Thursday, July 23, 2009
7 News Investigations: Checked Out
A world famous resort does not pay the contractors who rebuilt the hotel. The contractors can't pay their workers, the workers can't pay their bills. It's not fiction, it's a fact. As 7 news reporter Patrick Fraser disclosed in March, the Fountainebleau said they would pay everyone in six weeks. It's now almost 20 weeks later, and what is happening? Here is Patrick's report.
Checked Out Two
WSVN -- Since the Fountainbleau re-opened last fall, the hotel has made headlines.
In May, Regis and Kelly broadcast live for a week, bragging to the nation about the hotel. In June, a rough day, as 9 inches of rain fell on Miami Beach, knocking a hole in what should have been a sturdy brand new roof. That storm cleared, but financial clouds still hover over the hotel after 7 News first reported in March, dozens of contractors who rebuilt the hotel are accusing the Fountianebleau of not paying them.
Patrick Fraser : "And how much do they owe you today?"
Walt Jordan, Lor Design: "$438,000 and some change."
Walt Jordans company did some of the metal work for the Fountainbleau, including the 7,000 bottle wine rack for Gotham Steak. The money Jordan says he is owed would drive some people to drink. It's almost driven his family owned business into the ground.
Walt Jordan: "Everyone I love it affects everybody that is involved with me, and trusted me, it affects them, direct affect."
Jordan has mortgaged his house to stay in business.
Walt Jordan: "Absolutely, I can't pay some of my bills now."
Rob Branson says if he doesnt get the $80,000 the hotel owes him, his company might go out of business.
Rob Branson, Rob Branson Inc: "They promised us that we were going to get paid immediately."
Horacio Leal's company did the fancy glasswork that graces the Fountainbleau.
Rob Branson: "And we did everything that they requested, but at the end not a penny."
Leal says he is owed $150,000.
He's in a long line of people claiming the Fountainbleau owes them money. Look at the lien amounts filed by contractors claiming they were not paid by the Fountainbleau for their work to remodel the hotel.
Patrick Fraser: "So, you think it's 44 million, about 44 million?"
Jim Carmel, Builders Notice: "Here is the Eon Electric one for 3.8, here's CCK Contractors for about 2 million."
When Jim Carmel last checked the liens against the Fountainbleau reached $44,000,000, double the $22 million in liens when we first reported the financial mess back in March.
Jim Carmel: "After you add these up, it's beyond comprehension, it really is."
Even worrying the contractors more, several have received these notices from the bankruptcy court handling the Fountainebleau's Las Vegas project. The work on that Fountainbleau Hotel ground to a halt when the project filed for bankruptcy. The letter told the Miami Beach contractors they also needed to file a claim to get their money.
Another headache for people like Branson who wonder if they will ever get their money.
Patrick Fraser: "You say it with like an, ehhhhhh."
Rob Branson: "I don't expect to get it, that's why."
The Miami Beach Fountainebleau told us they have no plans to file for bankruptcy. That this notice that went to seven of their contractors was a mistake. Their attorney sent this letter telling contractors to disregard the notice,
so if the hotel has the money, why haven't the contractors been paid the 44 million they say they've been owed for months. The hotel says because some people owed the money didn't earn the money.
In March, the head of the Fontainebleau, Howard Karawan told me the audit would be finished in 8 weeks. It's now been 19 weeks. Because of the ongoing litigation Karawan said he could not talk on camera now.
In a statement the hotel told me that their audit had uncovered and been slowed by an extraordinary degree of overbilling that they had paid more than 20 contractors who filed liens, plus many others who did not. That the fraudulent action of a few contractors has created a hardship for many honest and good ones. The audit is now expected to be finished in September, and the statement also made the same promise Karawan made to me four months ago.
Howard Karawan, CEO Fontainebleau: "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."
None of the contractors in this story have been contacted by the auditors and they want to talk to state their case for their cash.
Jerome Teger: "Came down to get some money from the Fountainbleau. We havent been paid."
When Jerome Teger couldn't get the Fountainbleau to return his calls, he came to the hotel to get his money. Horacia Leal got tired of waiting and hired an attorney to sue the hotel, but his attorney gave him a warning.
Ross Rosenberg, Attorney: "You can't get blood from a stone as the old saying goes. It's not hard to win, it's hard to collect."
The Fountainbleau continues to say everyone will collect. The contractors keep saying when.