Waukesha County District Attorney Brad Schimel is set to meet with village leaders Friday about the ongoing saga that has become the Radisson Hotel.
Over the past several weeks, hotel contractors, who have been awaiting payments for the work they completed more than a year ago, have requested Schimel meet with the village to find an answer for thousands of stalled payments.
Schimel made it clear that that there is no criminal activity implied with Friday’s meeting, but is following up on a request.
“I’ve been asked to take a look into it, and I don’t want to turn a blind eye,” Schimel said. “I haven’t decided that a crime was a committed.”
Schimel didn’t elaborate further on what he would specifically discuss with village officials, and Village Manager Mark Fitzgerald could not be reached for comment Thursday.
For the past three Village Board meetings, several contractors have appeared during the public comment portion to demand answers for not getting paid. Contractors believe a title company is holding the funds, and want the village to release that money to solve their outstanding debts.
Village leaders have withheld comment on the contractor woes throughout the past several weeks. However, Fitzgerald on June 4 said an official statement from the village regarding the Radisson would be forthcoming and an indefinite date. The Village Board had met in closed session before that meeting.
The ownership group, Lodging Investors of Menomonee Falls, has failed to make its first two $700,000 payments on the village-backed loan. Based on recent developments, it doesn’t appear any payments will be made by the ownership group.
Last week, principal hotel owner Jim Heyden was barred from stepping foot onto the hotel property. It also became clear Monday that the village could soon own the hotel as they look to proceed with foreclosure.
Patch reported in May that the village was pursuing foreclosure, after obtaining an email from an unnamed source.
A Troubled Past
In April 2010, the village inked a development agreement with Lodging Investors that featured a $17.65 million loan to kickstart the hotel construction. The ownership group included Heyden, Dave Gilbert, Dean Grosskopf, Paul Nooyen and William Krueger.
However, things quickly went south after the village approved the loan. In October 2010, Gilbert, who was a 10 percent owner of the hotel, filed for Chapter 7 bankruptcy. According to documents from the U.S. Western District Court, Gilbert’s assets were worth some $3.3 million but had outstanding liabilities of $106.4 million.
That was just months after Gilbert provided necessary documentation to ensure he had necessary net worth to account for his portion of the hotel’s worth.
Then, Grosskopf’s hotel management firm, Professional Hospitality, became embroiled in a civil fraud lawsuit in Dane County Circuit Court. According to the suit, Madison investor, Gregg Raup, is accusing Professional Hospitality of wrongfully diverting $1.2 million from hotels in Beloit and Green Bay to the Radisson Hotel in Menomonee Falls.
That spurred the village to take preemptive action and appoint a receiver to monitor day-to-day operations at the hotel and its revenues in November. At the time, Fitzgerald said officials were concerned but optimistic.
"The Village Board of Trustees is certainly concerned about recent events involving the Menomonee Falls Radisson Hotel and the outside litigation that is pending against current owners," Fitzgerald said in a statement at the time. "However, the Village Board of Trustees believes that the appointment of a receiver is a prudent measure to take to assure the community and its citizens that the hotel’s operations will be legally protected during this period of outside litigation."
As part of the developer agreement crafted by the village, the hotel’s ownership group was required to make scheduled payments on the principal of the loan. However, the group failed to make its first $700,000 payment when it came due in November. A total of $4.1 million in principal is due to be paid by the partners over the next four years. According to the development agreement, the loan will be paid in full by the time the calendar turns to 2026.