08/29/2018
Date: August 28, 2018
PRESS RELEASE
FOR IMMEDIATE RELEASE
City of Marion Sued over Mismanagement of Funds
Illinois Star Center Alleges Improper Use of Bonds
On August 22, 2018, owners of the Illinois Star Center filed an Amended Adversary Complaint against the City of Marion seeking an Equitable Accounting from the City of Marion as it relates to the financing of the Illinois Star Centre Mall and surrounding area in Marion, Illinois.
This Adversarial Complaint relates to the Chapter 11 Petition for Bankruptcy filed by Illinois Star Centre, LLC.
In response to a recent Freedom of Information Act request, the City of Marion acknowledged that it either destroyed or otherwise did not maintain documents regarding the financing of public improvements related to the development of the Illinois Star Center Mall.
According to the Amended Complaint, a review of the available Ordinances, Financial Documents and Bonds related to the financing of the mall reveal potential fraud including:
(1) The existence of several unexplained transfers, totaling several million dollars, out of designated accounts that were established to pay off the bonds that were used to pay the developer of the mall and surrounding area,
(2) The City continues to Assess and Levy taxes on the mall when it appears that all of the bonds related to the development of the mall and surrounding area should have been paid off.
(3) It does not appear that the bond fund proceeds that were earmarked for the development of the mall and surrounding area were used in accordance with the requirements of Illinois’ Special Service Area Tax Law.
(4) It appears that the City has improperly commingled Bond Fund proceeds.
(5) It appears that the City unfairly gerrymandered the Special Service Area which was established to fund the development of the mall and surrounding area which unfairly burdened Illinois Star Centre, LLC. with all of the tax liability while arbitrarily excluding three of the four anchor stores and other surrounding businesses that clearly benefited from the improvements.
The filing of the Adversarial Complaint was authorized by Dennis Ballinger, Jr., managing partner for Illinois Star Centre, LLC, because the City would not voluntarily cooperate with the requests for additional financial information to determine what, if anything, was still owed on the bonds related to the development of the mall and surrounding area. Ballinger informed the City that the additional information was needed because a potential buyer of the mall had been identified and needed the information to perform its due diligence.
The Marion Mall was originally developed by Eddie Debartolo, Jr. in the later 1980s after his company received approximately $24 million in incentive payments. Shortly after receiving the incentives, Debartolo’s company sold the mall.
