Before the Fall, Cellini Firm Feasted on Fees

It would appear that William Cellini’s reign as a state powerbroker is over, especially since he’s probably headed for jail.

That’s in sharp contrast to a few years before his conviction last November in federal court of extortion conspiracy and soliciting a bribe. At that time, the real estate investment firm he ran was flush with tens of millions of dollars in fees provided by the Teachers Retirement System (TRS) of Illinois.

Cellini’s Commonwealth Realty Advisors received $30 million between 2001-2010, the Better Government Association found.

It was Cellini’s influence on the state’s largest public pension fund that helped lead to his downfall. Cellini was convicted of scheming to pressure a co-owner of investment firm Capri Capital in 2004 to make campaign contributions to then-Gov. Rod Blagojevich in return for Capri’s managing some TRS investments worth $220 million.

Federal authorities have alleged in court documents that Blagojevich insiders Tony Rezko and Christopher Kelly were also part of the scheme to force Capri to make payments to the ex-governor’s campaign fund.

The plot backfired when Capri co-owner Tom Rosenberg, a Hollywood producer whose films include “Million Dollar Baby,” refused to give money to Blagojevich, according to court documents.

Rosenberg threatened to go to the authorities.

To try to prevent that from happening, Cellini, Rezko, Kelly and TRS board member Stuart Levine decided Capri should get the $220 million investment stake anyway. But they vowed to use their influence to block Capri from receiving future state business, federal authorities alleged in court documents.

In October 2008, a federal grand jury indicted Cellini on charges of conspiracy to commit mail fraud, extortion conspiracy, attempted extortion and soliciting a bribe.

Cellini was subsequently convicted in federal court, where Rosenberg was a key government witness.

Cellini’s family still has property and business interests in Springfield and downstate, so a comeback for the resilient political powerhouse is always a possibility.

But that’s a long shot: Cellini faces up to 30 years in prison and his firm, Commonwealth Realty, has closed. His sentencing is scheduled for June 15.

This blog entry was reported and written by BGA Investigator Andrew Schroedter, who can be reached at (312) 821-9035, or at aschroedter@bettergov.org.

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IMRF Vs. TRS: Getting More For Less

Over the past decade, another major public employee pension fund reaped a higher investment return, paid less in financial fees and used fewer advisers than the Teachers Retirement System (TRS) of Illinois.

The Illinois Municipal Retirement Fund (IMRF), which had $24 billion in assets at the end of 2010, had an average annual return of 5.4 percent (not including fees) for the 10-year period ending in 2010.

The fund couldn’t provide a net return for the 10-year period.

During that period, IMRF paid $594 million in fees to money managers, significantly less than TRS’ $1.3 billion payout. Eighty vendors were paid more than $1 million each by IMRF compared to more than 200 TRS vendors.

Another difference: IMRF, which manages pensions for local governments and school districts, is not state-funded as is TRS and four other major state-backed pensions.

IMRF was about 80 percent funded at the end of last year, according to a preliminary estimate.

In comparison, TRS is less than half funded.

Brett Chase is a Chicago-based freelance reporter and BGA investigator.

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ROUNDUP: Kidding Around at CPS; D.C. Lobbyist Gets Another Deal at Sanitary District; Lush Spending in Lincolnwood

>> Southwest Side school under scrutiny on residency

In the old days, we heard somewhat regularly about city parents obtaining phony addresses in the suburbs so their kids could attend public school there for free and not be subjected to CPS.

Keller Elementary Gifted Magnet School

In a twist on that practice, we recently heard the Chicago Public Schools’ inspector general is investigating allegations that at least one family from the south suburbs is boundary jumping into the city so their kids can attend Keller Elementary Gifted Magnet School on the Far Southwest Side.

We wondered whether this might be a symptom of an improving – at least in some quarters – city school system.

Either way, it turns out residency schemes occur with relative frequency, according to the IG’s 2011 annual report, which reads: Continue reading

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As Relationship Simmers Between Chicago Fire Commissioner and IG, Management Questions Persist

(remixed image, original courtesy mhowry/cc)

In the opening scenes of the 1991 Ron Howard film “Backdraft,” two young brothers are horsing around in the Chicago firehouse where their father works when an emergency call comes in. As firefighters ready their engine to answer the call, the younger brother beams when his dad asks if he wants to ride along.

They reach the scene with sirens blazing, and the son watches his father pull a child from the top floor of the burning building. But then a tragic turn: A gas leak leads to an explosion, and the boy’s father dies in the blaze. From there, the film flashes forward decades when both brothers are Chicago firefighters.

The movie is loosely based on the lives of Chicago Fire Commissioner Robert Hoff and his older brother Raymond Hoff, third-generation Chicago firefighters whose father was killed fighting a fire in a South Side apartment building in 1962, according to media reports.

The film came to mind recently because Commissioner Hoff—presumably depicted as the younger brother in “Backdraft” who rode along with his firefighter-father – is now at the center of a controversy involving fire department “ride alongs.” Continue reading

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Radio Silence in Melrose Park, Despite Some Promising Reforms

Hey, where'd you get that uniform?

Melrose Park remains a curious place.

Historically it was a town with strong organized crime influences. While the current leaders of Melrose Park may not like that image, they don’t do a lot to correct it either, considering Mayor Ron Serpico continues to take campaign contributions from a waste-hauling company that the FBI has long contended is run by two high-ranking mob figures.

But we digress.

The mob aside, run-of-the-mill public corruption hasn’t disappeared from the western suburb, as evidenced by a scandal a few years back that sent the now-former police chief, Vito Scavo, to federal prison.

His crimes?

The Chicago Sun-Times puts it quite succinctly: Continue reading

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Chairman of South Suburban College Board Takes Campaign Cash From Union, Approves Union Contracts

Thornton Township Supervisor Frank Zuccarelli

The union representing teachers and staff at South Suburban College has donated more than $60,000 to the elected official who serves as chairman of the South Holland school and helps set their taxpayer-funded salaries, the Better Government Association has learned.

Frank Zuccarelli has been on the board of the community college since 1978, and has served as chairman since 1987. He holds two other elected posts – Thornton Township supervisor and Thornton Township Democratic committeeman – and helps oversee several campaign funds that support his political activities.

The political action committee of the Cook County College Teachers Union – which represents more than 400 faculty and staff members at South Suburban College – donated a total of $60,053 to those funds since 1999, according to the Illinois State Board of Elections.

The most recent donation from the union – to a campaign committee called the Thornton Township Regular Democratic Organization – amounted to $1,250 and was reported on Aug. 29, state records show.

MORE FROM THORTON TOWNSHIP — 11/7/2011
Is This Township Official Living on Easy Street?

The community college board votes on contracts with the union – meaning Zuccarelli and his colleagues help set the pay and benefits received by teachers and staff.

Under a current contract expiring next year, the faculty received no raise in the first year and a 5 percent raise in the second, says Perry Buckley, president of the Chicago-based Cook County College Teachers Union.

The terms were not as sweet as the previous four-year agreement, which boosted the faculty’s pay by 5 percent a year, or by a total of 20 percent, Buckley says.

In fiscal year 2010, the average full-time faculty member at South Suburban had a base salary of $68,363, slightly higher than the statewide average of $66,582, according to Illinois Community College Board data.

Despite the apparent conflict of interest, Zuccarelli says he sees nothing wrong with accepting union donations. He not only has voted on every contract involving the union’s members in recent years, he says he plans to do so again after deals for full-time faculty and staff expire next summer.

Buckley likewise says he sees nothing wrong with the donations.

“We give money to people who we think can help us,” he says. “Do we support Frank because he’s chairman of the South Suburban College board? Yeah. . . . But there’s no quid pro quo.”

South Suburban’s administration has no problem with Zuccarelli pocketing the donations, and doesn’t believe they impact how he votes, says Patrick Rush, spokesman for the school, which serves about 17,000 students a year.

“The college doesn’t view it as a conflict of interest,” he says.

Rush apparently thinks highly of Zuccarelli.

Over the years, Rush donated more than $4,000 to Zuccarelli’s campaign funds, state records show.

This story was written and reported by BGA investigator Andrew Schroedter. He can be reached at aschroedter@bettergov.org or (312) 821-9035.

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The Charmed Life of Rahm’s Chief of Staff

Theresa Mintle, chief of staff to Chicago Mayor Rahm Emanuel

The BGA and Crain’s Chicago Business recently published the findings of an investigation into Mayor Rahm Emanuel’s top aide, Theresa Mintle, who stands to gain from a pension perk that she had a hand in crafting while at her last job, at the CTA.

Here’s an excerpt from the article:

“Mayoral Chief of Staff Theresa Mintle helped enact a special early-retirement plan at her former employer—the Chicago Transit Authority—that entitled her to a $65,000 annual pension she wouldn’t have qualified for otherwise.”

“Official records obtained in a joint probe by Crain’s and the Better Government Assn. indicate Ms. Mintle . . . is eligible for a pension of $64,908.53 at age 65, based on just eight years of service at the agency. The early-retirement sweetener passed in 2008, when she was chief of staff to then-CTA board Chairman Carole Brown. Ms. Mintle resigned from that job last spring to assume similar duties for Mayor Rahm Emanuel.”

The mayor’s office ultimately told us that Mintle won’t be taking this pension perk after all. We hope she puts that in writing.

But there’s another angle that was lost in the shuffle, something we figured still was worth mentioning: Mintle’s CTA pay hike.

While serving as the CTA board chairman’s chief of staff, Mintle somehow ended up with a pay raise—even though there was supposed to be a pay freeze at the time for all CTA employees.

What’s more, that pay hike increases the amount of her pension payout, at least on paper.

A CTA spokeswoman, via email, explains and justifies Mintle’s salary hike this way:

“She joined CTA in 2003 as GM, Gov’t Community Relations at salary of $105,000. At the time of promotion to Chief of Staff in 2007, she was making $126,000. Her new salary as COS was $145,673. In 2008 there was an across the board pay increase which brought her to $154,544. As you and I have previously discussed, the 2008 raise was to balance a new 6% payroll deduction (3% increase in pension deductions and a new 3% deduction for retiree healthcare fund) so actual take home pay did not increase.”

“She received her last increase in July 2009. As I previously told you, when she was hired she was paid significantly less than her predecessor ($17,426 to be exact.) She received a raise after being in the job two years because she was given additional responsibilities. After the Chief Financial Officer (Dennis Anosike) left in February 2009, Theresa was asked to assume his place on key boards and committees. She served as the Vice Chair of the Retirement Allowance Committee, a trustee for the Retiree Healthcare Trust and Chairman of the Deferred Compensation Committee. At the same time, the Deputy Chief of Staff in the Chairman’s office left and the position wasn’t filled due to a hiring freeze so she had to handle those responsibilities as well. The raise she received brought her to $175,000 (a 13% increase) but she wasn’t actually paid that amount since she was also subject to 18 unpaid days this year and last. Her actual pay this year would have been $162,884.”

It’s worth noting that lots of people got additional work thrown at them at the CTA as the ranks shrank, and lots of employees there were subject to furlough days. Why was Mintle so special as to be compensated for it?

Meanwhile, we also learned through well-placed sources that, as word spread that Mintle might get her final CTA pay raise, some agency executives were so aghast they actually signed and circulated an internal petition opposing the move.

Some rare dissent—which ultimately proved unsuccessful.

We wondered if the current mayor—who has advocated for a more business-like approach to government and an end to “business as usual” favoring the insiders over everyone else—knew about all this, and if so, when he found out?

According to an Emanuel spokeswoman, the mayor “found out when I told him about the press story that you were running” with Crain’s.

This blog entry was reported and written by Robert Herguth, the BGA’s editor of investigations. Contact us with tips, suggestions and complaints at (312) 821-9030, or at rherguth@bettergov.org.

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Metra ‘Observers’ Monitoring Ticket Collection on Crowded Trains

Ticket collection on a Metra train (vxla/Creative Commons)

It’s a common scene on Metra after events such as Lollapalooza and the Navy Pier fireworks: hoards of passengers pile into train cars, conductors can’t easily navigate through the crowded aisles to collect fares and hundreds if not thousands of passengers end up riding for free.

But facing a massive budget shortfall and the prospect of raising fares, the commuter rail agency is getting tough with its employees to make sure all riders pay their fare share, the Better Government Association has learned.

Not only have conductors been instructed to start collecting every dime, Metra is keeping a closer watch on them, assigning anonymous “observers” to ride train lines and see if the ticket collectors are reaching everyone, Metra spokeswoman Judy Pardonnet said.

What’s more, conductors are being told they could face discipline – perhaps termination – if caught giving freebies, even to off-duty Metra personnel, Pardonnet said.

“Recently, the number of concerns and complaints about this problem has increased,” she said. As a result, Alex Clifford, Metra’s new executive director, “is taking this very seriously because of budget concerns.”

A ticket to ride (Sugar Sweet Sunshine/Creative Commons)

“We’re putting forth a more concerted effort to put trained observers on board to monitor fare collections,” Pardonnet added. “It’s being communicated to the crews and employees that [letting riders skate] is an unacceptable and dismissible offense.”

The crackdown started in early August, shortly after the BGA began inquiring about fare-collection practices. But Pardonnet said that’s not what sparked the tough new approach.

Metra conducted an online consumer survey in August that garnered more than 7,000 responses. Some people indicated they wouldn’t support a fare hike because Metra does not collect existing fares from everybody, Pardonnet said.

Although Metra didn’t tally the complaints, there were enough to assign observers to monitor the situation, she said. (Observers aren’t new to the agency, but Metra ramped up their use after Metra’s Aug. 12 board meeting.)

Clifford has sent memos to Metra employees on the subject. So far no employees have been let go for violating the edict, although at least one worker is being disciplined. “The idea is not to single people out, but to alleviate the problem,” Pardonnet said. “Hopefully the warnings serve as a deterrent right then and there.”

Union officials had no immediate comment.

But conductors interviewed by the BGA said it can be difficult to get fares from all riders when a train is packed.

Post-event Metra train runs can make ticket collection harder. (Jordan Fischer/Creative Commons)

“The crazier and more crowded the trains are, the harder it is for us to collect everyone’s tickets,” said a conductor interviewed recently at Union Station in downtown Chicago. “It’s like a police officer trying to radar everyone that speeds. Sometimes it’s just impossible to catch everyone.”

Another conductor said a lack of manpower is another reason fares sometimes don’t get collected. He said there are supposed to be three conductors on his train, but it’s common for one to be transferred to another train to fill a vacancy, making it tough to get to all the riders.

Metra seems to lag in collection efforts during train delays, inclement weather, and big events such as music festivals (including shows at Ravinia in the north suburbs) and sports games (including horse races at Arlington Park), which cause trains to be packed and the crews to be sometimes unprepared. But passengers interviewed by the BGA said they’ve witnessed conductors neglect fare collection even when it wasn’t crowded.

“I recently took a late afternoon train from Lake Forest to Chicago,” said Davis Anderson, of Chicago. “Occasionally, a conductor would come through, and people would attempt payment, only to have the conductor say he would come back and get it. I am not sure how many people had a free ride, but in my car alone there were a lot.”

It’s hard to quantify how often fares actually go uncollected, and how much money is at stake; Metra apparently has not studied the issue in depth, although Metra officials have speculated that, over the years, the total is in the millions of dollars.

It’s worth noting that on the CTA, fare collection is done in rail stations, at turnstiles, and not on board.

“It seems like a lot of money is being missed out on,” said Jeffrey Durkes, of Chicago, who takes Metra to watch Northwestern University football games. “If you ride the CTA and know you’re going to get hit up 100 percent of the time, why not just go down to the Metra and get the possibility of a free ride?”

This story was written and reported by BGA Editor of Investigations Robert Herguth and BGA Investigative Intern Melanie Zanona. Contact us with tips, suggestions and complaints at (312) 821-9030, or at rherguth@bettergov.org.

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Chicago Tribune, EveryBlock Follow Up on BGA Investigation of Deteriorating Brown Line Platforms

Paul Beaty/Chicago News Coop; Emily Jurlina/BGA

Today the Chicago Tribune picked up on a BGA and Chicago News Cooperative investigation from late 2010 about the deteriorating Brown Line renovation project. The Brown Line recently underwent a $530 million overhaul that officials claimed would minimize maintenance. Fewer than two years since the renovation, planks are warping, rotting and growing mold.

The Chicago Transit Authority (CTA) initially installed wood pre-treated with only a fire-retardant. On the advice of a wood expert and former employee of the federal government’s Forest Products Laboratory, the CTA later applied a weather-resistant preservative to the platforms between April and August 2009. It turns out that the preservative does not work well when applied over the fire-retardant, and deterioration ensued.

As a result, taxpayers have spent more than $350,000 in replacing planks. The CTA ensures that rider safety is not at risk. Read our Dec. 31, 2010, investigation here.

Citizens Take to the (Digital) Streets

This investigation has led to a new kind of citizen engagement the BGA is excited about: An Albany Park resident took to EveryBlock this August to find out how her public officials are responding to the problematic planks on the Brown Line platforms. As you’ll see, a community is forming around the issue: http://chicago.everyblock.com/announcements/aug16-deteriorating-cta-platforms-4186225/#comment-32128

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BGA Loses a Best Friend, John J. White

John J. White (1919 - 2011)

I am saddened to share news that the BGA lost one of its best friends, John White. John was a few months short of his 50th anniversary as a BGA Board member when he died last week. I was fortunate to spend a few minutes with John in his final days, and I know he heard and understood my heartfelt expression of gratitude for his passionate commitment to the BGA over nearly half a century.

You can read about John’s remarkable life—he epitomizes the “Greatest Generation”—and find the details of the memorial service planned for Friday, in this death notice, found here.

John: We miss you already.

Andy Shaw
BGA President & CEO

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