Wednesday, March 11, 2009
7 News Investigations: Fontainebleau: Checked Out
If you ask people all over the world to name a hotel in South Florida, many would instantly say the Fontainebleau. It's been a legend for 50 years and recently finished an incredible renovation, but now Seven News investigative reporter Patrick Fraser has discovered that over a hundred companies who rebuilt the hotel are claiming they have not been paid for their work and say if they don't get paid they will try to foreclose on the hotel. What is going on? Here is Patrick's exclusive report.
WSVN -- It is a spectacular hotel where the owners spent $500 million to restore and re-invigorate the historic property.
Howard Karawan, Fontainebleau Resorts: "It's exciting. There is a buzz around, and everybody is humming, getting ready for the grand opening. It's a great feeling."
And the grand opening of the Fontainebleau was an eye opener. The November opening weekend cost the hotel millions of dollars as they brought in Victoria Secret models to walk the runway, and TV stars lined up to see the fabulous new Fontainebleau.
Martha Stewart: "I look forward to seeing every inch of it."
Clearly the owners of the Fountainbleau know how to put on a show, but the contractors who worked on the property claim they don't know how to pay their bills.
Beginning last summer, the hotel stopped paying many contractors. Today, the people who rushed to finish the hotel claim they are owed at least $22 million.
Tony Pino, Designers Tops: "They told me they needed some work done as soon as possible since they wanted to open up the Fontainebleau for the Victoria's Secret fashion show."
In November, Tony says his company installed the counter tops in the hair and nail salon. He cannot get paid.
Patrick Fraser: "How much do they owe you?"
Tony Pino: "Right now, about $25,000."
Ronald Finger says his firm put in the waterworks and drainage system for the Fountainebleau.
Patrick Fraser: "So, how much do they owe you today?"
Ronald Finger, KMC Corp.: "About $180,000."
Rob Branson says he did this marble and granite work as well as the stairways in the steakhouse.
Patrick Fraser: "How much do they owe you today?"
Rob Branson, Rob Branson Inc.: "Three separate parts totaling about $78,000."
The list of companies who say they are owed money by the Fontainebleau is long. More than 100 construction and supply companies have recorded liens since July, with amounts in the thousands, tens of thousands, hundreds of thousands. To this company owed two and a quarter million dollars and this electric company owed $3 million.
Jim Carmel, Builders Notice: "Extremely unusual, extremely."
Jim Carmel's company sends notices when construction jobs start and records liens when the companies don't get paid.
Jim Carmel: "I have been doing this since 1980, and I have never seen one like this, never."
It's devastating to many of the companies owed money because they have bills and employees to pay.
Rob Branson: "Business is very hard, and you need every dime, so it really hurts."
And further infuriating the contractors owed money, watching the hotel spend millions to show off the facility on opening weekend.
Tony Pino: "They've made a lot of money in the last month and a half or so, between the Victoria's Secret show, the Food and Wine Festival. I mean, they should be able to pay up some of their bills."
What happens if the Fontainebleau ignores the liens and refuses to pay? Legally, the next step is for the contractors to go to court and foreclose on the property, but that rarely happens and won't in this case, according to the man who runs the hotel.
Howard Karawan: "Just because a lien has been filed, does not mean that it is legitimate."
Howard Karawan is the chief operating officer of the Fountainebleau.
Howard Karawan: "We are in the process of going through an audit."
He says they stopped paying many contractors after he suspected a few were ripping off the hotel.
Howard Karawan: "This is the 22nd hotel in my career that I have been involved with, and I haven't seen the level of dishonesty and lack of craftsmanship, lack of integrity that I have seen on this job anywhere else."
There is no indication any of the contractors we interviewed are suspected of wrongdoing. In fact, when I told Karawan that Tony Pino's company needed their $25,000 quickly, he agreed to pay them this week, and he says, when the audit is done is six to eight weeks, other checks will start going out.
Howard Karawan: "We have every intention and will pay every contractor that has completed the work, according to the contract. We will be paying that contract in full."
Karawan says the new Fontainbleau is performing up to expectations, that they have the money to pay off the liens in full. It can't happen soon enough for the contractors.
Ronald Finger: "It's a great hotel. Service is great, very extravagant, beautifully done, but let them pay the subcontractors. The small man on the street needs to eat."
A historic hotel and a monumental headache for some people who helped restore it.