City report suggests improper billing in costly Evergreen Terrace lawsuit
A decade of decisions places Joliet in its current position; sifting through the litigation process to secure the purchase of Evergreen Terrace, a 356-unit housing development near downtown Joliet once deemed a “cancer on the civic body of Joliet.”
A lot can happen in 10 years and officials revealed during a March 17 press conference, that costly hang-ups were discovered as of recently in the city’s accounting books.
Chris Regis, the city’s recently appointed inspector general, was accompanied by Mayor Bob O’DeKirk when he spoke on behalf of the city and referenced a 25-page report he prepared on the Evergreen Terrace case, explaining what he thinks is most notable about their findings.
“The law firm [Figliulo & Silverman] increased their rates,” he said. “Now, in a 10-year litigation that’s not altogether shocking that sometime the prices would go up. But in some instances, the increases were quite significant.”
Since engaging in the legal fiasco involving the purchase of Evergreen Terrace in 2005, the city has racked up and paid a number of legal fees.
To date, the city has undertaken a total of $21 million including legal fees to the firm in question and the acquisition of the apartment building.
Over the years, the city government has seen a number of changes in leadership, including the positions of city manager, corporation counsel and mayor, among others.
Joliet’s first inspector general pointed out how city ordinances denote that any cost over $20,000 needs to be submitted to the City Council for approval. That has not always been the case, however.
For about the first year, when the court proceedings began and the costs started to roll in, no forms were submitted to the council for the approval of legal fees, Regis said. The costs were relatively low and wouldn’t require City Council approval.
Another year’s worth of records show fees being submitted to officials but never received a vote. Other forms were marked in an effort to request the treasurer’s disbursement revealing a rise in costs and yet, these documents never came before the City Council, Regis added.
After years of mismanagement of the case, O’DeKirk said seeing Joliet improperly billed was a concern that sparked their attention.
“Back in the fall when it first came to my attention that there was a problem with the billing, we did contact a local law firm who was looking into the billing,” he said. “This was around the time that we discovered the billing was being done at the wrong rate. There’s also some indication that the bills that were submitted were considerably overbilling the city of Joliet.”
O’DeKirk said having a $5 million condemnation lawsuit, which could continue to rise in value should the litigation process continue, was a red flag for officials. Through subsequent information, the city uncovered that billing was being done at rate that had never been contracted for.
In response to possible wrongdoing in billing, James Figliulo, an attorney for Figliulo & Silverman, said any statement saying there’s wrongdoing is false and said with malice.
“The fees charged were reasonable and the rates were less than market,” Figliulo said. “The city of Joliet received detailed bills from us each month which disclosed the fees charged, the services rendered, the lawyer who performed the service, the hours spent and the hourly rates.”
Regis said former city attorney Jeff Plyman should have made the council aware of the change in legal fees, but he signed off on invoices without gaining their approval.
“The difference in the billing was if we do the math at the originally agreed upon $250 an hour and calculate the rate at that, and then calculate it at the final billing hour… there’s a difference of around $660,000 in the billing that was not approved by the City Council,” he said.
Figliulo said the city’s investigation would be better directed inward rather than outward at the firm.
“The city even paid a bill for our services at these same rates as recently as last month” he said. “If the Mayor or his long time friend, the new Inspector General, think those rates are improper and still had the city of Joliet pay them less than one month ago, maybe they ought to investigate themselves.”
O’DeKirk said knowing that Joliet put forth $15 million toward the purchase of Evergreen Terrace means the city is virtually locked in and further, the consensus among officials is that they should move forward with the redevelopment.
In 2014, the city won its condemnation lawsuit where the U.S. Supreme Court determined they were permitted to proceed with the purchase of Evergreen Terrace. Two months ago, the owners of Evergreen sought to overturn the ruling and the valuation of the property in the Court of Appeals. A decision is expected later this spring.
To date, the city’s overrun costs include but are not limited to payments valued at over $120,000 to consultants working to create a redevelopment plan and more than $260,000 have been paid to attorneys to negotiate with HUD.
O’DeKirk said it’s unclear if other employees were involved in the matter. He added that it’s not certain what, if any, criminal charges could be brought.
“I believe that through the civil or criminal process that will come to light,” he said, adding that a breach of fiduciary duty is evident.
O’DeKirk said the city will likely reach out to law enforcement in pursuit of an investigation. He added that it’s unclear whether they’ll pursue civil or criminal charges.