Posted on 01/25/2003 8:30:50 AM PST by sweetliberty
Companies headed by onetime Democratic mega-donor James Levin are under investigation by school officials for allegedly pocketing more than $1 million of $2.7 million in school fencing contracts, money intended for minority- and women-owned businesses, school officials said Thursday.
Because of the alleged scheme, officials said they are moving to bar Levin, his parents and nine others--including representatives of four minority- or women-owned businesses--from doing business with the Chicago Public Schools for three years, the maximum possible penalty.
Levin was notified of the allegations this week, and hearings were being scheduled for all 12 parties, officials said.
Board of Education attorneys initiated the hearing process Wednesday, the day the Chicago Sun-Times first inquired about the case, but said their timing was unrelated to the Sun-Times' inquiries.
After a one-year investigation, Interim Schools Inspector General James Sullivan alleged that Levin, while an executive of Tru-Link Fences & Products and Tru-Link Commercial, won bids for two school contracts between the fall of 1998 and the fall of 2000 by falsely claiming his companies would subcontract out far more than the 31 percent minimum required for minority- and women-owned firms, officials said.
Four of the subcontractors later said they never agreed to do the work and, in fact, never did the work, said Peter Cunningham, a school spokesman.
Instead, officials said, Levin's firms did the work and kept the money intended for the subcontractors.
One of the four subcontractors found out about the inspector general's investigation and asked Tru-Link officials why he wasn't receiving $375,000, as listed in the contract, officials said. In response, said board attorney Robert Hall, that contractor was paid $21,500 "to keep his mouth shut.''
Action also is being taken against the three other minority- and women-owned firms and their executives because they allegedly falsified records after learning of the scheme, Cunningham said.
In total, 12 individuals and six companies will face hearings on whether they should be barred from board contracts for three years, officials said.
But Levin "was calling the shots'' on the deal, Sullivan said Thursday. "That's what our investigation showed.''
Levin's parents, Michael and Helen, were listed as owners of Tru-Link Fences & Products for years, but the company has since been purchased, officials said.
Levin filed for personal bankruptcy last September, after rising to prominence as a huge Democratic donor. He could not be reached for comment Thursday.
During the Clinton administration, Levin moved in powerful circles. He spent two nights in the White House, and joined a millennium party there during New Year's Eve 1999. He personally committed to donate $1 million to Clinton's presidential library in Arkansas, and served as a fund-raiser for Hillary Rodham Clinton's successful U.S. Senate campaign. He also has contributed to former President Bill Clinton's legal defense fund.
In addition, at one time Levin ran Thee Dollhouse, which was then an upscale North Side strip club.
At issue now are two contracts, one for which Tru-Link Fences & Products allegedly received $2.6 million--more than a million of which was to go to minority- or women-owned businesses. The second was worth up to $2 million to Tru-Link Commercial. However, officials said the company received only $200,000 on the second contract before being fired for non-performance.
Levin came under investigation after the Inspector General's Office noticed, during another investigation, that his companies reported the exact same percentages of minority- and women-owned subcontractors on several jobs, officials said.
"We thought it was not possible,'' Sullivan said Thursday. During his one-year probe, Sullivan said, Levin's company refused to comply with a subpoena for documents from his office--something required of all board contractors.
In February of 2002, the Inspector General's conclusions were referred to the Board of Education's law department. The board chose to take action against Levin and his company after investigating all the companies and executives involved, Hall said Thursday.
Schools CEO Arne Duncan said Thursday he was "appalled'' by the allegations.
The alleged scheme, Duncan said, "harms all those small minority businesses that are looking to grow that we are looking to do business with. It's a double disservice.''
Duncan said Board lawyers did not drag their heels on initiating hearings, adding, "Why would we? We did a thorough investigation. It was a fairly intricate scam. It took some pretty good legwork to uncover all the facts.''
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