No one disputes that the 20,000-square-foot Aloha Lodge in Lake Geneva, Wisconsin — which was listed in 2023 and sold in August 2024 for $21.85 million — had an earlier $37.5 million offer on it from a well-known Chicago-area buyer of high-priced homes.
However, in a recently filed lawsuit in Lake County, the seller of the estate alleges that the $37.5 million offer by financier and former pharmaceutical executive Jack McGinley was a binding offer that tied up the property and caused it to lose its market momentum.
The suit filed by the Harold B. Smith Foundation alleges breach of contract and breach of good faith and fair dealing, and seeks unspecified damages from McGinley. The foundation also alleges in the suit that McGinley, of Lake Forest, has a “practice of breaching sales contracts” and tried “to avoid his contractual obligations and obtain different and more favorable terms than those to which he willingly agreed.”
McGinley’s lawyer, John Ruskusky, said in a written statement that the offer was not binding. Ruskusky also said that during the attorney review period associated with the offer, McGinley sought reasonable changes, which he claims that the seller never addressed. That, plus a major medical episode that McGinley suffered, caused him to walk away from buying Aloha Lodge, Ruskusky said.
A longtime business executive who died in 2022 at age 89, Harold B. Smith had been a top executive at Glenview-based Illinois Tool Works, which his great-grandfather, Byron L. Smith, founded.
In 1998, Smith purchased Aloha Lodge, located on the southern shore of Geneva Lake, and renovated it. The Southern colonial-style mansion was built around 1900 for Tracy Drake, who, with his brother John Drake, constructed the Drake and Blackstone hotels in Chicago.
Smith put in a new foundation, two new wings and a basement theater. After Smith’s death, his foundation, which was formed in 2018, took ownership of Aloha Lodge.
According to the complaint, which was filed on Dec. 5, the foundation listed the estate for $35 million in 2023. The foundation alleges that McGinley and his wife, Julie, executed a written offer to buy Aloha Lodge for $37.5 million in May 2023. The foundation accepted the McGinleys’ offer one day later.
After the offer had been accepted, the foundation alleges in the suit that McGinley sought to learn if there were other showings or competing offers. The foundation also alleges in the suit that McGinley asked the foundation to hold off on updating the real estate multiple listing service to reflect that an offer had been accepted, ostensibly to allow other offers to materialize.
Complicating matters further was the fact that in the midst of the attorney review process, McGinley suffered a pulmonary embolism requiring emergency care and hospitalization. Such a health event, the foundation was advised, could be the basis for canceling a contract to buy a property, according to the lawsuit.
After McGinley’s health event, the lawsuit alleges, McGinley proposed several changes to the terms of the contract, including delaying the closing date, having a 10-day right to walk away based on health concerns and adding a due-diligence provision permitting him to abandon the deal based on renovation plans.
In the end, McGinley never delivered any earnest money and walked away from the Lake Geneva deal, according to the suit. Ultimately, the foundation wound up selling Aloha Lodge in 2024 for $21.85 million to another buyer.
The foundation alleges in the lawsuit that McGinley’s “bad faith conduct” harmed Aloha Lodge’s reputation and caused the foundation to incur “substantial additional costs to sell the property at a price that was substantially lower than the agreed contract price.” As a result, the foundation is seeking monetary damages, “including additional marketing and care costs and the difference between the contract price and the price at which (the) seller sold the property in mitigation of its damages.”
A spokesperson for the foundation told the Tribune that by accepting a lower price for Aloha Lodge in Lake Geneva, that sale price “directly harmed” the foundation and, by extension, Chicago-area nonprofit organizations that the foundation supports, such as the Newberry Library and the Rush University System for Health.
Ruskusky denied the foundation’s allegations, telling the Tribune in his statement that “Jack is a highly reputable, longtime participant in numerous successful real estate transactions, and we flatly reject any allegations to the contrary. This was a standard real estate negotiation subject to attorney review and approval, and no final, binding contract was ever completed.”
Ruskusky said that McGinley “properly invoked the attorney review provision in a timely manner to request reasonable changes, which the seller failed to address, making the proposal null and void by its express terms.”
McGinley near-concurrently had a similar experience with the foundation, having struck a contract to buy a different estate owned by the foundation in Palm Beach, Florida, for $38 million, according to the suit. Shortly before the foundation accepted McGinley’s $38 million offer on Aloha Lodge in May 2023, he separately decided not to proceed with buying the Palm Beach property, which wound up selling in 2024 for $29.25 million to payday-lending mogul W. Allan Jones, according to news accounts.
Public records show that McGinley paid nearly $10.37 million in 2004 for his current home, a more than 16,000-square-foot mansion on almost 3.5 acres in Lake Forest. The couple also owns a century-old, 9,000-square-foot mansion on the Gold Coast — which they purchased for nearly $7.13 million in 2013 — that is the subject of ongoing litigation. According to a lawsuit pending in Cook County, a trust whose beneficiary is Julie McGinley accepted an offer from a Tampa, Florida, couple to buy the couple’s Gold Coast mansion for $7.5 million. After the sale did not proceed, the Tampa couple sued the McGinleys, seeking a court ruling to allow the deal to close. That case is pending.
Bob Goldsborough is a freelance reporter.