Partner in Fox Lake hotel proposal accused of misusing money
The main partner and general manager of a Fox Lake hotel proposal is accused of misusing money for the development, including paying off personal debts, according to a lawsuit filed in federal court in Chicago.
Michael Stessman, former managing partner for Fox Lake Lifestyles LLC and former manager with inPlay family entertainment, misspent about $2 million of a $5.1 million construction loan from an Iowa bank that was intended to purchase, maintain, clear and build on a 10-acre site on Route 12, a half block south of Eagle Point Road, the April 2 lawsuit filed by Fox Lake Lifestyles states.
The allegations include that Stessman pocketed more than $624,000 from Fox Lake Lifestyles - the hotel project's parent company - and paid money to a construction company for work on a storage dock that has not been done.
Attempts to reach Stessman on his cell phone were unsuccessful Monday. Stessman, who has reportedly left inPlay, has not been criminally charged or indicted in connection with the accusations, lawyers for Fox Lake Lifestyles said Monday.
The bank that distributed the funds, Bank Iowa, is also named in the lawsuit; it is accused of issuing individual payments to Stessman without checking to ensure the funds were used on the hotel. The Lake County sheriff's office also has been named so Fox Lake Lifestyles can stop an April sheriff sale on the property due to an unpaid claim from a previous lawsuit.
Gary Meyers, a consultant with Fox Lake Lifestyles, said the project isn't dead, but acknowledged little work has been done, and the development has been at a standstill for 10 months.
"The village officials are determined to get a hotel in town," Meyers said. "But, yes, plans for the hotel are in a holding pattern right now and we have some real hoops to jump through."
Stessman announced in a 2006 village board meeting he intended to build a $22 million, 80-room Holiday Inn Express hotel, banquet hall and inPlay game facility on the former "Sayles property" that abuts Pistakee Lake.
Some of the claims in the lawsuit are:
• Stessman took $361,000 from the first payment from the Iowa bank to Fox Lake Lifestyles to pay off personal debts.
• Stessman gave contractor James Tiemann or his company Tiemann Co. of Nebraska more than $842,000 for construction of a drystack storage facility on the hotel site. The facility was to have been completed by April 2008, but has not been built.
• Stessman withdrew $100,000 from the Fox Lake Lifestyles LLC bank account to pay for plans and specifications needed to bring in Holiday Inn Express as the hotel chain for the property, but that money was never used for those purposes.
• Stessman withdrew $58,000 from the Fox Lake Lifestyles bank account to pay the parcel's property taxes. However, the lawsuit alleges Stessman did not pay the taxes and, instead, forged a receipt to show investors the taxes were paid.
"We are trying to get all of this resolved," Meyers said. "In my opinion, it appears the bank behaved in a very negligent fashion in issuing this money without checking to make sure work was completed."
Fox Lake Village Manager Nancy Schuerr said the village was reviewing the lawsuit and is unclear on the future of the project.
"We just received the lawsuit and need to look it over before we can officially comment," she said. "But, we are committed to bringing a hotel to Fox Lake."