Lake Geneva Mansion Sale Turns Litigious

A failed luxury home deal on Wisconsin’s Geneva Lake spilled into court, with the seller of a storied estate accusing a deep-pocketed Chicago buyer of tying up the property and blowing a $15 million hole in its value.

The Harold B. Smith Foundation sued financier and former pharmaceutical executive Jack McGinley, alleging that his $37.5 million offer to buy Aloha Lodge in Lake Geneva was binding, and that his eventual walkaway cost the estate crucial market momentum. The lawsuit, filed earlier this month in Lake County, Wisconsin, claims breach of contract and breach of good faith and fair dealing and seeks unspecified damages, the Chicago Tribune reported.

Aloha Lodge, a roughly 20,000-square-foot mansion on the south shore of Lake Geneva, which sits on 12 acres at 768 South Lake Shore Drive, ultimately sold in August 2024 for $21.9 million — far below both its original $35 million asking price and McGinley’s offer. The foundation contends that McGinley’s conduct forced that outcome. LSV Asset Management’s James Owens was the buyer.

According to the complaint, McGinley and his wife, Julie, executed a written offer in May 2023 to buy the estate for $37.5 million, which the foundation accepted the next day. Afterward, the suit alleges, McGinley sought information about other showings and competing bids and asked the seller to delay updating the multiple listing service to reflect an accepted offer. The foundation says the maneuver stalled activity and chilled interest in the property.

Complicating matters, McGinley suffered a pulmonary embolism during the attorney review period, requiring emergency hospitalization. The foundation claims it was advised such a medical event could justify terminating a contract, but alleges McGinley instead used the moment to seek revised terms — including a delayed closing, a new health-related walkaway provision and a due diligence clause tied to renovation plans. No earnest money was ever delivered, the suit alleges, and McGinley ultimately abandoned the deal.

McGinley’s attorney, John Ruskusky, flatly disputes that any binding contract existed. In a statement to the Tribune, Ruskusky said the offer was subject to attorney review, that McGinley requested reasonable changes the seller failed to address, and that the proposal became null and void by its own terms. He also cited McGinley’s medical emergency as a factor in his decision not to proceed.

Aloha Lodge has deep Chicago ties. The Southern colonial-style mansion was built in about 1900 for Tracy Drake, co-founder of the Drake and Blackstone hotels. Harold B. Smith, a longtime Illinois Tool Works executive, bought the property in 1998 and undertook a major renovation before his death in 2022. His foundation, formed in 2018, inherited the estate and listed it in 2023.

The lawsuit also points to a parallel deal gone sideways. About the same time as the Lake Geneva negotiations, McGinley had a contract to buy another foundation-owned estate in Palm Beach for $38 million, a deal he also exited. That property later sold for $29.3 million.

The foundation said accepting a lower price for Aloha Lodge directly harmed the nonprofit organizations it supports, including the Newberry Library and Rush University System for Health. Ruskusky rejected claims that McGinley has a pattern of breaching contracts, calling him a “highly reputable” buyer with a long track record of successful deals.

— Eric Weilbacher