The U.S. Department of Justice has placed a restraining order on the former Motorola property in Harvard, documents show.
The order prevents the largely absent owner from selling the campus without court approval, but local officials say there are several prospective bidders.
Charles Eldredge, administrator of the Harvard-Woodstock Enterprise Zone, told members of the enterprise zone commission Oct. 26 that while there is interest in the property, there is “no evidence” that current owner Xiao Hua Gong will sell at a reasonable price.
“We have talked about a variety of ways to incentivize him to sell, but whether those will bear fruit is not clear,” Eldredge said.
Gong has come to Harvard several times and stays the night on the property. He has set up a bedroom on the top floor of one of the office buildings, Eldredge told enterprise zone commissioners on Oct. 26.
Eldredge told commissioners in April that Gong wanted $50 million but “may accept $15 million” for the massive estate, which has been vacant for about 15 years.
Gong bought the property at an online auction for $9.3 million in April of 2016, announced plans to develop a smartphone manufacturing plant in March of 2017, and was arrested in Canada on fraud charges the following December.
Gong allowed property taxes on the 1.5 million-square-foot campus to go delinquent in September of 2017. He redeemed them that December, but now the taxes are delinquent again.
When property taxes are sold, the buying investor puts a lien on the property that it can then hold for two and a half to three years. If the owner of the property doesn’t redeem the taxes, the investor can take control of the property.
The taxes on the 325-acre Motorola campus were set to go to auction in McHenry County again Monday, but Treasurer Glenda Miller said she flagged them because the Department of Justice filed a restraining order on the property in early October.
The DOJ filed the order on behalf of the Ontario Superior Court of Justice, according to the order.
The order also applies to Gong’s luxury hotel and convention center in Dearborn, Michigan, and the Pittsfield Hotel and Apartments in the Chicago Loop.
The order aims to protect the assets should they be subject to forfeiture. Gong cannot sell or give away the affected properties without written approval from the Ontario attorney general. Gong must also keep the properties in good condition, according to the order.
If the attorney general approves a sale, the department will hold the monies “until further order,” according to court documents.
This has come about because of Gong’s fraud charges.
The Ontario Securities Commission charged the business tycoon with criminal fraud offenses, including fraud of more than $5,000, possession of property obtained by criminal activity, laundering crime proceeds and forgery.
Gong is accused of fraudulently selling securities for two companies, 024 Pharma Inc. and Canada National TV Inc., worth hundreds of millions of dollars to Chinese citizens.
Gong allegedly controlled both companies and arranged the sales from the Toronto area, according to the Ontario Securities Commission. The commission said the sales took place between 2012 and Dec. 20, 2017.
Authorities abroad set wheels into motion to restrain his properties and assets in March of 2017, according to court documents filed with the High Court of New Zealand.
“The judge concluded there were reasonable grounds to believe Mr. Gong had unlawfully benefited from significant criminal activity in China,” documents read. “There were reasonable grounds to believe identified items of property constituted tainted property.”
Gong has also faced criticism for attending Canadian Prime Minister Justin Trudeau’s controversial “cash for access” fundraising dinners, court documents show.
The restraining order issued in March captured $60 million in assets in New Zealand alone. In December of 2017, Gong attempted to get the courts to release more than $30 million “to pay the Canadian tax debt of a company connected to him.”
Gong later sold two of his Michigan properties for $20 million and now apparently wants to sell the Motorola campus.
McHenry County Economic Development Corp. Chairman Mark Saladin called the situation “a mess.”
“[Gong] has a desire to sell it, but his ongoing legal proceedings are causing issues with that,” Saladin said. “And now we have the real estate tax issue. ... The city of Harvard has indicated there has been no communication with Mr. Gong at all.”
Motorola built the $100 million commercial campus in 1997.
The property includes four multistory buildings, two heliports, and other amenities such as an auditorium, a fitness center and biking and walking trails.
Motorola shut down operations after five years and residents, officials and developers have speculated on what the site would become ever since. It’s been marketed as a potential prison, educational facility, manufacturing plant, water park, Department of Homeland Security office, and another smartphone factory.