GREEN BAY, Wis. (WBAY) - Five Green Bay aldermen gathered Monday to accuse Mayor Jim Schmitt of fraud and deception regarding the funding of the Hotel Northland project.
Alderman Guy Zima led a news conference to detail a complaint claiming Schmitt diverted $3.2 million in public funds to a bank account used by Northland owner Keith Harenda. Zima alleges Harenda used the money to "pay himself."
Zima says they are accusing Schmitt of perjury, ongoing intent to deceive, fraud, and violation of public trust. They are asking the Brown County District Attorney's Office to open an investigation into the matter.
Zima also accuses Schmitt of diverting $500,000 to help settle a private lawsuit between former owner Michael Frantz and Harenda. Zima says Mayor Schmitt and his staff "lied and conspired to deceive" the Redevelopment Authority and City Council to settle the lawsuit between Frantz and Harenda.
Thomas De Wane, Andy Nicholson, Chris Wery, and Mark Steuer joined Zima at the news conference.
Mayor Schmitt responded to the alderman's claims in a statement after the news conference.
Mayor Schmitt said the aldermen's "explanations of the events that transpired in the last 10 months regarding the Hotel Northland reveal a deep misunderstanding of financing and banking."
Schmitt also said the aldermen do not comprehend that the city does not own the hotel.
He went on to say that senior staff members Kevin Vonck and Vanessa Chavez are "well versed" in creating contracts and development agreements, and work hard to "bring innovated development to our community."
"If not for these alders' obstructionist tactics, the Hotel Northland would have long been open by now," read Schmitt's statement.
"I am disheartened by the inaccurate and malicious statements made by Alderman Zima during the press conference he called today [Monday] regarding the Hotel Northland," said City Attorney, Vanessa Chavez in a statement.
Chavez says this project has been talked about publicly for the last 10 months and at no point did Alder Zima take the opportunity to speak with her about any of the issues Zima brought up at the news conference.
"We did not offer money to settle the private dispute between Mr. Harenda and Mr. Frantz. Claiming that we did is an absurd spin on the situation." said Chavez.
Chavez says she has not received a copy of the complaint, she plans to cooperate "with any investigation so that we may put these allegations to bed once and for all."
Development Director, Kevin Vonck also said in a statement Monday that he is "appalled" at the accusations the aldermen made.
"This project has been a challenge to keep moving forward, especially when several of the same Alderpersons have privately worked against the recommendations of city staff," read Vonck's statement.
On Oct. 12, Schmitt tweeted that power was back on at the hotel and that it would open in 2018.
Earlier in the month, a judge appointed Oshkosh-based attorney Paul Swanson as receiver for the Hotel Northland, giving him power over the financial decision making for the project.
Green Bay's City Council approved receivership for the project with two goals in mind.
One goal is to pay millions of dollars owed to vendors and subcontractors for work completed on the $44 million project. Once the debt is paid off, the receiver would put the hotel up for sale and decide a new owner.
In August, Action 2 News reported that lender Octagon Finance was willing to put forward money to finish the project and pay the contractors.
The second goal is to get the hotel open by July 2018.
The project has been delayed multiple times due to a fight over ownership of the hotel, the inability to secure a senior lender, and a lawsuit over unpaid work.
Work on the hotel restoration was halted several months ago because KPH Construction had not secured financing to continue the project.
KPH Construction has said that work on the project is 75 percent complete.