Forest Beach property owners say they are concerned about the involvement of a convicted felon in plans to spruce up the Metropolitan Hotel and its vacant annex building on Hilton Head Island.
New California Hotels Corp. announced June 13 it will partner with the Metropolitan's owner, H2 Associates, to renovate the 78-room hotel and convert its annex into a hostel and housing for foreign students here on work visas.
Neighbors have raised concerns about the proposed venture after learning of past legal and financial woes of Remo Polselli, CEO of the Laguna Beach real estate development company.
Attempts Wednesday to reach representatives of H2 Associates were unsuccessful.
Polselli was sentenced to 27 months in federal prison in June 2003 and made to pay $2.9 million in restitution on three counts of felony tax evasion.
He pleaded guilty to charges of failing to account for and pay withholding and Social Security taxes collected from employees, as well as failing to pay income taxes or file returns on gross income he earned in 1995 and 1996 as owner of the Plaza Hotel in Southfield, Mich., according to federal court records.
He was released from prison in December 2004, according to the Federal Bureau of Prisons.
New California Hotel's website confirms that Polselli spent 300 days in prison "related to payroll tax" and refers to it as "the darkest moment in his life."
Another hotel investment company with which Polselli and his wife, Hanna Karcho, were affiliated -- Club Metro Investments LLC, which bought The Metropolitan Hotel near the Detroit metro airport -- declared bankruptcy in March 2012 and reorganized, according to online court filings.
A hotel property Karcho managed in South Florida was hit with a foreclosure lawsuit from Comerica Bank in May 2012, according to court filings and the South Florida Business Journal. Karcho also is involved with the operations of New California Hotels, according to its website.
Three times since September 2012, the National Labor Relations Board ordered Polselli and his wife to refrain from unfair labor practices involving unionized employees working at two hotels Polselli and Karcho own and operate, in Troy and Romulus, Mich., and to comply with terms of a settlement reached with the union.
Polselli on Wednesday argued the orders from the labor board are "strictly allegations, which we are fighting," and says his past conviction "has absolutely no bearing whatsoever in what we are doing on Hilton Head."
"I always accepted responsibility. It happened 16 years ago," he said Wednesday. "I am remorseful for it. ... This is not about me. This is about a hotel. ... This is a fantastic property that will do well. This project is not a dream. It will happen. We are going to do our job ... and hopefully the community will be receptive."
Tenants and owners at the neighboring Oceanwalk Villas have complained about the appearance of the building behind the hotel off South Forest Beach Drive. They also have safety concerns after fire inspectors issued citations for several code violations at the annex.
"It's disappointing they could not partner with a more credible organization," said former Oceanwalk board president Bruce Bartow, who owns two Oceanwalk condos. "I fear this will not go as advertised, and any progress on the property will have to be force-fed by the town through citations and fines, which is unfortunate."
Town Councilman George Williams Jr., who represents the area, said there's not much town officials can do.
"This is between two private parties, and I'm not sure the town has any business getting involved," Williams said. "It concerns me. But, hopefully, the owners have looked into this thoroughly and are satisfied with the arrangements that have been made."