May 11, 2012 10:41 AM
Businessman Asks: Is Politics Stalling Cook County Fraud Probe?
The state’s attorney’s office is investigating a company for alleged minority-contracting scheme, but two prosecutors have owned piece of a related firm. Now, whistleblower questions whether those connections are delaying case.
By Andrew Schroedter/BGA and the Chicago Sun-Times
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A little more than two years ago, Cook County State’s Attorney Anita Alvarez’s office subpoenaed a Chicago businessman named Harold Davis Jr., who had accused a major county contractor in a lawsuit of trying to use his company to defraud taxpayers in a minority-contracting scheme.
Nearly every month since, Davis says he’s phoned Alvarez’s office about its investigation. And each time, he says he’s been told by an Alvarez aide that the case is "too sensitive" to discuss.
Now, Davis is questioning whether Alvarez is vigorously pursuing the information he provided about Aramark Correctional Services, the food supplier to the Cook County Jail, in light of Chicago Sun-Times reports that revealed ties between Alvarez’s office and Aramark subcontractor McMahon Food Corp., which is paid about $2.5 million a year to deliver milk to the jail.
In a series of stories published in March on the decades-long hold the politically connected McMahon family has had on Chicago school milk contracts, the Sun-Times reported that McMahon Food’s owners included Frank J. McMahon and two of his daughters: Mary B. McMahon and Frances J. McMahon. The daughters both work for Alvarez as assistant state’s attorneys. They were among a dozen attorneys from Alvarez’s office who traveled with her in February to Washington, D.C., to be admitted to practice law before the U.S. Supreme Court. McMahon family members and their companies have contributed $41,900 to Alvarez’s campaign fund since 2008.
Davis suspects the investigation of his allegations has gone nowhere because "Anita Alvarez would have to expose the McMahon people."
Dan Kirk, Alvarez’s chief of staff, says he won’t talk about Aramark, except to say the McMahon sisters "would have absolutely nothing to do" with investigating Davis’ allegations. He notes that they work in the criminal division of Alvarez’s office. The Aramark probe is a civil matter, according to Davis’ subpoena.
Dismissing the notion that the McMahon sisters got any special treatment regarding the trip to Washington, Kirk says they paid their own way and that Alvarez offered the same opportunity to other attorneys in her office.
A Cook County ethics ordinance bars county employees from having "a financial interest" in "any contract, work or business of the county," but Kirk says that’s not an issue with the McMahons for two reasons.
First, he says that employees of the state’s attorney’s office — though paid by county taxpayers — fall under the auspices of the State of Illinois, according to a legal opinion from Kirk’s agency. Also, he says the sisters no longer are owners of McMahon Food. He says Mary McMahon told him this week she divested her interest in McMahon Food several years ago. Frances McMahon "divested recently," he says.
Asked for details about the ownership of the company, Thomas Breen, an attorney for McMahon Food, says he has "not been able to investigate" that.
Cook County requires Aramark to subcontract some of the work under its jail contract to companies certified as being owned by women or minorities. Hiring McMahon Food, which had been certified as a woman-owned business, had helped Aramark meet that requirement.
But, in February, McMahon Food President Bridget McMahon Healy — who took over that post in her mid-20s when her 90-year-old grandmother stepped down in 2007 — withdrew the company’s application to the county to be recertified as a woman-owned business.
That left Aramark with a problem. Last month, Aramark told county officials it would continue to use McMahon Food as a subcontractor while it seeks "a viable solution."
Davis’ South Side food-supply company, named Amer I Can, obtained minority certification in 2006 and became an Aramark subcontractor that same year. Davis says he thought he was hired to be a broker to Aramark for soda pop, chips and other items.
But Davis says Aramark wanted to use his company only as an illegal minority "pass-through" and offered to pay him $17,000 a month to do little more than allow Aramark to buy the goods on its own but in the name of his company.
"They wanted me to pass it through, and I wouldn’t do it," he says.
In August 2007, he sued Aramark, accusing it of costing his company hundreds of thousands of dollars it could have made as a broker. Davis says he reached an out-of-court settlement in March 2010 in which Aramark paid his company $215,000.
Aramark officials won’t comment.
Alvarez’s office subpoenaed Davis and a business partner in December 2009, and Assistant State’s Attorney Allison Marshall interviewed them the following month, Davis says.
The subpoenas noted that the investigation was being conducted under the state’s Whistleblower Protection Act. Under that law, Davis could share in any monetary damages if his allegations uncovered fraud against the county.
This story was written and reported by Andrew Schroedter and Robert Herguth of the BGA, and Chris Fusco and Tim Novak of the Chicago Sun-Times. To reach them, email firstname.lastname@example.org or call (312-821-9035).