Irish firm sues to recover deposits on Uptown project

By Thomas A. Corfman
Oct. 10, 2008

(Crain’s) — A group of Irish speculators apparently has lost more than $250,000 in earnest money on an Uptown condominium project proposed by a Pakistani-born developer whom state authorities are investigating for fraud.

The developer, Salman Ibrahim, CEO of Chicago-based Sunrise Equities Inc., disappeared in August, leaving investors with losses that could total $50 million, according to published reports. The securities department of the Illinois Secretary of State last month began investigating Mr. Ibrahim, who attracted Islamic investors to his projects by using financial structures that avoided interest payments, which the religion prohibits.

Chicago attorney Alan S. Levin, who represented Mr. Ibrahim on the Uptown project and on other matters, did not return a call requesting comment.

Dublin, Ireland-based Castleroc Estates Ltd., which marketed the 18-story project at 4700 N. Clarendon Ave. for Mr. Ibrahim, is seeking to recover the deposits that secured the purchase of 16 units, according to a complaint filed Sept. 26 in Cook County Circuit Court. Details about the 162-unit project are in an investment summary that was on Castleroc’s Web site at one time but has been taken down.

“Sunrise Development provides this summary to assist you in planning and executing a successful investment strategy,” the document said.

Named in the lawsuit is a development venture whose principals include Mr. Ibrahim and J. P. Morgan Chase Bank, which held the deposits in an escrow account. Bank records show that the escrow account is empty, said Chicago attorney Thea Pazen, who represents Castleroc. The complaint against the bank sought only to obtain records, but Ms. Pazen said she is exploring additional legal action against J. P. Morgan Chase. She declined further comment.

A bank spokeswoman declined to comment.

Castleroc had a co-brokerage and referral agreement with the development venture, according to the complaint. Between November 2007 and January 2008, the Irish investors put down $256,150 to secure the purchase of 16 units at a total purchase price of nearly $4.9 million, according to a list attached to the complaint.

For Islamic investors, Mr. Ibrahim stressed that his developments were structured to comply with Shariah, or Islamic religious law. Under that structure, a bank doesn’t charge interest to the development venture. Instead, the bank buys the project and then leases it back at a profit, Mr. Ibrahim said in a news release given to Crain’s in July 2007. The profit the bank makes would be equivalent to the interest payment it would ordinarily charge, he said in the release.

“As banks realize the demand for this, they’ll find it’s an excellent, additional way to generate revenue, with no more risk than their current practice,” he was quoted as saying in the release.

This summer, Mr. Ibrahim turned down an opportunity to be profiled by Crain’s ChicagoRealEstateDaily.com. A spokeswoman said he declined because the story would require the publication of a photograph, which she said would have violated his religious beliefs.

Source: http://www.chicagobusiness.com/cgi-bin/news.pl?id=31354