|By Julie Wernau, Chicago
TribuneMcClatchy-Tribune Regional News
Oct. 12, 2012--A hotelier and contractor have been indicted by a federal grand jury on allegations that they conspired to bilk two Illinois banks out of millions of dollars.
According to the indictment, a hotelier named Atul Bisaria convinced both Mutual Bank in Harvey, which has since failed, and Chicago's Broadway Bank to loan him in excess of $9 million and $10 million each to renovate and redevelop a Doubletree Hotel in Boca Raton, Fla. and a Ramada hotel in Cincinnati, Ohio.
Through his contractor, Steve Lewis, owner and president of Contract Purchasing and Design, Bisaria allegedly sent invoices to the banks for everything from steel to air conditioning work that it claimed the money was being used to fund. In reality, that work wasn't being done, according to the indictment.
Instead, the vast majority of the money ended up in Bisaria's personal piggy bank and was used to prop up failing hotel properties in Nebraska and Pittsburgh as well as properties in India, according to Michael Popok, an attorney with Weiss Serota Helfman PL representing United Central Bank, which has since acquired the assets of Mutual Bank.
The Boca Raton transaction is one of several pending federal and state lawsuits United Central Bank has pending against Bisaria, said Popok.
In all instances, the transactions allegedly followed a similar pattern -- Bisaria would take out a mortgage for a hotel property, along with a construction loan, make superficial changes to the hotel property and then funnel the borrowed money elsewhere. The bank has successfully foreclosed on one property owned by Bisaria in Detroit and is also seeking the same for the Boca Raton property, he said.
In that case, Bisaria allegedly told the bank he would be adding two stories to the property.
"The only thing he built," said Popok, "was a pile of invoices."
Similarly, according to the indictment, the money Broadway Bank loaned for renovations in Cincinnati did not fund renovations as promised.
The Federal Deposit Insurance Corp. is embroiled in a $104 million lawsuit in connection with the April 2010 failure of Chicago-based Broadway Bank. Among the defendants are former President Demetris Giannoulias. His brother Alexi, who lost a U.S. Senate race amid questions about his role in the bank's troubles, isn't named as a defendant.
Lewis and Bisaria could not be reached for comment Friday. Bisaria's attorney did not immediately return a call.
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