanted to buy.
The Flisk buildings house several businesses, including an office of Dish Network, Barron Custom Furniture and Wishing Well Florist, owned by Flisk’s daughter.
Two years ago, Brian Flisk appealed the property taxes on two of the buildings, according to records he filed with the Cook County assessor’s office that claimed those buildings were 96 percent leased. At that point, those two buildings were on the market for $10.9 million, records show.
In its grant application, Cinespace said it planned to pay $11 million for those two Flisk buildings, in the 2400 block of West 16th Street, plus another $1.85 million for two other Flisk buildings, at 1534 S. Western and 1700 S. Western. Cinespace said then it would pay a total of $12.9 million for the four buildings, with $5.4 million of that coming out of the state grant, according to the documents the movie studio filed with the state.
Cinespace said it needed the $10 million grant to buy all seven properties — including those owned by the Flisks — at a total cost of $18.9 million. The studio said the properties would allow it to expand its campus, where movies and hit TV shows like NBC’s “Chicago Fire” are filmed.
Quinn aides were unaware the Flisks stood to profit from the state money, according to sources familiar with the awarding of the grant who also said the former governor’s administration didn’t know of Brian Flisk’s criminal past.
A week after Pissios submitted the grant application in November, Lakeside Bank filed a foreclosure suit against 1600 Western Venture seeking repayment of $2.3 million on a mortgage for 1534 S. Western, one of the buildings Cinespace wanted to buy. Lakeside also filed four other foreclosure lawsuits seeking more than $4 million related to properties owned by companies that involved Flisk’s twin brother.
Under Quinn, Cinespace got a total of five state grants for a cumulative $27.3 million, including the $10 million the studio returned under Rauner’s orders.
Rauner’s administration is reviewing two other grants to family-owned Cinespace: $10 million awarded on Aug. 1, 2013, and $1 million approved on March 1, 2012, records show.
The $10 million was to buy a $1.2 million property and “reimburse the [studio] for prior incurred costs associated with construction/renovation activities conducted during 2012 and 2013,” records show. The $1 million was for land acquisition.
It’s not unusual for the state to give grants to reimburse businesses and governments for work already done. Nor is it unusual to seek records about grants even after they’ve been “closed out.”
The $10 million grant included hundreds of payouts to dozens of companies, including $12,784 to Pissios and others in his family for “equipment / material / labor,” the records show.
Nearly $43,000 from the grant money overseen by the Illinois Department of Commerce & Economic Opportunity went to Karen Banks, a niece of former Ald. William Banks (36th), for “construction management / oversight.” Her brother, attorney James Banks, is chairman of Belmont Bank & Trust, which has given Cinespace millions of dollars in loans. Quinn reappointed James Banks to the Illinois Tollway board — a position he continues to hold under Rauner.
“Karen Banks is a full-time Cinespace employee — one of more than three dozen full-time Cinespace employees — and has been since 2011,” said Herman, the studio spokesman. “She works as an administrative assistant. DCEO grants in part cover construction management and oversight, and Karen’s duties included that during the relevant time period. Therefore, a portion of her salary was allocated to the grants. Portions of the salaries of other Cinespace employees were also allocated to the grants.”