The Chicago Illusions building gets a tax break because it has two apartments — even though it appears those units are used as part of the business.
Source: Chicago.suntimes.com
USA – CHICAGO – Behind the blacked-out windows of a Near West Side storefront building, 10 dominatrixes offer clients a variety of services at what’s billed as “Chicago’s premier dungeon,” catering to people with sexual fetishes.
For 32 years, Chicago Illusions has been in business there.
For the past two decades, the property owner has taken advantage of a Cook County program to give tax breaks to owners of small storefront buildings that also have apartments. He’s used that program to cut his real estate taxes by 60% a year — for a tax savings totaling nearly $300,000.
That’s $300,000 in property taxes that had to be covered by all other Cook County taxpayers.
It’s all because the building has a pair of four-room apartments upstairs. Those apartments allow the whole building to be taxed as residential property rather than commercial — at a sharply lower tax rate than businesses have to pay.
It’s unclear, though, from government records whether anyone really lives in either apartment. No one, for instance, has been registered to vote from there for the past 10 years.
The apartments are leased by the operator of Chicago Illusions, according to records the property owner filed with Cook County Assessor Fritz Kaegi.The sex dungeon advertises “BDSM” services: bondage and discipline, dominance and submission, and sadism and masochism.
Anthony Vaughan, the dungeon’s operator, says he doesn’t use the apartments for his sex business, which he says is limited to the 1,450-square-foot ground floor retail space at 1210 W. Grand Ave.
“The apartments have nothing to do with the business on the first floor,” says Vaughan, who says he uses them occasionally, sleeping there at times rather than driving home to Itasca.
If the apartments were deemed to be part of the business, Cook County officials could end the lucrative tax breaks for the building owner, Frank P. Cangelosi, who paid $15,274 in real taxes last year. Without the tax break, the tax bill would have been $40,075.
Vaughan told a Chicago Sun-Times reporter who asked to tour the building that he’d have to check first with “the owner,” then didn’t respond after that.
According to a promotional video the business posted on YouTube in 2017, Chicago Illusions occupies 5,000 square feet. According to a property appraisal Cangelosi filed with the assessor’s office, the Grand Avenue building has contains a total 4,406 square feet, not including the basement.
‘Any fantasy you could possibly imagine’
“We’ve been in the same location for 25 years, a luxurious 5,000 square foot complex with over a dozen different themed rooms that are fully equipped to make any fantasy you could possibly imagine become a reality,” according to the video. “No amateurs. No judgment. No extortion.”
In a failed effort in 2022 to get the taxes cut further, Cangelosi’s attorney James P. Boyle submitted a 101-page property appraisal to Kaegi.The appraisal included photographs of the apartments, which were shown to be equipped with various chains, whips and a St. Andrew’s cross — a large, X-shaped piece of equipment that’s commonly used in BDSM dungeons.
Some of the rooms in those photos also are featured on the Chicago Illusions website, which shows dominatrixes posing in the bedrooms with chains, whips and the cross — used to restrain clients.
Asked by a Sun-Times reporter about the property, Kaegi says he has decided to investigate whether Cangelosi’s building is entitled to the residential tax break that the Cook County Board established in 2000 at the urging of then-Assessor James Houlihan.
“After we received information that this property may be used and operated solely for commercial purposes, we requested evidence to confirm the property is also in fact being used for residential purposes to warrant its current 2-12 mixed-use classification,” Kaegi spokesman Christian Belanger says. “We will review any documentation provided to determine whether a classification change is appropriate.”
A Sun-Times investigation in 2017 reported that many businesses, including bars and rooftop viewing operations near Wrigley Field, were taking advantage of the tax break. Some carved out a tiny upstairs apartment so the property owner could pay the cheaper residential property taxes on an entire, otherwise-commercial building.
Chicago Illusions opened in the Grand Avenue building in August 1992, according to Vaughan, shortly after he finished serving probation for a conviction of using violence to collect debts owed to a Fulton Market meat distributor. According to a court filing that described him as tall and burly, Vaughan would hand out business cards bearing a drawing of a funeral wreath and the words: “We guarantee results.”
On its website, Chicago Illusions says its clients can call to make reservations for services that include bondage and spanking — but no sex. “Do not request any escort, massage or prostitution services from your mistress,” the website says. “We are a House of BDSM and Fetish and do not provide these services.”
The building used to be owned by the estate of the late Louis Panozzo, whose widow sold it for $120,000 to Bill Zada in August 1993, according to deeds filed with the Cook County clerk’s office. A year later, Zada sold the property to a trust for $135,000.
By 2004, the Cook County treasurer’s office had been sending the property tax bills to Cangelosi’s Northwest Side home, records show. His company, Design Contractors LLC, took ownership of 1210 W. Grand Ave. in August 2005.
Tax breaks at sex dungeon building since 2003
County records show the property has been getting tax breaks since at least 2003. That’s when Houlihan classified it as a residential building with six or fewer apartments, though the dungeon also was operating there as a business. Had the building been classified as commercial property, Cangelosi’s tax bill would have been $10,845. The residential classification meant he had to pay $4,133.
In 2004, Houlihan reclassified the property to “mixed-use commercial/residential building” with no more than six units and no more than 20,000 square feet of space.
It’s been classified by the assessor’s office for tax purposes that way ever since.
As a result, Cangelosi gets a 60% tax break every year as long as the building contains residential space.
Cangelosi’s tax appeal doesn’t say anything about Chicago Illusions or its sex dungeon operation, only that the monthly rent for the ground floor commercial space is $2,480. He says he gets $1,910 for the second-floor apartment and $2,010 for the third-floor apartment.
While Kaegi’s office investigates whether it should continue to classify the property in a way that allows it to pay taxes at the lower residential rate, Cangelosi’s property tax lawyer, from the law firm Crane & Norcross, is trying to cut its tax bill further. He’s once again appealing the assessor’s estimate of the property’s value in hopes of cutting the real estate taxes that are due later this year.
The property appraisal that Cangelosi submitted in that 2022 appeal to lower his assessment was prepared by an appraisal firm owned by Leslie Kruse, whose father, Robert Kruse, was chief deputy assessor under former Cook County Assessor Joseph Berrios, Kaegi’s immediate predecessor.
The elder Kruse then went to work for an appraisal firm where one of his sons had worked for nearly 20 years. The firm was founded and run by Christopher M. Crowley, a nephew of attorney Michael Crane, whose firm Crane & Norcross has been handling tax appeals for the dungeon for the last 20 years.
Berrios replaced Kruse by hiring Crowley as his chief deputy assessor, the Sun-Times reported in 2015. Kruse and Crowley also were business partners in running another company.
