Posted on 09/26/2003 2:22:15 AM PDT by Prince Charles
Feds: Janitorial contractors cleaned up in city set-aside scam
September 25, 2003
BY FRAN SPIELMAN, CITY HALL REPORTER
The owners of a controversial maintenance company with political ties to Mayor Daley and reputed ties to organized crime were accused of racketeering, conspiracy, mail fraud and money laundering today for their alleged participation in a $100 million scheme to fraudulently obtain government contracts earmarked for minorities and women.
The federal indictment accuses James Duff, his mother, Patricia Green, their business associate William Stratton and four other people of using “fraud, deceit and deception” to obtain certification as minority- and women-owned businesses, giving their companies a leg up in obtaining government contracts.
The government is seeking at least $10 million to compensate Chicago taxpayers for the alleged fraud that helped the Duffs obtain janitorial contracts and subcontracts at such marquee locations as the international terminal at O’Hare Airport, the Harold Washington Library and at Area Two police headquarters.
The indictment also seeks to seize the headquarters of Windy City Maintenance and Remedial Environmental Manpower as well as the Burr Ridge and Olympia Fields homes of James Duff and William Stratton. REM is the alleged minority front chosen by Waste Management as a subcontractor on the city’s blue bag recycling program.
Over the years, Daley has accepted campaign contributions and political foot soldiers provided by the Duff family. The mayor severed his ties to the Duffs after the federal investigation began.
“These companies were operated, controlled and owned by male members of the Duff family. Mrs. Duff’s and Stratton’s positions were done as shams and fronts to get the certification, but they were controlled by male members of the Duff family and constituted the Duff family enterprise, which is the criminal racketeering enterprise that’s charged in the indictment,” said Randall Sanborn, a spokesman for the U.S. attorney’s office.
“In addition, the indictment alleges that Stratton, REM and Windy City Maintenance had money that went from those entities to another Duff-controlled entity called American Management, and that money then went from there directly to James Duff and to other members of the Duff family.”
Windy City was formed shortly after Daley took office and was placed in the name of Patricia Green, wife of John Duff Jr., who has a criminal record. Duff Jr. and his son, John Duff III, have a history of ties to organized crime dating to the 1960s.
A no-bid contract to clean up Taste of Chicago started the ball rolling on $100 million in government contracts for Duff-controlled companies.
On New Year’s Eve, 1999, the city’s Law Department stripped Windy City of its status as a woman-owned business after an internal investigation found that men ran the company. At the time, Corporation Counsel Mara Georges insisted there was no evidence of fraud because the ownership evolved when Patricia Green gradually withdrew from the company because of an illness.
Today’s indictment does not allege that the city’s investigation was a whitewash. In fact, City Hall was portrayed as a “victim” of the elaborate fraud scheme. Georges could not be reached for comment.
“The indictment alleges how they were deceived and defrauded, even during the course of the . . . 1999 investigation—the steps that the defendants took to deceive the city’s investigation,” Sanborn said.
“They directed people, employees to lie about Mrs. Duff’s involvement—about the lack of any role of James Duff. They changed an office phone line from ‘James’ line’ to read, ‘Mrs. Duff’ to give the appearance that it was her phone line—not his.”
Yet another prong of the sweeping federal indictment involves accusations of worker’s compensation fraud involving Windy City Labor, a Duff-controlled company that provided warehouse workers and unskilled day laborers. Insurance company defendants in that scheme are accused of helping the Duffs obtain worker’s compensation insurance.
African-American aldermen welcomed today’s long-anticipated political bombshell. They have complained for years that the city’s failure to police minority- and women-business “fronts” deprives legitimate minorities of their fair share of city contracts.
“I am a strong supporter of the city’s MBE and WBE programs. There has to be vigilance on the part of government to make sure these programs are not abused by companies that claim to be women-owned or minority-owned and are, in fact, majority-owned businesses,” said Ald. Toni Preckwinkle (4th).
“I’m encouraged that action is being taken to ensure that only those firms that are eligible for designation as WBEs or MBEs benefit from the programs that government provides.”
Pressed on whether she believes the city’s investigation of Windy City was a whitewash, Preckwinkle said, “It’s unfortunate in Chicago that a lot of tough issues do not get dealt with, except at the federal level. I have no idea what the city did. Suffice it to say that the action was brought by the federal government and I’m encouraged by that.”
Earlier this year, the grand jury subpoenaed two city purchasing officials and tons of city records as it sought to bring its long-running investigation of the Duffs to a close.
Contract compliance officers Robert Cunniff and Vera Elue testified before the grand jury on Nov. 21, two weeks before City Hall was ordered to turn over the first pile of documents to prosecutors investigating the business maneuverings of the reputedly mob-connected Duff family.
Single ethnic group (Italian or Irish), harassed by the police, denigrated as a group in movies and TV.
Next thing you know they will sue the city for civil rights violations
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