The Case Against Rahm
I wish I could be with Rahm and feel Chicago is in the hands of a tough, capable leader. But I’ve come to understand that our great city is about to re-elect a guy just as bad or worse than Rod Blagojevich. I wish I were exaggerating.
If this mayor isn’t corrupt, he does nearly everything possible to look like it. And, where isn’t corrupt, he’s just incompetent.
Like you, I had heard buzz words that went in and out of my head – red light cameras; Magic Johnson; Janitors; Bond downgrade. Election day is Tuesday, and I needed to figure out who to vote for. So, I started reading. And, I’m horrified by what I’ve learned. When you lay it all out, it’s a stunning portrait of a skilled crook, who is either going to bankrupt our city while he blusters and bullshits or he’s going to tempt the doors of prison.
Rahm is Corrupt
Can we start with a basic rule? People who make decisions on how to spend government dollars shouldn’t be a recipient of any of those dollars. That’s a conflict of interest, and it’s illegal. So, here’s the problem: some of Rahm’s decision-makers are recipients of the public cash they are spending for the city. Not pennies – millions of dollars of government money are funneled by Rahm or his soldiers into the pockets of Rahm and his soldiers. It’s just that simple. No one is hiding it. They are stealing my tax dollars and yours in broad daylight. But, look, I don’t want to write a 30 page opus any more than you want to read it. So, let me tell you a few short stories, ripped from the headlines.
Magic Johnson and the School Janitors
In 2013, The Chicago Public Schools (CPS) hired Magic Johnson’s company, SodexoMAGIC, to clean 33 schools; they also hired Aramark, a huge company, to clean the rest of the schools. The price: $80 million to Magic Johnson, $260 million to Aramark.
In September, not long after Magic and Aramark took over cleaning the schools, principals and teachers started complaining that the schools were filthy, infested with vermin and covered in grime or worse. Rahm promised to fix the problem. Five months later, the schools remained filthy – Magic Johnson did three things:
- He announced he would give back $10 million to a Chicago summer jobs program.
- He gave $100,000 to Rahm’s campaign funds.
- One month later, he gave another $150,000 to Rahm’s campaign funds.
When a reporter asked Rahm if taking campaign contributions from a city vendor was unethical, the Mayor said, “The good news is he’s given $10 million to our children and provided 5,000 of our kids an after-school program.”
So Magic Johnson got an $80 million paycheck from our city, donated $250,000 to the boss and did a shoddy job for our school children. Ironically, he did manage to launder the exchange with a $10 million donation to the city that can probably be used to reduce taxes on the $80 million of income from the city.
Money From Pension Managers
Of course, the city pays millions of dollars every year to a variety of professional investment firms to invest city pensions – that’s okay. The problem is that many of those firms are run by people who have donated more than $600,000 to Rahm’s campaign accounts.
For example:
- Managers at Madison Dearborn have given more than $500,000 to Rahm’s campaign funds. Madison Dearborn is concealed as a city vendor. You have to peel back the layers on the funds it manages, and when you do, it turns out that nine Madison Dearborn funds hold a substantial chunk of one $5.3 billion pension.
- Another investment firm, John Buck Co., manages roughly $54 million in Chicago pension funds and earns hundreds of thousands in fees every year. Managers at John Buck Co. have given $57,500 to Rahm’s campaign funds.
These donations could violate at least two laws:
- SEC rules against managers of municipal pension funds bribing government officials.
- Rahm’s own adopted rules against city officials taking campaign contributions from city contractors.
Look, there is a reality to politics – you have to raise money. But, Rahm raised more than $30 million. If he didn’t want to be or look corrupt, he should have followed his own rule and not taken money from people who have benefited financially from his ability to control the city. He should have had more respect for the voters and the city to avoid both the suspicion and the drama of parsing out which funky payments were the product of graft and which were the product of friendship. But, all the money doesn’t just flow into Rahm’s campaign funds – some goes to his friends.
$20 Million Mentors for School Principals
Here’s a doozy. CPS is $1.1 billion in the hole for next year, and measures are being put in place to enable CPS to file for bankruptcy. But, CPS just hired a company to coach school principals – for $20 million. The company is Supes Academy. Before Rahm named her to be the CEO of Chicago Public Schools, Barbara Byrd-Bennett worked for Supes Academy. No one else – for-profit, not-for-profit or academic – was asked to bid on this contract. If Supes was an outstanding, obvious choice, fine, but Supes has a relatively weak track record and no relevant differentiators that make them qualified for a no-bid contract.
School Board Member’s Companies Triple Business with CPS
Deborah Quazzo is a venture capitalist who invests in for-profit education companies. Rahm appointed her to the Chicago School Board in June, 2013. And, man, oh man, is she mad. The Sun Times figured out that companies she partly owns have tripled their business with CPS since Quazzo joined the board. She is outraged that someone would dare to besmirch her reputation, since she’s done everything to the letter. Okay. Let’s put aside some key omissions from her disclosure report (like a couple of companies). Let’s put aside the fact that, after she joined the board, one of Quazzo’s companies started discounting bills to just below $25,000 (sparing required CPS approval for bills over $25,000.) Let’s just look at the coincidental facts:
She has recused herself from voting; she has promised to donate profits made form contracts. But, she still owns them, she still maintains a powerful presence on the board. And those companies that provide for-profit services to our nearly insolvent not-for-profit schools have exploded under her watch.
The Red Light Cameras and Rahm’s Number One Aide
For years, lobbyist John Borovicka was one of Rahm’s top aids. In 2013, the city needed to hire a new red light camera provider. The city awarded the $44 million city contract to Xerox State & Local Solutions, Inc., just 18 days after it hired John Borovicka to lobby the mayor’s office. (Truthfully, I’m the only one I know who likes the red camera program. But, in reality they don’t work very well. They ticket people running through yellow lights or a few miles over the speed limit, and there is no proof that they improve safety.)
So those are the 4 stories I promised you. There are more, but after awhile it just gets repetitive. If Rahm is not corrupt, he’s got a funny way of showing it. If he’s not corrupt, he would hold himself, his decision-makers, as well as his donor-vendors accountable. But, that’s not always the case.
Remember, CPS outsourced its janitorial services to Magic Johnson’s company and Aramark. From the beginning, school workers complained about filthy buildings. On September 17, 2014, Rahm was The Case Against Rahm | Profit and Laws:
