7-Jul-22 – One of the attorneys for a group of Chinese-based investors who had invested nearly $50 million to fund construction of a never-built condominium and hotel tower at Wabash & Superior says evidence has been uncovered that proves his clients’ money was siphoned from the project to the personal accounts of the developers.

Douglas Litowitz, who along with attorney Glenn Dunn is representing the investors, says documents show the investors’ money did not go to the failed project as required by law.

“When no permit was issued to build, they diverted the investment to the managers’ personal accounts and other projects,” said Litowitz (left). “When they were discovered, they tried to smooth it over with a lie that they would return the money with a $200 million dollar Bahraini loan, which was never investigated, and which had them lying to federal judges for a year.”

Individually, the victims in the Chicago project had invested up to $550,000 for a total of $49.5 million to fund construction of what was known as the Carillon Towers project. The investors had been participating in the controversial EB-5 program which provides foreign investors with a fast-track to permanent residency status in the United States. For many participants, the investment is often a substantial portion of their life’s savings.

Earlier this year, U.S. District Chief Judge Charles Kocoras appointed Bahrain-based attorney Karim Mahmoud to serve as a federal special master. As special master, Mahmoud has investigatory powers which has enabled him to sort through the many claims made by New York-based developers Jeffrey Laytin and Jason Ding. The pair had failed in their attempt to build the 60-story tower after 42nd Ward Alderman Brendan Reilly, citing neighborhood opposition, blocked the project from moving forward.

Project inspired landmark district and saved three 19th century buildings

Construction of the tower would have resulted in the demolition of a group of three historic buildings that are now part of the Near North Side Multiple Property Landmark District. The district covers an area in River North and Streeterville bounded by Chicago Avenue, Fairbanks Court, Grand Avenue, and LaSalle Drive.

(Above) Locations of the 15 buildings in the Near North Side Multiple Property Landmark District. 1 - 642 North Dearborn Street, 2 - 17 East Erie Street, 3 - 14 West Erie Street, 4 - 110 West Grand Avenue, 5 - 1 East Huron Street, 6 - 671 North State Street, 7 - 9 East Huron Street, 8 - 10 East Huron Street, 9 - 16 West Ontario Street, 10 - 18 West Ontario Street, 11 - 212 East Ontario Street, 12 - 222 East Ontario Street, 13 - 716 North Rush Street, 14 - 42 East Superior Street, 15 - 44-46 East Superior Street.

The buildings within the district were constructed in the 19th century as fashionable homes for some of Chicago’s most affluent families, and are a time capsule of architectural styles, including Italianate, Romanesque Revival, Second (French) Empire, and Queen Anne. Nearly half of the homes were built in the first decade after the Chicago Fire of 1871.

For more than a year, Laytin (right) and Ding have told federal judges they would be returning their investors’ money, but they never did. They had claimed they had secured funding through a loan from Bahrain, but that loan was just a mirage, according to Litowitz, and his clients are still waiting for their money to be returned.

Litowitz says what Mahmoud has uncovered is not simply messy paperwork but an elaborate fraud.

“The special master has said that the supposed loan from the Middle East to pay off the Chinese investors was made up, fake, and that the lawyers were giving forged documents to the court,” Litowitz said.

The website of the supposed Bahraini lender, Awalco Investment Company WLL, appears to have been last updated in 2016 and has a 2018 copyright.

Litowitz says he wants the developers and their attorneys to face consequences for their actions.

“My goal is to see the defendants in jail and their lawyers sanctioned and disbarred, if possible,” he said.

Laytin and Ding have not responded to numerous requests for comment.