Feds investigating possible minority-contracting fraud involving city deals worth millions

Antonio Perez/Chicago Tribune/TNS

Federal prosecutors are investigating possible minority-contracting fraud involving a series of Chicago government contracts worth hundreds of millions of dollars, including many with ties to a clout-heavy trucking and recycling company owner, according to sources and documents obtained by the Tribune.

The U.S. attorney’s office last month issued federal grand jury subpoenas to several city agencies seeking copies of contracts, bid packages, payment and payroll records as well as compliance documents for the city’s set-aside program for women and minority businesses.

The ongoing investigation is targeting possible fraud in the minority-owned business programs in the city of Chicago and other municipalities, sources with knowledge of the probe told the Tribune.

No criminal charges have been filed, but the investigation has been active in recent weeks, with several people being approached by law enforcement, the sources said.

The subpoenas, obtained by the Tribune through an open records request, sought several contracts awarded to companies tied to Markham-based businessman James Bracken, a politically connected owner of a series of construction-related businesses who the Tribune has previously reported is under federal investigation for activities in south suburban Riverdale.

Bracken and his wife, Kelly, own several construction and contracting-related companies, including for excavation, renting dumpsters and trailers, hauling garbage, providing transport support and aggregate materials, as well as topsoil and pulverized soil.

The subpoenas — delivered June 20 to the city departments of Procurement Services, Streets and Sanitation, Water Management, Transportation, and Assets, Information and Services — sought records for nine contracts with those departments. At least six of those contracts were awarded to companies owned by Bracken. Two were awarded to a second company, NPL Construction, headquartered in Arizona. One contract was not publicly available.

Bracken could not be reached for comment.

While it remains unclear what the precise nature of the federal probe entails, the investigation has once again brought scrutiny to Chicago’s minority-owned business program.

Begun in 1990 with the goal of awarding at least 25% of the total value of all city contracts to minority businesses and 5% to women-owned operations, the program has been the subject of fraud allegations almost since its inception. Company owners, hungry for multimillion-dollar contracts, have put up phony fronts to get certified as minority or women-owned or fudge the percentages of work that actually went to minority subcontractors.

A spokeswoman for the city of Chicago’s law department said the city “intends to comply with the subpoenas and has no further comment.” The subpoenas had a return date of Wednesday.

One of the companies that federal authorities are seeking documents about is Utility Transport Services, which is a Bracken-owned firm that received three contracts in 2018 with the city’s water department worth up to $144 million, city records show. The company offers hauling services and access to materials and aggregates.

The subpoenas also sought documents for Brackenbox Inc., which is owned by the Brackens and won a city of Chicago contract starting in 2016 worth up to roughly $62 million to provide dumpsters to the city’s Department of Streets and Sanitation. That contract has been extended and was scheduled to end in February of 2023. City records show Brackenbox was paid just shy of $19 million for that contract.

Brackenbox was awarded four other city contracts, including with Streets and Sanitation for similar services, starting in 2009. Two were awarded just last month. The company also was awarded an emergency sewer debris hauling contract with the city’s Department of Water Management in 2011.

State campaign records show Brackenbox contributed to several aldermen this past election cycle.

Also listed in the subpoena: two contracts worth up to $9.7 million that were awarded to KLF Trucking, where Bracken is listed as president.

One was with the Chicago Department of Transportation for topsoil delivery; the other was with the Department of Assets and Information Services for the rental of heavy equipment and operators during natural disasters. The company secured six other contracts with various city departments between 2011 and 2017, Chicago procurement records show.

In addition, the subpoenas sought documents tied to a Phoenix, Arizona-based company that won two contracts worth up to $185 million from the city’s water department. The firm, NPL Construction, was awarded the contracts in 2016 for work related to water main replacements. Procurement records show the company was paid $120 million for that work.

A spokeswoman for NPL said the company “has not been contacted by authorities, but if we are, we will cooperate fully and support any investigation.”

Records show attorney Michael Synowiecki, a former City Hall lawyer with long-standing ties to indicted former Chicago Ald. Edward Burke, 14th, is the registered agent and city lobbyist for several of the businesses that won contracts or were named in the subpoena.

Synowiecki is law partners with Mara Georges, who was the city of Chicago’s longtime corporation counsel under Mayor Richard M. Daley. According to his company biography, Synowiecki “began his career in government at the Chicago City Council Committee on Finance,” which Burke led for decades and where Synowiecki “advised members of the City Council on ethical compliance, legislation, and policy.” The bio also lists an “externship with Supreme Court Justice Anne Burke,” the former alderman’s wife.

Synowiecki did not return messages seeking comment.

All but one of the contracts listed in the subpoena and obtained by the Tribune had bid goals for 25% minority business enterprise participation and 5% women business enterprise participation. The subpoena sought MBE and WBE certification files for seven companies. Of the seven, four served as subcontractors on Bracken-related projects, helping him reach the city’s set-aside requirements — Cadillac Transportation, HCR Carriers, M. Mendoza Inc. and Trim’s Trucking. Trim’s and M. Mendoza also were listed as minority subcontractors on both of the NPL contracts.

All three of Bracken’s companies that won contracts listed in the June 20 subpoenas — Brackenbox, KLF and Utility Transport Services — also were named in a separate subpoena sent to officials in Riverdale last May.

The Tribune previously reported that suburban Riverdale’s mayor is under federal investigation for allegedly receiving secret payments from a landscaping materials and recycling firm that was granted approval to open in the south suburb several years ago despite the protests of a rival company.

A federal grand jury subpoena sent to the village by the U.S. attorney’s office in 2022 demanded contracts, payments, communications and other records pertaining to the company, Riverdale Materials LLC, and its owners, James and Kelly Bracken, according to a copy of that subpoena.

State EPA officials cited Brackenbox in 2011 as a “chronic” violator of environmental regulations, with infractions including illegally dumping crushed drywall in an open field and improperly accepting household hazardous waste, garbage and landscaping debris at the company’s Markham transfer station.

Bracken previously told the Tribune he felt unfairly singled out for “minor” issues but said he would address the problems.

Historically, among the investigations involving Chicago’s minority-contract program, the highest-profile probe was the politically connected Duff family and its janitorial and recycling companies. With businessman James Duff at the helm of the scheme, family matriarch Patricia Duff and a trusted Black associate posed as leaders of phony minority and women-owned businesses for more than a decade, winning more than $100 million in city contracts. James Duff later pleaded guilty to 33 counts of fraud, racketeering and other charges.