Detective from the City Room

In the city-room pecking order at most big dailies, the real estate editor ranks somewhat below the writer who covers high school sports; his main function is to supply a few columns of editorial top-dressing for the real estate ads. Albert Jedlicka of the Chicago. Daily News is a glittering exception. With a yearlong, still-continuing series of stories in the tradition of the hard-digging reporter-detective, Jedlicka has played a major role in exposing a mortgage-financing scandal that has rocked the Chicago real estate and building industries (see U.S. BUSINESS).

For at least two years Jedlicka had been hearing rumors that some of the city's smaller suburban savings and loan associations were in trouble, but the first hard news came with last April's announcement that tiny Hillside S. & L. (assets: $13.9 million) was being merged with financially stronger Oak Park Federal S. & L. ($147 million). Jedlicka wrote the story as a straight news item; then he began to dig.

AppalIing Abuses. His spadework was painstaking and effective. A native of Chicago, Jedlicka still remembers his father's making mortgage payments at the neighborhood S. & L., which had an office in a grocery. Jedlicka has what his boss, Daily News Executive Editor Larry Fanning, calls "a good sense of moral indignation."

When he started prying into the background of the Hillside-Oak Park merger, Jedlicka checked the association's directors and major borrowers. He consulted independent appraisers about valuations established by Hillside for mortgages. He combed endlessly through taxpayer lists, and through County Recorder's office listings.

By the beginning of last summer, Jedlicka was ready to spring some details in "an incredible story of mortgage lending abuses that ran a small west suburban savings and loan association into the ground." He exposed loans made illegally long before the borrowers owned the property that served as security. He found inflated appraisals, including two cases where the resulting loans were higher than the purchase prices. And he found an appalling rate of nonpayment. Hillside had a delinquency rate of 36%, compared with a national average under 1 1/2 %.

Once Jedlicka started printing specifics in the Hillside case, he began getting more tips. One source told him to take the El to a suburban station. When he arrived at the station, a man met him with a car and spent the whole day driving Jedlicka around housing developments that had shady backgrounds. Other sources gave Jedlicka aliases to use when calling back. In all, six S. & L.s were merged, liquidated or put under direct governmental control as a result of stories in the News's real estate columns.

Ingrained Skepticism. In November, Jedlicka scored a different kind of coup: S. & L. Supervisor Chris Stolfa of the Illinois Department of Financial Institutions resigned. Though he was not accused of having a hand in the S. & L. frauds, Stolfa was badly hurt by the revelation that one S. & L. outfit had celebrated the opening of new offices with the help of $5,746 of jollity purchased from a Stolfa-owned liquor store. In mid-January, Jedlicka reported that Chicago's Deputy Building Commissioner Robert Ewbank had signed loans totaling $800,000 with two of the questionable S. & L.s. Ewbank resigned.

Next week a first report on ways of strengthening the savings and loan laws is due from a state task force of businessmen and S. & L. officials. "What is done with their recommendations will show whether the state means business," says Jedlicka with a seasoned newsman's skepticism.

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