Company owned by felon, former FBI informant buys vacant Elgin hospital campus
The former Sherman Hospital campus north of downtown Elgin was purchased by a company owned by real estate developer John Thomas, a former FBI informant who spent time in prison.
Thomas is the CEO and managing principal of Freedom Development Group of Chicago, which bought the 13.7-acre campus at 901 Center St. that includes three vacant buildings. His specialty is to "find assets that are way undervalued and see a path toward an exit," he said late Tuesday.
Thomas said he and his partner Daniel Olswang, president and principal of the company, are open to reselling the Elgin building -- a "for sale" sign from a commercial real estate company already stands outside -- or redeveloping it, possibly into senior and residential living, "if we can work out a deal with the city," he said. "Elgin is a great community."
Thomas wore a wire for federal authorities in the corruption case of Antoin "Tony" Rezko, a former adviser and fundraiser for former Gov. Rod Blagojevich. Thomas was convicted in 2015 of stealing $370,000 in tax-increment financing money from the village of Riverdale in the South suburbs. He got out of prison in 2017.
Thomas said he's tired of his past being rehashed. "I have done nothing wrong since I got out of prison. I have been rehabilitated," he said. "I built my company from zero from walking out of prison."
Olswang also said the future of the Elgin building hasn't been decided. He declined to comment on Thomas' past, calling it "old news."
The new owners of the property paid less than the $1.5 million suggested opening bid for the auction held in May. Rick Levine, president of Rick Levine & Associates Inc., of Chicago, which handled the auction, described the property as "unique and hard to value."
The property was sold for $1.01 million to 901 Center Street Holdings LLC, according to documents dated in July and filed Monday with the Kane County recorder's office. The LLC was organized Aug. 28 and its agent is Olswang, according to the Illinois secretary of state's office. The two companies have the same downtown Chicago address.
Advocate Sherman Hospital spokeswoman Terri Hickey said the LLC was the sole bidder in the auction.
But Thomas said his company didn't place a bid and instead initially "proffered a contract to circumvent the auction" with no success. After the auction didn't go anywhere, Advocate Sherman Hospital "came back to me" regarding the sale, he said.
Hickey also said, "We have worked with city officials and neighborhood leaders throughout this process and expect that they will collaborate with the new owners on a plan for development that benefits the community."
But city spokeswoman Molly Gillespie and K. Eric Larson, president of the neighborhood group, contradicted that.
"The city is disappointed Advocate Sherman did not choose to inform the city and surrounding neighborhood it was pursuing the sale of the campus to the Freedom Development Group after its unsuccessful attempt to auction the property," Gillespie said.
The neighborhood group in the past had a good relationship with hospital representatives, but the sale was handled "at higher levels" and there was little, if any, communication, Larson said. "I'm not anxious but, honestly, quite surprised," Larson said.
Thomas contacted the city to advise that Freedom Development Group was planning to purchase the property, but no plans for redevelopment were discussed, Gillespie said.
Thomas said he has been in communication in the last few weeks with Community Development Director Marc Mylott. He also attempted to reach representatives of the neighborhood group, he said.
Mayor David Kaptain said he and City Manager Rick Kozal were surprised to find out about the sale a month or so ago, after a real estate transfer stamp was submitted to the city. Neither had met with the developers and didn't know any of their backgrounds, Kaptain said.
"It's been kind of mysterious," he said. "They never had a conversation with anybody (before buying the property). They never talked about what the property looks like, what is the sewer like, what about the water (services)? Those are the kinds of things you want to know about."
The property is zoned for use as a hospital and medical offices, so the new owners will require city approval before any redevelopment, with input from the neighborhood. The city's 2018 comprehensive plan calls for demolition of the hospital buildings and redeveloping the property into single-family homes and open space.
Freedom Development Group's portfolio also includes properties in Chicago, Aurora, Waukegan and St. Paul, Minnesota, as well as subsidiaries in real estate construction/contracting, real estate services and food grocery market.