Insurance company alleges Wyndham owner caused damage

The owner of the Wyndham Springfield City Centre conspired to cause the extensive water damage that rendered the 369-room hotel inoperable on March 27, an insurance company alleged in documents filed Aug. 25 in federal court.

Tower Capital Group general manager Al Rajabi attempted to fool Affiliated FM Insurance Co. to get the company to pay a liability insurance claim filed by Rajabi through "willful misrepresentations and concealments of material fact," according to documents from Affiliated that are part of its defense against Rajabi's civil lawsuit against the company in Springfield's U.S. District Court.

Rajabi filed a lawsuit June 11 in Springfield's U.S. District Court to address Affiliated's refusal to reimburse him under his property policy for the March 27 vandalism.

Citing the alleged conduct by Rajabi, a resident of San Antonio, Texas, who bought the 30-story downtown Springfield hotel in a foreclosure sale in 2019, Affiliated said it denied Rajabi's claim to remediate damage from what Springfield authorities were investigating as an intentional act of vandalism.

In an Aug. 11 letter to Rajabi that was included in the recent court filing, Rhode Island-based Affiliated said it "determined that the vandalism and resulting loss and damage that occurred in the early morning of 27 March 2025 at the hotel was intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage, and/or the damage was caused by other individuals with the knowledge of Mr. Rajabi."

Affiliated also said Rajabi filed a fraudulent claim for damages related to a purported March 14, 2024, lightning strike on the hotel building that resulted in Affiliated paying out $4.05 million to Rajabi. Affiliated said in court documents that Rajabi lied about the extent of any damage.

"If lightning struck the hotel … the damage was minimal," Affiliated said. "The cause of the electrical disturbances was intentional, and the vast majority of the damage claimed by the hotel was not caused by an alleged lightning strike and resulting power surge. The damage was intentionally caused by Mr. Rajabi, Mr. Rajabi colluded with others to cause the damage, and/or the damages were caused by other individuals with the knowledge of Mr. Rajabi."

Affiliated asked the court to order Rajabi to pay the company $12.2 million because Illinois law on insurance fraud makes Affiliated eligible to recover three times the value of the fraudulent claim, plus attorney's fees, interest and costs.

A spokesperson for the law firm of Barnes & Thornburg, which is representing Rajabi, said in an email to Illinois Times that the insurance company's allegations about Rajabi are "baseless." The spokesperson noted that Affiliated's allegations came more than two months after Rajabi filed his lawsuit seeking reimbursement for the vandalism claim.

"This allegation of insurance fraud is not only outlandish and embarrassing, it is a vicious attempt to justify Affiliated FM's business model of maximizing profits at the expense of consumers," the spokesperson said. "Mr. Rajabi will vigorously pursue justice in court, not just for himself but for all victims of bad faith insurance practices."

Attorneys for Affiliated didn't respond to requests for comment.

The investigation initially was spearheaded by the Springfield Police Department but was taken over a few months ago by the FBI, SPD Police Commander Jarod Maddox said Aug. 26.

No criminal charges have been filed in the investigation into the alleged vandalism, and there have been no arrests, although a Springfield police spokesperson acknowledged in late May that the damage at the hotel "is being investigated as an intentional act."

FBI special agent Jake Griffin, spokesperson for the FBI's Springfield office, declined to confirm or otherwise comment on the investigation.

Rajabi and his affiliated businesses – Full Service Hospitality LLC and Tower Capital Group LP – alleged when they filed the suit on June 12 that Affiliated's failure to decide on a timely basis whether and how much to pay out to repair the damaged hotel amounted to a "breach of contract and bad faith and unreasonable and vexatious delay." Affiliated denied the allegations.

Affiliated said Rajabi claimed at one point that the damage was caused by "two individuals unknown to him" who were being investigated by local police. Affiliated said Rajabi also told the company that the damage "was likely caused by disgruntled employees without his knowledge."

Rajabi said in the suit that flooding in the 52-year-old hotel, which included 27 apartment units, made the six passenger elevators inoperable and caused "significant water damage to the hotel's restaurants, meeting rooms, banquet rooms, hotel rooms, apartment units and common spaces located on the majority of the hotel's 30 floors which required removal of water and will require, among other things, the replacement of electrical equipment, drywall, plaster, wallpaper, carpet and tile in the future."

Rajabi never made public any estimate of how much those repairs would cost. He said in his lawsuit that his policy with Affiliated provided almost $231 million in total liability coverage.

The Springfield Fire Department said in a March 28 news release that it responded to an "alarm call" at the Wyndham on March 27. The department said it found flooding and elevator system damage at the hotel but no fire.

SFD and State Fire Marshal's Office officials barred the hotel from being used by the public after the water damage in March because of non-working elevators and an out-of-service fire alarm and fire sprinkler system.

A fire department battalion chief wrote in a March 27 email to another city official – obtained by Illinois Times through a Freedom of Information Act request – and said firefighters at the scene that morning found water running down an elevator shaft.

"The issue was two approximately 200-gallon tanks" on one of the highest floors of the hotel, the email said. "The shutoff valve for these tanks came completely apart, leaking water into the elevator shafts. We were able to shut those off, but they still had to drain."

Affiliated said it hired Michele Sutphin of Legacy 1811 Investigations and Consulting to assist in the company's internal investigation. That investigation, Affiliated said, included examinations under oath of Wyndham's former general manager, Gosia Wray, and two other employees, Evan Reimer and Zane Kienzler.

"In addition to their sworn testimony, they provided photos, text messages and/or screen shots," Affiliated said.

The shuttering of the hotel has caused the city's convention and visitors bureau to scramble to find convenient rooms for attendees at downtown conventions.

Moreover, the uncertainty surrounding the Wyndham's future could create problems for Springfield and Sangamon County officials who are considering options for expanding the BOS Center and creating opportunities for a new hotel next to the expansion.

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One potential site for the new hotel is the site of the Wyndham, which would require the current hotel at 700 E. Adams St. to be torn down.

Rajabi had been frustrated by the Springfield City Council's refusal since 2022 to grant zoning approval that would have allowed Rajabi to sell the deteriorating hotel to GoodHomes, a New York-based development company that wanted to spend $25 million to renovate the building and convert it into mostly market-rate apartments and some hotel rooms.

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