Friday, March 21, 2008

Did Chicago Go Easy on a Mob Connected City Vendor? African-American Politicians Say Yes

African-American politicians accused the Daley Administration on Thursday of giving a “slap on the wrist” to James Duff, head of a mob-connected family that became the poster child for minority business fraud in Chicago.

Instead of barring James Duff and his two co-defendants from ever doing business with the city -- as recommended by Inspector General David Hoffman -- newly-appointed Chief Procurement Officer Montel Gayles chose a three-year ban.

Hoffman strongly disagreed -- and African-American politicians sided with him.

White members of the Duff family fraudulently obtained $100 million in janitorial contracts earmarked for minorities and women through their company, Windy City Maintenance.
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“If you can commit a $100 million fraud and get a three-year slap on the wrist, the next fraud may be $200 million with the precedent being established by the Duff’s that you get to come back and play. It might even be something that encourages fraud,” said U.S. Rep. Jesse Jackson Jr. (D-Ill.).

“To restore public trust, a more stringent penalty is needed — not only for the Duff’s, but for other companies that might take advantage. To do otherwise is to support a cycle of, ‘Let me get mine. After a few years off, I get to come back and participate again.’ That stinks of insider dealing.”

Ald. Ed Smith (28th) agreed that James Duff “should be made to pay severely — by never doing business with the city again.”

“As big as it is, they should have been an open-arms company sensitive to minority business. They should have tried to help minorities. Instead, they ripped them off. It was a disgrace.They should be made to pay for that much more severely than three years,” Smith said.

Ald. Toni Preckwinkle (4th) condemned the three-year penalty as “an incomprehensible slap on the wrist. What exactly do you have to do, then, to be barred permanently? If this isn’t sufficient cause, what is?”

Gayles could not be reached for comment. In arguing for a lifetime penalty, Hoffman cited a de-barment rule issued by the Department of Procurement Services in December, 2005.

At the time, Library Commissioner Mary Dempsey had been brought in to clean up the mess caused by the Duff scandal and other minority business fraud.

The rule states, “The period of de-barment may be for a stated period of time or -- if no duration is set at the time of the debarment -- indefinitely. Periods of de-barment may be imposed concurrently or consecutively.”

“They had the discretion … to go as high as they wanted to … The crimes to which Mr. Duff pleaded were very broad — including racketeering and money laundering. There’s no ordinance that restricts a de-barment period based on those convictions,” Hoffman said.

He added, “If contractors who commit serious misconduct are allowed to come back and compete for taxpayer-funded contracts, it becomes very hard to enforce a system of integrity.”

It’s not the first time City Hall has treated the Duff’s with kid gloves.

On New Year’s Eve, 1999, Corporation Counsel Mara Georges concluded that men ran Windy City and stripped the company of women’s business enterprise (WBE) status, which gave the company a leg up on city contracts. But, Georges insisted there was no evidence of fraud because ownership of the company evolved when Patricia Green -- Duff’s mother -- gradually withdrew from the company.

Six years later, James Duff pleaded guilty to engineering a $100 million fraud.

He is expected to be released from a South Dakota federal prison in 2014. He will become eligible to do business with the city in 2011.

Terrence Dolan, who was convicted with Duff, has already served his time and now works at a Hinsdale janitorial firm. Duff co-defendant William Stratton remains in a federal prison in Leavenworth, Kansas. He is expected to be released in 2010.

Thanks to Fran Spielman

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