Bogus spending made profit a loss

Our Opinion

News-Gazette, Champaign, IL
Published Wednesday May 21, 2008

A state audit shows why a Springfield hotel financed by taxpayers wasn't profitable.

One needn't be a genius to smell a rat when a Springfield hotel portrayed as a consistent money loser suddenly started making money under new owners.

So it doesn't come as a huge surprise that an audit of finances at the Abraham Lincoln Hotel and Convention Center in Springfield shows the former owners – Springfield power broker Bill Cellini and a host of politically connected friends – were playing fast and loose with the cash.

What's distressing is that they owed more than $30 million (an original $15 million loan plus interest) to the state on a loan backing the hotel's construction. Because the hotel supposedly wasn't making any money, the owners were excused from making payments on the debt under the terms of a sweetheart loan restructuring negotiated in the final days of the administration of former Gov. James Thompson.

The state took control of the Abraham Lincoln last year, and things are going very well. No wonder, the money now is being properly handled.

A recently completed audit, the results of which have been turned over to the FBI, shows the extent of the funny business. The audit reveals the former owners spent $2 million in hotel revenues on unrelated expenditures to make it appear the hotel was losing money. They included transferring nearly $500,000 in cash to a Cellini-related enterprise for no apparent work, spending more than $700,000 on legal fees generated by the owners and a variety of other questionable payments.

So if it wasn't already abundantly clear, it's now even more obvious that Gov. Thompson's decision in the early 1980s to loan taxpayers' money to finance the hotel's construction was a politically motivated disaster. The owners never made any realistic effort to repay the debt. They repeatedly, on the basis of their dubious accounting decisions, tried to persuade the state to accept pennies on the dollar to write off the debt. And they spent years in court fighting the state's effort to foreclose on the property.

It's not a pretty picture, although it's certainly not unfamiliar to Illinois residents who routinely watch the privileged elite stuff themselves at the public trough while our elected officials keep it stocked.