The Coliseum fraud case is nearing an end.
Lead defendant John Butler pleaded guilty to one misdemeanor count on Tuesday that will require him to pay the City of Bloomington and State of Illinois around $450,000 in restitution. Butler’s concessions company, BMI, also pleaded guilty to one felony count of theft.
After the plea hearing, Butler’s attorneys, Steve Beckett and Tristan Bullington, spoke to WGLT about the case. This transcript has been edited lightly for clarity and length.
WGLT: What would’ve been your opening statement, had the case gone to trial?
Beckett: So the state, in these 44 counts, had various theories of criminal liability. But when you really get down to it, every one of them related to something in the (arena management) contract, OK?
So let's start with what (BMI Concessions) and John pleaded guilty to. John took responsibility. He accepted responsibility for the wrongful acts of the general manager and the chief financial officer of BMI (Concessions). BMI is the concessionaire at the arena. And the contract provides that when the concessionaire receives the money, from concessions, that's the concessionaire’s money. That's not City of Bloomington money. That's not Coliseum Fund money. That is the concessionaire’s money. And under the contract, the concessionaire’s receipt of that money obligates CIAM (Butler’s Central Illinois Arena Management) to pay a commission. It depended on where the sale occurred. If the sale occurred in the suites, or was catering, then it was a 15% commission. If it was a general commission, anyplace else, it was a 32% commission.
Well, in the course of dealing between these parties, CIAM never paid those commissions. BMI always paid the commission. And so the chief financial officer, he saw this. He saw the weakness in the chain, because they had these portables (concession stands), where cash was received, primarily for beer. And from those portables, he had to make entries into Micros to report the sales. Now there were checks—they had what they called cup counts, so that the sales from that particular location, there were supposed to be a way to verify it. But he's also the guy who's taking the cash and putting it in the vault. OK?
So John Butler had nothing to do with any of that. He's not in the vault. He's never in the vault. He never handles cash. He's not.
So as I said, in June of 2017, John gets interviewed (by investigators) and the first thing they say to him is, “You realize you got a couple of employees who are embezzlers?” He goes, 'Oh my god, I've worked with these guys for 10 years. I trusted these guys.' Well, they're, they're embezzlers.
And so then they interviewed the two guys who were accused of embezzling and they said, 'Well, my boss said it was OK. I knew what my boss wanted. This was all OK.' That was not OK.
The other strange thing about the contract that the CFO of BMI saw was that if items were sold at a discount or at cost, then there was no commission due. And so he used that primarily on combo meals, and primarily on third-party vendors, like Avanti’s or Papa John's, and he paid no commissions.
What John would see every month was a summary statement of BMI’s operation that showed the commissions that were paid. He never saw these settlement sheets that showed how the commissions were calculated. And that's where the monkey shines was going on, way back down into the dirty work of the settlement sheets.
But the contract had provisions for audits. And so John relied on the audits because every year there'd be an audit and the audit would say everything's fine. So nobody got down in there into the details and looked at the food and beverage sales and commissions to determine that, in fact, this guy was underreporting commissions.
… There’s weakness in that contract. So then we have these charges that say that CIAM wrongfully received commissions. When CIAM sold naming rights, when CIAM sold suites, when CIAM sold sponsorships, 90% of that was Bloomington’s money; 10% was CIAM’s money.
And so the prosecution tried to use this strange provision in the contract that said in the last year, if you have a contract that extends beyond the end date, termination date, that’s not a proper contract. So they tried to use it to say, 'Well, we get to keep the money that you brought in. But you don't get your commission.' That makes absolutely no sense.
And then we have the 'Kelly Discount.' You may have heard this phrase. And basically what happened is, you know, taxpayers often at the end of the year will decide, do I want to receive the income in this year or in the next year? Or do I want to pay the expense this year or in the next year? So John was faced with that situation, I think, in 2010 and 2011. It was a really, really good year. It was really, really close. BMI had expenses that should be paid from the Coliseum Fund. And John said, I tell you what, I'm just going to let that go. I'm going to pay those expenses out of CIAM funds. And so he paid those expenses out of CIAM funds. And so it was a really good year, he sort of thought he was going to get an 'attaboy' for the management of the arena that year, and it never came. The critics were always there.
And so he decided he wanted to be paid back. And so he said to (Jay) Laesch and Kelly Klein, 'I'd like to be paid back.' And Laesch is the one who set up this method, from an event a certain amount would be taken out of commissions that otherwise would have been paid, and it was paid back to CIAM. So $35,000 CIAM paid in 2010 or 2011 was repaid in 2013 and 2014 from these. And so it was $35,000 that should have been paid then, but it was $35,000 that was paid over two years. And again, our accountants said, absolutely no harm, no foul, but those were counts that were in the complaint as well.
Then there are counts about legal fees. Well, the contract provides that legal fees, professional fees, are an ordinary expense. And after the contract was over, all of a sudden the city decides that the legal fees that have been paid during the contract, particularly for time spent in attempting to extend the contract and time spent at the at the very end, when they're trying to negotiate this $247,000 payment, that those didn't count. And so all of a sudden now legal fees were not proper under the contract.
… So I think you see if you walk through the indictment, that we literally had a defense to everything. And so then, well, if you had a defense for everything, why in the world did the guy plead guilty?
Well, 44 felony counts. 44 felony counts. So maybe this case was overcharged a little bit? … That if we overcharge him, if we intimidate him, you know, maybe the guy will plead guilty.
Once we found out that the guys were embezzling, we knew there was going to be commissions that were due, and we knew there’d be sales tax due. And so it was just a question of how much and what's the best way to reach an agreement on how much it was. Our position was, let's use the contract. Let's mediate. Let's negotiate. Let’s arbitrate. That's why those provisions are there.
But I think the city of Bloomington… maybe they wanted to save some legal fees. So they decided that they’d bring in the State Police and they’d try to coerce John to say uncle.
John Butler Statement by Ryan Denham on Scribd
John Butler was headed to trial until it was abruptly canceled on Day 2 of jury selection. What happened? What changed that led to an agreement when three years passed without one?
I can’t explain it. The state's attorney's office had some sort of change of heart. That's all I can say.
The corporate plea (the BMI count) was always on the table. And the suggestion was made, you know, how about a corporate plea and a misdemeanor for the defendant. 'Oh really? Make us an offer.' So we made them an offer, and then it was just negotiations.
And so I think you could you can see how significant the drop down from the 44 counts to a misdemeanor count is for John by the insistence, the absolute insistence, that he get home confinement. We're talking about a guy from the community with no prior record, who has done nothing but good for this community, and (the state says) he must be in home confinement.
They had to have some sort of an ounce of prevention or deterrence. They wanted to show how tough the prosecution was, so the guy has to go to jail. Well, he's not gonna go to jail. He's 60 years old, for goodness sakes, and he's got hypertension, and with COVID-19, we’re gonna put this guy in jail? It made absolutely no sense. So we negotiated home confinement.
Bullington: Look at what Jay (Laesch) and Paul (Grazar) got for stealing the money. It wasn’t jail. They both pleaded guilty to felonies. John has a misdemeanor, but he ended up with a home confinement sentence.
I think that goes to Mr. Beckett's point of, there’s this desire for this pound of flesh. But it's not necessarily what you would normally see for someone who, with no priors, is pleading guilty to a single misdemeanor.
There is still a lot of animus toward the arena in this town, people who just don’t like it or think it should’ve never been built. How did that weigh on you and your team here as you tried to approach the case, knowing that whatever jury you bring into the room is bringing with them potentially a lot of history?
We did a motion to change the place of trial, and did a public opinion poll, just to illustrate the difference between (jurors in) McLean County and Champaign County, barely 50 miles away, who know nothing about this case, how people had no opinions whatsoever, as opposed to McLean County, where lots of people have lots of opinions, most of them negative, about the arena.
And I just remember in particular, this one juror who ultimately got excused in the case, who referred to (former Bloomington Mayor) Judy Markowitz, and, you know, “The Judy Dome” or whatever it was, which reminded all of us that it's still out there, that that animus is still out there, and will always be there until we have another generation, assuming some passage of time.
Lack of specificity was an issue throughout not just John Butler's proceedings, but the other related cases as well. Overly vague charges were thrown out at different points. What does that lack of specificity tell you about the case big picture, that the state struggled so much with narrowing in on the actual wrongdoing?
I think that's one of the problems with bringing a case with complex charges, is that ultimately what you have to remember is that you're going to try this case to a jury of lay people. And it better be simple. It better be something that the common ordinary citizen can understand. We're not going to have 12 accountants on the jury. We're going to have people from all walks of life, many of whom don't understand that deep financial stuff.
And so you ought to be careful. But once you bring broad charges like this, then you see the morass that you've created, and the morass of evidence that you have to use to try to prove it.
The jury instructions that we prepared were (really) thick. … And then we would have expected the jury to go back and deliberate after three weeks of evidence, with us worrying about this hidden animus about the arena. It’s just a very, very, very tough call.
And so, you know, the question really is for the prosecutors, why did you think you had to make the case that complex? Why not make it simple? Why not pick your strongest counts and charge those counts? And the strongest counts literally are the cash. If I was on a jury, I think I would be offended by people skimming cash. Those are the strongest counts. And I suppose if you have the skimming of the cash, then you can go to the sales tax, and you can go to the commissions, but you could at least narrow it.
John Butler owes $450,000 in restitution to the city and state. Why that amount?
I guess our thought was, that's kind of a premium. To get a misdemeanor, John had to pay more than I really think — I was more in the $260,000 to $300,000 (range). Once we were done with the accountants of the potential arguments …. Now, you know, if everything didn't go our way, on (contract provision) 6.4, which is the concessions liability for commissions, if that didn't go our way on the third-party vendors, the combo meals, then that's the kind of restitution that I thought that we that we would be facing.
And if it had been arbitrated, I think that's the kind of money that we would have been facing. So he probably paid $100,000 or so more than that he should have had to pay. But you know, good for the state. They got something out of this. I've always thought that this case was about the money.
How does Butler have $450,000 just sitting around? How's he going to pay that?
I guess I would say that he is from a family that’s supported him and would help him meet that obligation.
There's a tendency in the public to rush to judgment and presume guilt about people when you see 44 counts or 111 counts against these defendants. What is your message to the public and the media about the next time this happens?
An investigation is done. The investigation is marshaling sufficient evidence to be able to bring a charge. But that's not the rest of the story.
I've never seen the police investigate to try to determine the defendant’s innocence. In this case, John was a marked man. They wanted a scapegoat. John Butler was their scapegoat. He was the big kahuna. He got the 44 counts.
But the best example I can give you is Kelly Klein. She is absolutely innocent. She should never have been charged. She was a bookkeeper doing her job. So it just made absolutely no sense for her to be charged.
And to the same extent, I think Bart Rogers falls in that arena, too. Although because he's a manager and he has a car, and he has this and he has that, he's a little more attractive as a defendant, I think, for the prosecutors. But in my view, from all the evidence I know, Bart is absolutely innocent as well.
Bullington: It's a very complex contract, that I, to this day, think that there are still people in the city who dealt with it that don't understand the terms of it. And that complex contract, the media didn't get to look at it when the story came out, and members of the public who have commented on it haven't read or seen what that contract said. And we see people assuming an intent there when there's really just a contract that, in my legal opinion, is written terribly. It has provisions that quite honestly just don't make a lot of sense and can get interpreted in different ways. And the city and CIAM disagreed on some of those terms as to what they meant.
But I think the members of the public, as they deal with this in the future, need to remember that there's going to be a lot more to the story than just the fact that charges have come out. And assuming that someone is guilty, just because there's a whole bunch of (counts), doesn't mean anything. And this is I think, a good description of that, because 44 of those charges are now gone.
Had this case gone to trial, I assume you at some point would have cross-examined former employees of the City of Bloomington about the contract, the audits, financial statements, all that, and we would have gotten a window into whatever oversight or lack thereof existed. Were you looking forward to that?
Sure. Because the city controls the audits. The city contracted with the auditors every year, and they could have told those auditors, 'Get in there and look. Look at the concessions. Look at the liability for commissions on concessions. Get down there in the details.'
And they apparently didn't do that because there’s nothing in those audit reports that shows that there's anything wrong with the concessions being paid for food and beverage.
WGLT depends on financial support from users to bring you stories and interviews like this one. As someone who values experienced, knowledgeable, and award-winning journalists covering meaningful stories in central Illinois, please consider making a contribution.
