Potential conflict of interest between local officials and China-linked Gotion rattle Michigan suit

The Michigan township that turned against a planned battery plant project led by a China-tied company, and is now being sued over their decision, alleged in court filings that former board trustees failed to disclose conflicts of interest and apparent inducements to approve the controversial project. 

The allegations filed late last week are poised to shake up battery-maker Gotion’s lawsuit against the Green Charter Township and its new board, which moved to reverse efforts by the previous trustees to facilitate the firm’s plans to build and electric vehicle battery plant in the community. The new board’s efforts, Gotion claims, violate a Development Agreement signed between it and the township last year. 

However, citing text messages and testimony uncovered and now part of the lawsuit, the township argues the development agreement with Gotion is void, in part, because of conflicts of interest from former board members that were undisclosed when the agreement was supposedly approved. The court filings show that at least two former board members stood to receive financial benefits from Gotion while it was seeking approval for its project.

According to text messages attached to the filing last Friday, a senior Gotion executive offered Jim Chapman, the then-supervisor of Green Charter Township, a trip to Hefei, China. Another former board trustee stood to benefit financially from the sale of land to Gotion for the plant and failed to disclose that conflict when he voted to approve the preliminary development agreement with the company. 

A controversial project

The Gotion battery plant deal came under scrutiny from locals almost immediately after it was announced publicly in September 2022. Locals were worried for several reasons, citing the environmental impacts and disruption to their community. But one of the most important and controversial reasons was Gotion’s ties to China, and specifically the Chinese Communist Party. 

Despite previous claims to the contrary by company executives, Gotion recently admitted in a  Foreign Agents Registration Act (FARA) filing that the company is “partially subsidized through government funding supplied by the People's Republic of China.” Previous reports show that Gotion is wholly owned by its parent company, Gotion High-tech Co., which participated in programs designed to acquire military technology for China and employs at least 923 Chinese Communist Party members. 

One former official with experience of China's strategies, the former Ambassador to Fiji, Kiribati, Nauru, Tonga, and Tuvalu in the Trump Administration and Director of a China-focused think-tank dedicated to exposing the country's influence in Michigan and across the U.S., says the Gotion deal has all the hallmarks of a Chinese influence operation.

“The filings with the court seem to reveal that PRC-based and CCP-tied Gotion will stop at nothing to get their way - including what appears to be corrupt practices and enrichment of public officials. From the outset, this has had all of the markings of a subnational incursion and influence operation led by PRC-based and CCP-tied entities and operatives," Cella told Just the News. 

"This is precisely why our national security and intelligence agencies warned a bi-partisan group of state and local elected officials and business leaders about the grave risks of engaging in seemingly benign business deals with companies based in the PRC," he added. 

"Instead of following directives of these agencies to perform due diligence and strict scrutiny, and ensure transparency, integrity and accountability, government and business elites did the exact opposite.  They moved fast and in secret with binding and punitive non-disclosure agreements and secret code names, rupturing the consent of the governed and jeopardizing our national security," he continued. 

Cella is scheduled to testify Tuesday at a House Oversight Committee hearing about U.S. Government’s failure to address Chinese influence operations broadly and plans to address the Gotion deal specifically, he told Just the News.

China and China-based entities have recently come under increased scrutiny from Congress and individual states for purchases of vast tracts of land in the United States, some near sensitive military locations. Gotion’s proposed battery plant site is within 100 miles of Camp Grayling, one of the largest National Guard training camps in the country. The Wall Street Journal reported that the Guard trains Taiwanese soldiers at the camp. 

Bill Evanina, a 32-year veteran of the FBI, CIA, and National Counterintelligence and Security Center, told the House Select Committee on the Chinese Communist Party last year China uses “non-traditional” collectors to gather intelligence in the United States. 

“The non-traditional collectors, serving as engineers, businesspersons, academics, and students are shrouded in legitimate work and research, and oftentimes become unwitting tools for the CCP and its intelligence apparatus,” he said in his opening statement at a July 26, 2023, hearing.

When asked by Rep. John Moolenaar, the future chairman of the committee, whether there was a chance the Gotion project in his Michigan district could be compromised in this way, he confirmed that he had no doubts that it would. 

“In your view, is it basically a guarantee that some of the people who come from China to work on this project will spy for the CCP?” Moolenaar asked. 

“100 percent,” Evanina replied. “There will often be an effort by the Communist Party of China to infiltrate that capability via cyber, human and hybrid methods, using businessmen, engineers, and what we call the non-traditional collector.” 

Allegations of conflicts of interest

According to the Township, the court filings and attached exhibits show the development agreement between Gotion and the previous board should be void in part because of the inducements and conflicts of interest uncovered during the lawsuit. 

On the same day that the Township board was set to review and approve the preliminary development agreement, text messages show a Gotion senior executive offered Chapman a fully-paid paid trip to Hefei, China—where Gotion’s parent company, Gotion High-Tech Power Energy Co., is headquartered and runs its Engineering R&D Institute, according to the group’s website.

Michigan law makes it illegal for a public officer or employee to "solicit or accept a gift or loan of money, goods, services, or other thing of value for the benefit of a person or organization, other than the state, which tends to influence the manner in which the public officer or employee or another public officer or employee performs official duties."

“BTW Gotion will pay for your travel if u are able to visit hefei,” Gotion’s North American Vice President for Manufacturing, Chuck Thelen, wrote in a message to Chapman on August 1, 2023. The court exhibit shows Chapman did not immediately respond to the message. 

However, two days later Chapman said “Please let your chairman know that I am honored by his invitation. Unfortunately ongoing issues in my township preclude me from being absent for this trip.” 

But, Thelen proposed rescheduling the trip as a way to try and keep the “heat” of public scrutiny off the local politicians. 

“Gotcha. We are seeing many people that can't get visas in time. Might reschedule for January after things settle down. Keep the heat off u and other politicians. Would that help?” Thelen asked. 

“Yes,” Chapman wrote. “My visa is long expired.” 

Chapman did not respond to an email request from Just the News for comment Monday. 

"I have never accepted any enticement of any kind from Gotion or any other group.  Gotion considered a trip to see their plant for a group of local people.  I was on the list but chose not to go.  The trip never happened," Chapman told Just the News in an email after publication. 

"The township’s multiple legal firms are grasping at straws to justify their multiple attorney bills. They will continue to generate useless paperwork until they bankrupt this small rural township for their own gain. The current administration will continue to use township funds to pay for this useless paperwork because it placates their political base in an election year," he wrote.

You can read the main filing and above exchange in the court exhibits below: 

It is unclear if Chapman ever took a trip to China paid for by Gotion. But, by this time, Chapman and the rest of the Green Charter Township board were under threat of a recall brought by the local voters upset with the board’s decision to help Gotion secure land and construct its factory without their input. 

By November, voters would oust Chapman and the rest of the five-member board from their positions. However, that did not stop Gotion’s Thelen from doing all he could to help his close partner, Chapman, retain his seat. 

On August 14, 2023, shortly after the old board had approved a preliminary development agreement pending further negotiations, Thelen sent a message to Chapman asking how he and his wife could donate to the supervisor’s defense fund in the midst of the recall. 

“Hi jim, tracey and I would like to donate to your defense fund. Do u take venmo?” Thelen wrote. “I think I heard u say alsonthat [sic] the limit is $1200 that u can accept from a single donor is that correct?”

“1200 is the Limit. I’m set up to go through PayPal. I have a qr code…” Chapman wrote back, and attached the QR code to his message.  

Campaign finance records show Chuck Thelen’s wife, Tracey, donated $1000 to Chapman’s defense fund that same day. 

You can read the campaign finance record in the filing excerpt below: 

“Wow… thank you,” Chapman wrote that evening. 

“The least we can do Jim,” Thelen wrote back. You have had my back now it is my turn to help. 

Thalen did not respond to a request for comment from Just the News Monday. 

“It’s called democracy,” Chapman told The Detroit News last December after he was removed by voters in the recall. “It is what it is.” 

"I never received any contributions from Gotion," Chapman told Just the News, however, he did not dispute the campaign contribution from Thelen's wife. 

A property for sale

Another Green Charter Township trustee, Dale Jernstadt, stood to benefit financially from approving the development agreement. In fact, the court filings show he owned property in the planned project zone and testified that Gotion offered him and his brother $2 million for their approximately 70 acre property. 

Jernstadt also testified he in fact contracted with Gotion to sell the property in September 2022, about a year before he would participate in township board deliberations and vote on the development agreement with the company. He confirmed in his deposition that he never told anyone at the township about his property sale. 

You can read the excerpts of Jernstadt’s deposition below: 

Jernstadt could not be reached for comment by Just the News. A email message for comment sent to Jernstadt Dairy—which Dale Jernstadt testified is his family’s local business—did not receive a response. 

Talk of backup jobs for ousted trustees

The court filings indicate that at least one other board trustee testified that Chapman discussed potential jobs with Gotion if the board lost their recall elections against the community challengers. Former trustee Denise McFarland said in her deposition that “there might have been” discussion about a job with Gotion. 

"If -- worst-case scenario, because we had thought we were going to lose in the recall. So, it came as a total surprise. So, there would have been, hey, if this goes wrong, I'm going to be unemployed and I need a job,” she said. She clarified that she discussed this possibility with then-Supervisor Chapman, but not with Gotion directly. 

After losing his recall election, Chapman also continued his relationship with Gotion, offering pro bono services to the company with his security consulting firm Redoubt Protection Inc. in early 2024. However, Chapman testified that he never received any compensation for this work.

"I did some option planning for a security issue that came up in a conversation because I was bored.  I was not hired nor compensated for it," Chapman told Just the News.