A federal judge said Monday that Monte Brannan and Gary Matthews engaged in "lies and deceit" when they defrauded investors in a scheme to line their own pockets with money that was supposed to go toward a redevelopment of the Hotel Pere Marquette.
Brannan, 71, of Peoria and Matthews, 81, of East Peoria were sentenced to prison on Monday and ordered to pay millions of dollars in restitution for defrauding investors, including the city of Peoria, during their time as the developers of the downtown Peoria hotel.
Matthews was sentenced to 40 months in prison and ordered to pay $8.1 million in restitution.
Brannan, who was a secondary player in the fraud scheme, was sentenced to 24 months in prison and ordered to pay $4.7 million in restitution.
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U.S. District Judge Sara Darrow recommended both men serve their time at the minimum-security prison camp in Pekin due both to their ages and proximity of the prison to their families.
In her sentencing of both men, Darrow told them their actions were not mistakes but rather were deliberate choices the men made in efforts to "deceive and steal from investors."
The court set the total damage figures stemming from fraud on victims to $8.1 million for Matthews and $4.7 million for Brannan.
Evidence shown during the trial and sentencing hearing showed that Brannan and Matthews used investor money for the Pere Marquette project to line their own pockets, fund other business ventures and pay back other investors in a scheme that Darrow said had a real world impact and had real victims.
Both Brannan and Matthews gave statements to the court Monday in which they asked for a more lenient sentence of home confinement rather than prison time, arguing they spent a majority of their careers as developers bettering the Peoria area and acting with "integrity" in their business dealings.
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Matthews said in his statement that he "never intended for the Pere Marquette to end in failure" and said he was "driven by a deep belief in the city of Peoria" to see the project through but blamed "obstacles" that arose for its failure. He said he always "adhered to the highest ethical standards" in his business dealings.
Brannan made similar statements in his speech, saying he was "deeply troubled" by the verdict and maintains his innocence. He said his only motivation for the Pere Marquette project was to provide a handsome building for downtown Peoria and asked "what was my mistake?"
The judge, however, did not buy much of either statement, telling the men they were not the victims they tried to portray themselves to be.
Darrow told Matthews she believed his primary motivations were "self-preservation and hubris" and said his attempts to "cloak it under a veil of altruism" that he was trying to help the city was flawed, given the city of Peoria was one of his victims.
Darrow echoed similarly strong statements to Brannan, telling him he "lied and stole" and told him the "first part of the definition of integrity is honesty and you were dishonest."
"You set yourself up that high and you set yourself up to fall that low," Darrow told Brannan.
Peoria City Manager Patrick Urich spoke in court Monday to give a victim's statement on behalf of the city. He said Matthews had personally guaranteed the $7 million loan the city gave him for the project, which had already come on top of the $29 million grant the city issued for the development.
Urich said instead of making good on promises, the developers instead "pilfered money from borrowers" and doomed the project to failure.
The city of Peoria previously won a multi-million settlement case against Matthews for the money, but he filed for bankruptcy immediately after, and Urich said the city has not seen any of the settlement money. He said city taxpayers have had to subsidize $5.3 million in bond payments because of the fraud perpetuated by Brannan and Matthews.
All that money, Urich said, could have instead been used to fund city infrastructure projects and improvements.
At the heart of Monday's nearly seven-hour sentencing hearing was how much money in victim damages should be applied to Brannan and Matthews. Ultimately, the judge ruled both against and in favor of some of the defendants' objections and settled on $8.1 million and $4.7 million for Matthews and Brannan, respectively. The original proposed amounts had been roughly $9 million for Matthews and $6 million for Brannan.
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