Jefferson Davis is a longtime resident of Menomonee Falls. He is the proud parent of two wonderful boys. He enjoys singing, volunteering, reading, gardening, politics, antiques, history, guitar, violin, piano, officiating, helping neighbors and yard work. He served as Village President of Menomonee Falls from 2003-05. He is a member of Northbrook Church and serves on the Advisory Council for the Salvation Army Rehabilitation Center. He is an independent registered representative practicing in the areas of insurance, investments and retirement.
Solyndra Syndrome Hits Menomonee Falls Hard
Similar to the recently much covered Solyndra Solar Panel Company story out of California (http://articles.chicagotribune.com/2011-09-18/news/ct-met-kass-0918-20110918_1_solyndra-loan-guarantee-obama-fundraisers-obama-white-house) involving corruption at the highest levels of the federal government that has taken on the form of bribery, quid-pro-quo, cash payments, fund raising bundling and possible extortion with President Obama, his administration, the Department of Energy, campaign supporters and businesses over a $535,000,000,000 taxpayer loan in 2010 resulting in bankruptcy less than a year later, the taxpayer funded hotel and restaurant on Main Street in Menomonee Falls appears to be headed for possible bankruptcy and or foreclosure if bills aren't paid and funds returned to business owners.
The Vanguard has recently learned that if court documents made available to the public in Dane County for the $18,000,000 taxpayer funded Radisson Hotel are true, fully disclosed and anywhere close to being remotely accurate, then the taxpayers of Menomonee Falls have apparently been duped by the Village Manager, Village Attorney, Village Board, their agents and the 5 business partners of the hotel and RBG Restaurant for unanimously approving the $18,000,000 bond issue, with interest, in May of 2010 to rebuild the hotel on Main Street that opened for business just 5 months ago in June of 2011.
The Vanguard has written extensively about this very questionable project when no one else in the local press and media would touch it other than to report what a wonderful project this was for the revitalization of Main Street (http://www.menomoneefallsnow.com/blogs/communityblogs/121502704.html).
Branch 10 Court Documents in Dane County Reveal Lawsuit Against Falls Hotel Owners for Unaccounted Funds
Court documents filed in Dane (Case 11-CV-4348 http://www.countyofdane.com/court/) and Waukesha County (11-CV-01803 http://www.waukeshacounty.gov/Courts.aspx?id=21044) dating back to May of 2011 with Judge Colas, Branch 10, accuse the Radisson Hotel and RBG Restaurant Owners of apparently illegally obtaining, converting and using nearly $1.2 million in funds for personal use for the Menomonee Falls Project as one of the parts for violating a hotel management agreement with hotel owners in Green Bay and Beloit since 2006 who filed the lawsuit in Waukesha County that was moved to Dane County in a change of venue petition by the parties.
Professional Hospitality, LLC (http://www.prohospitality.com/contact.aspx) is one of the original partners of the Menomonee Falls Radisson Hotel and RBG Restaurant showing an address of 2418 Crossroads Drive, Suite 3800, Madison and are the hotel management company who signed the hotel management agreement with the Green Bay and Beloit Hotel Owners.
It has been suggested by those who spoke to The Vanguard on the condition of anonymity that the change of venue to Dane County was necessary for the Menomonee Falls hotel and restaurant owners in hopes that no one from the local press and media would catch on and would spare them the embarrassment of the multiple lawsuits against them.
That strategy has worked well for the Menomonee Falls hotel and restaurant owners so far as this matter has been in the courts starting in May of this year and still no coverage by the local yocals.
The documents also show that bank statements were allegedly deliberately falsified by the Radisson Hotel and RBG Restaurant Owners to conceal funds from the Green Bay and Beloit hotel owners while using the funds for personal use which is prohibited by the hotel management agreement between the parties.
The bank statements for the Green Bay and Beloit hotels were allegedly falsified to make it look like the money for the hotels, that were being managed by the Menomonee Falls group, was in the bank when it wasn't.
The Dane County documents also allege the plaintiffs believe the 5 business partners of the Menomonee Falls Radisson Hotel and RBG Restaurant are either insolvent or in imminent danger of insolvency and can't pay their obligations or creditors thus requiring a court appointed receiver of all the assets, property, rents and profits of the hotel and restaurant to avoid any of the assets and property from being lost or materially impaired.
It would appear from the court documents that at least one of the Menomonee Falls Radisson Hotel and Restaurant Owners agrees with the plaintiffs that they are indeed insolvent as of August of 2011.
The plaintiffs also believe that receivership is necessary to prevent waste and to preserve the assets for creditors in the future.
Attorney Doug Mann, a Milwaukee Receivership Lawyer (http://pview.findlaw.com/view/1456075_1), apparently has been appointed by Judge Colas to act as the receiver for the Menomonee Falls hotel and restaurant to pay the taxes and costs of the facility as of 10-10-11.
The court documents disclose multiple liability insurance policies (10-15) from Nationwide and AMCO for the Menomonee Falls hotel and restaurant owners.
Nationwide and AMCO Insurance Companies specifically state through their attorneys that there is no coverage in place for the Menomonee Falls hotel and restaurant owners that will cover them for lawsuits such as the one that has been filed against them in Dane County.
The plaintiffs in the case are as follows from Madison and are represented by various Madison attorneys:
- Lodging Investors Green Bay, LLC
- Lodging Investors Beloit, LLC
- Raupp Portfolio Fund, LLC
- Lodging Investors, LLC
The defendants in the case are as follows:
*Professional Hospitality, LLC - 2418 Crossroads Drive, Suite 3800, Madison
*Dean Grosskopf, 5508 Woodland Drive, Waunakee
*Jim Heyden, 1885 Hwy 175, Richfield
*Lodging Investors Menomonee Falls, LLC - N88 W14750 Main St., Menomonee Falls
*Ed Gallagher, 6390 Brandywood Drive, Sun Prairie
*William Krueger, 7157 South Hill St., De Forest
*ABC Insurance Company - no address on record
Dean Grosskopf, Waunakee, is also the subject of at least three foreclosure actions as recent as September of 2011 according to court documents on file with Dane County and the Wisconsin Court System websites including one with Jim Heyden his Menomonee Falls Radisson Hotel Partner (Associated Bank and sheriff sale http://pdf.countyofdane.com/sheriff/sales/11011098.pdf and Park Bank http://wcca.wicourts.gov/caseDetails.do;jsessionid=54079DD257ABA7CD60EAF96A8ADB7056.render6?caseNo=2011CV002558&countyNo=13).
The specific court case numbers are 11-CV-1077, 11-CV-002558 and 11-CV006808.
Grosskopf and Professional Hospitality, LLC have apparently been evicted from their 2418 Crossroads Drive, Suite 3800, Madison Office because a simple search for office space in Madison lists this address as available to lease at $13.75 sf/year (http://www.loopnet.com/Listing/17278241/2418-Crossroads-Drive-Madison-WI/) and according to a tipster to The Vanguard.
According to documents obtained through an Open Records Request with the Village, two of the original partners for the hotel and restaurant in early 2010 before the Village Board are not named in the lawsuits.
Dave Gilbert, 10% ownership interest, and Paul Nooyen, 10% ownership interest, were originally listed in the Village documents as part of the 5 member group who had to submit financial statements, marital property agreements, spousal consent forms and collateral assignments in order to get the $18,000,000 bond issue, plus interest at 4.25% a year (about $750,000), recommended by the Village Manager, Village Attorney and their agents that was ultimately unanimously approved by the Village Board.
Nooyen had listed on his financials the Wisconsin Retirement System Pension Plan (WRS http://etf.wi.gov/) as one of his assets in the amount of $324,000 at the time for possible collateral.
Gilbert and Nooyen are listed as President and Vice-President of Gil-Her, Sun Prairie, respectively (http://www.powerprofiles.com/profile/00005148001692/GIL-HER+LTD-SUN+PRAIRIE-WI).
Typically, public employees can not take lump sum cash settlements unless they are in pre-retirement years (i.e. under 55) and then the employee forfeits 50% of their pension plan account value upfront and would also have to pay current state and federal income taxes unless the account is rolled over to a qualified retirement plan (i.e. IRA).
Ed Gallagher was not listed in the Village documents as one of the original partners for the hotel and restaurant in 2010 and now claims to be an inactive member according to the court documents in Dane County.
The 12 specific charges outlined in the lawsuit against the Menomonee Falls Radisson Hotel and RBG Restaurant Partners for the alleged missing $1.2 million are as follows:
- Breach of contract for the hotel management agreement for the Green Bay Fairfield Hotel
- Breach of contract for the hotel management agreement for the Beloit Fairfield Hotel
- Breach of fiduciary duty
- Conversion of funds for personal use
- Theft of funds
- Injury to business
- Intentional misrepresentation
- Negligent misrepresentation
- Conspiracy to commit fraud
- Punitive damages
- Disgorgement of improperly obtaining funds
- Constructive trust
Of course the Menomonee Falls hotel and restaurant owners deny most of the charges.
One of the Menomonee Falls partners (Krueger) resigned from the group on 2-28-11.
Another member of the Menomonee Falls group (Gallagher) feels that he is an inactive member.
The motion hearing for the $1.2 million lawsuit against the Menomonee Falls Radisson Hotel and RBG Restaurant Partners in Dane County is November 23, 2011.
Waukesha County Court Documents Reveal 6 Construction Lien Lawsuits Against Falls Radisson Hotel Owners
Court documents in Waukesha County also show at least 6 lawsuits have been filed by various companies and businesses against the Menomonee Falls Radisson Hotel and RBG Restaurant Owners since June of 2011 totaling nearly $3,000,000 as construction liens and are pending before the judge.
The plaintiffs, outstanding amount due to contractors and court case numbers in Waukesha County against the hotel and restaurant owners in Menomonee Falls are as follows:
- Court Case 11-CL-000079 - Gypsum Supply Company - Madison - $24,669.99
- Court Case 11-CL-000085 - NIC Meyer Construction - Sussex - $27,995.60
- Court Case 11-CL-000092 - GIL-HER, LTD - Sun Prairie - $2,775,483.17
- Court Case 11-CL-000098 - Don Stevens - Egan MN - $15,054.40
- Court Case 11-CL-000106 - Craftmaster Painting - Milwaukee - $37,615.50
- Court Case 11-CL-000109 - Horner Plumbing - Pewaukee - $80,336.95
Former Village President and private real estate attorney, Rick Rechlicz, whose office is located across the street from the hotel and restaurant that is included in the TIF District Revitalization of Main Street and currently for sale, has represented the property owner in the case and was recently quoted publicly as saying,
"The situation is not adversarial."
Of course not.
Being accused of stealing money and not paying contractors for millions of dollars is not adversarial at all.
Rechlicz was well known for using his public office position while Village President to recruit clients who had business before the Village and would then collect on free rent, campaign donations, barter agreements, referrals and real estate transactions in exchange for getting projects approved before the Village Board while sometimes recusing himself or abstaining from voting.
Rechlicz had never represented any of the clients before as their attorney until he became Village President.
Bernie Madoff and Solyndra Come to Mind
There is no other way to look at this situation other than to say that this is a total mess and someone(s) is going to go to jail or will be forced to resign from public office or their public positions with the Village Government once everything is said and done with the courts.
If these accusations are true against the Falls Hotel and Restaurant Owners, then the potential exists that the taxpayers of Menomonee Falls may have another Bernie Madoff and or a Solyndra situation(s) on their hands thanks in part due to the actions of the Village Manager, Village Attorney, Village Board and their agents.
It is unclear until the court process is exercised just what the liability will be for the taxpayers of Menomonee Falls partly because of the actions of the Village Manager, Village Attorney, Village Board and their agents.
The taxpayers are on the hook for the entire $18,000,000 bond issue, with interest, for the hotel and restaurant project recommended to and unanimously approved by the Village Board in May of 2010.
In the words of US Senator Howard Baker, R-TN, during the Watergate Scandal of the Nixon Presidency, it will be interesting to learn,
"What did the Village Officials and Village Board know and when did they know it?"
Menomonee Falls Radisson Hotel and RBG Restaurant Plagued With a Long History of Legal, Financial and Ethical Problems
The hotel was purchased by one of the current business partners being sued in Dane County in 2003 with the general understanding and possible hopes of the Village helping to secure financing to renovate the facility when the parties met informally with Village Staff, financing reps, real estate reps and the Village President at the time to explore possibilities as any good business person(s) and officials would do before any formal decisions and or approvals are reached.
The hotel had become the brunt of so many jokes since the '80's about how terrible Main Street was in Menomonee Falls as the hotel was the poster child for how pathetic that area of the village had become from the standpoint of the lack of commerce, a declining tax base, evaporating jobs and challenged aesthetics for so many years with the Village Board and Staff literally doing nothing other than to watch it deteriorate into a state of almost total disrepair.
Because of jealousy, envy, who might get the credit if something would actually get done and outright hatred on the part of most of the long time serving Village Board Members toward a minority of newer Board Members in 2003, the hotel owner was left with empty promises from the Village and extortion attempts from some members of the Village Board in exchange for their votes to approve his projects if the hotel owner would pay them cash or buy their property on Main Street.
The hotel owner's proposal in 2003 to help secure private financing with the Village's assistance to help guarantee the loan, was voted down twice by a vote of 6-1.
Village Board Trustees Try to Extort Hotel Owner in Exchange for Their Approval of Hotel Project
Trustee Mike McDonald wanted cash under the table from the hotel owner and the hotel owner's potential partner at the time, in exchange for his vote when the Trustee and Menomonee Falls Municipal Judge, Mike Hurt, would meet at the North Hills Country Club with the hotel owner and his potential partner to solicit cash payments in exchange for the promise of getting approval for the project.
Trustee McDonald is often times the subject of legal issues with law enforcement officials involving drunk driving, obstructing officers and being in a bar after hours.
Judge Hurt was paid thousands of dollars in cash by one of the hotel owners when the judge promised to "lobby" the Village Board for their votes to approve the hotel project if the hotel owner would stay away from certain Village Board Members because the judge promised the hotel owner that these certain board members would be "taken care of" in the near future.
The judge later had to resign from the bench as the Menomonee Falls Municipal Judge as a result of the Wisconsin Supreme Court disciplining the judge for taking money under the table instead of passing it through the law firm the judge represented, for not reporting complete client lists to law firms to avoid potential conflicts of interest and for violating terms of probation imposed by the disciplinary division of the Supreme Court dating back to the late '90's as part of the investigation and probationary terms (http://www.wicourts.gov/services/public/lawyerreg/statuspublic.htm).
The other potential hotel owner went back to Illinois after Judge Hurt and Trustee McDonald asked for cash in exchange for getting votes to approve the hotel project proposal.
The potential Illinois business partner had built the lovely and highly successful Hilton Garden Inn complex at the Hwy 41/45/Good Hope Road intersection that along with the other hotel (Comfort Suites) in that area contribute approximately $750,000 a year in property and hotel taxes to the City of Milwaukee at no cost to taxpayers according to the Milwaukee Convention and Visitors Bureau.
Trustee Jeff Steliga and non-profit corporation Falls Fest Treasurer, along with his father, Bob Steliga, former Village President and current non-profit corporation Falls Fest President, tried to force the hotel owner to purchase the ill fated empty theater across the street from the hotel on Main Street in exchange for their approval of the hotel project which the Steliga Boys illegally obtained at a 75% discount from Marcus Corporation in 2003 in exchange for the Steliga Boys helping to get votes from the Village Board to approve 4 new movie screens for Marcus at their new complex near Applebee's.
The hotel owner refused to buy the empty and run down theater from Falls Fest.
Taxpayers funded studies, consultants, surveys and focus groups approved by the Village Board for the hotel project for well over $1,000,000 starting in 2003, showed that the revitalization of Main Street, that had been neglected for so long, was in the best interest of the Falls if Main Street was ever going to come back to life.
Village Board Members, the Village Manager at the time, the Village Attorney and their agents in Closed Sessions during 2004 mocked, made fun of and openly ridiculed the hotel owner for his project request because in their words, "Well the Village might as well just buy the hotel, rebuild it and deed it back to the hotel owner upon completion."
The empty and run down theater was recently purchased after 8 years of failed attempts by Falls Fest to flip the property and to rid themselves of this albatross by the Wal Mart Grocery Store Developer from Tennessee.
As part of the redevelopment plan for the shopping mall at Pilgrim Road and Main Street, the developer would receive somewhere between $800,000 - $1,000,000 of taxpayer funds for the project from the Village Board which is made up of some Falls Fest Board Member(s) and or affiliates.
Trustee Jim Jeskewitz has been on the Board of Directors for Falls Fest at different times over the years and is still affiliated with the questionable non-profit corporation that has come under scrutiny over the last several years for "unusual" real estate transactions, indirect taxpayer funding, failure to repay a taxpayer funded loan(s) and their non-profit status.
Prominent Waukesha County Board Chairman Jim Dwyer, democrat, is also affiliated with Falls Fest.
Hotel Shuts Down in 2006 While Waiting for Public Funds
The hotel was starved for funds from the outset in 2003 and when the hotel owner wouldn't give Trustee McDonald cash in exchange for his vote after being repeatedly promised by the trustee that his project would be approved, the hotel was closed in the fall of 2006.
The hotel eventually closed in 2006 when it became apparent that it would be more cost effective to close the hotel instead of keeping it open.
According to Waukesha County Property Tax Records (http://tax.waukeshacounty.gov/ N88 W14750 Main St.), the hotel owner fell behind in property tax payments at various times while waiting for public funds to rebuild the hotel as promised by Trustee McDonald and the judge.
With a new village manager on board in 2007, the project received a life line and in 2008 a developer's agreement was unanimously approved by the Village Board at the recommendation of the Village Manager and Village Attorney and their agents that promised completion of the hotel, restaurant and condo projects along with TIF District Financing to be completed by the end of 2008.
As soon as the project started in August of 2008 with the gutting of the building and the sewer and water works being completed to the facility at taxpayer expense, the project all of a sudden stopped.
Another amount in excess of $1,000,000 was spent on the start of the project that included water and sewer projects, purchase of property on Main Street from Ernie Von Schledorn and legal fees.
Village Officials and the hotel partners publicly stated that the project was stopped because the hotel partners couldn't get "financing".
Wouldn't a responsible Village Board and Village Staff had done their due diligence to make sure that the hotel project had or would have been able to have secured financing before a developer's agreement would be approved?
What else happened in the fall of 2008?
The crash of the housing and financial markets.
The project sat dormant for over 2 years while being compared to the Baghad Hotel.
The hotel owner was facing potential bankruptcy and or foreclosure because he had mortgages totaling around $3,000,000 with 3 different banks that weren't being paid for a piece of property that was assessed at about $1,500,000.
A tad under water one might say which had become common place for most home owners in America in 2008.
$18,000,000 Taxpayer Bailout to the Rescue
Adopting the Barrack Obama liberal and progressive Keynesian economic model of, "...government knows best and spends the most to stimulate the economy" mentality, the Village Manager, Village Attorney and their agents recommended to the Village Board to approve a 4-year, $18,000,000 bond issue, with interest, from taxpayers in May of 2010 as part of yet another developer's agreement.
Using a page out of the progressive liberal democrat bailout playbook, the Village Board unanimously approved the Village Manager's recommendation of the $18,000,000 bond issue at 4.25% for the hotel owners that has a no interest payment clause for the first two years that is picked up by the taxpayers at approximately $750,000 a year.
The hotel owners have to make semi-annual principal payments (May/November) ranging between $400,0000 - $700,000 on the $18,000,000 before the entire bond issue is scheduled to be paid off by the hotel owners in 2014.
The partners had to provide financials, collateral assignments, spousal consent forms and marital property agreements in order to get the $18,000,000 from the taxpayers.
The partners are of course leveraged to the hill on all of their assets giving them and ultimately the taxpayers of Menomonee Falls very little if any equity or collateral should something go wrong with the project.
This mess would definitely qualify as something gone wrong.
An Open Records Request has been submitted to the Village to see how the $18,000,000 in funds was dispersed to the partners along with whether or not the partners have made their May and November 2011 $700,000 principal payments as required by the developer's agreement.
The Vanguard is trying to determine if the partners of the hotel were given the $18,000,000 cart blanche or did the Village hold the funds until bills were presented by the partners and then payments were made directly to the contractors by the Village.
It appears from the many lawsuits filed in Waukesha County that the Village just gave the partners the $18,000,000 to do with it as the partners saw fit.
Village Officials and Trustees stated publicly that this project had to be done because "things" had come too far not to in order for Main Street to be revitalized.
The $18,000,000 bond issue in 2010 brought the total Debt Service (principal and interest) for taxpayers in Menomonee Falls to $120,000,000 (http://www.menomonee-falls.org/DocumentView.aspx?DID=1564 page 24).
The DNR also fined the owners of the project for illegally depositing asbestos contaminated materials in the Menomonee Falls landfill without a permit or inspection.
The total amount of the fines was approximately $6,000 in 2008.
The Village Board still gave the partners the $18,000,000 in spite of the asbestos mess.
It is unclear if the taxpayers paid for those fines or if the owners did.
Anyone care to guess?
Probably the taxpayers.
The hotel and restaurant had a soft opening in May of 2011 with a formal opening in June of 2011.
Village Trustees have publicly raved and marveled at how great this project is for Menomonee Falls and how wonderful things are going for the new hotel and restaurant.
It is unclear if Radisson or RBG Corporate are aware of the many financial and legal issues facing the Menomonee Falls Partners.
Radisson Corporate has been contacted and state that they are indeed aware of the lawsuits and can not make any public comments at this time.
What do you think?
1. Will the judge in Dane County order the Menomonee Falls Partners to repay the hotel owners in Green Bay and Beloit their alleged missing $1.2 million?
2. Will the judge in Waukesha County order the Menomonee Falls Partners to pay the contractors their $3,000,000 in contractor fees?
3. Where will the Menomonee Falls Partners get any money to pay these bills if they are insolvent, leveraged to the max, facing multiple lawsuits and in receivership?
4. Will there be a liquidation sale of the hotel and restaurant?
5. Will the Menomonee Falls Partners be able to pay back the $18,000,000 to the taxpayers in 2014?
6. How long will the local press and media continue to cover up this story that has been out there since May of 2011?
7. Is the lack of coverage by the local press and media a sign of journalistic malpractice?
8. Will the taxpayers of Menomonee Falls end up owning the hotel and being part of the lawsuits?
9. What will be the average cost to taxpayers be if the $18,000,000, with interest payments of $750,000 a year due, be?
10. Even with the knowledge of the truth about this corrupt deal that is pending in court, will the taxpayers of Menomonee Falls even care?
Bonus question: Should any or all of the Village Officials and or Village Board Members have to resign because of the apparent dereliction of duty? Should the DA of Waukesha County be part of this to investigate any potential corruption that has taken place at the expense of taxpayer funds?
How to Contact Your Village Officials and Board Members
Where are the "leaders" of Menomonee Falls when they are needed? Where's Joe Greco? Where's Bob Steliga? Where's Sue Jeskewitz? Where's Dick Farrenkopf?
Oh that's right, they would probably approve of such things as this knowing their stellar track record with the MMSD mess, the Milwaukee Water agreement, the Ambrosia Chocolate loss, the double-dipping contracts for Village Retirees, unused sick leave cash payouts to retirees, free health care to retirees until they reach 65, lack of any measurable contributions by employees for health care and pensions, massive amounts of Village Debt Service, real estate deals with non-profits and Village Board, failure to repay loans to Village with non-profits, shaking down businesses for cash in exchange for votes like Marcus Theaters/The Chamber Building Agreement and the Waste Management revenue loss to mention a few.
Here is the list of the culprits who recommended and approved this colossal failure that taxpayers will be stuck with forever if you want to make your thoughts known to them:
1. Randy Newman, N74 W153000 Stoneridge Drive, 262-255-0183, firstname.lastname@example.org
2. Dennis Farrell, N94 W15987 Cherokee Drive, 262-251-1281, email@example.com
3. Jim Jeskewitz, N80 W15239 Hilltop Drive, 262-251-9595, firstname.lastname@example.org
4. Jeff Steliga, W209 N9106 Scenic Drive, 262-255-1114, email@example.com
5. Mike McDonald, W162 N7406 Tamarack Trail, 262-255-2365, firstname.lastname@example.org
6. Steve Raymonds, N76 W13657 Upper Circle, 262-255-5853, email@example.com
7. Sharon Ellis, N79 W15360 Goldenrod Drive, 262-255-6478, firstname.lastname@example.org
Mark Fitzgerald, W156 N8480 Pilgrim Road, 262-532-4241, email@example.com
Mike Morse, W156 N8480 Pilgrim Road, 262-532-4251, firstname.lastname@example.org
Village Financial Director
Mary Datka, W156 N8480 Pilgrim Road, 262-532-4230, email@example.com
Feel free to leave your comment.
The Vanguard welcomes any corrections, clarifications and or changes to this story.
There's more to come when the truth finally comes out!