Chicago City Council has never approved the proposed building on Wabash Avenue and Superior Street, and New York-based developer Symmetry Property Development finally agreed to repay the money last November, after a two-way battle. years about a federal securities fraud lawsuit. But investors have yet to receive a dime.
It’s another problem in a long history of development disaster that includes a foreclosure lawsuit, city hall roadblocks and a controversial federal visa program that critics say is vulnerable to fraud. While Symmetry may clean up the mess with a big loan from the mystery lender, lawyers for the Chinese investors doubt the money will ever arrive.
For several months, a Symmetry lawyer told US judge Charles Kocoras that a Middle Eastern lender had agreed to finance the development, with part of the loan proceeds being used to repay investors. But the process dragged on. Multiple heists due to anti-money laundering regulatory hurdles and other red tape have kept funds from arriving in the United States, Greenberg Traurig lawyer Daniel Hildebrand said in court.
Delays test the patience and confidence of investors and their lawyers. As part of its class action settlement with Chinese investors, Symmetry was required to repay them by May 7, Doug Litowitz, one of the attorneys, wrote in an email.
Symmetry “said the money is in their possession but has been stuck in a foreign country for 6 months,” he wrote. “As a former hedge fund lawyer, I have never seen such a delay in a wire transfer.”
Litowitz has another reason to be skeptical: It would be extremely unusual for a developer to receive such a large construction loan – $ 200 million, according to court transcripts – for a project that has not even been approved by the city. . A construction lender may agree to lend money on a conditional basis – after, say, the developer obtains the zoning and permits for the project – but they wouldn’t bet on coming in and advancing the funds on the project. prospect of approval.
“The money is unlikely to come out until the time” approvals are obtained, said mortgage broker Keith Largay, senior general manager of Chicago-based Jones Lang LaSalle.
The chances of that happening are slim as long as Ald. Brendan Reilly, 42, represents River North on City Council. In keeping with the longstanding tradition of city council, aldermen have veto power over developments in their neighborhoods. Reilly used this power in 2017, when he rejected Symmetry’s initial development proposal. He turned down a revised plan in 2019.
“It’s a total mess,” Reilly said in 2019. “There is no real proposal, there are no next steps and there are no pending approvals for the foreseeable future. “
Reilly declined to comment for this story.
To complicate matters, a foreclosure lawsuit on the River North development site owned by a Symmetry company. The case, which was filed in 2019, is pending.
Hildebrand, Symmetry’s attorney, ignored a request for an interview, releasing a statement instead. Attempts to reach Symmetry executives in New York were unsuccessful.
“My client has indicated that he will continue to go through the court process, as he always has,” Hilldebrand wrote. “They are working through the court to meet their terms of settlement.”
Although the hearings in the Symmetry case are open to the public, details about the Bahraini lender and the potential loan are not. Kocoras has authorized Hillebrand to file documents related to the financing under seal and to present certain documents privately to his chambers.
Still, court hearing transcripts reveal growing frustration among lawyers for Chinese investors and suspicions that they are being played. At a hearing in August, Litowitz questioned why the $ 200 million loan had to go through an Abu Dhabi bank and why Symmetry was struggling to pay a $ 200,000 fee related to the financing. Considering the amount of the loan, it should be easy, he argued in court.
“It’s like picking up a $ 100,000 Porsche and going to the bank and borrowing $ 1,000 on it, or borrowing a hundred dollars on it,” he said, according to a transcript. “I mean, it gets silly after the point, it gets amazing.”
Hildebrand, meanwhile, backed down, arguing that the delays were nothing more than that, not some sort of nefarious Symmetry plot to avoid reimbursement.
“I think we can really do some sort of reduction or ignore the suggestion that it might sort of,
at worst, be some sort of ploy to avoid the settlement agreement, ”he said at the same hearing in August, according to the transcript. “Nothing like that is possible. “
However, the challenge does not help the image of the EB-5 visa program, which allows developers to finance projects with money from foreigners who receive green cards in return. Symmetry raised its funds through the federal program, which has come under scrutiny in recent years amid allegations of fraud and mismanagement.
In 2017, a federal judge sentenced a Chicago developer to three years in prison after pleading guilty to defrauding 290 Chinese investors. He raised $ 158 million from them through the EB-5 program for a $ 912 million hotel project near O’Hare International Airport.
The visa program expired in June and Congress has yet to re-authorize it.