A Cautionary Tale...Redux

Mayor Neri's last gift to Northlake was the O'hareport hotel, an 18 story hotel and convention center next to the Tri-state expressway. The locals figured it to be just another vehicle for mob skim. Lacking a highway exit, it proved to be nearly inaccessible to anyone who didn't already live in town and it closed in June of '72, two years after it opened. It fell into foreclosure and eventually (in 1987) if found a useful life as a retirement home.

In December of 1971, during its tenure as a nearly vacant hotel, a Ford Mustang was found abandoned in the O'hareport Hotel parking lot. It had been reported stolen from the repair lot at Al Piemonte Ford a few months earlier. The car was towed to the insurance office in Freeport, Illinois, about a hundred miles away. When the insurance adjuster popped the trunk, he got a surprise.

In the trunk was the naked body of a man. He had been beaten, strangled and stabbed. A tattoo and fingerprints eventually identified the man as Henry Rufo, a Lombard, Illinois resident who had gone missing about a week before.

Back then, trunk music was bigger than disco. The joke around town was that the mob built the hotel because they were running out of parking spaces at the airport

That was the extent of the news coverage at the time. What we didn't know was that Henry Rufo was in fact Henry LaKey, the prime witness against Battaglia. He had opted out of witness protection and figured that changing his name would be good enough.

Apparently, the feds had been keeping William G. Riley, the developer, in Cleveland. Not long after Joe Shine Amabile's death he leaves protection and shows back up, under his own name, in Denver. This time he has a whole new real estate scam. This one involves "Installment Land Contracts" or what we used to call a "Contract for deed"

If the seller owns the land free and clear, these are straight forward things, but if there is a mortgage on the property, it's another kettle of fish. Banks like to know who owns the property they have lent on and put a due on sale clause in mortgage contracts.

Riley's idea is "what the banks don't know won't hurt them." The original owner just keeps paying the mortgage from the buyer’s payments and pockets the difference. Riley's scheme is even better. He organizes his company (Investment Realty and Mortgage) into separate buying and selling divisions that don't talk to each other. When someone wants to sell a property they go to the buying division and offer it at a price. Then the selling division looks for a buyer. When they find one the property is first sold by contract to Income Realty and then instantly resold to the buyer at a 25% profit.

Riley can get a commission from the seller, gets a piece of the buyer's downpayment, makes the float between all the buyers payments to him and his payments to the seller and puts an accounts receivable asset on his book for his profit on the sale.

Then he capitalizes these receivables by selling bonds.

You can see that this is a house of cards. Eventually, the banks get wind of the sales and start enforcing the due on sale clause.

A law suit ends proving that the banks have every right to demand this payment or to renegotiate the mortgage with the new buyer.

In 1980, to save his scheme, Riley spends his bondholders investments to finance a amendment to the Colorado State Constitution  that would limit the amount of interest the banks can charge on an assumed mortgage. The ballot initiative fails.

Once again, the feds are looking at his books and investors are looking for their money. In 1981 Income Realty goes bankrupt and steps ahead of a 28 count indictment for defrauding investors out of $6 million, Riley takes it on the lam to Santiago, Chile.  A year later, he's found in Florida, under the name of Grover W. Williams, trying to buy some real estate.

He was tried, found guilty, won an appeal and pleads guilty to a related theft. In the end he did about two years plus parole and relocated to Florida where he continued in real estate. He died in 2006.