Fox Point - Even during the recession, luxury homes like the one at 7736 N. Beach Drive commanded impressive prices from the privileged class. A 2008 brochure for the property, then listed for $4.5 million, said it "exudes the essence of the Hamptons," and called it "Too good to be true!"

A couple who bought it in 2009 now wish they'd have taken that second line literally.

David and Mary Gronik paid nearly $3.6 million for the house, some furnishings and its two outbuildings, a beach house and large garage with an upstairs guest apartment. "It was our beyond-our-wildest-dreams home," David Gronik recalled.

Now it stands empty, patched with tarps and assessed for just $1,000 by the village, not counting the lot. The purchase has become the subject of two lawsuits by the Groniks against sellers Norman and Susan Balthasar, and Shorewest Realtors and two of its agents. The suits, in state and federal court, claim the sellers and their agents intentionally misrepresented the condition of the home and seek total damages of $40 million.

In extensive court records, the Groniks' attor neys from Halloin & Murdock lay out what they say "may go down as one of the most sweeping residential real estate frauds in Wisconsin history."

The allegations didn't sit well with those who saw Balthasar as a pillar of the community, Gronik said. Then Norman Balthasar died of a heart attack last October just a few questions into his deposition in the case. One of the Balthasars' lawyers suggested the Groniks had killed him indirectly with their lawsuit, Gronik said.

Gronik said the ordeal hasn't been easy on him or his family. He's encountered enormous costs and has taken a leave of absence from his CEO positions at Accuval and LiquiTec to deal with the situation. The few months they lived in the house until extensive mold was discovered led to health problems for his wife and two young children, and a relapse of his own Crohn's disease, he said.

"They lied, they hurt my family and they need to be held accountable," he said.

The other side's not saying much yet.

"We've denied liability in the cases," said Michael Aprahamian, an attorney for Shorewest. "We're confident once we can present our side, we'll prevail."

Through her counsel, Ralph Weber, Susan Balthasar released a statement noting that Gronik is a sophisticated professional appraiser. It also said the claims against her family are wrong, and will be proven so in court if necessary.

"We are saddened by this awful litigation that has gone on for many months," it read. "In truth, it is a beautiful home that should be lived in and enjoyed."

Long-sought dream home

Norman Balthasar, the former chief operating officer for Fiserv Inc., retired in 2008 and put the house up for sale. The Balthasars had lived there about eight years, and owned another multimillion dollar home on the beach near St. Petersburg, Fla.

The Groniks, who already lived just down the street on Beach Drive, immediately sought to purchase the house, which they had admired for years. In the fall of 2008, they offered $4 million with a contingency for an inspection. The listing included a "clean" condition report, but the Groniks had the home inspected and found several major concerns with the pool, windows and other issues.

The Groniks canceled the deal, and turned over their list of flaws to the Balthasars. The home was taken off the market.

"We were incredibly disappointed, but we went on with our life," Gronik said. They began looking for bigger homes in Mequon and River Hills and working on plans to perhaps build a new home on their existing Beach Drive lot.

It was during that search, he said, that they bumped into the Balthasars' Shorewest agent, Anne Schwartz, who told them in March 2009 that the Beach Drive home was again for sale. The Balthasars had addressed all the issues raised by the Groniks' prior inspection, spent $140,000 on new windows and had an engineer do a structural review that cleared the building.

Knowing what he knew from the first time, why did Gronik make an offer without another inspection? He and his court records say that he relied on the repeated assurances that the Balthasars' reputation was sterling and that "they do everything right."

In fact, the Groniks now claim, only the pool problems had been repaired, even though yet another condition report for the re-listing in 2009 reported no defects.

Asked for reaction, Schwartz said, "Don't believe everything you hear. No comment."

On June 30, 2009, the Groniks offered $3 million for the house, relying on the assertions that all identified defects had been addressed. The Balthasars rejected it.

Several weeks later, the Groniks offered $3.1 million. They were told there was a competing offer, and to get the house they'd need to go up to $3.5 million, and later $3.6 million, and that no more inspections would be allowed. The Groniks' final offer of $3.55 million was accepted.

The Groniks now claim, as part of their legal action, that the competing offer had in fact expired six days before the Groniks made their $3.1 million offer on Aug. 19.

When the Groniks closed on the purchase in October 2009, they couldn't have been happier.

"We got a sitter for the kids and we were dancing in our socks," David Gronik recalled. "We were four feet off the ground."

The joy was short-lived.

Problems began showing

That very first night in the house, it rained, hard. Gronik said he noticed water cascading down a big kitchen window. Alarmed, he went around the rest of the house and found 19 more leaks.

He said he called Balthasar, who came out the next day and said it was a 100-year rain, and they had never experienced such leaks when he lived there. Then, Gronik said, Balthasar looked at him and "almost gloating, said, 'I bet you wish this happened yesterday.' "

The leaks were just the start. Over the next few days, Gronik claims, he called several contractors who had previously done work on the house and learned about serious prior flooding, sewage backups, electrical issues and window problems never disclosed by the Balthasars.

Why didn't he call a lawyer right then and there?

"My personality is such that I'm going to figure it out, we're going to make it work," Gronik said, and he moved his family into the place a week later.

Some of the biggest problems were related to windows. Gronik said an expert had advised the Balthasars to replace more than 100 of them, many in the pool atrium, but they replaced only a few and had sills and frames from one area moved to another. On some, Gronik said, someone had artfully filled in rot with putty to match the contours of the frames.

He said the problems seemed to diminish with the winter freeze, but during the first big rain of spring, in May 2010, the leaks returned with a vengeance. When they opened a kitchen wall to find the source of one leak, they first discovered mold, according to court records. More was found in the basement, where plywood had been laid over two floor drains.

Behind a soggy ceiling in the master bedroom, they found a bulging rubber liner. They sliced it open and water blackened with more mold came streaming out, all captured on video.

Suddenly, he said, the "cycle of illness" that had beset his whole family all winter made sense. "We just didn't really understand" before, he said, and now all the dots were connecting.

They called doctors, the health department, environmental toxicologists - and lawyers.

Litigation pending

They sued the Balthasars that October 2010, in federal court because the Balthasars were Florida residents. They sued Shorewest in March 2012 in state court, a case that's basically been put on hold pending the federal suit. Court records indicate mediation is scheduled for next week.

Also pending is the Groniks' motion for summary judgment on their claim of intentional misrepresentation, and against all but one of the Balthasars' defenses, such as that the Groniks failed to mitigate their damages.

The Groniks say it would cost around $4 million to fix all the problems, about $6 million to replace the main, carriage and beach houses. They also seek damages of more than $30 million based on Gronik's shortened life expectancy owing to his now-aggravated Crohn's disease.

How could such an expensive home wind up with so many leaks and other problems? Gronik's initial inspection suggested the design may have left it subject to twisting from winds that ruined window seals and opened gaps in the roof.

Gene Eggert, the North Lake architect who designed the home for original owner Charles Wright, said the home was thoroughly engineered and no one ever mentioned a problem before.

"It sounds like someone didn't take care of it," Eggert said. "It's (lack of) maintenance, if it took that long for someone to have problems.

"It's very sad. It was a very beautiful house."

Wright, now living in the Virgin Islands, was disappointed to hear what has befallen what he called his favorite house, that he left only at his then-wife's insistence.

"That house was perfect when we left," he said. "Absolutely perfect."