Pittsfield Building in East Loop changes hand during court battle

A venture led by Tom Liravongsa, an investor from Grand Rapids, Mich., acquired the Pittsfield space through a foreclosure sale in late April. An unknown in Chicago real estate circles, Liravongsa is managing partner of L’Cre Partners, an investment boutique that specializes in real estate and other alternative investments, according to its website.

Now, the question is whether Liravongsa has the creativity, fortitude and money to get the job done. He already faces one obstacle: a lawsuit by the former owner of the space, a venture led by Chinese-Canadian business mogul Xiao Hua “Edward” Gong. Filed in Cook County Circuit Court in early April, before the sale closed, the complaint asks a judge to block the transaction, alleging it was improper and accusing the court-appointed receiver who arranged it of a variety of shenanigans.

Judge Celia Horan did not step in to stop the sale, but case is proceeding. If the suit drags on, it could stall any redevelopment plan, leaving the Pittsfield in its current state of disrepair.

For now, however, Liravongsa’s venture owns all but floors 13 through 21 in the Pittsfield. The former office space is mostly gutted, waiting to be redeveloped. Previous developers proposed a hotel and residential units for the space; given the continued strength of the apartment market, rental housing could make the most sense there now. Apartments fill the other floors in the buildings, which are owned by Chicago-based Marc Realty.

But it’s unclear what Liravongsa plans for the Pittsfield. Liravongsa and his attorney did not return calls.

Marc Realty executives recently spoke to Liravongsa’s team by phone, according to Marc Principal Gerald Nudo.

“They said, ‘We’re planning to fix up the building,’ and we were encouraged,” Nudo said, declining to say more on the record.

It will take a major investment to turn around the Pittsfield. Designed by Graham Anderson Probst & White in a hybrid art deco and Gothic style, the high-rise was the tallest building in the city when it opened in 1927. It is “one of Chicago’s finest 1920s-era skyscrapers, built during the decade when the city’s distinctive tower-pierced downtown skyline first began to take shape,” according to a 2001 report recommending a landmark designation for the property.

But the 21st century has not been kind to the building. Morgan Reed Group, a Miami Beach, Fla. investor, acquired the entire tower in 2000 and divided it up into two pieces, selling off floors 13 through 21 — the space now owned by Marc Realty — and retaining the rest. In 2017, the Morgan Reed venture that owned the Pittsfield space filed for Chapter 11 bankruptcy protection.

A few months later, the city of Chicago filed a lawsuit in Cook County Circuit Court over numerous building code violations at the property. A few months after that, a venture led by Gong, the Chinese-Canadian businessman, paid $20.8 million for Morgan Reed’s space in a bankruptcy auction. For a moment, it seemed like the building was on the cusp of a turnaround.

But Canadian prosecutors crushed those hopes in late 2017, when they charged Gong with criminal securities fraud. Prosecutors froze his assets, obtaining a restraining order on the Pittsfield, another impediment to its redevelopment.

In January 2020, a judge installed local real estate executive Courtney Jones as the receiver of Gong’s space. By then, the building had become a public hazard, with scaffolding installed to protect pedestrians on the sidewalk below from falling terra cotta. Jones oversaw several million dollars in repairs, but he and Marc Realty regularly squabbled in court over his expenses and management.

Gong re-entered the picture in 2021. As part of a settlement with Canadian prosecutors, one of his companies pleaded guilty to running a pyramid scheme. The prosecutors lifted the restraining order on the Pittsfield, Gong reassumed control of the property and Jones was dismissed as receiver.

One problem: Jones and multiple companies that handled repairs on the Pittsfield were never paid for their work. In February 2022, Jones filed a foreclosure suit against Gong’s portion of the building, demanding payment of about $5 million.

In January of this year, a judge approved a foreclosure sale of Gong’s space, allowing Jones to seize the property. But instead of taking title, Jones flipped the property to the Liravongsa venture.

In its April lawsuit asking a judge to block the foreclosure sale, the Gong venture alleges that it was never properly notified of the transaction because its registered agent had stopped representing the venture. In a court document in the foreclosure case, Gong’s attorneys accuse Jones of “insider trading” and “fraud,” alleging he concealed information from the judge overseeing the case and pocketed a $1 million profit by flipping the property to Liravongsa.

In the foreclosure suit, the judge approved a $6.3 million “credit bid” — a price representing what Jones was owed — for the Pittsfield space, according to the filing. But Jones transferred his rights to the property for a price of $7.3 million, the filing says.

“In other words, (Jones) essentially stole $1 million from (the Gong venture) in an attempt to make a profit beyond what was approved by this honorable court,” according to the document.

In court filings, attorneys for Jones argue that the entire foreclosure process was above board, and that the Gong venture only has itself to blame for its lack of attention to the court proceedings.

“While these grandiose statements may make for great prose, they are all red herrings,” they write in a filing earlier this month. “In reality, for over a year (Gong’s venture) slept on its rights and is now on a crusade to muddy these proceedings” by filing a lawsuit to block the sale.

Jones and one of this attorneys, Mark Silverman, partner in the Chicago office of Locke Lord, declined to comment.