Apr. 12, 2006 - The owner of a failed North Raleigh hotel was charged Thursday with embezzlement of $69,000 in state and county taxes.

Dwight Elam, head of Northeast Investments, a Henderson company that ran the Hotel Europa on Capital Boulevard, was arrested Friday by agents of the state Department of Revenue.

The three counts of felony embezzlement stemmed from the hotel's operation, said Tom Dixon, director of the Department of Revenue's criminal investigations unit.

According to the warrants, Elam, as head of Northeast, failed to pay:

* $18,153 in sales tax to Wake County;

* $18,131 in state income tax from his employees' wages;

* $32,677 in state sales tax.

Embezzlement is a more serious charge than nonpayment of taxes. It implies that the money was withheld and used for other reasons, Dixon said.

In a telephone interview Tuesday, Elam said that he received no notification from the department before he was placed under arrest for the charges.

"The taxes, from my understanding, was [sic] paid," Elam said. "This came up out of the air from nowhere."

The hotel's former employees dispute Elam's account.

Kathy Williams, the former general manager of the Hotel Europa, said money management was a problem at the hotel.

"I do know that we filed our taxes, but we didn't pay any taxes," Williams said.

The arrest Friday stems from an investigation into the hotel's finances begun by the revenue department last year, Dixon said.

Elam's arrest follows a settlement with the North Carolina Board of Labor for nonpayment of back wages to former hotel employees.

Formerly a failed Holiday Inn, Hotel Europa was opened by Elam in 2004 after a $1 million renovation. The 270-room hotel, on Capital Boulevard near Brentwood Road, promoted itself as a black-owned and operated establishment.

In September the hotel closed in the wake of a $360,000 lawsuit for failure to pay rent to the building owners, First Hospitality Corporation of Raleigh.

The hotel has since been sold to a medical group in California as an investment property.

Elam is out on a $70,000 bail and has a May 1 court date at Wake County Superior Court.

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