Nov. 1, 2003 - The board of the Denver Metro Convention & Visitors Bureau has placed bureau chief Eugene Dilbeck on administrative leave.

The bureau is under review by the city auditor, and a recent investigation by Denver's Channel 7 captured images of members of Dilbeck's administration hosting an event at a Denver strip club.

"The executive committee of the board of directors for the Denver Metro Convention & Visitors Bureau has placed bureau president Eugene Dilbeck on administrative leave with pay," said bureau spokesman Rich Grant, reading from a statement issued late Friday.

The statement said Richard Scharf, head of sales and marketing, is assuming the role of acting president.

Dilbeck wasn't available for comment Friday.

Denver Auditor Dennis Gallagher's office is conducting a review of how the bureau spends public money and has already determined that the bureau "commingled" tax money with private funds.

"It's not a violation of their contract with the city, but it makes it difficult to determine how they are spending the money," said Gallagher's spokesman, Denis Berckefeldt. "We told them that they have to change that, and they are committed to making that change."

Berckefeldt said the bureau had a budget of about $7 million last year -- with about $5.4 million that came from the bureau's share of hotel taxes.

The auditor's review of the bureau's spending, launched at the request of Mayor John Hickenlooper, will take about two months.

The auditor will look for specific violations of the city's contract with the bureau, such as whether the bureau used public money to buy alcohol. But drawing conclusions could be difficult because of how the bureau has handled its money.

Dilbeck was a strong backer of Hickenlooper's effort to become mayor. After winning the election, Dilbeck recruited volunteers to work on Hickenlooper's transition to power at City Hall.

Dilbeck was instrumental in the push to expand the city's convention center. Voters approved a $268 million expansion of the Colorado Convention Center in 1999, and the City Council this spring approved public funding for a $374.3 million hotel next to the center.

The expansion is expected to be completed in December 2004 and the hotel by 2006.

"Right now we are on pace to double the amount of future convention bookings," Dilbeck said in a statement released Wednesday, revealing that his bureau had booked $1.1 billion in future convention business and that another $900 million in business was tentatively booked.

Dilbeck was named director of the bureau in fall 1993. He replaced eight-year director Roger Smith, who abruptly resigned in 1993 amid criticism from the bureau's board concerning his job performance.

Dilbeck came to Denver from the New Jersey Travel and Tourism Division, where he had worked for three years. He jumped into the Denver bureau's wheelhouse just after voters killed a statewide tourism tax, leaving the state without tourism funding for the first time in a decade. Since then, he has championed tourism -- and the need to secure consistent funding for tourism promotion -- in dozens of arenas within Colorado.

Dilbeck has served on the governor-appointed board for the Colorado Tourism Office since its inception in 2000. He chairs the office's research committee, which this year is burdened with the task of proving to state legislators that the recent one-time injection of $9 million in tourism funding was a worthwhile investment. Last year's $2.5 million campaign yielded $12.74 in state and local taxes for each dollar spent.

"Truly you don't see an individual who is more passionate or more knowledgeable or more willing to work with every community in Colorado on tourism issues," said Sarah MacQuiddy, former chair of the state tourist board and executive director of the Greeley Convention & Visitors Bureau. "My mouth is hanging open on this."

Last week, Channel 7 news launched an investigation into how the bureau spends the money provided by the city to help lure conventions to Colorado. When the bureau rebuffed Channel 7's request for access to bureau expense reports, the news cameras followed the bureau administration to a two-hour event at the Diamond Cabaret, a Denver strip club.

City Councilman Doug Linkhart said leaders at the bureau showed poor judgment in holding a meeting at a strip club when its spending was under investigation by a television reporter.

"I would think that having a staff meeting at an inappropriate location with people doing inappropriate things would be a good cause for a reprimand," Linkhart said.

City Council President Elbra Wedgeworth said she believes the bureau has used public money appropriately.

"The visitor's bureau has always been diligent in how it spends city funds," Wedgeworth said. "I'm confident that there will be due diligence in reviewing that spending."

Wedgeworth said the bureau discloses how it spends the public money it gets to promote tourism and lure conventions to Denver, and that any spending of private money should be left to the bureau's discretion.

The mayor's office said it had nothing to do with the decision to put Dilbeck on leave and will leave the decision in the hands of the independent nonprofit board that oversees the bureau.

"The Convention & Visitors Bureau is a critical part of the city's economic future," said Hickenlooper in a statement. "I have full confidence in the board's ability to decide what course is best for the bureau."

But the mayor's office also called for the bureau's books to be open regarding the use of public money.

"The Convention & Visitors Bureau has generated an enormous return on taxpayers' investment," said mayoral spokeswoman Lindy Eichenbaum Lent. "That said, the mayor believes that the portions of the bureau's records that involve public tax dollars should be open."

By Jason Blevins and Mark P. Couch.

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(c) 2003, The Denver Post. Distributed by Knight Ridder/Tribune Business News.