The former chief tax assessor for the city of Chicago helped a giant real estate firm called American Invsco get a $216,000 reduction in property taxes, then shortly afterward acquired two units in a Rockville condominum owned by the firm, according to a confidential congressional report.
The Chicago assessor, Thomas Tully, bought his two apartment995ying for the condominiums until their value had increased by several thousand dollars.
Tully signed an agreement to buy one Grosvenor apartment for $118,000 in November 1979, but the sale was not completed and the deed recorded until seven months later, in July 1980, congressional investigators discovered. By that time similar apartments were being advertised for $135,000 and now are worth nearly $150,000, tenants of the project said yesterday.
American Invsco's dealings with Tully are among dozens of the company's transactions being probed by a House subcommittee chaired by Rep. Benjamin Rosenthal (D-N.Y.) that is looking into conversion of rental apartments to condominiums and cooperatives.
Rosenthal said he has asked the Securities and Exchange Commission to investigate possible securities law violations by American Invsco in the sale of co-op apartments in the Promenade complex in Bethesda. If co-op apartments are sold primarily as investments rather than as homes, the seller could be subject to SEC regulations, agency officials said.
The subcommittee has also turned over to the Department of Justice information indicating buyers of at least 48 apartments at Grosvenor Park may have violated federal laws by falsifying loan application papers.
The buyers claimed they intended to live in the apartments, so they could qualify for low down payment loans available only on owner-occupied dwellings. But congressional investigators found the apartment buyers were real estate speculators not living in the units and should have been required to put down at least twice as much money.
Falsifying a loan application is a federal offense, explained subcommittee counsel Peter Barish. The Federal Home Loan Bank Board is in charge of enforcing the law, he added, but normally does not investigate whether the owner actually occupies the home.
The subcommittee obtained lists of Grosvenor buyers and found four dozen who were not living in their apartments as they claimed they would be.
The names of Grosvenor buyers were gleaned from American Invsco documents obtained by the subcommittee after it subpoenaed the company's records. Though Invsco turned over thousands of pages of documents, it withheld critical information about its finances and internal information, the subcommittee staff report complained.
Rosenthal plans to ask the panel to cite Invsco for contempt of Congress for failing to provide all the information demanded. The staff report shows the company documents did not list the Chicago official among the purchasers of Grosvenor apartments.
Congressional investigators said they believe the purchase of apartments by speculators tends to inflate the price of housing by creating more demand for available units.
In some American Invsco projects, more than half the units have been purchased by speculators, many of them with connections to the company, the subcommittee staff study charges. In one 186-unit building in the Grosvenor complex, 45 percent of the apartments were sold to speculators and 15 more apartments were kept by American Invsco.
Based in Chicago, American Invsco is the largest condominium and cooperative converter in the country. The company buys entire rental housing complexes, then sells the individual apartments, often at tremendously inflated prices.
American Invsco paid $49.7 million for the Promenade apartments in Bethesda, and will get between $95 million and $100 million by selling the 1,100 units, the committee investigators found.
Company officials did not respond to the congressional charges yesterday. Former Cook County assessor Tully, who left that office in December 1978, did not return a phone call seeking comment from him.
The House panel said it found Tully owned apartments in at least five American Invsco projects.