Illinois treasurer denounces 'cozy' hotel

By Kathleen Haughney
Post-Dispatch, St. Louis, MO
Published Tuesday, May 20, 2008

SPRINGFIELD, Ill. — The long legal saga surrounding the Collinsville Holiday Inn will soon come to a close with an auction, while former owners of another hotel developed under the same controversial program are under scrutiny for allegedly diverting millions in profits that were supposed to go to the state.

Developers of both hotels signed what Illinois Treasurer Alexi Giannoulias called a "cozy deal" in the 1980s that did not hold them responsible for state loan payments until the projects turned a profit. Both establishments racked up debt leading the state to foreclose and take control of the Collinsville hotel in March 2007 and the Springfield property last November.

The state plans to sell both properties. Bids for the Collinsville Holiday Inn are due on Wednesday.

Meanwhile, officials announced Monday that an investigation by the state treasurer's office alleged that the owners of the Abraham Lincoln Hotel and Conference Center in Springfield diverted $2 million in profits from the hotel rather than paying that money back to the state.

According to an audit commissioned by the treasurer's office, hotel owners skimmed 80 percent of profits from an exclusive catering agreement with the Springfield Metropolitan Exposition and Auditorium Authority, netting its owners about $475,000. The hotel was owned by a parent corporation headed by Bill Cellini, a long-time Springfield power-broker.

The audit also showed that the owners used about $722,000 of hotel profits to pay legal fees unrelated to the hotel and spent $5,000 on gifts and lobbyist registration fees for the Illinois Asphalt Pavement Association, which is headed by Cellini.

"He robbed the state to pay himself," Giannoulias said in a news conference Monday.

No legal action has been taken against Cellini, but Giannoulias said his office had turned over the audit to the state attorney general and the FBI.

Cellini's attorney, Kathleen Vyborny, said she has not seen the audit but that all of the expenditures by the hotel were permissible under the state loan agreement.

Last May, an investigation by the treasurer's office alleged that the Collinsville property owners employed inflated salaries and ghost payrolling to avoid paying money back to the state.

Giannoulias said that the original deals with the state allowed the two hotels to conduct their own accounting before turning over the books to state officials who simply checked the math.

"It wasn't a bad deal," Giannoulias said. "It was a horrible deal."

The state hopes to recoup the nearly $30 million that was owed on the Abraham Lincoln Hotel and Conference Center and the $32 million owed on the Collinsville Holiday Inn through the sale of both properties.