Lakefront Church-Mansion Denied Tax Exempt Status Finally Sells

LAKE BLUFF, IL — A massive lakefront estate at the center of years of legal battles between local officials and its owner sold for $1.61 million this week, more than a decade after it was first put up for sale with a $12.5 million price tag.

The 15,000-square-foot mansion was built in 1941 on a nearly 4.9-acre lot beside the Shore Acres Golf Club on the northern edge of Lake Bluff. It includes 263 feet of private beach, with an outdoor tram leading down to the shoreline. In addition to the 17-room main house and attached 10-car garage, the property also includes a coach house and a 2,000-square-foot patio overlooking Lake Michigan.

"The entire property was fully updated in 2006 yet needs maintenance," according to its listing. Since that update, the house has been the subject of at least a half-dozen lawsuits.

In October 2003, Chicago real estate broker and FBI informant George Michael and his wife, Susan, purchased the property for $3 million. They added its indoor pool, racquetball court and two additional bedrooms. A reassessment the next year resulted in the property tax bill increasing from $27,000 to $87,000, which was among the highest in the village at the time, according to court records.

In March 2007, the Michaels transferred the property's ownership to a new corporate entity called the Armenian Church of Lake Bluff, converting the racquetball court to a chapel. Its treasurer would later testify he intended to set up the church "for tax exemption purposes." That November, Michael filed an application for property tax exemption on the grounds that his house provided housing for a religious officer, church administrative offices and religious education "instutution."

---

Village officials challenged the religious tax exemptions, and the Lake County Board of Review recommended it be denied. But after Michael sent the Illinois Department of Revenue a "misleading" affidavit claiming to be a "duly licensed Reverend" and a photograph of the exterior of the house with a cross drawn on it in marker, the department granted the exemption. Two of the taxing bodies set to lose out on property tax revenue from the property, Lake Bluff and School District 65 representatives, sought a hearing before an administrative law judge to reconsider.

Armenian church officials testified the Lake Bluff church was never recognized or affiliated with the Armenian Church of North America, the faith's governing body in the United States, according to court records. Michael testified that he paid a small fee online to become a reverend with the Church of Spiritual Humanism, despite not having any particular familiarity with it — or any idea whether it conflicted with his Christian faith.

"I do not question the sincerity of George Michael’s religious beliefs," Judge Kenneth Galvin said in his ruling. "But I must question the good faith of this exemption application from the Armenian Church of Lake Bluff which seeks to provide tax-free housing facilities in a 15,000 square foot residence for a minister who cannot canonically perform his 'vocation' for the religion he professes to believe in and follow."

---

Galvin's July 2009 decision was upheld in Cook County Circuit Court, which found the application for tax-exempt status to be "false or misleading." Michael appealed, and an appellate panel eventually unanimously sided with the village and school district. Michael was then hit with a $250,000 bill for the back taxes. In November 2009, Michael put the property on the market for the first time with a $12.5 million asking price.

In October 2010, Michael and his brother were banned for life from the banking industry by federal regulators. Their failed bank, Citizens Bank and Trust, was taken over by the Federal Deposit Insurance Corporation, and the brothers declared bankruptcy.

That followed a decision by a federal appeals court to uphold a jury's verdict finding the Michael brothers guilty on civil counts of assault and battery and ordering them to pay more than $700,000 in damages and fees following allegations from a former employee that they sexually harassed her. In 2013, Michael's brother, a former Chicago cop, was indicted on bank fraud charges but later found not guilty by a jury in 2016.

After being told their mansion would not be considered a tax-exempt church, the Michaels filed a 76-page federal civil rights lawsuit claiming local officials in Lake Bluff had conspired against him and his family due to his ethnic heritage. In 2011, a judge tossed out most of his claims but allowed some to stand and some to be re-filed. The Michaels filed a scaled-down, one-count amended complaint in March 2012.

By June, the parties had agreed on a settlement agreement. Both sides agreed to drop pending lawsuits, cooperate with the bankruptcy proceedings and cover their own legal fees. Michael also agreed not to conduct any future public worship services at the house.

---

In 2014, Michael was back in federal court to testify during the trial of the former Chicago cop and Buffalo Grove resident — now serving a life sentence — Steve Mandell, who authorities have linked with more than a half-dozen murders.

Michael wore a wire for federal agents leading up to Mandell's October 2012 arrest on charges of a murder-for-hire plot involving the Chicago Outfit, a suburban strip club and a "torture chamber" dubbed "Club Med" on Devon Avenue in Chicago. In 2017, the Chicago Tribune reported federal investigators believed Michael's undercover recordings indicate Mandell was also involved in the unsolved 2012 death of a Highland Park restaurant owner in a house fire.

Ownership of the former Armenian Church of Lake Bluff transferred to the bank Citimortgage last year, according to property records. A property tax appeal reduced its estimated market value for taxing purposes from nearly $4.36 million to just $2.75 million. That slashed the annual property tax bill from nearly $100,000 to about $61,500.

After the asking price was cut to $2.25 million over the summer, an offer was accepted in October and the sale closed Monday.

Dom Clarizio, who represented the buyers, provided a statement from the new owners, who have not yet been identified in public records, saying they plan to renovate the house and put it back on the market.

"We are excited to have an opportunity to restore and make available this amazing home on what is one of the most beautiful and private beach-front lots on Lake Michigan in Northern Illinois," they said. "This house has a ton of features that people are clamoring for given the pandemic, indoor pool, racquetball court, exercise area, movie room and your own private lakefront beach."

---

• Address: 1955 Shore Acres Drive, Lake Bluff, Illinois
• Built: 1941
• Lot Size: 4.87 acres
• Square Feet: 12,658 above-ground, 2,934 in finished basement
• Bedrooms: 5
• Bathrooms: 9 full, 1 half
• Last Sold: $3 million in February 2004
• First Listed: $12.5 million in November 2009
• Closing Price: $1.61 million on Dec. 7

Listing information originally appeared on realtor.com. For more information and photos, click here.