Daley’s Shady Contributions and Deals

“Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other.”

––Oscar Ameringer

All in the Family: Questionable Pension Contract to Daley’s Nephew

In a brief two months, Mayor Richard M. Daley took in a staggering sum of $1,775,000.00 from companies in the financial industry. Many of Daley’s major campaign donors manage city pension funds or real estate that Chicago pension funds could potentially invest in. Because Mayor Daley hides information and uses unsearchable data bases on the city’s website, it’s hard to tell how many of Daley’s campaign contributors manage city pension funds or have other city pension businesses.

The Daley administration has engaged in improprieties with Chicago’s pension funds before. Mayor Daley’s nephew Robert Vanecko received a $68 million pension money management contract though Vanecko had no prior pension management experience. Vanecko’s partner was Allison S. Davis, a lawyer and former boss of Barack Obama. Davis was also the real estate partner of Tony Rezko, who is now in federal prision for fraud and bribery. Davis’s lawfirm helped Rezko get $43 million dollars in government subsidies to rehab buildings for the poor. Davis became Rezko’s real estate partner in buildings that led to his and Rezko’s tennants living in squalor conditions. Why did the Chicago pension fund give Davis $68 million dollars of its money to manage when Davis had such a questionable real estate management background? Did the Chicago pension fund give Davis the $68 million pension fund management contract because of his ties to Obama? Together Vanecko and Davis earned $3.7 million managing Chicago pension fund money.

Sadly, Vanecko and Davis’ poor financial decisions will most likely cost the pension funds much more than the $3.7 million paid to them in fees. To cover up their pension fund loses, Vanecko and Davis collected $500,000.00 in rent from Chicago’s Water Management Department. The $500,000.00 was then redirected to the pension funds. After reports that Mayor Daley’s nephew needed money from a city contract to cover up poor pension investments, Vanecko and Davis gave up their city pension business.

Besides Davis, there is at least one other person with ties to President Obama who may have earned money through backroom deals. In 2009 Senior White House Advisor Valerie Jarrett received $218,454 from Navigant Consulting Inc. for serving as one of the company’s directors. Before Jarrett worked in the White House, she was Daley’s Deputy Chief of Staff and Commissioner of the Department of Planning and Development. Valerie Jarrett was First Lady’s Michelle Obama’s boss when Michelle was on Mayor Daley’s staff and when Michelle worked as Assistant Commissoner of the Department of Planning and Development. Navigant Chairman and CEO William Goodyear donated $25,000.00 to Daley. Navigant used two of its own employees in 2007 to lobby for city contracts or other city services. We’re unsure if Navigant has city business, but Navigant does tout its services for local governments on its website.

Questionable Campaign Contributions from Companies with City Pension Business

Five of Daley’s 2007 campaign contributors have Chicago pension business. John J. Rogers and Mellody L. Hobson both work for Ariel Capital. The Chicago pension funds and Ariel Capital have a management agreement. Rogers donated $100,000.00 and Hobson donated $50,000.00 to Daley.

Joseph F. Scoby and John Feri both work for UBS. The pension fund has a partnership agreement with UBS. Scoby donated $50,000.00 and Feri donated $5,000.00 to Daley.

John A. Buck donated $10,000.00 to Daley. Buck’s company has a partnership agreement with the Chicago pension fund.

Daley accepted a total $215,000.00 from five people who work for companies with Chicago pension business. Daley probably has taken in a lot more campaign contributions from companies with Chicago pension business, but we’re  unsure because Chicago’s record keeping system does not offer full disclosure.

When Daley ran in 2003, according to the “Chicago Sun Times” about $1 million of Daley’s $3 million campaign funds came from city contractors. As you can see from the two lists of campaign contributions in this post, when Daley ran for reelection in 2007, Daley did about the same thing but this time Daley reneged on his pledge to not accept campaign contributions from individuals and companies who do business with the city.

During the Rod Blagojevich trial, it was revealed that the former governor sought campaign contributions from the companies doing business with the state pension fund. Has Mayor Daley been using the Chicago pension fund managers to raise campaign funds like Rod Blagojevich did with the state’s?

There are five reasons why you should be suspicious of Daley’s campaign donors and hefty contributions from companies in the financial industry.

1. It took Daley only two months to raise $1,775,000.00 in campaign funds from companies in the financial industry.

2. The amount of the contributions to Daley were extremely large. The contributions ranged from $5,000.00 to $150,000.00. Daley received twice as many $100,000.00 to $150,000.00 contributions from people or companies in the financial industry than $5,000.00 contributions.

3. The people who donate larege sums of money can benefit from Mayor Daley awarding them city contracts. CEOs, company presidents, investment managers, and pension funds managment companies earn huge salaries and bonuses if Daley patronizes them with city contracts in return for their large campaign contributions.

4. The companies of Mayor Daley’s major campaign contributors can benefit if Mayor Daley steers them to city contracts. Financial advising, investment, and pension fund management companies who contribute large sums of money to Daley reap huge profits if Daley rewards them with city contracts.

5. Chicago has a history of pay to play. Pay Mayor Daley in the form of campaign contributions, and the contributing companies or people get to play in Chicago’s yearly billion-dollar-plus game of who gets city contracts and pension business.

The source of the campaign contributions listed below is the Illinois State Board of Elections website.

Individual’s Name or Company Donating to Richard M. Daley Amount of Contribution to Richard M. Daley Employer
Bruce Vincent Rauner $150000 Golden Rauner LLC
Kenneth C. Griffin $150000 Citadel
Chicago Mercantile Exchange $100000
Board of Trade of the City of Chicago $100000
Richard H. Driehaus $100000 Driehaus Capital Management
John A. Canning, Jr. $100000 Madison Dearborn Partners
Craig J. Duchossois $100000 Duchossois Industries
David B. Heller $100000 Advisory Research Inc.
Patrick G. Ryan $100000 Aon Corporation
Samuel Zell $100000 Equity Group Investments Trust
John W. Rogers, Jr. $100000 Ariel Capital Management Inc.
Joseph F. Scoby $50000 UBS
Mellody L. Hobson $50000 Ariel Capital Management Inc.
Archer Daniels Midland Company $50000
Michael W. Ferro $50000 Merrick Ventures LLC
Michael J. Sacks $50000 Grosvenor Capital Management
William J. Devers, Jr. $25000 Devers Group Inc.
Frontenac Company $25000
William M. Goodyear $25000 Navigant Consulting Inc.
Martin J. Koldyke $25000 Dean Witter VP, retired
Michael D. O’Halleran $25000 Aon Corporation
Brian Simmons $25000 Hennessy & Simmons
David Herro $25000 Harris Associates LP
Chicago Board of Options Exchange $25000
The Options Clearing Corporation $20000
Ringold Financial Management Services $20000
Edward A. Cox $10000 Chicago Board of Trade
Richard H. Cooper $10000 Cooper Fund Inc.
John D. Mable $10000 Mid-Continent Capital LLC
John H. Simpson $10000 Canyon Capital Advisors
David B. Small $10000 Governor Capital Management
Paul Meister $10000 Grosvenor Capital Management
Scott J. Lederman $5000 Grosvenor Capital Management
Eric A. Felton $5000 Grosvenor Capital Management
Brian A. Wolf $5000 Grosvenor Capital Management
Stephen J. Brewster $5000 Grosvenor Capital Management
John Feri $5000 UBS
Daley’s Total Campaign Contributions from People and Companies in the Commodities and Finance Industries $1775000

Table A

What If?

When Jay Stone ran for alderman in 2003 he proposed campaign contribution limits. Stone’s opposition to Chicago’s lack of campaign contribution limits is one of the reasons why Daley sent in his patronage workers to campaign against Stone. During Stone’s Illinois Reform Commission written and in-person (March 5, 2009) testimony, Stone encouraged the state to pass campaign contribution limits for all cities, counties, and towns in Illinois. In 2009 Chicago was the only major city in the country to allow unlimited campaign contributions.

Thanks in part to Stone’s initiative, a campaign contribution limit for the entire state of Illinois was passed by the legislature and signed into law by Governor Quinn .

Suppose the new state campaign contribution limit law had been in effect when Daley ran for reelection in 2007. Daley would have been restricted to accepting $5,000.00 or less from individuals and $10,000.00 or less from companies. If the limits were in effect in 2007, Daley would have raised $210,000.00 in contributions compared to the $1,775,000.00 that he actually accepted. Campaign contribution limits would have reduced Daley’s haul from financial service companies to 1/8th of what he actually raked in.

More Suspicious Donations

Daley targeted the commodity exchanges and financial service companies for campaign contributions because they readily turned over gigantic sums of money to him. Daley also concentrated his campaign fund-raising on real estate developers, high tech companies, and other wealthy Chicago businesses. Daley could have easily used his job as mayor to provide city services or tax increment financing funds to these campaign contributors.

With Chicago’s purposely convoluted record keeping system, one never knows what really goes on in City Hall. The burning question, “What really happens in City Hall?” is one reason why the federal court assigned a monitor to watch over the Daley administration during the last five years.

Stone doesn’t blame the campaign contributors for their political donations. It’s politicians like Daley who set up the campaign contribution system to exploit contributors. If it was up to Daley, Chicago would still have no campaign contribution limits. Without campaign contribution restrictions, Daley’s campaign war chest could easily swell to 10 to 20 times more than his closest challenger.

Daley did not testify at the Illinois Reform Commission; Stone did.

When the Illinois Reform Commission sought new reforms, Daley did not offer any; Stone offered several.

When the Illinois legislature passed new reforms, there was not one reform proposal from Daley; there were two from Stone.

The campaign contributions listed in the Table B are $10,000.00 donations or higher that Daley accepted between Nov., 2006, and Feb., 2007. If the state’s new campaign contribution limits were in effect when Daley solicited these contributions, the maximum Daley could have taken from these 66 contributors would have been $460,000.00. Without the campaign contribution limits,  Daley’s haul was $1,799,000.00. Campaign contribution limits would have shrunk Daley’s campaign war chest by $1,339,000, or 74.4%

Stone believes that some Daley contributors listed below had business with the city. If contributors are engaged in city business, their yearly contribution limit is $1,500.00 or less. Stone is not alleging that any of these contributors broke a law, but he does claim that some campaign contributions may have been in violation of Chicago’s Ethics Code.

Daley appointed all of Chicago’s Ethics Board members, Because Daley appointed these people, they are beholden to him. All of the employees who work at the Chicago Board of Ethics were also hired by Daley. For obvious rerasons, no Chicago Board of Ethics employee or board member has ever blown the whistle on Daley or Chicago’s corrupt campaign contribution system.

Daley accepted $1,775,000.00 from companies in the financial industry (Table A). Daley’s campaign fund received $1,799,000.00 from campaign donors who donated $10,000.00 or more (Table B). The combined total of Daley’s campaign contributions from people and companies in the financial industry (Table A) combined with those contributing $10,000.00 or more (Table B) is $3,564,000.00 (Tabels A + B).

If Daley had run in 2007 under the state’s new campaign contribution limits, he would have taken in at most $670,000.00. Illinois’s new campaign contribution laws would have reduced Daley’s campaign war chest by $2,894,000.00. Daley would have had 81% less money from these campaign donations if Chicago’s campaign contribution limits had been in effect in 2007.

Daley received 54 campaign contributions between $25,000 and $200,000. How many Chicago voters have $25,000.00 to $200,000.00 to throw at a candidate like Daley’s contributors did? The average donation from the $25,000.00 and above Daley contributor was $34,700.00. According to the 2000 census, Chicago’s per capita income was $20,175.  Each of Daley’s deep-pocket contributors gave him nearly twice what the average Chicago man or woman earns in a year.

Contributor Contribution Amount Employer/Occupation
Judd D. Malkin $200000 JMB Realty
Miles D. White $100000 Abbott Laboratories
Simpson Community Trust $100000
Fred Krehbiel $100000 Molex Inc.
John Krehbiel $50000 Molex Inc.
Liam Ventures $50000
Phillip H. Corboy $50000 Corboy and Demetrio
Joseph A. Power $50000 Power, Rogers, and Smith
Trans Union $50000
Edgewater Management $50000
Eugene Golub $50000 Golub Real Estate
J M R Trust $50000
John Jordan II $50000 Jordan Industries
SLP LLC $50000
E. A. Brennan $35000
M. Pritzker Capital LLC $30000
Miles Berger $25000 Retired Real Estate Investor
Crate and Barrel $25000
Christina Kemper Gidwitz $25000
J.W. Higgins $25000 Higgins Development
Bellrush Restaurant LLC $25000
John H. Bryan $25000 Retired Sara Lee CEO
Development Specialist Inc. $25000
Daniel J. Edelman $25000 Edelman Worldwide
Michael Keiser $25000 Recycled Paper Greetings
Fred S. Latsko $25000 Developer
Andrew J. McKenna $25000 Schwarz Paper Company
William D. Smithburg $25000 Director Abbot Labs, Northern Trust
Lisbeth Stiffle $25000
John Apostoulous $20000 Giordano’s Owner
Berle Blitsein $20000 Crown Glass
Connaught Real Estate $20000
Beverly R. Braverman $12500 Real Estate Investor
Stephen Lomardo, Jr. $12500 Gibson’s Restaurant
Hugo Ralli $12500 Gibson’s Restaurant
Treasure Island Foods $11500
535 North Michigan Venture $10000
Irv Barr $10000 Barr Management
Michael Blechman $10000 Pamco Printed Tape
John A. Buck $10000 John Buck Real Estate
Lee S. Casty $10000
Chicago Stadium Corporation $10000
Vijay B. Dave $10000 Cardovascular Clinics
Demetrios Dellaportas $10000 First National Development
Elite Staffing Inc. $10000
Halstead Bay Holding $10000
K. Harris $10000 Investor Harris Holdings
Blair M. Hull $10000 Matlock Capital
Peter Kamberos $10000 Attorney
George A.Giannoulias $10000 United Investors Inc.
David M. Lansburgh $10000 Investor
Jules M. Laser $10000 Investor Laser, Pokony, Schwartz, and Fried
Mid-America Services Group $10000 Real Estate Company
William A. Osborn $10000 Banker Northern Trust
Park One Inc. $10000
Robert T. Schwartz $10000 Los Angeles, CA, Trader
Chris P. Tomaras $10000
Distinguished Dwellings LTD $10000
Burton E. Glazov $10000 Real Estate Developer
Isaac S. Goldman $10000 Investor
Henry Crown and Company $10000
Robert A. Judelson $10000 Bajer Financial
John P. Keller $10000 Keller Group Inc.
L & M Riverbend Venture $10000 Development
Miller Brewing Company $10000
Allen J. White $10000
Daley’s Campaign Contributions over $10,000.00 (11/2006 to 2/2007) $1799000

Table B

Daley’s Campaign Contributors Line Up to Lobby City for Business

In 2006 L & M Riverbend Venture acquired land in a TIF district and signed a developement agreement with the city. A short time later L & M Riverbend Venture donated $10,000.00 to Daley. If L & M Riverbend violated the city ethics code with its contribution to Daley’s campaign fund, the most likely penalty would require Daley to return’$8,500 of L & M Riverbend’s contribution. That would put L & M Riverbend at the contribution limit of $1,500 for companies who have city business.

Elect Stone mayor and instead of politicians like Daley only having to return illicit campaign contributions, Stone will insist that penalties for improper campaign contributions are more severe.

Several of Daley’s big campaign donors also show up on the city’s registered lobbyists list. If Chicago had transparency of lobbyists and what they were lobbying for, we would already know what kind of city contracts or services these companies were seeking through their lobbying efforts. For example, JMB Realty Chairman Judd D. Malkin donated $200,000.00 to Daley. JMB Realty also hired lobbyists to lobby the City of Chicago, but it is virtually impossible to find out what they lobby for.

Because Mayor Daley and the Chicago Board of Ethics do not require complete lobbying information as other cities do, we don’t know why JMB Realty hired lobbyists to lobby for them. Elect Stone mayor and he’ll stop the information shell games that Daley and the Board of Ethics play with information that should be readily available for any citizen or reporter to access.

Table C below is a cross-referenced list between Daley campaign contributors and the corresponding company whose name appears on Chicago’s list of Registered Lobbyists. Because these contributors appear on Chicago’s 2007 or 2008 list of Registered Lobbyists, it is assumed these companies were seeking city business or service at the time.

Contributor Contribution Amount Lobbying Company
Judd D. Malkin $200000 JMB Realty
Miles D. White $100000 Abbott Laboratories
Board of Trade of the City of Chicago $100000
Eugene Golub $50000 Golub Real Estate
Joseph F. Scoby $50000 UBS
William A. Goodyear $25000 Navigant Consulting Inc.
William D. Smithburg $25000 Director of Northern Trust and Abbott Laboratories
William A. Osborn $10000 Northern Trust
CC Industries $10000
Miller Brewing Company $10000
John Feri $5000 UBS
Total Amount of Contributions from Companies who  Lobbied the City for Business $585000

Table C