Banker Takes $12.5 Million 'Church' Off Market

LAKE BLUFF, Ill. (TheStreet) -- To its adherents, a church is a place of worship, a sanctuary and a second home. What it often isn't, however, is a $12.5 million mansion on Lake Michigan.

Chicago banker and realtor George Michael says he was acting in good faith when he built a 14-person chapel for his wife, who suffers from an autonomic heart disorder and progressive multiple sclerosis, in their five-acre estate. Michael and his wife, his third cousin, had attended services at St. Gregory the Illuminator Armenian Church on Diversey Street in Chicago before her declining health prompted their move to the waterfront home on 265 feet of private beach in 2004.

Banker George Michael of Lake Bluff, Ill., built a chapel in his mansion on Lake Michigan so his ailing wife could continue to attend services.

When she was no longer able to attend services, Michael built the chapel and invited Armenian priests to hold services for his family and guests. Before doing so, however, he applied for a church tax exemption that state revenue officials initially approved, allowing him to avoid $80,000 in property taxes. After neighbors told newspaper reporters that they never saw services held on the property, and a Department of Revenue judge reversed the initial ruling that he called a "sham," Michael faced lawsuits, suspended sanitation service, nearly $800,000 in proposed fines for services, visits from local law enforcement and the press. The scrutiny led him to put the house on the market through his own agency in September and October before withdrawing it.

"We thought it would probably be best if we left Lake Bluff, because we weren't wanted there," Michael says. "I put it on the market for a few days, but I discussed it with my wife, and she doesn't want to move."