The owner of Republic Windows and Doors and two other unnamed people conceived and executed a scheme to defraud their creditors, abandon their debts and move hundreds of thousands of dollars of window-making machinery to Iowa, prosecutors said yesterday.
The ultimate goal of the scheme, prosecutor Jon Mahoney said in court, was to start up the business again under a different name at a window factory in Red Oak, Iowa, without being under a cloud of debt.
“They diverted money from Republic, created fraudulent corporations and bank accounts,” Mahoney said.
Republic owner Richard Gillman was charged with eight felony counts, including mail fraud, wire fraud, money laundering, financial conspiracy and theft. He was arrested at his Magnificent Mile condominium at 8 a.m. Wednesday, court documents said.
In court yesterday, he appeared in a dark suit with faint pinstripes and a white dress shirt. He is being held at the Cook County Jail.
“Gillman and his coconspirators victimized many people,” Mahoney said, noting the 200 workers who were abruptly laid off from Republic Windows & Doors in December.
Prosecutors pegged the claims of several creditors, including Bank of America, JPMorgan Chase and General Electric, at more than $10 million.
A separate federal bankruptcy case has been winding its way through court for several months trying to sort out which companies had a stake in which assets. The handful of former Republic workers who have filed claims in that case are seeking a combined $190,000, Mahoney said.
Gillman shipped three semi-trailers of machinery to Red Oak shortly after Republic closed, Mahoney said. Seven more trailers full of equipment were hidden on a property on the Southwest Side and have been recovered, he said.
Gillman's arrest comes six months after an exclusive Daily News article detailed the removal of equipment from the Chicago plant. The article raised questions about the transactions that led Gillman to take over the Red Oak, Iowa, plant, which was subsequently closed amidst lawsuits and recriminations.
In February, a Daily News reporter saw some of the former Republic machinery on the floor of the Red Oak plant, though it had not been set up and had not been put to use.
Traco, the company that used to own the Red Oak plant before Gillman’s company took it over, filed a lawsuit shortly after Echo shut down, seeking $1 million that it held as a lien on the plant.
Gillman will remain in jail for now, said his attorney, Ed Genson. A judge set Gillman’s bond at $10 million -- an amount 20 times higher than the $500,000 bond that the state’s attorney’s office had requested. Under the terms of the bond, Gilman would have to post $1 million to be freed.
After the hearing, Genson blasted Judge Peggy Chiampas’ decision as being baseless and ridiculous, pledging to appeal the bond ruling to the state appellate court.
“That was the most blatant misuse of judicial discretion I have seen in 45 years,” Genson told reporters after the hearing.
“The guy is in personal bankruptcy,” Genson added. “Where’s he going to a get a million dollars?”
Genson insisted that the same issues in this case – who owned the assets, and how much they are worth – are already being sorted out in the federal bankruptcy case.
“There’s no other reason but a play at publicity,” Jensen said after the hearing.
Gillman’s next court date is set for Oct. 5.