OIG Second Quarter 2012 Report

The City of Chicago Office of Inspector General (OIG) has transmitted its second quarter report for 2012 to the City Council and City officials. Available for download on the right of your screen, the report provides a summary of OIG activity from April 1 through June 30, 2012.

Seven of the 14 investigations summarized in the report involve cases referred to the City’s Department of Procurement Services (DPS). Some of these matters were discussed in previous Quarterly Reports because OIG originally had a practice of publically reporting contractor cases when DPS notified OIG how it intended to proceed. Now that OIG only reports on investigations once the full discipline, debarment, or other corrective remedy is complete, we are providing final updates on multiple older cases.

Highlights from the OIG administrative investigations include:

  • An OIG investigation found that a former employee in the Office of Compliance, who had already been terminated for other reasons, accepted over $3500 in gifts, including tickets to sporting events and meals from three City vendors over whom he/she had contract management authority, in violation of the City’s Ethics Ordinance. Despite abundant evidence to the contrary, including admissions in both electronic evidence and investigative interviews, the Board of Ethics found no evidence that the vendors actually gave the item or service, or, that (the former employee) actually accepted it.” (emphasis in original)
  • OIG concluded an investigation which revealed that a Mayoral appointee and a chief financial officer of a City delegate agency each submitted false statements in several financial disclosures they filed with the City. These false statements concealed the existence of several outstanding state and federal tax liens for the delegate agency’s non-payment of its payroll tax obligations. The delegate agency’s chief financial officer told OIG investigators that truthful disclosure of the liens and outstanding tax liabilities would likely result in the contract’s termination and the end of payments to the delegate agency. Even after he/she acknowledged the existence of the tax liens to OIG investigators, the chief financial officer made additional false statements that concealed the liens in order for the agency to receive a new delegate agency contract with the City for 2012. The City awarded the contract.
  • An OIG investigation determined that a City vendor certified by the City as a Minority and Woman-owned Business Enterprise and Disadvantaged Business Enterprise (MWDBE) did not have the staff, equipment, or expertise to perform in areas in which it was certified. The certified firm conspired with a prime contractor on at least three City-funded jobs to act as a MWDBE “pass-through” – passing payments from the prime to the subcontractors actually doing the work in return for a small fee and allowing the primes to claim MWDBE credit for the payments. The prime contractor improperly claimed more than $3.4 million in MWDBE credit for payments to the certified firm, over 95% of which was passed on to non-certified firms which actually did the work. The prime contractor knew the certified firm was unable to perform most of the work and knew that the certified firm subcontracted its work to non-certified firms. Frequently, the prime contractor even procured the non-certified firms that did the work for the certified firm.

*The report has been updated to include a summary of the Follow-up Report to OIG’s 2010 TIF Audit.