At the most recent District 91 Board of Education meeting, Edward Brophy, assistant superintendent of operations, offered an optimistic update about the ongoing Illinois Metropolitan Investment Fund (IMET) fraud case. The promising outlook stems from recent comments by IMET’s attorney, Randall Lending, at the organization’s annual meeting. Mr. Lending revealed a letter of intent to sell seized assets, five hotels, to an undisclosed buyer. The deal could be closed by May. This information represents the latest developments in an ongoing scandal affecting hundreds of local government entities in Illinois.
Once the assets are liquidated, 60 to 70 percent of the total loss resulting from the scandal could be recouped, according to a recent email from George Chirempes, CFO of the Proviso Township Treasurer’s Office (PTTO). In addition, Pennant Management, a Wisconsin-based financial services company and IMET both have insurance policies that may offset any remaining gaps after the liquidation of the seized assets. IMET hired Pennant Management in 2012, according to the Chicago Tribune.
Established over two decades ago, IMET assists Illinois municipalities with their investments through both its 1-3 Year Fund and Convenience Fund. Problems arose with the latter when it was discovered that a Florida-based organization, First Farmers Financial, misled IMET. In its deal with IMET, First Farmers claimed to be offering guaranteed loans, backed by the U.S. Department of Agriculture. That assurance proved to be false. As a result, about $2 million of PTTO’s funds were exposed to risk. D91’s share of at-risk funds is $176,653.60. IMET traditionally invests conservatively and mostly accepts offers from highly rated banks. The First Farmers deal represented a break from convention but the results were disastrous.
First Farmers’ chief executive officer, Nik Natel, was arrested in September 2014 for fraud, according to an Orlando Sentinel report. Since then, a federal judge in Chicago appointed Michael Nanosky, a Florida businessman, to oversee the management of Mr. Natel’s remaining assets. Meanwhile, Pennant and IMET brought suit against First Farmers Financial and Mr. Natel.
While the issue is far from resolved, Chirempes referred to the latest developments as “promising news.”