State corruption watch: October


From Illinois Policy

October was a rough month for Chicago taxpayers. In addition to city aldermen passing the largest property-tax hike in modern Chicago history, news of one of the most serious public-school scandals in recent memory erupted as former Chicago Public Schools, or CPS, CEO Barbara Byrd-Bennett pleaded guilty to wire fraud for funneling $23 million worth of school-district contracts to consultants with whom she has connections. The scheme included a deal to give Byrd-Bennett $2.3 million in kickbacks.

Though initially denying any involvement in this scandal, Mayor Rahm Emanuel has admitted that his office knew of one of the no-bid contracts at issue. Now his office is refusing to release hundreds of emails regarding the matter.

The Chicago Tribune filed a lawsuit over Emanuel’s use of private phones and email while attending to public matters. The lawsuit argues that records of business conducted by a public official should be accessible by the public, regardless of the kind of device on which the business is conducted.

Separately, the Chicago Tribune found that companies in Illinois have benefited from lucrative tax credits under the Economic Development for a Growing Economy program, or EDGE, in exchange for promises to create more jobs. Some of these companies have not only failed to create jobs in Illinois, but have even downsized and laid off employees. EDGE credits have often only served businesses looking for handouts, while hurting taxpayers in the process.

The city of Dixon concluded the auction of scandal-ridden former Dixon Comptroller Rita Crundwell’s assets. Crundwell stole $53 million in tax dollars from the small town over the course of twenty years. She was sentenced to prison for 19 years in 2012.

When instances of back-door dealing and corrupt business practices such as these occur, taxpayers are the real losers. In addition to the CPS, Chicago mayor’s office, EDGE tax credits and Rita Crundwell scandals, here are the other corruption stories across the state for the month of October:

1. Oct. 1, 2015 – Better Government Association: CPS revises grad rates after BGA/WBEZ report.

Chicago Public Schools acknowledged Thursday that its graduation rate – heralded by Mayor Rahm Emanuel during his reelection campaign because the number of students finishing high school was reportedly rising – was overstated.

The school system was forced to make the embarrassing revision following a Better Government Association/WBEZ investigation earlier this year that found thousands of students were being counted as transfers when they should have been counted as dropouts. Transfers aren’t factored into the graduation rate, but dropouts are.

2. Oct. 2, 2015 – ABC 7 Chicago: Sandi Jackson to serve sentence in West Virginia, report says.

Former Chicago Alderman Sandi Jackson will serve her one-year sentence for falsifying tax returns at a federal prison camp in West Virginia, according to a report. …

Her husband, ex-Congressman Jesse Jackson Jr., completed on Sept. 18 his sentence for spending $750,000 in campaign money on personal items.

3. Oct. 2, 2015 – Chicago Tribune: Illinois businesses get lucrative EDGE tax breaks, fall short of job goals.

Illinois’ flagship job program has awarded millions of dollars to companies that never hired an additional employee.

It’s doled out millions more in tax breaks for corporations that eliminated jobs and became smaller.

And it’s allowed companies to reap lucrative rewards and then relocate to other states without penalty or repayment. …

In the first comprehensive analysis of 783 EDGE agreements, the Chicago Tribune found that two of every three businesses that completed the incentive program failed to maintain the number of employees they agreed to retain or hire.

State officials can’t say how many jobs have been created through the job program; nor can they say how many jobs EDGE companies have eliminated. The Tribune, however, found that 79 current or former EDGE recipients have reported eliminating 23,369 jobs through layoffs and closures since entering the program.

4. Oct. 6, 2015 – Better Government Association: Lynwood settles suit over beating by cop.

The Village of Lynwood has paid $500,000 to settle a federal civil rights lawsuit that claimed a police officer cold-cocked a handcuffed prisoner without provocation.

5. Oct. 8, 2015 – Sauk Valley Media: Nearing the finish line on sale of Crundwell assets.

The last belongings of Rita Crundwell will be auctioned online from Oct. 20 to Nov. 3. …

They include memorabilia autographed by NFL Hall of Fame quarterback Terry Bradshaw, a Childeric English saddle (worth almost $4,000 new), Harley Davidson apparel, pairs of cowboy boots, western hats, an ATV and mopeds.

This will be the first of two auctions the U.S. government will host following its summerlong seizure of Crundwell’s remaining assets.

6. Oct. 8, 2015 – Sauk Valley Media: Ex-Chicago Public Schools leader charged with corruption.

The former CEO of Chicago Public Schools plans to plead guilty to corruption charges announced Thursday that allege she helped steer more than $23 million worth of no-bid contracts to education companies in exchange for hundreds of thousands of dollars in bribes and kickbacks. …

The indictment alleges that Byrd-Bennett expected to receive kickbacks worth 10 percent of the value of the no-bid contracts, or about $2.3 million. It’s unclear how much money was set aside.

Prosecutors allege the scheme started in 2012, the same year Mayor Rahm Emanuel chose her to become CEO of the nation’s third-largest school district. Rahm released a statement Thursday saying he was “saddened and disappointed to learn about the criminal activity” that led to the indictment.

7. Oct. 11, 2015 – Chicago Sun-Times: The Watchdogs: Clout-heavy firm getting millions from state’s late bill-paying.

Cashing in on the state of Illinois’ financial crisis, a company founded by two Democratic Party insiders has been paid millions by fronting money to vendors the state is behind in paying — and then getting the late fees once the state pays up, records show.

Brian Hynes and Patti Solis Doyle’s company has gotten more than $22 million from the financially battered state government through those late fees in the past three years.

8. Oct. 11, 2015 – Better Government Association: Community college leaders cash in.

Leaders of taxpayer-subsidized community colleges in the Chicago area are collecting salaries that surpass most of their peers around the country, a Better Government Association analysis finds.

They also are getting perks in some cases worth more than $135,000 a year.

9. Oct. 12, 2015 – Chicago Tribune: Mayor’s office withholds records on school contract scandal.

Mayor Rahm Emanuel’s office was more involved in a $20.5 million school contract with a now-indicted consultant than previously disclosed, public records indicate, but his administration has refused to release hundreds of emails that could provide a deeper understanding of how the deal came to be.

10. Oct. 14, 2015 – Department of Justice: Former owner of Edgewater Medical Center sentenced to 21 months for willfully impeding efforts to collect $188 million in civil judgments.

The former owner of Edgewater Medical Center on Chicago’s North Side was sentenced to 21 months in federal prison for his efforts to thwart collection of more than $188 million in civil judgments.

PETER G. ROGAN lied in a federal affidavit when he denied controlling millions of dollars in a trust account in the Bahamas. He also willfully violated multiple court orders as part of a decades-long effort to protect his offshore assets from judgment creditors who had obtained more than $188 million in combined civil judgments arising from fraud during Rogan’s tenure as CEO of the now-shuttered medical center.

11. Oct. 15, 2015 – Better Government Association: Hiring, ‘pay to play’ part of Dorothy Brown probe.

Under investigation for well over a year for possible corruption, Cook County Circuit Court Clerk Dorothy Brown is facing more scrutiny from law enforcement, including a federal probe focusing in part on personnel decisions made by her office.

One source familiar with the case said the U.S. attorney’s office in Chicago has an active grand jury looking into Brown’s conduct, including loans she may have received from employees “in connection to employment.”

12. Oct 15, 2015 – Chicago Sun-Times: Aaron Schock legal bills more than $2.7 million – with more to come.

So far, former Rep. Aaron Schock, R-Ill., has been billed more than $2.7 million in legal fees, as federal prosecutors pursue him in criminal grand jury proceedings and a court fight over document production.

13. Oct. 15, 2015 – Alton Telegraph: Brighton woman pleads guilty to healthcare fraud.

A Brighton woman has pleaded guilty to federal healthcare fraud charges, submitting fake bills to a Medicaid waiver program as a personal assistant. She also admitted to neglecting one of her customers. …

Jessica A. Teets, 27, of Brighton, pleaded guilty in the U.S. District Court on Tuesday to the charge that she engaged in a scheme to defraud a health care program.

Sentencing has been set for Feb. 9, 2016, in East Saint Louis. Teets will face up to 10 years in prison, a fine of up to $250,000, and up to three years of supervised release.

14. Oct. 16, 2015 – Department of Justice: Kenilworth businessman indicted for failing to report $3 million in personal income from downtown real estate deal.

A Kenilworth businessman has been indicted on charges he evaded federal income taxes by concealing $3 million he earned in connection with a high-rise real estate deal in downtown Chicago.

15. Oct. 16, 2015 – Chicago Tribune: 2 cops under investigation in connection with sex trafficking of underage girl.

Two veteran Chicago police officers are being investigated in connection with the sex trafficking of an underage girl while off-duty, the Tribune has learned.

Investigators are looking into the role the two played in connection with a 14-year-old girl who had been soliciting prostitution on a website, according to a source familiar with the investigation.

16. Oct. 16, 2015 – Department of Justice: O’Fallon woman pleads guilty to healthcare fraud charge.

Ann Marie Sheppard, 54, of O’Fallon, Illinois, pled guilty in federal court to charges that she engaged in a scheme to steal from a health care program and committed mail fraud. Sentencing has been set for February 10, 2016. Sheppard will face up to 10 years in prison, a fine of up to $250,000, and up to 3 years of supervised release.

During her plea hearing, Sheppard admitted that she had submitted false and fraudulent bills in relation to her alleged performance of personal assistant services in the Home Services Program, a Medicaid Waiver Program designed to allow individuals to stay in their homes instead of entering a nursing home. Sheppard admitted to falsely billing the program between June 30, 2013 and April 30, 2015, when she purportedly rendered personal assistant services to a customer when, in fact, she had not because she was out of the country for eleven days and on an ocean cruise for four days, along with other times she was not with the customer. As a result, Sheppard improperly billed 2,883.4 hours of services and obtained $34,168.33 in payments for services not performed.

17. Oct. 19, 2015 – The Guardian: Homan Square revealed: how Chicago police ‘disappeared’ 7,000 people.

Police “disappeared” more than 7,000 people at an off-the-books interrogation warehouse in Chicago, nearly twice as many detentions as previously disclosed.

From August 2004 to June 2015, nearly 6,000 of those held at the facility were black, which represents more than twice the proportion of the city’s population. But only 68 of those held were allowed access to attorneys or a public notice of their whereabouts, internal police records show.

18. Oct. 21, 2015 – Chicago Tribune: Ex-Countryside police chief in prison loses six-figure pension.

Nearly nine months after he admitted to misusing money meant for a police nonprofit, a former suburban police chief had his six-figure pension revoked Wednesday in a case that highlighted the legal debate on how and when to stop retirement checks to cops found to be corrupt.

State law requires a pension be taken away if an officer is convicted of a felony that relates to, arises out of or is connected with his or her work as an officer. Based on that, the Countryside police pension board voted 5-0 to stop sending pension checks to ex-Countryside Chief Timothy Swanson.

Swanson is serving a 27-month sentence in federal prison after pleading guilty in January to felony charges he committed fraud and pocketed money meant for a police helicopter program he ran while chief of Countryside and, later, as an employee in the Kankakee County sheriff’s office.

19. Oct. 21, 2015 – CBS Chicago: Ex-Rep. Derrick Smith’s last minute bid to avoid prison fails.

A federal judge has ordered the West Side Democrat to report to prison by Friday and begin serving his five-month sentence for taking a $7,000 cash bribe. …

The feds caught Smith on tape accepting a $7,000 cash bribe in exchange for a letter of support for a state grant application roughly a year after he’d been appointed to the Illinois House of Representatives.

20. Oct. 23, 2015 – Department of Justice: CEO of Chicago healthcare company pleads guilty to fraudulently billing Medicare in $1.8 million scheme.

The chief executive of Chicago-based Mobile Doctors pleaded guilty to charges that he fraudulently increased Medicare bills for in-home treatment that was shorter and less complicated than the claims indicated.

DIKE AJIRI, 44, of Wilmette, admitted in a plea agreement that he personally altered patient files so that the now-defunct company could fraudulently bill several patient visits to Medicare at the highest possible level. The improper billing – known as “upcoding” – defrauded Medicare and the Railroad Retirement Board of approximately $1,854,000, according to the plea agreement. …

According to the plea agreement, Ajiri personally altered Mobile Doctors’ billing forms – and instructed Mobile Doctors’ personnel to do the same – so that many of the in-home visits were fraudulently billed to Medicare and the Railroad Retirement Board at the highest level. Ajiri knew that these visits did not qualify for the maximum payment, and that it was unlawful for him to submit the false claims.

21. Oct. 23, 2015 – Chicago Tribune: Veteran Chicago cop convicted of excessive force.

After a weeklong trial, [Aldo] Brown was convicted of a single felony count of excessive force in the beating of a suspect in a South Shore neighborhood convenience store three years ago that was captured by surveillance cameras. The same jury acquitted him on two other counts of obstruction of justice that alleged he lied in police reports about the incident.

22. Oct. 23, 2015 – Pekin Times: Nurse punished for welfare fraud.

A Tremont woman must return $12,327 she received in state welfare over two years in which she earned more than $100,000 as a traveling nurse.

Melissa Horton, 36, also was sentenced to 30 months of probation with her guilty plea Friday to felony state benefits fraud. Her punishment, which included no incarceration, came with a warning. …

She was charged last May after her fraud was discovered by a state Department of Healthcare and Family Services (IDHFS) investigator.

Horton cited no income when she applied in 2012 and 2013 to the Illinois Supplemental Nutrition Assistance Program (SNAP) operated by IDHFS. The program is available to persons whose incomes are considered inadequate to purchase food sufficient for “good health,” according to the program’s website.

23. Oct. 25, 2015 – Better Government Association: Congressman’s decisions benefit dad’s lobby clients.

In the eight years since he opened a lobbying practice, business has been good for former U.S. Rep. Bill Lipinski (D-Ill.).

Since then, he’s been paid $4.8 million — including $4 million from clients with business that goes before the U.S. House transportation committee where his son, U.S. Rep. Dan Lipinski (D-Ill.), now serves.

Dan Lipinski is the senior Illinois representative on the 59-member committee, which decides federal funding and policy crucial to public transportation agencies and private companies such as railroads. While Dan Lipinski says his father doesn’t lobby him, critics say the unusual relationship is problematic.

24. Oct. 27, 2015 – Chicago Tribune: LaGrange Highlands man alleges fraud in Indian Head Park police billing.

A lawsuit has been filed against the village of Indian Head Park alleging police paid to patrol unincorporated areas were instead responding to service calls in the village. …

The legal action is brought according to the False Claims Act, which allows a member of the public to file suit on behalf of a governmental entity which has experienced fraud at the hands of another government body. …

Cook County Sheriff’s police have jurisdiction in LaGrange Highlands and other unincorporated areas. Lyons Township has contracted for additional police patrols for a number of years, because the county doesn’t have sufficient staff to dedicate an officer to patrol LaGrange Highlands, Kielczynski said.

LaGrange Highlands residents are assessed twice for police protection. Kielczynski said every six months he pays $139.22 for sheriff’s police services and $57.93 for the Lyons Township Special Police District, which funds the contract with Indian Head Park. …

In addition, the suit shows 11 instances of fines for tickets written by Indian Head Park police in unincorporated areas were not paid to Lyons Township, but were collected instead by the village. …

“Ultimately, my client would like to see the township made whole for overpayments and for monies withheld and for this not to continue,” he said. “This costs taxpayers real money to engage in this contract, and they should get the fair value of what they pay for.”

25. Oct. 27, 2015 – Chicago Tribune: Schaumburg coach held in abuse of disabled girls faces extradition, DCFS inquiry.

A Schaumburg gymnastics coach has been charged with sexually abusing two disabled girls during a trip to Georgia for a competition, authorities said.

Patricia Hermann, 48, is charged with sexual battery of a minor and aggravated sexual battery of a minor, said Sgt. Dana Pierce of the Cobb County Police Department.

26. Oct. 28, 2015 – Department of Justice: Statement by the U.S. Attorney’s office following the guilty plea of former U.S. House Speaker John Dennis Hastert.

… JOHN DENNIS HASTERT, 73, of Plano, pleaded guilty in federal court to one count of illegally structuring cash withdrawals in order to evade financial reporting requirements. …

The United States Attorney’s Office for the Northern District of Illinois issued this statement following the guilty plea:

“Now that Mr. Hastert has pled guilty, and the Court has accepted his guilty plea, the case will proceed to sentencing. As part of the sentencing process in this case, as in all cases, we will provide the Court with relevant information about the defendant’s background and the charged offenses, and the defendant will have an opportunity to do the same, so that the Court can impose an appropriate sentence taking into account all relevant factors in the case. We have no further comment about the matter at this time.”

27. Oct. 30, 2015: Chicago Tribune: Waukegan police have history of wrongful convictions, abuse allegations.

No city police agency in Illinois, other than Chicago’s, shares responsibility for as many known wrongful convictions as the Waukegan police, who helped send six men to prison — some for decades — before they were cleared, according to an analysis of data from the National Registry of Exonerations. Waukegan police also have been inundated with abuse allegations, records show, and insurers and the city have paid out $26.1 million in police cases since 2006, outspending towns with more police and, in some cases, more violent crime.

The Waukegan Police Department has been led by officers who played central roles in some of the costliest investigative failures in Lake County history, and police with troubled records have flourished in the department. Scandal and instability have plagued the agency, and the city is now run largely by former officers who have given little public indication that they detect a problem.

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