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Thanks for Saving Duff's duff Mayor Daley

Please make sure you read this extended post. Todd Lighty and Laurie Cohen expose more of the Clout and Corruption at Chicago City Hall. Ever have the feeling Daley just don't get it. Chicago City hall is broke, flat broke. Time to sell more assets so Daley's pals can live high on the hog. Patrick McDonough
12:07 AM CDT, March 20, 2008 Mayor Richard Daley's administration has banned the head of Windy City Maintenance and two others convicted of contract fraud from doing business with the city for three years, despite a recommendation from the inspector general that they never be allowed to do work for City Hall again. James Duff, who cheated the city and insurance companies out of millions of dollars, should be subject to the stiffest penalty outlined in policies drawn up in 2005 following a series of contracting scandals, Inspector General David Hoffman said Wednesday. Duff, a member of a mob-connected family with strong ties to the mayor, became the face of contracting fraud in Daley's administration after creating phony minority-owned and woman-owned businesses to get city work. A federal prosecutor once called Duff "the epitome of greed" and a city official previously gave assurances that City Hall had no interest in ever again doing business with Duff-related companies. After Duff was sent to prison in 2005 for racketeering and fraud, Hoffman recommended in late 2006 that Duff and two co-defendants, William Stratton and Terrence Dolan, receive lifetime bans. "Allowing the defendants in this case to be eligible for city contracts in the future sends a message that is inconsistent with deterrence and integrity in the system," Hoffman said Wednesday. "If racketeering, fraud and money laundering only merit three years' debarment, then it will be hard to convince other contractors that their misconduct will result in a powerful financial sanction." Montel Gayles, the chief purchasing officer, did not explain why he decided on the three-year ban when he notified Duff and the others this month. Karen Bates, spokeswoman for the Department of Procurement Services, said current rules do not allow for a lifetime ban and that no contractor has ever been banned permanently from doing business with the city. Rules adopted after the Duff and other contracting scandals allow for a contractor to be cut off from doing city business for a specific period of time or "indefinitely." Bates said Gayles relied on a city statute that sets a three-year ban for those who make false statements about their use of minority- and women-owned businesses. Hoffman insisted that current contracting rules allow for companies to be banned permanently. He said the City Council should consider whether the municipal code needs to be amended to explicitly allow for permanent bans. "When someone is convicted of a massive racketeering, fraud and money laundering scheme involving city contracts, in which the city taxpayers are the victim," Hoffman said, "the city should say to that person, 'You have forfeited your opportunity to compete for city contracts.' Period." The city revoked Windy City Maintenance's favored status as a woman-owned firm in 1999 after a Tribune investigation found that the janitorial firm was controlled by male members of the Duff family instead of by James Duff's mother, Patricia Green Duff. In 2003, federal authorities charged that the Duff family used Green Duff and Stratton, a trusted black associate, to pose as fronts for sham minority- and women-owned businesses in a massive fraud that garnered more than $100 million in city contracts. Duff, 49, was sentenced to nearly 10 years in prison. He is in the Yankton federal prison camp in South Dakota and is eligible to seek city business in 2011--three years before his expected release from prison. His lawyer, Terence Campbell, said he was unaware of the city's decision. Campbell said he did not know Duff's future plans but added, "I don't think he has any intention of ever doing business with the city again." Stratton, 66, was sentenced to nearly 6 years behind bars and is in the federal prison at Leavenworth, Kan. His lawyer, Michael Sher, said he does not know what Stratton's plans are when he is released in 2010. Dolan, 56, former operations manager at Windy City, finished his 21-month sentence in November. He now helps run a Hinsdale-based janitorial firm called Custodial Plus, state records show. Asked if he would try to work for the city after three years, Dolan said, "It's the farthest thing from my mind right now." tlighty@tribune.com lcohen@tribune.com

Comments

this mayor is a rotten man. i just look on with disgust how he is still where he is at. he has made people i know lose thier homes because of his rush to enrich his friends and build up a city before he passes. everything is on the fast track for his legacy, at a huge cost to the poor and middle class people in this city. karma will reward and demote those accordingly. and i wait for that day. enough!.how much more can an uncaring man take from the cities poor. his legacy will be one of destroying the little guy. i hope his son finally gets indicted. that will smear all the way back to this heartless man.he spread out this realestate boom to wide going west and south in this city. now the slowing market will leave rich wealthy people living in ghetto neighborhoods in which to raise they're children.

i viewed that tape of you and coconate. i can read a person like a book. i thought maybe you had a grudge with the city, and what i see in you is an honorable man who the city tried to shaft. it was your demeanor and honesty that allowed you to prevail against the city. i have no doubt about that now. events will soon be interesting. i hope that mcain gets the white house. we need fitzgerald.

Chicago now says work ban permanent
By Laurie Cohen and Todd Lighty

March 21, 2008

Facing an outcry from critics, Mayor Richard Daley's administration abruptly reversed course Thursday and said it planned to ban three men convicted in a multimillion dollar contract scheme from ever doing business with the city again.

Just a day earlier, city officials had said that a permanent ban for James Duff, the former head of Windy City Maintenance, and two others was not allowed under city rules.

But after aldermen blasted the decision, which was revealed Thursday by the Tribune, newly appointed Chief Procurement Officer Montel Gayles said in a statement that he had made a mistake when he sent out letters earlier this month imposing bans of only three years.

Duff, a member of a mob-connected family with close ties to Daley, became the most notorious example of contracting fraud in the mayor's administration after creating phony minority-owned and women-owned businesses to get city work.

Top aides to Daley put the blame squarely on Gayles and tried to distance the mayor from the mushrooming controversy.

Jacquelyn Heard, the mayor's spokeswoman, said Daley knew nothing about Gayles' decision to go with a three-year ban. Heard said the administration had moved last year to ban the three permanently and that Gayles had made an honest mistake.

"That mistake left a gaping opportunity for career critics of this administration, as well as people with legitimate concerns, to criticize the mayor and question his judgment," Heard said. "The truth is he had nothing to do with the very wrong-headed reversal of the right decision made a year ago."

Lori Healey, the mayor's chief of staff, said the decision to impose a permanent ban was "totally not related" to mounting criticism that the city had been too lenient on Duff and his two co-defendants, William Stratton and Terrence Dolan.

Before City Hall's about-face, aldermen said the city was sending the wrong message to contractors.

"I can't believe that the city is trying to defend this company," said Ald. Pat Dowell (3rd).

Ald. Sandi Jackson (7th) called the original penalty "a slap on the wrist." Jackson said the three years "can only be seen as an incentive for similar businesses to commit the same kind of fraud in the future. What [Daley] basically said is to take a vacation for three years and to come back and to go at it again."

Inspector General David Hoffman, who had been pushing for lifetime bans, said he was pleased that the city had agreed with his recommendation.

After Duff and his associates went to prison, Hoffman in late 2006 recommended that the three never again get city business. Last October, purchasing officials notified the men that the city was proposing to permanently ban them, according to a letter that the city released on Thursday.

But Gayles, who was appointed by the mayor in January, sent out letters on March 6 stating they could not do any business with the city for three years. In the letters, he did not say how he decided on the length of the ban.

Asked on Wednesday why Gayles did not accept Hoffman's recommendation, his spokeswoman said that current contracting rules did not allow for lifetime bans.

A day later, Daley's chief of staff said Gayles issued the three-year ban "in his zeal to clean up a backlog" of contractor cases that needed his attention.

"He made a mistake," Healey said. "It has always been the city's intention to move forward with permanent debarment."

Duff, who engineered the massive fraud that garnered more than $100 million in city contracts, is serving a nearly 10-year sentence in federal prison in South Dakota.

Dolan was operations manager of Windy City Maintenance, the phony woman-owned janitorial company. He finished his 21-month sentence in November and now helps run a Hinsdale-based janitorial firm, state records show.

Stratton, a trusted black associate, posed as the head of Duff's separate sham minority firm. He was sentenced to nearly 6 years and is in a Kansas prison.

Tribune reporter Dan Mihalopoulos contributed to this report.


As long as an individual is incarcerated within the custody of the BOP, that individual is forbidden to conduct any business, whatsoever.

Were an individual to be found to be conducting a business while in custody, that would be a violation of the rules and said individual would likely be found to be ineligible to receive any part, or all, of his/her 'good time' credit, thus increasing the amount of their sentence that they would have to serve in custody.

As an individual incarcerated within a BOP facility, serving a term of imprisonment imposed by the federal justice system, can, at most, earn, by obeying the rules of the BOP, an approximately 15% reduction in the amount of time said individual must serve, it is unlikely that an individual so situated, would either risk spending more time in custody or successfully deceive the BOP officials.

Duff banned for life from doing business with city

March 21, 2008

BY FRAN SPIELMAN City Hall Reporter
Mayor Daley's chief procurement officer on Thursday did an abrupt about-face -- by issuing a lifetime ban against James Duff, head of a mob-connected family that became the poster child for minority business fraud in Chicago.

Hours after defending his decision to bar Duff from doing business with the city for just three years, Chief Procurement Officer Montel Gayles fell on his sword and ordered a permanent de-barment.

The decision to side with Inspector General David Hoffman followed a barrage of criticism from black elected officials.

Chief-of-staff Lori Healey insisted that the decision to issue the lifetime penalty against Duff and his two co-defendants was made in October, 2007 and that a letter was issued to the effect by Gayles' temporary predecessor, Doug Yerkes.

"It was an unfortunate error. It was always our intention to permanently dis-bar this company. It is a little bit of a mess. It will not happen again," Healey said.

Gayles, who has only been on the job for 60 days, neglected to read the file in his apparent haste to clear his desk of pending cases.

A former assistant state's attorney, Gayles also failed to carefully read the law which grants him broad discretion to when it comes to penalizing contractors, sources said.

After a trip to the woodshed, Gayles was forced to acknowledge his mistake -- by affirming the lifetime penalty Hoffman recommended more than a year ago.

That's how important it was for City Hall to erase the perception that the Duff's were being given yet another "slap on the wrist" because of the family's past ties to Daley.

White members of the Duff family fraudulently obtained $100 million in janitorial contracts earmarked for minorities and women through their company, Windy City Maintenance.

Until the scandal broke, Daley had accepted campaign contributions and political foot soldiers provided by the Duff family and attended their Christmas parties at the Como Inn.

"If I made any mistake in my haste to try to do the right thing, it is that I did not have that letter that showed we had already moved to get them permanently disbarred," Gayles said.

"Additionally, based on further discussion with the Law Department, it became clear that I currently have the authority to issue a stronger penalty. I was [initially] given legal counsel that I could not invoke a stronger penalty beyond the three years I saw in the statute. But, based on the conduct of these individuals, they should be permanently disbarred. There's no question about it. "

Shortly before his about-face, Gayles defended the three-year penalty.

"I don't know the Duff's from the Diff's. We looked at the fact scenario involving this case. Under fraud or misrepresentation, three years was the penalty," he said.

Earlier Thursday, black politicians denounced the three-year penalty as a "slap on the wrist."

"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-Il.).

"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?"

In arguing for a lifetime penalty, Hoffman cited a December, 2005 Procurement Services rule that 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."

"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 been accused of treating 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. 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.