Al Capone's Old Headquarters to Become Hotel


A real estate developer is getting some help from the Feds in his quest to transform Al Capone's former headquarters, once an opulent palace of sin, into a respectable hotel for business travelers.

The Lexington Hotel, on Chicago's Near South Side, was the posh Prohibition Era haven from which Capone ruled his criminal empire in the late 1920s and early '30s, before he was sent to federal prison on an income tax evasion charge.

Today, the abandoned building is a neighborhood eyesore, despite its city and federal landmark status.

Broken liquor bottles litter the boarded-up main entrance, next to an abandoned blues bar. The masonry exterior is dotted with cracked terra-cotta decorations and broken bay windows.

Real estate developer Ganesan Visvabharathy wants to change all that.

The Indian-born Visvabharathy plans to transform the 10-story building into a 258-suite hotel geared to business people attending events at the nearby McCormick Place exhibition center.

Visvabharathy said he had not known about the hotel's past when he responded to a real estate ad in June, 1988. He bought the property for $600,000 from the Sunbow Foundation, a nonprofit group that trains women for construction jobs.

But Visvabharathy said that Capone's legacy was an added incentive for proceeding with plans for the $28.6-million rehabilitation project.

"A lot of people would consider Al Capone something like a negative, but, in my opinion, that's exactly why you should use it as a positive thing to market the hotel," Visvabharathy said in a recent interview.

"If you go anywhere in the world, people may not know anything about Chicago, but they know Al Capone," said Visvabharathy, 41, who left India in 1974 to study for a doctorate in business administration at the University of Illinois.

In September, the U.S. Department of Housing and Urban Development awarded an urban development action grant to the Lexington Hotel rehabilitation project. The $2.6-million grant will be used by the city to make a low-interest loan to Vilas Investment Properties Inc., the real estate development company that Visvabharathy started in 1982.

A partnership formed by the Vilas company is investing $3 million, and the remainder of the money will come from bank loans and city development bonds.

Visvabharathy plans to begin construction in late November, and the restoration should be completed by November, 1991.

Joseph J. James, the commissioner of the city's Department of Economic Development, said he is excited about the project.

"It will breathe some new life into a neighborhood that we are very interested in," James said. "If we can facilitate some tourism and interest using one of our more notorious former residents . . . I can certainly live with that."

The Lexington was opened in 1892 and was one of the city's first high-rises. President Grover Cleveland honeymooned there, and society's elite once danced on the lavish ballroom's tiled floors.

When Capone made the hotel his headquarters, he occupied the fourth and fifth floors. Part of the hotel was converted to a brothel, and there was a network of underground tunnels and secret stairways.

The Lexington was renamed the New Michigan Hotel after World War II. It became a bordello and, finally, a flophouse and was closed by court order in 1980.

Visvabharathy said that little is salvageable inside--except for some tile flooring from the ballroom and tiles in the bathroom of Capone's four-room suite.

He plans to faithfully restore Capone's suite, including its lavender bathtub, but it won't be rented out to guests. Instead, it will be a tourist attraction.

In 1986, the Lexington drew attention when television's Geraldo Rivera blasted open a sealed basement chamber billed as Capone's secret vault in a live TV broadcast. All that was found were a few empty whiskey bottles and an old sign.

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