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The Million-Dollar Question

A nonprofit founded by Congressman Bobby Rush was given $1 million to create a "technology center" for a troubled South Side neighborhood. The project never happened. Where did the money go?

By Sandy Bergo and Chuck Neubauer/BGA

December 12, 2013 7:16 PM

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In 2000, in the midst of a bruising but ultimately successful Democratic primary campaign against then-state Sen. Barack Obama, U.S. Rep. Bobby Rush (D-Ill.) launched a nonprofit with a stated mission of reviving the violence-plagued Englewood neighborhood.

Called the Rebirth of Englewood Community Development Corp., the group soon found a generous benefactor in the telecommunications industry: SBC – now called AT&T – donated $1 million toward the creation of a "technology center" that would provide advanced computer training to residents and serve as a small-business incubator in a community with few other entrepreneurial opportunities.


If you don't see the video above, click here and watch it on the Chicago Sun-Times.

Congress also voted to spend $175,000 in taxpayer money to buy and renovate a building near 68th and Halsted to house the facility – which was to be named the Bobby L. Rush Center for Community Technology, according to federal documents and other records.

Rush said he did not run the day-to-day operation and kept no records.

But more than a decade later, the money is all gone, and Rush's tech center never moved beyond the design stage. Englewood remains as desperate and desolate as ever, and Rush continues to represent the 1st Congressional District, serving an 11th term.

As disturbing as the broken promises from Rush, he is unable or unwilling to show where that money ended up, the Better Government Association found. Rush said he did not run the day-to-day operation and kept no records.

What's more, Rush said in an August interview that, contrary to press releases put out in 2003 by his office and SBC, the $1 million grant never was intended for a building – but for programs.

As such, the SBC money – paid by SBC's charitable arm and arriving as the company was pushing for legislation in a House committee on which Rush was a key member – went for computer training at churches, libraries and other locations, according to Rush.

But Rush couldn't say whether Englewood residents learned computer basics or – as intended – graduated ready to program, install and repair computers.

"I couldn't answer whether they were high-tech or low-tech," he said. "A lot of it was technology. Most of it was technology. . . . Let's stop splitting hairs."


The "Who's Who" of Rebirth of Englewood Community Development Corp.

U.S. Rep. Bobby Rush: Rebirth founder, board member.

Carolyn Rush: Wife of congressman, Rebirth board member.

Flynn Rush: Son of congressman, on Rebirth staff as employment placement specialist.

Vincent Barnes: Rebirth executive director until 2007, previously legislative counsel on Rush's congressional staff.

Stanley Rakestraw: Rebirth board member, board president in 2009, former Metra board member.

Timothy W. Wright III: Rebirth board member through 2007, former law partner of ex-U.S. Sen. Roland Burris.

State Rep. Dan Burke: Listed on documents as Rebirth board member through 2007, though he says he was unaware he was mentioned as a board member. Burke, brother of Ald. Edward Burke (14th), says he agreed to join Rebirth's board but no one followed up and he never attended a meeting.

Sources: Interviews, publicly available nonprofit filings.


Did the tech center grant underwrite other programs from Rebirth?

"That was many years ago," Rush said. "I have no answer for that. I have no way of knowing that."

He insisted the money wasn't stolen or squandered.

"Every penny of that money went toward programs for the Englewood community," he said, adding: "SBC was quite pleased with how their money was spent."

An SBC/AT&T spokesman declined comment for this story, but in 2006, when the Chicago Sun-Times first reported on the grant and raised questions about its appropriateness, an AT&T official indicated the firm was still "hopeful" the center would open.

Other officials once affiliated with Rebirth either couldn't be reached for comment or said they didn't know where the money ended up and why the project fell apart.

Englewood businessman Johnny Smith served on Rebirth's board but left several years after the nonprofit received the million-dollar grant – unnerved when the staff informed him the money would be spent on programs, not a center.

"That was the first time I heard it. I was confused. With me not understanding what it was, I left. I thought I should have been made aware of that initially," said Smith.

The BGA asked Stan Rakestraw, president of the nonprofit's board before it dissolved in 2010 and a regular member of the board when the SBC grant arrived, if he knew what happened to the money.

"No. No, I do not," he said.

Unlike a private grant, the $175,000 approved by Congress is more easily tracked.

The money was approved in 2004 in the form of an earmark – which is a grant requested by a member of Congress for a specific project – for the purchase and renovation of a center, federal records show. That summer, Rebirth bought a long-abandoned storefront at 6821 S. Halsted for $142,500, Cook County records indicate.

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2007 photo of 6821 S. Halsted  / www.cookcountyassessor.com

Architect Vernon Williams said he was paid $70,230 to complete designs, which included computer technology studios, office space for startup businesses and an Internet cafe. Plans also called for the nearly 100-year-old building to get a facelift with a modern facade and a rooftop garden.

Rebirth staff showed the schematics, finished in 2005, to their then-alderman, Freddrenna Lyle.

"It seemed like a really good plan," said Lyle, now a Cook County judge. "But the technology center as it was proposed did not come to fruition."

Why?

The plans were simply cost-prohibitive, Rush said.

"I'm pointing the finger at the architect," Rush said. "He wanted to build a Taj Mahal in Englewood with storefront money."

Williams said the poor condition of the building raised the estimated cost of renovation to over a million dollars. The roof leaked, flooding the basement.

"My first recommendation was to tear down the building. There was no intrinsic architectural value. There was no structural value to that building," said Williams.

New construction would have cost less, he said.

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 Inside and outside views of proposed South Side Technology Center / Vernon Williams - Architects, P.C.

The project came to a halt, according to Williams, because he wasn't paid his final $31,000 invoice.

"Mr. Rush or his shadow organizations should pay their bills rather than trying to cast aspersions against others," Williams said.

Ironically, the Rush nonprofit received only $32,630 from the federal earmark because it did not document rehab expenses to justify the full $175,000.

The building stayed vacant and boarded up until 2009 when Rebirth sold it to Beloved Community Family Wellness Center, a health-oriented mission of the South Side church that Rush founded. Aside from being a politician, Rush also is an ordained Christian minister.

To close the $150,000 sale, Rebirth loaned the wellness center $94,000, then didn't cash the loan payment checks, records show. In other words, one Rush group cut another Rush group a tremendous break on a piece of property.

Questioned by the BGA, Rush defended the deal, saying, "Are we going to quibble about whether or not it's a sweetheart? That's your terminology. It's a sweetheart deal for those who are sick and who have no health care, access to health care, in the poorest community in the City of Chicago."

By March 2006, Rebirth had spent $411,333 on tech center program expenses, according to disclosure forms required of tax-exempt charities. But the documents do not specify what that money was used for, or whether the $1 million grant covered some or all of those expenses.

The IRS revoked Rebirth's tax-exempt status in 2010 because for three years in a row, it failed to file disclosure reports required of nonprofits. The last report filed, for the period ending March 2006, reported $735,000 in assets and listed among its achievements "Technology Center: built a center to help Englewood and West Englewood residents develop technology skills to bridge the technological and economic divide."

Rebirth's disclosure forms, like other IRS returns, are signed "under penalties of perjury." A spokesman for the IRS said that federal law bars the agency from commenting on a specific taxpayer's situation.

Previously, Rush has said the House Ethics Committee ruled there was no conflict of interest for Rebirth to accept the $1 million because he did not benefit personally. But that approval couldn't be confirmed because the committee is barred by House rules from making public the advice it gives to individual members of Congress.

Either way, despite the lack of progress on the center, the relationship between SBC/AT&T and Rush's nonprofit initiatives did not sour. In 2006, the foundation awarded Rebirth another $50,000 for its "Technology Enhanced Employment Program," according to the AT&T charity's disclosure forms, which are publicly accessible.


If you don't see the video above, click here and watch it on WTTW.

And from 2006 through 2008, the SBC/AT&T foundation awarded $450,000 for youth, social service and health care programs operated by newly formed nonprofits affiliated with Beloved Community Christian Church, which Rush founded, and where he serves as pastor. Rush said he didn't solicit the grants. "Those are competitive grants, as far as I know," he said.

Rush has served on the House Energy and Commerce Committee, which oversees telecommunications and energy, since 1995 and is currently a senior member. For many years Rush served on its telecom subcommittee and played important roles in key telecom legislation.

In 2001, when Rebirth received the tech center grant, SBC had important business in Washington, D.C. As phone companies transformed into Internet providers, SBC wanted Congress to lift regulations in place at the time.


Read More: The Utility Man

Phone, cable and electric companies have donated more than $1.7 million to charities affiliated with Bobby Rush – as they successfully secured his help in Congress.


Rush backed SBC's position, but only after co-authoring an amendment to make sure the deregulated sector would bring high-speed Internet to low-income communities. The amended bill passed the House but failed in the Senate.

Later, in 2006, Rush co-sponsored legislation sought by the telecom industry, then interested in competing with cable by offering video services. The industry wanted to replace the town-by-town cable franchise process with one-stop approval from the Federal Communications Commission. This bill also passed the House but died in the Senate. In the years that followed, Rush continued to align with telecom companies in opposing "Net Neutrality" regulation of Internet providers, desired by consumer advocates and many liberal Democrats. In a December 2010 speech, Rush said the debate "misses the point of the people I serve." Rather, he said, the priority is to open doors for minorities as executives and owners of telecom businesses.

In recent years AT&T has shown its appreciation for Rush by hosting expensive receptions in his honor, most of them timed to coincide with the Congressional Black Caucus Annual Legislative Conference in Washington, D.C. Rush said up to 2,000 guests attended the gospel-themed receptions.

Congressional lobbyist disclosure reports filed by AT&T from 2008 through 2011 show the company spent $303,000 on hotels, entertainment and related expenses for the special events recognizing Rush. The program for 2011 announced an evening reception called "The Best is Yet to Come: AT&T Reception Honoring Congressman Bobby L. Rush."

Sandy Bergo and Chuck Neubauer are special contributors for the Better Government Association. They can be reached at sandybergo@gmail.com or chuck.neubauer@gmail.com. To contact the BGA's investigative unit call (312) 386-9201.

If you appreciate the work of the BGA, please consider making a donation.

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Capt. Renault
So why are you racists asking about technologically improving Englewood. It was a long time ago, so difference does it make...
8:18 AM Dec 18th