A Canadian court has paved the way for sale of the long-vacant former Harvard Motorola campus, but the current owner’s assertion that he’s already speaking with a potential buyer could delay matters further.
Until now, court orders tied to a criminal case against current owner Xiao Hua “Edward” Gong have prevented new businesses from moving into the 1.5 million-square-foot space at 2001 N. Division St. A Sept. 25 order from the Ontario Superior Court, however, has allowed for the sale of the property before the criminal case against Gong is resolved.
Still, the site won’t go to auction immediately.
Gong is allegedly in talks with an interested buyer who offered to purchase the property for $16 million, one of the businessman’s attorneys, Michael Walsh, said Tuesday in a McHenry County court, where the city of Harvard has been working to gain control of the property.
Gong bought the property for $9.3 million through an online auction in April 2016. At the time, he submitted an incomplete application for economic incentives through the Harvard-Woodstock enterprise zone, but the proposed $32 million smartphone manufacturing project never came to fruition. Gong also allowed property taxes to fall delinquent for three consecutive years, leaving more than $1 million in unpaid taxes, records show.
The city of Harvard has been working to move the property into more productive hand’s since then but has been unsuccessful, losing out on a potential deal that would have brought hundreds of high-tech jobs to the area.
Attorneys from the U.S. Department of Justice and the city of Harvard, however, weren’t confident in Gong’s alleged buyer. Mary Butler, chief of the U.S. Department of Justice Asset Forfeiture and Money Laundering Section, noted that the reported purchaser, whose identity was not disclosed in court, allegedly made an “all-cash offer, which always raises questions.”
“It’s my understanding that the Canadian authorities are investigating that offer,” Butler said in court Tuesday.
If the Canadian court approves of Gong’s purported buyer by the next Oct. 20 court date in McHenry County, then the sale will be conducted in Canada. Otherwise, the property is likely to go to auction through the U.S. Marshals Service, according to the Sept. 25 order.
Rather than forfeiting the property if Gong were to be convicted, Canadian government would freeze any leftover sales proceeds once the property taxes were paid and the site was brought back into health and safety compliance, attorneys said. Details surrounding the auction process will be clarified at a future court date.
Gong, a politically connected businessman, is accused of fraudulently selling securities worth hundreds of millions of dollars to citizens for two companies, 024 Pharma Inc. and Canada National TV Inc. The scheme involved properties that Gong purchased in the U.S., China, Canada and New Zealand. Gong, who has donated about $7,000 to the Liberal Party of Canada, has been photographed alongside Canadian Prime Minister Justin Trudeau at a Liberal fundraiser in 2016, The Globe and Mail reported.
A restraining order on three of Gong’s U.S. properties, including the Harvard site, has prevented him from selling or giving away the property without written approval from the Ontario attorney general. The order also required Gong to keep the properties in good condition, though Harvard officials say he hasn’t held up that end of the bargain.
With concerns about defunct sprinklers and alarm systems, mold, and other health and safety issues, Harvard officials were hopeful when they found a promising buyer in 2018. Following Gong’s indictment in Canada, Ohio-based digital signage company Stratacache reached out to Gong in an attempt to purchase the Harvard property, the company’s CEO Chris Riegel has said. After years of attempting to buy the property, however, Stratacache backed out in July and instead purchased a former computer-chip factory in Oregon.
Meanwhile, general upkeep and payments on delinquent property taxes have fallen to the wayside under Gong’s ownership, Amadeus’ attorney Peter Baugher said in court Tuesday.
“Their conduct has delayed this process now for a full year,” Baugher said.
In a Sept. 24 letter addressed to one of Gong’s Canadian attorneys, Toronto prosecutor Brian McNeely detailed the multiple occasions on which Gong alleged to be speaking with an interested buyer. As of early June, Gong’s Chicago broker allegedly received one bid for the Harvard property – a Florida corporation with “unknown beneficial owners,” according to McNeely’s letter.
On June 13, one of Gong’s attorneys forwarded McNeely a letter from a would-be corporate purchaser, McNeely said in the letter.
“In the letter, seemingly written by a person whose first language was not English, the writer promised to ‘employee many people’ at the Harvard plant, admitted there were other beneficial owners but also announced that he saw no need to provide further information on the beneficial owners,” McNeely said in the letter.
According to McNeely, one of Gong’s Illinois attorneys said on June 26 that there were only “a few ends to tie up” with the Florida buyer.
“In response to an email query from me, Mr. Gong’s Illinois counsel said he did not know the name of the lawyer representing the mystery buyer behind the Florida corporation. That, he said, was one of the loose ends,” McNeely said in the letter.
Months later, prosecutors in Canada were allegedly presented with an “unsigned ‘offer’” to buy Gong’s Dearborn property.
“I indicated that I did not consider a document that was not signed by the would-be purchaser to be an offer,” McNeely said in the letter.