For the past 16 months, lawyers for lead Coliseum defendant John Butler have stayed relatively quiet in the media as his criminal case inched its way through the justice system.
That changed this week after GLT reported on a newly disclosed transcript of the Sept. 20, 2017, grand jury proceedings that led to Butler’s indictment. The 58-page transcript—largely a Q&A between a prosecutor and the lead State Police investigator—became public after another Coliseum defendant’s defense attorney filed it as part of a motion to dismiss the charges against her. The investigator, Special Agent Dan Rossiter, walked grand jurors through the case step by step, alleging over $750,000 in money stolen from the City of Bloomington over several years.
The release of that transcript was a “game-changer” that required a response, said Steve Beckett, Butler’s defense attorney. He spoke to GLT this week to discuss the allegations against Butler and to again argue that the issues between Butler’s Central Illinois Arena Management (CIAM) and the City of Bloomington were a resolvable civil contract dispute—nothing criminal.
GLT: Why did you want to respond to the grand jury proceedings?
Beckett: It's not something that I really wanted to do. I want to try this case in court. I don't want to try this case in newspapers are on the radio. But when the grand jury transcript got released and became public like that, you have to consider that the grand jury—it isn't like I'm saying that the Agent Rossiter is lying. I’m commenting upon his view of his own investigation, and it's an unfiltered view. There was nobody cross-examining him. There was nobody presenting these opposite points, as you're allowing me to do today. The ethics law in Illinois for lawyers only allows me to comment on these things that you’ve asked me about because of this public release that wasn't something that John Butler or I generated.
The lead State Police investigator in the case, Dan Rossiter, testified that the city had no access to the Coliseum fund—the main fund used for building operations, where city money moved in and out. He said the city had sought access but was denied by your client, John Butler, or his staff. What’s your response to that?
My response is that (CIAM’s 10-year contract with the city) provided that the city had access, and all they had to do was come to the Coliseum to look at records, financial records, and that the true issue here was sort of the problem that you have where you have a public-private partnership.
So the CIAM company, of course, had contracts with “X” (artists) that they booked and with promoters, and those contracts provided that financial information had to be kept confidential.
And so it would be a breach of the contract. So, for example, no entertainer wants anybody to know how much they got paid for in Bloomington when they're trying to negotiate with Champaign, Peoria, Springfield, or whatever. And so that's why they have those provisions. To be able to get a good act to come to Bloomington and play in the Coliseum, you have to agree to those terms.
So, if the financial records were readily accessible to the city, for example, by internet, like we all get to see our bank records now, then they become public records, and they obviously also are (able to be requested through the Freedom of Information Act). But you sort of see the problem between the public-private.
In fact, I know that there were a couple of occasions that city official or employees did come over to the Coliseum and look at financial records, but they were always there. And the contract had a provision that said the city could do that.
So how they had access and whether or not it was immediate access, obviously was a dispute. The city had their mind about the way they wanted things done. And obviously CIAM had their mind the way they wanted things done. And it was done that way, you know, for 10 years. And so it's only after the fact that and at the end of the contract when disputes arose, that all of a sudden the city is complaining, saying they never had access to financial information. And that's just not accurate.
Your client was running a private business. But a private business inside a public building. Isn’t there some increased need for transparency for a private business that’s hired by a public entity in this way?
I think it's a good argument. And I think that the law on this has changed. I think at the time that the folks first went into the contract (in 2005-06), the private aspect of this information would have truly been considered private in the law. But there have been some cases decided over the last several years that sort of changes our thinking about this, that if a private company is doing a government function that that makes the information about that private entity susceptible to purview and review.
And so it would be it would be more difficult now, I think. And so we have the benefit of hindsight, and so I certainly understand your question. But certainly at the time these folks began this relationship, private was private and public was public.
Your client and his staff are accused of using an accounting method on discounted items, like combo meals, to lower the amount of money paid to the city in commissions. They’re also accused of not paying the city its full owed commission on so-called third-party sales, like when an Avanti’s or Papa Johns sold food inside the Coliseum. What’s your response?
Let's take the third-party contracts. The third-party contracts are negotiated, and they pay an upfront licensing fee. For example, a particular vendor might pay $20,000 to be able to sell their product, and that money, that licensing fee, goes to the City of Bloomington. CIAM receives a commission from making that licensing sale. It’s no different than selling advertising. And then their product comes in and it's being sold.
So if there's also a commission on the individual, for example, slice of pizza, if you do the financial analysis, then CIAM or BMI, which is actually the counterpart that's actually doing the food concessions (also owned by Butler), actually would be losing money on each slice of pizza. It just makes no sense. And so the way CIAM interpreted the contract, and there's a provision in there for sort of “discounted food sale items,” which CIAM said that's what this was, this in essence is equivalent to the discount of food sale items. So way back in 2007 or 2008, I remember seeing a document about how this was going to be handled. And it was handled that way for 10 years.
And again, at the end of the contract, now people are looking back at it and say, and it's a dispute that arose in the last couple of years of operation, but CIAM had its interpretation of the contract in the city had its interpretation of the contract. Which one is right? Well, there's the dispute. We call that a contract dispute. And the contract provided for conciliation, mediation, arbitration to try to resolve that dispute. It's a question about amount of money. It's stuff like that that happens in business all the time. Can we reach an agreement and resolve this dispute?
Well, that opportunity was never presented. Instead, the city wants to State Police. The State Police decided that this was criminal, and we end up with an indictment.
Did John Butler ever tell the city, ‘This is the way I’m interpreting the contract as it relates to discounted items and third-party sales’?
Yes, yes. This is not a surprise.
With the grand jury, the State Police investigator talked about how what John Butler and his staff were doing was contrary to “industry standards.” What do you think of that? Citing not only the law but industry standards to make the case for indictment?
First of all, I don't think that there is a “industry standard” that applies in all situations. It depends on the language of the contract. That’s why I was troubled and had a prior motion in this case, because the grand jury didn't have the (CIAM-City) contract. How can you ask intelligent questions if you don't have the contract in front of you? And so the real question is, what does the contract say?
But the industry people that I've contacted say that it depends on the language of the contract. There are some situations where commissions would apply to third-party sales, and there are some situations where commissions wouldn't apply. To say that there's one all-being industry standard (is not true).
The other problem with that is to say that a violation of so-called industry standard, in somebody's opinion, is a violation of the criminal law. That's kind of a vague way to charge someone with an offense.
The grand jury transcript also goes into greater detail of the alleged cash skimming inside the Coliseum’s vault. Around $100,000 in cash was allegedly taken from the vault over several years, costing the city $14,000 in unpaid commissions and the state additional money in unpaid taxes. What’s your response to that?
That John Butler and CIAM did not know there was skimming. This wasn't the city's money that was being scammed. This was BMI’s money. It’s like any employer who has employees who are dealing in a cash business like a bar or restaurant where you have to worry about the manager and waitresses and bartenders and whether or not they're putting money in their pocket. This isn't a situation where all of a sudden $100,000 was gone. This a situation where money was taken over the long period of time, and there's a pattern and practice, and there is an individual who's admitted that he did it. (Coliseum defendant Jay Laesch pleaded guilty in November.)
The State Police investigator testified that John Butler authorized at least some of this, specifically $12,000 in Christmas bonuses for three employees. Is that not true?
No, it's not. First of all, the issue that the $12,000 wasn't Christmas bonuses. It was gratuity. And so this gentleman who pled guilty approached John and said, you know, ‘All of the bartenders and waitresses, everybody is getting gratuities. And I've added that up and our management employees should have should have gotten gratuities over this period of time too, and it amounts to about $12,000.’ And so John said, ‘Well, OK, I understand your logic. That's OK. Yeah, you can do that. You can pay yourself your gratuities.’ But John thought it was gonna be paid like payroll, in the normal way of payroll. He had no idea there was some sort of cash fund that this guy had accumulated. And he took the money out of cash. (Butler) had no idea that money was paid that way.
What about this last-minute infusion of cash that John Butler and his finance chief, Kelly Klein, reportedly asked for in the final weeks of their contract? The way that State Police describe this—asking for $247,000, and then some of that money moves into John’s account—it looks unusual. What’s your explanation for that?
For one, it's not unusual. From time to time throughout the operation of the Coliseum over a 10-year period, there would be cash flow problems, and CIAM would have to approach the city and say, ‘We need money in the Coliseum fund. We have utilities to pay.’
And obviously CIAM had earned commissions. So they were entitled to payments for the advertising and sponsorships and things that they have done over the years. And now the contract is coming to an end (in early 2016), and if they don't get that money paid by the end of the contract, now they're going to be chasing the City of Bloomington for the commissions they're entitled to. So the request for the infusion of cash, one, is something that's happened every year throughout the 10 years, and maybe a couple times a year, depending upon the time of year when the cash needs were.
And second, it's the end of the contract. Once the contract is coming to an end, and the money comes to CIAM, then that's CIAM’s money, and the principal behind CIAM is John Butler. And so CIAM’s money ultimately becomes John Butler's money. So if you just think about it logically, there's really nothing surprising about this.
Is this case going to go to trial?
I don't see any reason why it wouldn’t. My client’s not guilty. And so why in the world would they accept responsibility for something they’re not guilty of?
Butler is due back in court Feb. 14. He and three other Coliseum defendants have pleaded not guilty.
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