By Jennifer Edwards, Brenna R. Kelly and Cliff Peale
Enquirer staff writers

Federal authorities are investigating a part owner of the troubled Florence minor league baseball team.

Authorities with information about the case said this week that they are in the early stages of an investigation, which appears to be focusing on how Chuck Hildebrant secured funding to build the estimated $7 million to $8 million stadium for the Florence Freedom.

FREEDOM FACTS

• The Florence Freedom is a minor-league baseball team owned and operated by Northern Kentucky Professional Baseball LLC. • The city of Florence issued bonds to buy land in 2003 for a baseball stadium at Interstate 75 and U.S. 42, and improve roads around the site. • The city leased the land to the baseball group, which is owned by a group of private investors. • The group committed to build a stadium. It is required to make semi-annual rent payments on the land to the city for 30 years. • The city can declare the lease in default if any liens are filed against the stadium. • If there are no liens or other financial encumbrances on the stadium, the city takes ownership of it when it's completed. • The baseball group keeps all revenue from the operations of the team, then shares a portion of that revenue when the team makes more than $4 million a year, starting in the sixth year of operation.

Spokesmen for the Cincinnati office of the FBI and the U.S. attorney for Southern Ohio would neither confirm nor deny the investigation.

Hildebrant is a 20 percent owner in the Northern Kentucky Professional Baseball LLC, which owns and operates the Florence Freedom team. That group and the city of Florence signed a lease last year saying the city would rent the group land to build a stadium.

The stadium is about 80 percent built. As of Friday, contractors had filed liens saying they have not been paid a total of $3.5 million. The baseball group is scheduled Tuesday to make its first lease payment, which is $197,617.

The lease further specifies that all the owners of the baseball group are responsible for payment.

But Hildebrant and his wife, Connie, signed a personal guarantee to pay for construction of the stadium if the group does not fulfill its obligation.

The Hildebrants could not be reached for comment at their Morrow home Thursday or Friday. They did not return repeated phone calls.

Hildebrant's lawyer, Ray Stewart of Covington, said Thursday that he was unaware of an investigation.

"I'm not sure they would have told me if they were investigating," he said. "They are usually pretty quiet about that stuff."

He said Hildebrant is upset by the negative publicity about stadium finances and acknowledges his responsibility to build the stadium.

"These are obligations of the LLC, and he has a personal financial obligation to ensure the city that the stadium is complete and there is no debt on it."

No matter what the outcome, Florence Mayor Diane Whalen said residents will not be left holding the bag.

"We did everything in that lease agreement to protect the citizens and the taxpayers," she said. "We'll own a stadium when it's all said and done, and somebody's going to pay to finish it - and it's not going to be the city."

The mayor said she was unaware of an investigation and could not comment.

"It's so frustrating," she said. "It's a wonderful project. The community believes in baseball."

Several deadlines

The federal investigation is the latest development in a series of financial challenges for Hildebrant and the baseball team, which has been playing since June in the stadium along Interstate 75 at U.S. 42.

The city required the Hildebrants to provide financial statements showing they had personal assets to cover the cost of building the stadium. That means the city could go after the Hildebrants' assets to ensure that the stadium is finished, according to the lease.

After the Enquirer requested those statements, a Boone County judge ordered the city to withhold them. Friday, the Enquirer asked the court to make the records public.

The ownership group faces a number of upcoming deadlines.

Tuesday, the first payment is due on the 30-year lease on the land.

On Aug. 22, the first of 19 liens must be paid to 17 contractors. The liens on the stadium violate the lease - and if the contractors are not paid, the city could evict the team from the stadium.

"It is my belief that if they show that there is due diligence, if they are making progress to clear the liens, we will grant them an extension," Whalen said. "It serves no purpose to us to evict them if they are willing to work with us and to resolve the liens."

The city takes ownership of the stadium after it is built and paid for. The lease allows the baseball group to operate the stadium and retain all profits from events, advertising and merchandise and concession sales, Whalen said. After six years, the city will get a share of the stadium's revenue once it reaches more than $4 million.

Whalen said Friday that the baseball company has hired an accounting firm to examine builder contracts, including how much contractors have been paid, what they are owed and the amount of work left to be done.

Paul Michels & Sons Inc., of Fort Wright, the paving contractor for the stadium, is owed about $843,000, the highest lien to date, said Joe Michels, the company's vice president.

Michels said he was unaware of the federal investigation and was unsure how it might affect the liens. But he was optimistic that the contractors will be paid.

"I don't know if it's going to expedite things or keep things tied up," Michels said. "It would depend on the nature of the investigation and what they uncover and how it affects the team's ability to either find new ownership or put a new ownership structure together."

Last week, the Frontier League took over management of the Florence Freedom and said the ownership company is seeking new investors.

Dennis Buckley, attorney for the baseball company, said Hildebrant owns 20 percent of the baseball club. He declined to say whether Hildebrant controls the group. In the lease with the city, Hildebrant listed his position as chief executive officer.

Buckley would not comment on the investigation or the club's financing of the stadium.

Stewart, Hildebrant's lawyer, said his client is upset that attention is focused on him.

"Of course he's upset about it," Stewart said. "He's upset for the team. He's upset for the city. He's upset for himself.

"He was not one of the original partners, and they reached out to him and asked him to get involved and bring his financial wherewithal in there to get this thing done,'' he said. "Out of all the partners, he's the only one who provided any kind of personal guarantee to get this kind of thing done. ... And so I guess no good deed goes unpunished."

Background unchecked

Florence's mayor said the city did not examine Hildebrant's background before entering into the lease.

"We felt the financial statement was adequate documentation," Whalen said.

But what she didn't know was that Hildebrant was convicted in 1991 of forgery when he altered county documents to buy a car, according to court records and county officials. At the time he bought the car, Hildebrant worked for the Warren County Water and Sewer Department.

Hildebrant was sentenced to five years' probation and 200 hours of community service. The court terminated his probation after he asked to move to Florida to work and "begin a fresh career," according to court records.

Hildebrant resigned before he was indicted.

Hildebrant's attorney acknowledged the criminal record but said it has nothing to do with the stadium situation.

"That was 14 years ago," he said. "I don't think it's that relevant."

Florence officials didn't think it was necessary to look into Hildebrant's past.

"He was an investor in the ownership group we were working with on this," Whalen said. "He was just one more investor."

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E-mail jedwards@enquirer.com; bkelly@enquirer.com; cpeale@enquirer.com