The Pittsfield Building is the subject of a new legal dispute. An out-of town investor has filed a lawsuit to stop a sale that was approved by the court.
The sale of 30 out of 40 floors of the 55 E. Washington St. high-rise could be the end of an era of turmoil for the property. This has included bankruptcy, numerous lawsuits, aborted deals and even an international financial scandal. The Pittsfield, which is nearly a century-old, has been neglected for years and badly needs an upgrade.
Tom Liravongsa is an investor from Grand Rapids in Michigan. He led a venture that acquired the Pittsfield property through a foreclosure auction held late April. Liravongsa, a relative unknown in Chicago’s real estate circles is the managing partner of L’Cre Partners. The investment boutique specializes in real-estate and alternative investments.
The question now is whether Liravongsa possesses the creativity, courage and money necessary to complete the project. The former owner, a Chinese-Canadian venture headed by business mogul Xiao Hua “Edward” Gong, has already filed a lawsuit against him. The complaint was filed in Cook County Circuit Court early in April, just before the sale. It asks the judge to block the deal, claiming it is improper, and accusing the receiver appointed by the court of various shenanigans.
The case has not been stopped by Judge Celia Horan, but the court is still hearing it. The suit could drag on and stall any development plan. Pittsfield will remain in the current state of dereliction.
Currently, Liravongsa owns the entire building, except for floors 13 to 21. The former office space has been gutted and is waiting to be redeveloped. The space was originally intended for a hotel, but given the strength of the rental market and the current demand for apartments, it may be best to rent the space out. The other floors of the building are filled with apartments.
Liravongsa’s plans for Pittsfield are unclear. Liravongsa’s attorney and Liravongsa did not return any calls.
Gerald Nudo, Marc Principal, said that Marc Realty executives spoke by phone to Liravongsa’s team recently.
Nudo, who declined to give more information on record, said: “They said ‘We plan to fix up this building’, and we were encouraged.”
Pittsfield will require a significant investment in order to be able to transform. The high-rise, designed by Graham Anderson Probst & White with a hybrid art deco/gothic style, was the tallest in the city in 1927. According to a recommendation for a landmark designation, it is “one Chicago’s finest 1920s skyscrapers built during a decade when the distinctive tower-pierced Downtown skyline was first taking shape.”
The 21st century, however, has not been kind towards the building. Morgan Reed Group, an investor from Miami Beach, Fla., bought the entire tower in 1999 and split it into two parts, selling floors 13-21 — now Marc Realty’s space — and keeping the rest. Morgan Reed, the venture that owned Pittsfield’s space, filed for Chapter 11 bankruptcy in 2017.
Few months later, Chicago filed a suit in Cook County Circuit Court for numerous violations of building codes at the property. Few months later, Gong, a Chinese-Canadian entrepreneur, led a bid for Morgan Reed’s office space at a bankruptcy auction. It seemed for a brief moment that the building was about to undergo a transformation.
Canadian prosecutors charged Gong in late 2017 with criminal securities fraud. The prosecutors froze Gong’s assets and obtained a restraining on the Pittsfield. This was another obstacle to its redevelopment.
A judge was appointed as receiver of Gong’s space in January 2020. The building was a public safety hazard by then. Scaffolding had been installed to protect pedestrians from falling terracotta. Jones was responsible for several million dollars of repairs. He and Marc Realty were in court about his management and expenses.
Gong returned to the scene in 2021. One of his companies pleaded to operating a pyramid scheme. The Pittsfield was released from the restraining orders, Gong took control of the property back and Jones was fired as receiver.
Jones and other companies who performed repairs at the Pittsfield have never been paid. Jones demanded payment of $5 million in February 2022 against Gong’s part of the building.
A judge granted a foreclosure of Gong’s property in January this year. This allowed Jones to seize it. Jones, however, did not take title to the property. Instead, he sold it to Liravongsa.
The Gong venture claims that its registered agent stopped representing it, and therefore the venture was not properly informed of the sale. Gong’s lawyers accuse Jones in a court document filed for the foreclosure case of “insider dealing” and “fraud,” claiming he hid information from the judge overseeing case and made a $1,000,000 profit by selling the property to Liravongsa.
According to the filing, in the foreclosure lawsuit, the judge accepted a “credit bid” of $6.3 million — a price that represented what Jones owed — for Pittsfield. The filing states that Jones sold his property rights for $7.3 million.
The document states that “Jones” essentially stole 1 million dollars from the Gong venture in order to profit more than what this court approved.
In court documents, Jones’ attorneys argue that all foreclosure proceedings were conducted in a fair and legal manner. The Gong venture is only responsible for not paying attention to court proceedings.
In a document filed earlier this month, the group wrote: “These grandiose claims may sound impressive but they are nothing more than red herrings.” “In truth, (Gong’s Venture) has been sleeping on its rights for more than a year and is now on crusade” to muddy the proceedings by filing a suit to block sale.
Jones and Mark Silverman, a partner at Locke Lord’s Chicago office, both declined to comment. Constantine Gavrilos, an attorney for Gong at Amundsen-Davis, did not return calls.