By Bob Peryea



A Lake Geneva landmark has been placed in receiver-ship by a Walworth County Circuit Court judge

The Cove in Lake Geneva is still open for business despite the receivership from the Walworth County Court.

because of questions arising from an unpaid loan and the whereabouts of nearly $1 million, according to court records.

On Sept. 27, Circuit Court Judge John R. Race placed The Cove Condominiums in receivership due to questions of misdirected funds and un-paid mortgages and bills.

According to court records, PNC bank loaned $1.9 mil-lion to the Cove Condominium-um Association to build a clubhouse and a banquet facility. Both facilities were built, but the loan has been allowed to default, despite the purported payment of over $1 million by the condo owners to the management company.

The loans, one for $250,000 and one for $1.65 million, came due in September 2008 and October 2012, respectively.  As of the court date in September, there was still $1.6 million owed.

According to Robert Pyzyk, an attorney representing PNC, 95 condo owners paid a lump sum of $10,000 each. The remaining 122 con-do owners have apparently been paying a monthly charge to cover the cost of the loan.

In an interview conducted by telephone on October 11, Cathy Hurlbut, the President of the Cove Condominium Association Board and an attorney from Illinois, said, “That is not accurately depicted. There is no way for him to know that.”

According to Pyzyk, despite several forbearances that the bank granted, which required the management company to supply complete accountings, none were ever given to the bank.

“How could that be?” Judge Race asked the attorney.

“That’s the question that we’re seeking the answer to, Judge,” Pyzyk said.

Hurlbut said, in response to that accusation, “They have all the financial documents up to February of 2012.”

Several condo owners hired their own representation in the case because they were concerned about the management of the facility and wanted to express their desire that the court take the hotel and condo facility out of the current management’s hands.

One of the owners’ attorneys, David Pelletier of Axley Brynelson, LLP, of Madison, told the court that his clients supported the appointment of a receiver.

Hurlbut said, with regard to the group of owners, “This is a small group of owners who did not win the elections to the Board in June. They are trying to cause havoc at the Cove. This goes way beyond a standard receivership.”

The attorney for the Cove Condominium Association, Bradley Lochowicz of Seymour, Kremer, Koch & Lochowicz, argued that the request for a receiver had been filed under the wrong statute.

As part of the requirement for a receivership, the plain-tiff has to prove that the company is insolvent, or longer able to pay its bills.

“I think if they want to request a receiver under of the grounds then they should file those documents with the court,” Lochowicz said. He went on to say the other side had never made a request for discovery. “They have no knowledge of the assets.”

The Judge responded, “Isn’t that a little bit disingenuous to argue that they haven’t alleged the information that is necessary for the appointment of a receiver and yet over a two-year period that is this duty apparently by contract to furnish that information your client hasn’t.”

Hurlbut said to this allegation, “There is no evidence that documents were not sent. Jackie Brennan (Vice President at PNC Bank) received all of those documents. There is no evidence of insolvency.

“We requested an evidentiary hearing but we were not granted one. There has been no request for discovery.

“The association continued to make payments to PNC up until July of this year when they filed this action.”

Pyzyk had explained to the court that the original loan documents and all three of the forbearances that the condo association received were tied to the fact that the condo as-association had to provide a complete accounting of the association’s assets. They also had to provide a quarterly accounting of the fees being paid by the condo owners.  “The last financial information that they had goes back to 2010,” Pyzyk said. “Nothing for 2011 has been submitted. Nothing for 2012 has been submitted.”

In July of this year, PNC bank requested a temporary restraining order to prevent the management company from “disposing of any of its assets pending a further hearing on this matter.”

In that instance, Judge James Carlson, issued an order that nothing could hap-pen to those assets.

According to court records, the order was served on Sal Sardina, “the registered agent for Cove Condominium Association,” on July 23.

“On July 25th, Mr. Sardina had two checks drawn out of the Cove Condominium Association and payable to his management company in the sum of $107,451.64,” Pyzyk told the Court. PNC Bank did not honor the checks, but Pyzyk told the Judge, “the checks were issued contrary to the court’s order in this matter.”

The court records further state that the management is no longer depositing funds into the PNC Bank accounts that they had been using prior to the July hearing.

“…They’re using other banks. Where those banks are, where the accounts are, we have no knowledge,” Pyzyk said. “All we know is that the funds are being diverted and are not being paid in accordance with the notes.”

Hurlbut stated that the association was never notified in advance of the July hearing. After the hearing, “We were advised that there could be no dissipation of assets. The payment to the management company was part of the normal operating expenses, not a dissipation of assets.”

When asked about alleged back taxes owed by the Cove, Hurlbut stated, “No back taxes are owed by the association. We are non-profit and don’t generally pay taxes.”

The back taxes that are owed to the State of Wisconsin are sales and withholding taxes totaling $548,782. Ac-cording to the State’s Delinquent Tax Payers website, these taxes are owed by Geneva Hospitality, LLC, whose officer is Sal Sardina, Sardina is also “the registered agent for Cove Condominium Association,” according to the court records.

Hurlbut repeatedly stated and wanted to emphasize, “the Cove is open for business and operating normally.” She expressed concern about the impact that the situation could have on the owners, who de-rive a significant amount of income from the rental of their condominiums.



  1. reformer says:

    OH Ms. Cathy…..played fast and loose with Kane County tax dollars also. She also failed to pay her property taxes and bounced a check to the Recorders Office. She also recieved a campagin check from the Cove Homeowners Assoc. last Feb. for $5000. We in Kane voted her out of office, hope the Cove does too.

  2. Daniel Burke says:

    nothing mentioned about the $5000 given to Cathy Hurlibut political campaign by Sal Sardinia owner of Geneva Hospitality theymanage the cove,and then they were awarded a 5yr contract and a 2% increase in commission. how does she get away with this?

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