GOSHEN — The group that purchased Concord Mall last year has been ordered to pay nearly $7 million back to the shopping center’s original owners, while also being accused of defaulting on payments.
The recent court decision comes as the buyers also face fraud, theft and embezzlement accusations in separate federal case.
Judge Teresa Cataldo ruled against Chicago-based Ton Real Estate Investments Inc., GLN Investments and guarantors Daniel Olswang and John Thomas in a mortgage foreclosure case Oct. 11 in Elkhart County Superior Court 3. According to the decision, Ton Real Estate, Olswang and Thomas were ordered to repay the $6.48 million they agreed to purchase the mall for last year, as well as $456,821 in overdue interest, late fees and property taxes, and another $35,000 in attorney fees.
The order also included an option for the mall at 3701 S. Main St. in Elkhart to be re-sold.
Ton Real Estate bought the mall through a promissory note at the $6.48 million amount and via a mortgage in February 2020. Ton also took out a $1.4 million junior mortgage on the property for the Chicago-based GLN that April, according to court documents.
Concord Mall Properties alleged Ton had defaulted since October 2020 by failing to make payments on monthly interest and property tax escrow. The two sides then went into a forbearance agreement in March, and Ton also allegedly failed to make payments under that, according to court documents.
Concord then filed the foreclosure suit May 21.
As the case progressed, Concord Properties sought a receiver to take over the mall’s management and collect rent. The company also worried the property could be damaged by Ton’s failure to manage it, according to allegations in a receivership motion.
Judge Cataldo sided with Concord and appointed Bradley Company to serve as the mall’s receiver July 21.
Bradley submitted reports Oct. 14, showing Ton Real Estate had not turned over files and funds as ordered, so the company had to work with the limited number of documents at the mall, as well as through help from tenants.
The company noted $74,205 in rent had been collected in September, amounting to about 78% of the month’s rent payments.
While for August, at least $60,854 had been paid to Ton Real Estate instead of Bradley as the receiver. The report showed Ton had sent $20,000 of that to Bradley to delay a contempt hearing, but the rest hadn’t been turned over.
Concord sought a final judgment in the foreclosure case in August. About a month later, Ton Real Estate had filed a response and then withdrew it with a statement that Concord could seek the judgment as though no response had been filed, court documents show.
With her order, siding with Concord in the judgment, Cataldo found Concord could sell the mall either privately, via an Elkhart County Sheriff’s Office sale, or by a third-party auction.
Staff at Triyar Realty Group, the parent of Concord Mall Properites, declined to comment Tuesday on the case or on whether or not the mall would be sold again.
The ruling in the foreclosure suit comes as Olswang and Thomas, along with their Chicago-based Freedom Development Group, several affiliates, bank accounts and “dummy or sham corporations” are also defendants in a lawsuit in a bankruptcy court in Illinois. Freedom Development shares and address with Ton Real Estate.
In that case, a bankruptcy trustee for Freedom Development alleges Thomas and Olswang used the company as a “cash cow” by fraudulently transferring about $2.8 million from company accounts to themselves and “related entities.”
The complaint lists 35 counts, with charges against the two that include conversion, fraud, larceny or embezzlement, breach of duty, along with similar charges against business entities, dummy corporations, and at least one unknown person with bank accounts involved in the money transfers.
One count has asked the court to pierce the “corporate veil” and find the defendants listed in the case are alter egos of Freedom Development and instruments of Olswang and Thomas. The complaint wanted the defendants to be liable for Freedom Development’s debts, court documents show.
An evidentiary hearing on a motion for an injunction in the case is scheduled for Tuesday, Oct. 26.