Questions about AKHAN, looking to move to Gurnee, surface in complaint
Questions about the viability of a project touted by AKHAN Semiconductor -- a high-tech company being lured to Gurnee with millions of dollars in state and local incentives -- have surfaced in a complaint filed with a federal agency by a former Argonne National Laboratory executive.
Jonathan McKay of Westmont raised concerns about the ability of the partnership between AKHAN and the U.S. Department of Energy's Argonne lab to develop and manufacture a new diamond film technology in an internal ethics and retaliation complaint related to his firing from the federal facility.
McKay filed the complaint against Argonne with the Department of Energy last Sept. 19 -- three days after former Gov. Pat Quinn announced a combined $5.8 million state and local tax incentive package for AKHAN and praised the company for being a diamond technology leader.
Gurnee village board members are scheduled to vote Monday, Jan. 26, on the package proposed for AKHAN, a subsidiary of AKHAN Technologies Inc. The company was founded in 2007 by Gurnee native Adam Khan, who says use of diamond semiconductors, rather than silicon, means devices can be made thinner and operate at higher temperatures, benefiting smartphones and "wearable" technology such as Google Glass.
Mayor Kristina Kovarik said she has full confidence in AKHAN and believes state and local officials have done their due diligence regarding the company.
"The incentives from the state, county and village are performance-based -- no performance, no incentive -- and the property tax abatement agreements have clawback provisions, both of which are structured that way to protect the community's investment and adds a measure of accountability for use of the supporting funds," Kovarik said.
Khan did not respond specifically to references to AKHAN in McKay's complaint but said in a statement his company is "committed to always acting with integrity and conducting business in a safe, ethical and legal manner."
AKHAN has had a partnership with Argonne to develop technology using diamond film as semiconductors. In November, Argonne announced it granted an exclusive licensing agreement for the technology to AKHAN, which is expected to gain a competitive advantage by becoming the first U.S. company to fully develop the process for industries such as aviation, defense and power.
Plans call for AKHAN to use the tax incentives to bring 54 employees from Hoffman Estates and California to a Gurnee business park for a company headquarters and factory. AKHAN pledges to create up to 80 jobs within two years because of projected growth.
McKay, who was an executive in technology development and commercialization at Argonne for about 1½ years until he was fired June 24, 2014, alleges in his complaint he made repeated efforts to halt misrepresentations by his boss, Carl Shurboff, to outside investors regarding Argonne's ability "to develop next generation diamond-based microelectronics technology with a clear path to mass volume manufacturing and sale of these products worldwide."
McKay claims a two-day meeting at Argonne that included Khan in 2013 raised his concerns about the idea of the diamond technology going into production for commercial purposes anytime soon.
"McKay, with broad and deep technology and business development experience, immediately realized that commitments on deliverables dates being made by Khan and Shurboff based on Argonne resources were impossible, with some probably not even scientifically feasible," according to the complaint.
Shurboff referred a message seeking comment to an Argonne spokesman. Christopher J. Kramer said officials at the research laboratory are aware of McKay's complaint, which is under investigation by the Department of Energy.
"We take seriously any complaints and we are cooperating fully with the Department of Energy, but we are not at liberty to discuss the specifics of the matter," Kramer said. "This process will take time. If at the end it is discovered that a problem exists, we will take swift and appropriate action to correct it."
In his statement, Khan said: "Since 2007, AKHAN Technologies, a semiconductor company, has specialized in pioneering research and the development of diamond-based semiconductor devices with applications in the microelectronics industry. We stand committed to always acting with integrity and conducting business in a safe, ethical and legal manner. While it would be inappropriate for AKHAN to comment on a personnel matter involving one of our partners, we are proud of the organizations that have validated our progress such as Argonne National Laboratory, the Department of Energy and the CleanTech Open, among others."
Attorney Rick Duffin said neither he nor McKay would elaborate beyond the 63-page complaint and an additional document filed Dec. 8.
The incentives to bring AKHAN to Gurnee include a maximum of $530,000 in sales tax from Lake County and $1.5 million in sales receipts from the village over five years. Documents show the entire package of local incentives, including tax abatements from the Warren and Woodland school districts, would be worth roughly $2.3 million and come on top of $3.5 million available to AKHAN through the Illinois Department of Commerce and Economic Opportunity.
While the state's financial incentives were mentioned in a news release from Quinn's office, the Department of Commerce and Economic Opportunity denied a recent Daily Herald open-records request for the entire proposal because it's considered confidential until the final vote by Gurnee officials. Quinn said the incentives and investment by AKHAN would amount to a $15 million total commitment to northern Illinois.