James Gierczyk —the Illinois developer whose LLC, Chesterton Development
Partners (CDP), was going to breathe new life and transfuse fresh blood into
Coffee Creek Center—appears to have cash-flow problems.
Not only is Giercyzk in hock to Old Second National Bank of Chicago Heights,
Ill.—according to a lawsuit filed on May 19 in Porter Superior Court—to the
tune of $12 million.
Four of his other LLCs have also been sued by another creditor, the First
Bank and Trust Company of Palatine, Ill., which alleged that he defaulted on
loans totaling $31.6 million and owed in excess of $22.5 million in
principal, interest, and late fees.
First Bank and Trust has accused Gierczyk as well of transferring assets to
his wife with “intent to hinder, delay, or defraud his creditors.”
Meanwhile, Giercyzk’s legal firm has sued him in an attempt to recover more
than $250,000 in legal fees and litigation expenses which the firm claims
Giercyzk refused to pay.
And Crain’s reported last month that Wheatland Bank of Naperville, Ill., has
filed foreclosure suits on three of Giercyzk’s suburban strip-mill
developments in that state.
Notwithstanding his hideously off-putting billboards once seen in the
region—the bald ugly baby—Gierczyk was making a reputation for himself, four
years ago, as the developer of upscale waterfront projects in New Buffalo,
Mich., boutique condos with names like Light Harbor Moorings and Light
So when, in 2006, Gierczyk came to Chesterton to do business, through CDP
LLC, it was with the expectation that he would use his clout to get stuff
built there. That, at any rate, is how Lake Erie Land Company (LEL)
spokesman Tom Godfrey put it at the time. “Part of (Gierczyk’s)
responsibility is to bring the builders and get things built,” Godfrey said
then. “He’s basically utilizing his vast network of builders and contractors
in that industry to participate in that.”
Actually, Gierczyk’s relationship with LEL was twofold, a source familiar
with it has told the Chesterton Tribune. On the one hand, there was a
joint venture to develop two pieces of LEL property in particular: one
located west of Ind. 49 across from Coffee Creek Center, the other north of
On the other hand, there was a separate obligation to purchase, each year
over the deal’s 10-year lifetime, a certain acreage from LEL, and in fact
CDP did acquire not only the Sand Creek Country Club but 18 residential lots
in the Estates of Sand Creek and 42 commercial acres in Coffee Creek Center
proper, located east of Ind. 49 and between Gateway Blvd. and Voyage Blvd.
It was on those 42 acres that PBR Development of Chicago proposed, in the
summer of 2006, building a 380,317-square foot retail mall.
That went nowhere fast.
It was also those 18 lots in Sand Creek and 42 acres in Coffee Creek Center
which Gierczyk mortgaged two years later, in October 2008, to secure an
$11.9 million loan from Old Second National Bank. That loan matured on Jan.
10, 2010, and when—Old Second alleges—Gierczyk’s CDP LLC failed to pay it,
the bank filed suit against him last week, seeking a judge’s order to
foreclose on that property. Named in that suit as well is are host of other
entitites—including LEL, the Coffee Creek Homeowners Association, Sand Creek
Country Club Real Property, and Centier Bank—none of which is on the hook in
any way for the loan but all of which have some interest in the property in
question and were accordingly included in the filing “to answer as to” those
As it happens, $11.9 million is the value of real-estate assets—namely, Sand
Creek Country Club and unspecified acreage at Coffee Creek Center—which
NiSource Inc. had classified since 2006 as discontinued operations held for
As NiSource announced, however, in its annual report filed earlier this year
with the U.S. Securities and Exchange Commission, Gierczyk—through CDP
LLC—failed in the second quarter of 2009 to make a scheduled payment to LEL
for that property, prompting NiSource to record a $16.6 million impairment
loss in the fourth quarter of the year. That impairment consisted of $8.8
million in uncollectable receivables owed by CDP and a further $7.8 million,
the amount by which the book value of the assets remaining to be sold under
the agreement exceeds the fair value.
So that’s the end of that.
While he was here, though, Gierczyk floated a couple of ideas. He wanted the
Town of Chesterton to issue a financial instrument known as special
improvement bonds—“dirt bonds,” as they’re called—under which an additional
tax is levied on lots in a designated district, the revenues from which he
would have used for the development of 200 townhomes at Coffee Creek Center.
Special improvement bonds are supposed to encourage development by freeing
the developer from the pesky up-front costs of typical bank financing. That
went nowhere fast.
Gierczyk also suggested the use of tax increment financing moneys to pay for
infrastructuring the chunk of property owned by LEL west of Ind. 49. At the
time Wal-Mart was mentioned in connection with that property. And that too
went nowhere fast, at least partially because, as a general policy, the
Chesterton Redevelopment Commission has been opposed to using TIF revenues
to build infrastructure for private developers.
The one fruit of LEL’s relationship with Gierczyk: the Village Green
Townhomes at Coffee Creek Center.
As uneventful as Gierczyk’s time in Chesterton was, in Illinois things
started happening for him in the summer of 2008, when—according to First
Bank and Trust Company’s lawsuit—Gierczyk defaulted on separate loans to
four of his LLCs: a December 2003 loan for $2.6 million to First JPG
Development; an April 2004 loan for $6 million to Lighthouse Place
Development; an April 2005 loan for $6 million to Gierczyk-Ghezzi Cottages;
and a February 2006 loan for $18 million to Light House Preserve. All were
due on June 30 or Sept. 30 of that year, First Bank and Trust alleged in the
suit, which sought a total of $22,863,868.53 in principal, interest, and
A year later, in September 2009, First Bank and Trust Company sued
Gierczyk’s wife, alleging that Gierczyk had transferred to her and to an LLC
of which she was the registered agent numerous assets, including $243,516.50
in proceeds from an IRS tax refund $523,683.42 in proceeds from a
certificate of deposit; Real property in Tinley Park, Ill., for which the
purchase price was $1.85 million; lots located in the Estates of Sand Creek
here in Chesterton; and a 2007 Lincoln Navigator, a 2002 Chevrolet truck,
and a 2006 Grand Jeep Cherokee. First Bank and Trust Company further alleged
that Gierczyk made those transfers with “the actual intent to hinder, delay,
or defraud his creditors such as First Bank.”
A few months later, in January 2010, the legal firm Shaw Gussis Fishman
Glantz Wolfson & Towbin sued Gierczyk, alleging that he has refused to pay a
legal bill, incurred between February 2005 and August 2008, of $256,945.38.