Super Lawyers
The Netional Trial Lawyers - Top 40 Under 40
Avvo Clients Choice
Avvo Top Contributor
Avvo Rating
Published on:

Two Illinois Businessmen Accused of Embezzling Funds Related to Pere Marquette Hotel Complex Development

pexels-pixabay-164595-300x200Two Illinois businessmen have been indicted for their alleged role in a scheme to embezzle revenue from hotels in Peoria in order to enrich themselves and their business interests from 2008 to 2018.

Gary E. Matthews, 78, and Monte J. Brannan, 67, both of Peoria, are charged with mail fraud, money laundering conspiracy, and money laundering. The 67-years old suspect faces an additional three counts of concealment of bankruptcy assets. It is unclear if they have acquired legal representation.

According to a Department of Justice news release, the older suspect is the founder of GEM Hospitality, a company created in 2008 to develop a hotel complex in downtown Peoria. The defendants became business partners in July 2011, when the 67-year old defendant bought 50 percent ownership of the company for $1 million.

The City of Peoria reportedly signed a redevelopment agreement with the older partner in 2008 that included the renovation of the Pere Marquette Hotel in downtown Peoria and the development of the Pere Marquette Courtyard Marriott Hotel. The project received $92 million in loans from a fund known as Indure, which was pooled from multiple sources, including local banks, the City of Peoria, and private investors. The partners were not to touch the funds except as “explicitly stated” in the lending agreements, sources indicate.

Marriott International managed both the Pere Marquette after it reopened in 2013 and the Pere Marquette Courtyard Marriott Hotel after its opening in 2014. The defendants did not have access to the hotels’ revenues, so they worked to change that, the press release alleges. In 2014, the older defendant allegedly attempted to take control by claiming that the Marriott was a poor manager, but the city rejected the proposal. However, the city agreed to execute a side letter amendment to allow him to retain and manage First Hospitality Group of Rosemont.

The side letter amendment reportedly required the partners to file monthly compliance certificates with various stipulations, including one that prevented the pair from taking fee payments. The news release alleges that they filed only three certificates, all of which were false and then stopped complying with that requirement altogether. Both defendants directed FHG to transfer monthly payments from hotel accounts to their accounts and used those funds for personal expenses, according to the indictment. Financial statements FHG sent to Indure were purportedly misleading and listed the payments as monthly rent, garage rent, franchise expenses, and Marriott rewards expenses.

Both partners were allegedly aware that FHG could not pay for the hotels’ financial obligations, including payments to Marriott International and vendors. In June 2016, Marriott issued a notice of default for past due obligations of approximately $1.4 million. The defendants didn’t respond to the notice and instead continued to transfer money to themselves, the indictment claims. They reportedly only made a payment in 2017 after Marriott shut off the hotels’ reservation system.

After Marriot issued the notice, Indure also issued a notice of default on its delinquent loan and filed a foreclosure action. The indictment claims that the partners and their related businesses repeatedly delayed court proceedings while maintaining access to hotel funds. Even though they defaulted on loans and other duties, both purportedly continued to fraudulently transfer hotel revenues, diverting approximately $750,000 to themselves after the notice of foreclosure.

As a result of the scheme, they were able to transfer an estimated $13.8 million of the hotels’ revenues to an account they controlled and diverted approximately $1.6 million to themselves and their businesses. The younger partner was additionally charged with concealment of bankruptcy assets after he allegedly filed for bankruptcy in April 2018 and failed to disclose bank accounts, a vehicle, and $80,000 in cash.

A court date for the two business partners has not yet been scheduled. The investigation was conducted by the U.S. Postal Inspection Service and the IRS – Criminal Investigation Division.

South Florida Fraud Defense Attorney

Are you suspected of committing fraud in South Florida? Contact Brian Silber, P.A. to set up a free initial consultation with one of South Florida’s most experienced fraud defense attorneys.

Source: 12.16.20 Indictment alleges two Illinois businessmen embezzled funds related to pere marquette hotel complex development.pdf

Contact Information