Though an elected lawmaker in Oregon, Brian Clem has spent much of the last two years living out of a dorm room at a defunct university in this Mississippi River town trying to make millions.
He's still waiting for his big pay day, with patience waning.
Clem, 44, co-owns the former Ashford University campus, which he and two partners bought at a deep discount after its for-profit owner folded the operation. Under the name Clinton Catalyst LLC., they want to sell the plush 15-acre campus to Chinese investors, whom they envision would turn it into a public boarding school instructing teenagers in science, technology, engineering and math. As Clem sketches it out, Iowans would attend for free while Chinese and out-of-state students pay $40,000 a year.
If he can flip the campus, it could mean a windfall for Clem and his partners. They bought it for $1.6 million and are marketing it with a $28 million asking price.
But he believes this downtrodden town stands to gain even more. Like many small cities built on industry, Clinton has been hit hard by a culling of manufacturing jobs. Its miseries remind him of those that battered his home town of Coos Bay, where he grew up the younger of two brothers, raised by divorced parents: his father, a mailman, and his mother, a teacher.
A new school packed with deep-pocketed foreigners would be a shot in the arm for Clinton, a working-class city of 26,000. Its economy and pride would rebound if the premium property in town -- the well-kept college campus -- were reanimated with Chinese millions.
Big players back the project, too. Chief among them is Iowa Gov. Terry Branstad, who is President Donald Trump's nominee for Chinese ambassador. Clem said he and Branstad chatted in-person about the project at least five times, including at the campus and a governor's mansion party, in Des Moines. Other Iowa power brokers are on board too.
But with no investors biting, the campus has sat vacant, burning a hole through Clem's wallet. Campus security, groundskeepers and utilities cost $50,000 a month. The partners hoped to avoid property taxes through a nonprofit with Chinese ties, but the plan went awry. Clem mortgaged his Salem house to help finance his $500,000 buy-in to the campus deal.
Unlike Clem, the other Clinton Catalyst partners are itching to cash out, even if it means boarding up the school.
"I'm starting to get panicked," said the tall and paunchy Clem, during an interview at his state Capitol office. "I'm sweating bullets."
Before he trained his business ambitions on Iowa, Clem focused them on Asia. His wife, Carol Suzuki, is Japanese-American, and her father -- once an internee during World War II -- made himself wealthy through a successful farm and investments. After marrying up, Clem wanted to prove himself.
"It's different when you marry someone who has lots of resources," Clem said. "You do feel a little bit like you have something to prove."
In 2009, he started a business with Chris Edwards, then a state senator, to export to Taiwan cherries grown on Suzuki's family orchard. The venture was a dud.
Clem then traveled to Taiwan, Singapore, Vietnam, South Korea, Japan, Thailand and the Philippines attempting to peddle armored vests, helmets and other combat gear to their militaries.
"This is all on my own time. I went on 11 trips. Probably spent $80,000. Never sold anything," Clem said. "It was terrible, terrible. But I met a ton of people."
In 2015, he found success brokering a licensing deal between Chinese basketball legend Yao Ming and Oregon's famed Hood to Coast relay race. Inking the deal gave Clem a taste of the profit possible outside of politics.
Sitting on a beach on China's island province of Hainan, he thought of quitting the Legislature, despite being elected five times and rising to committee chairman. Resigning, he thought at the time, would give him freedom to focus on making money. Being an Oregon lawmaker pays little more than $23,000 a year.
On the beach, Clem prayed to himself and decided to stay in office. Searching for guidance, he turned to the Bible. A passage from a Christian writer stuck with him: "You are approaching a crossroads in your journey. In order to follow Me wholeheartedly, you must relinquish your tendency to play it safe."
Days later, Clem was on the road with Danton Wagner, a friend and wealthy Wilsonville real estate investor known in national Democratic donor circles. They were heading to Hood River for a fishing getaway, and Wagner's phone would not stop ringing. A real estate agent was calling to pitch him on the Ashford University campus.
Wagner wasn't interested. What would he do with an empty college campus in rural Iowa? But Clem was intrigued.
"Can I get in on this?" he said to Wagner. "Let's just go look at it."
They headed for Iowa. After a three-hour visit, Clem and Wagner, along with David Glass, a successful Texas auto dealer and property investor, formed Clinton Catalyst and bought the campus. The deal closed December 29, 2015.
Wagner worried they would be unable to find a buyer, but Clem assuaged his fears.
"I'm going to go live there," Clem told Wagner. "I'll take care of it. I'll figure this out."
Clem set up camp in a vacant dorm room. He slept on a bunkbed, ate off plates found in a closet and nabbed a classroom television to use in his dorm. Most of his time in Iowa was spent cleaning up the campus with maintenance crews, or with his real estate agent, chaperoning potential buyers to the school for tours.
Clem said he's missed little legislative work due to his Midwest experiment, except to fly to Iowa to meet Chinese investors during the first weeks of the annual lawmaking session. Records show he's missed at least 29 votes on six days in February and April -- not atypical for an Oregon lawmaker. Clem wrote on absence forms that he was away from the Capitol for "personal business" or "travel/work."
To woo potential investors, the Clinton Catalyst partners printed a prospectus, in English and Chinese. It includes a photo of a beaming Branstad, the Iowa governor, clinking wine glasses with an old friend: Chinese President Xi Jinping. Campus buyers could make up to $15 million a year if they opened a STEM academy for Chinese students, the glossy brochure says. It touts Clinton as "a cultural mecca with a river view."
The full picture is less rosy.
The town's largest employer is corn processor Archer Daniels Midland Co., which spews pungent fumes from its Mississippi River plant. Much of Clinton smells of the dog food made at a Purina factory at the west end of town, or the fat and flesh rendered off meat by-products at a facility to the south.
Nice houses dot nearby hills. But blue-collar neighborhoods surrounding the Ashford University campus are largely unkempt, porches crooked and paint peeling. Downtown storefronts sit empty, one after the other. A gas station clerk cackled at the idea of a first-class school here attended by hordes of Chinese teenagers.
"Why Clinton?" she cried. "Clinton stinks!"
Once a logging town, with Manufacturing Drive a major thoroughfare, those jobs disappeared decades ago. More recently, a paper processer shuttered and big box stores followed. The population has declined by a third in three decades and the number of school-aged children has fallen by half.
Clinton is "the quintessential Midwestern town," said Jenna Sanders, 30, who was born here and owns a coffee shop downtown. But she said "It's definitely a depressed area." In her experience, the young, motivated people leave.
When Ashford University was still open, its students filled her café. "They had endless amounts of money to spend on coffee and treats. It was good for us," she said. Those days are gone.
"We need younger people," said Gene Othon, 78, who retired here from California. "They go to the bigger cities because there's jobs."
Like Clinton, Clem's home town of Coos Bay was once booming, with logging its backbone. But timber harvests collapsed and logging jobs were axed after environmental groups won lawsuits to protect the forest's endangered birds. County funds dried up. With locals unwilling to pass a schools levy, Clem's mother lost her teaching job.
"It used to be a proud place where people had jobs in the woods and jobs in the mills," Clem said. "And now it's a place like Clinton."
Though rough around the edges, the Ashford University campus is Clinton's crown jewel, perched atop a bluff with views of the Mississippi River.
Before it was Ashford University, it was Mount St. Claire Academy, a Franciscan school for girls founded in 1893. The day-school went collegiate in 1918, and eventually turned co-ed and offered four-year degrees and graduate programs, all while under Franciscan sisters' stewardship. Financial trouble struck and in 2005 the sisters sold the school to California-based Bridgepoint Education, a publicly traded company, which changed the name to Ashford University.
Under a new name and new management, Ashford struggled to retain students and faculty, and a good reputation. Students complained to federal and state regulators that the school was a rip-off, printing worthless degrees. Federal officials found that the school rewarded teachers on how well they recruited students, and the school misspent federal student aid funds. Tom Harkin, then a U.S. senator from Iowa, called Ashford University an "absolute scam."
Bridgepoint Education was slammed with a $31.5 million fine for bilking students and company stock tanked. It sold the Ashford University campus to Clinton Catalyst, but retains the school's name for its online operations, run out of San Diego.
Losing the school was a punch to the gut for Clinton -- "tragic," said Rita Hart, the area's state senator. Professors and staff lost their jobs. Students left. The town had invested in Ashford; its riverfront Minor League ballpark, home of the LumberKings, is named Ashford University Field.
"It reinstated this fear that everything's leaving. Like, 'Oh, look who else is leaving us,'" said Sanders, the café owner.
The campus looks as if students were there yesterday. Pots and pans hang ready in the dining hall kitchen, and silverware is sorted for dinner service. Pool cues lie dormant on residence hall billiard tables.
"We could start a school there next Monday morning," said Norlin Mommsen, Clinton County's state representative. "Everything is there. It's unbelievable."
Bridgepoint Education invested in Clinton, too. The company spent $40 million to buy the campus from the Franciscan sisters plus tens of millions more to upgrade buildings. It constructed state-of-the-art science labs and a library with tens of thousands of volumes. And it built a football stadium -- replete with a turf field, nine-lane track and Ashford University Saints logo -- even though the school never had a team.
Financial documents show that by selling all that to Clem and his partners for less than $2 million, Bridgepoint Education secured a $50 million tax write-off.
Clinton Catalyst has tax problems too: Its Iowa property taxes cost over $50,000 a month. That's more than double Clem's annual legislative salary.
Clinton Mayor Mark Vulich suggested the partners find a nonprofit that could "hold" the property, Clem said. He recalled Vulich saying, "You'll be off the tax rolls. It'll buy you some time."
Clem scoped out a few groups, landing on the Portland-based Asian Education Foundation. It agreed to buy the campus for $28 million, with no payments due for three years. The deal was executed January 27, 2017 and recorded in Clinton County property rolls.
No money changed hands, however, or ever would. In fact, Clem says, the Asian Education Foundation had no money to give. Oregon financial records show it has never received or spent a dime in a decade of operation.
Much like the $28 million deal, the Asian Education Foundation exists mostly on paper.
The nonprofit's website promotes its operations as "encouraging Asian youth to study in America." But there is no evidence it has recruited Asian students to attend American schools. Photos of smiling international students on the site appear to be lifted from university web pages, including from Portland State University's.
Reached by phone, Amy Lee, the foundation's secretary, said she is retired and unaware of the $28 million contract. The foundation's only deep-pocketed connection is its treasurer, Chong Foo Chaw, a wealthy Singaporean property investor, who Clem described as a "magnate." Chaw could not be reached for comment.
Overseeing the foundation's Iowa business is its director, Yuhong "Jenny" Dong, a former nail technician who runs the nonprofit and an investment company from a small Portland business park. Dong visited the Iowa campus several times with Clem, and even ventured to Des Moines to glad-hand with the governor.
In an email exchange, Dong said she's known Clem and Wagner "for a long time." They sought her out after buying the Ashford campus, she said, because of her experience as president of a Portland cultural exchange center. She declined to discuss her private investment firm.
Clem had hoped that by transferring ownership of the campus to a nonprofit, the property tax bill would be forgiven. But this month, Clinton's tax assessor, on advice of the city attorney, decided the partners would have to pay property taxes.
With the tax-saving plan scuttled, the Asian Education Foundation scrapped its contract with Clinton Catalyst.
"That was not good news," Clem said. He added that the Clinton Catalyst partners are "burning cash like crazy."
Though his cash runway is shrinking, Clem still sees a future in courting Chinese investors. He travelled to Atlanta during Easter weekend to meet potential buyers who'd said they'd allow Clem to pitch them on the campus.
They stood him up.
"Turns out, it's really hard to sell a campus," he said.
Ever optimistic, Clem says negotiations with Chinese investors are ongoing.
For Clem's partners, it's becoming time to cash out.
"It's a liquidation. That's all it is," said Glass, the Texas investor, over continental breakfast at the Holiday Inn in Clinton. He repeated his mantra over and over: "Buy. Sell. Trade."
City officials worry that taxes and utilities will force Clinton Catalyst to seek a quick exit. The campus science labs alone are home to millions of dollars of high-value equipment, which could be sold piecemeal. They've been approached by eager auctioneers.
"It's been a battle," said Hart, the state senator, during a tour of the campus' empty halls. "I thought someone would step up by now."
Like others with their hearts tied up in a potential deal, when she realized it might not materialize, "I thought we were screwed," she said.
But Clem's motivation, she and other officials say, is less about money and more about community.
"He could have just flipped the property and left because that's what he and his partners do quite well. They make money," Deb Olson, the Clinton schools superintendent said of Clem. "But for some reason he has something in his conscience that he wants to see this through."
"To their credit, they've stuck with us now for over a year writing checks," said Mike Kerchoff, who heads Clinton's development nonprofit. "I would say somebody who was just in it to make a quick buck would have walked away a long time ago."
"My first impression was this is a bunch of investors coming to make a quick buck. But I learned that is not the case," said Mommsen, the lawmaker. He said Clem has "bent over backwards trying to do what is right to better the community."
Clem continues to dream big. He said if everything goes perfectly and a buyer is found, he'll fly to Beijing and hold a press conference on the new way to "save small town America."
If not, his asset will end up a liability.
"I could see us having to board it up, sell off all the contents," he said. "The town will be very unhappy. But I will have given everything, including probably my own retirement, to make it work."
(c)2017 The Oregonian (Portland, Ore.)
