B
oruch Drillman, the real estate investor who pleaded guilty to a mortgage fraud scheme last year, is facing new legal troubles in Chicago. After trying to block a foreclosure of an industrial property on the Southwest Side with a last-minute court filing, Drillman has surrendered and allowed the lender to proceed.

    Drillman's entities that owned a 308,000-square-foot warehouse campus at 5301-5323 South Western Avenue withdrew their emergency lawsuit in New York that had temporarily halted the foreclosure sale. The property's ownership failed to pay off an $8 million loan, and the lender, Castellan Real Estate Partners, now claims it's owed nearly $10.8 million after accounting for interest and fees.

    Drillman personally guaranteed the loan, which means he could still be liable for repaying the debt even if he loses his equity in the property. His personal guarantee may also trigger an obligation to repay the debt in full out of pocket due to his guilty plea. Drillman's attorney declined to comment beyond public court filings.

    Drillman pleaded guilty to conspiracy to commit wire fraud affecting a financial institution in a $165 million loan scheme last December. He could face up to five years in prison while awaiting sentencing. The Gage Park property has not been implicated in this case, but the ripple effects are still being felt, with Fannie Mae halting multifamily loan transactions closed by title insurers involved in Drillman's deals.

    The property was 50% leased when it was listed for sale at over $11 million earlier this year. After the New York lawsuit's settlement advanced Castellan's foreclosure process, a debt servicer tied to the loan filed a Cook County suit to initiate the final steps of the takeover process. An auction that could transfer the property to the mortgage lender and strip Drillman-managed entities of their equity has not yet been scheduled.