Old debt haunts Farnham
Rep. Keith Farnham, D-Elgin. | Sun-Times Media File Photo
Updated: September 18, 2012 6:17AM
State Rep. Keith Farnham was successfully sued for $92,000 by a former business associate in 2008, but the Elgin Democrat still has not paid up more than four years after the judgment, The Courier-News has learned.
Farnham’s former business associate, Dan Elvart of River Forest, says he has stopped pursuing the money because of the legal costs involved, but adds, “I think the public should be aware of this.”
For his part, Farnham, who is running unopposed in the November election, acknowledges the judgment and says it was a business issue.
“It was an incorporated business, not Keith Farnham. I started, ran, and owned the company, but it still was an incorporation,” Farnham said in an interview with The Courier-News.
Still, he admits that he and his wife, Susan, were embarrassed by the situation.
“(Stuff) happens in real life. Do I like it? Not one bit,” Farnham said.
Elvart claims that with interest, Farnham should now owe him about $150,000. Despite that, Elvart has made no further legal moves to collect the money.
“I stopped spending money on lawyers,” Elvart said. “His company was broke. Collection was highly unlikely. And I wasn’t going to spend more chasing money that I wasn’t going to get.”
Elvart had worked for about three years as an estimator and salesman for a company Farnham owned, K & R Christopher, Inc., a painting and decorating business which Farnham dissolved in late 2007.
Farnham told The Courier-News that at the time he ended the company, he owed between $600,000 and $800,000 on a line of credit his company had established with First Midwest Bank.
“At one time, we had a payroll of $100,000 a week and accounts were bringing in $6 million to $7 million a year,” Farnham said.
Then, with the recession hitting hard, “things got worse and worse,” Farnham said.
Farnham said he decided to get out of the business, which he had operated for about 25 years. Elvart used assets obtained from K & R Christopher to start his own firm with business partner Mike Kosac, K & E Decorating and Painting, which is now located in Wood Dale, and which used Farnham’s former location in Elgin for its first five weeks or so of operation.
According to court documents from November 2007, Elvart said he had extended a loan of $150,000 to Farnham in 2003, and that on Oct. 1, 2005, Farnham signed a promissory note to repay the loan in full at a rate of 7.5 percent annual interest within a year.
The note upped the annual interest rate to 12 percent if the loan went into default. Elvart had the right to demand immediate, full payment of the balance, plus interest, should the loan do so, and to collect attorney fees from Farnham, according to the agreement.
Elvart contended that Farnham had been continuously in default on the note, and in February 2007 he demanded full payment of remaining principal and interest on the loan.
Elvart said he sustained damages in the amount of $92,365.32.
Farnham told a Cook County judge that “it was the agreement of the parties to the note that it would not be repaid.”
But in January 2008, the court ruled in favor of Elvart to recover the amount in question from Farnham’s business.
Farnham claimed that Elvart was informed through attorneys to stop harassing him about the money after the ruling.
According to online records, Farnham’s company also was taken to court in Kane County in March 2008 by Sherwin-Williams for almost $43,000, by Decorative Surfaces for almost $2,900 and by Epco Paint and Wallpaper for almost $17,000.
Farnham said in this week’s interview that when he dissolved the business he paid down his debts as far as he could, with the bank being his first priority. He said he worked out a deal on what was owed to Epco, which has since been folded into JC Licht, then Benjamin Moore.
Sun-Times Media writer Dave McKinney contributed to this story.