A Bad Policy?

State legislator Karen Yarbrough sells insurance to Maywood development, then uses government letterhead to lobby for project.

In 2005, state Representative Karen Yarbrough wrote the Illinois Department of Public Aid in support of a proposed senior care complex in Maywood and asked the state agency for "all due consideration" in the regulatory and licensing process.

Yarbrough, a top Democrat in the Illinois House and a resident of the west suburb, predicted in the letter, sent on official Illinois General Assembly stationery, that the "facility will provide significant economic benefits to the Village of Maywood."

As it turns out, the project also provided economic benefits to Yarbrough, the Better Government Association and FOX Chicago have learned.

Yarbrough confirmed that the company she owned at the time, Hathaway Insurance Agency, was hired by the senior care center’s developer, Patrick J. Angelo Jr., sometime before her office sent the Jan. 27, 2005, support letter. Yarbrough said she helped Angelo secure an insurance policy for the construction site, and was paid a commission that may have been $1,000 or more.

Financially benefiting from a project that she backed as a legislator would appear to be a serious conflict of interest, but Yarbrough said she sees it differently.

"I do not see the ethical problem here," she said in a recent interview. "Nobody got harmed in this deal...People got helped."

"I would send a letter of support for any economic development project" in her 7th legislative district, Yarbrough added. "I’d write another support letter today" for the senior citizen project if asked.

She was more apologetic when told that public records indicate her husband – Maywood Mayor Henderson Yarbrough – voted twice on the development when aspects of the project came before the village board. One vote, in 2009, involved a zoning change that allowed the project to clear a relatively small but important bureaucratic hurdle, according to municipal records. The other vote, from earlier this year, involved the proposed withdrawal of federal funding from the project.

"My husband has made a mistake, he’s not perfect," said Karen Yarbrough, an assistant majority leader in the House who was recently slated by the Democratic Party to run in the March 2012 primary for Cook County recorder of deeds. "My husband should have been paying attention. He’ll be more mindful in the future."

Henderson Yarbrough said he did not know that his wife had received insurance business from the developer.

Either way, the Yarbroughs also benefited politically from Angelo: The Park Ridge resident and his businesses donated more than $7,000 to political funds controlled by Maywood’s power couple, according to the Illinois State Board of Elections. The contributions started in June 2005 – roughly five months after Karen Yarbrough’s letter was sent – and ended in early 2009, around the time Angelo stepped back from the project, transferring control to another developer, Tom Leontios.

Angelo, a dentist with an office in River Forest, said he was not pressured to hire Hathaway for the Maywood project, which involves converting the long-shuttered Baptist Retirement Home at 316 Randolph St. into a state-licensed "supportive living" facility for low-income seniors. (While the license was certified by state regulators in August 2005, the plans, now overseen by Leontios, remain in a sort of limbo following an accidental fire this past summer that may have been started by a construction worker using a blow torch, according to records obtained under the Illinois Freedom of Information Act, and interviews.)

Angelo said he met Donald Williams Sr. – father of Karen Yarbrough – through somebody else, and discovered Williams, a former Maywood mayor, sells insurance.

"I met Mr. Williams and when he told me he was in the insurance business, I said,...‘Can you help me?’ And he did," Angelo said.

Williams runs a State Farm agency in Maywood, and was vague about if and how he referred business to his daughter.

"There are instances when people can’t qualify for State Farm and they have to go somewhere," Williams said in a recent interview. "Hathaway is right next door, or a few doors away, so sometimes people just gravitate there."

Karen Yarbrough said the insurance policy she secured was a "vacant risk policy," which provided coverage on the multi-unit building while it was empty. Karen Yarbrough "divested" her ownership stake in Hathaway in 2007, according to Illinois secretary of state records. The Maywood firm now is run by a brother-in-law, she said, describing her current role at Hathaway as purely advisory. She said she doesn’t make "a nickel" from the company now.

Meanwhile, Karen Yarbrough said she doubts her letter to the Department of Public Aid, which now is called the Illinois Department of Healthcare and Family Services (HFS), had much impact on the project getting successfully licensed.

But HFS spokesman Mike Claffey said developers wanting state licensing need to "show community support," and opinions from local elected leaders are part of that equation.

The most important aspect in the licensing process "is the financial information of the applicant, including a financial plan for operating the facility," Claffey said. But HFS also wants it "on the record that somebody thinks it’s a good idea," so applications from developers often include recommendations from elected officials and community groups.

Being licensed by the state entitles the operator of a supportive living facility – which offers independent living for seniors, but also on-site medical and social services – to obtain payments from state government if elderly residents do not have enough money.

Overall, the project is expected to cost $28 million and involve the creation of 137 apartment units for needy seniors, said Leontios. (Angelo bought the 1.6-acre site in 2003 from the old Baptist Home operators, and Leontios said he took over the land and the state license from Angelo in 2008.)

The project is stalled at the moment while Leontios tries to work with Montpelier – the insurance provider Karen Yarbrough secured for the site through Hathaway – to cover the damage from the fire.

Leontios said the company is "hedging" on paying out on the policy.

But a Montpelier spokesman said: "We’re waiting for some information" before a final decision can be made.

Clean up in the aisles
The Village of Maywood awarded roughly $3.25 million in taxpayer money to help developers open a much-needed grocery store in the western suburb last year. 

Maywood Mayor Henderson Yarbrough was among the village officials to approve the subsidies, according to a redevelopment agreement filed with the Cook County recorder of deeds.

But if local taxpayers coughed up for the store, Yarbrough’s sister-in-law cleaned up, the Better Government Association found.

A State Farm agency run by Yarbrough’s wife’s sister, Sharlene Estelle, was hired by the Maywood Market developers to provide insurance for the grocery store, officials confirmed.

Estelle, the sister of state Representative Karen Yarbrough, told the BGA that clout did not play a role in her getting the policy. Rather, Estelle said she went over to the market, introduced herself and asked to submit a bid, which she then won.

"I’m on the Maywood Chamber of Commerce, so when things come in I try to get the business," Estelle said. It’s unclear what her commission was on the Maywood Market policy, but she allowed that it’s fairly sizable.

One of the developers, Bob Haralambopoulos, told FOX Chicago he can’t recall how Estelle was hired, but that he’s sure no pressure was applied to use her agency.

Billed as Maywood’s "first full-service grocery store in more than 20 years," the shop opened in April 2010, according to a press release put out at the time by the village.

In the same news release, Henderson Yarbrough was quoted as saying: "This full-service grocery store will be a catalyst to future economic development in the village."

But revenues were so weak, the store recently closed, meaning the municipal government likely will assume ownership of the site, and search for a new operator, village officials said.

That also likely means that Estelle will lose the Maywood Market insurance policy as the coverage shifts to the village government’s existing policy, officials said.

"I wish I could keep it," Estelle said, referring to the "business policy" that covers a variety of things, including liability claims and storm damage.

Henderson Yarbrough said he did not realize his sister-in-law held the insurance on a project he was so intimately involved with from a government standpoint.

Karen Yarbrough dismissed any talk that Estelle’s involvement represented a conflict of interest. "People saying this don’t have any basis for this," she said. "I see this as a non-issue."

These articles were written and reported by Robert Herguth, the BGA’s editor of investigations, and Dane Placko of FOX Chicago News. To contact Herguth, call (312) 821-9030 or email rherguth@bettergov.org.