Mayor Rahm Emanuel permanently banned Windy City Electric Co. in August 2012 from getting municipal work following allegations the firm fraudulently obtained City of Chicago contracts.
But that didn’t stop the politically connected electrical contractor from securing more than $3 million in work from another Emanuel-controlled agency – Chicago Public Schools – after the city “debarment,” according to records and interviews.
The Chicago Board of Education, the mayoral-appointed panel that governs CPS, even voted to renew Windy City Electric’s “contracting services agreement” in October 2013 – more than a year after City Hall publicly cracked down on the electrical contractor for falsely purporting to be a woman-owned business, a preferred status that gave it an edge in the competition for city contracts.
According to City Hall, the company was controlled not by two sisters-in-law but by their husbands: Anthony McMahon, a top precinct captain for Ald. Edward Burke (14th), and brother John McMahon, an ex-city electrician.
Although Emanuel ultimately oversees CPS, the school system is technically a separate governmental agency and isn’t required to follow City Hall’s lead and cut ties with the company.
CPS policy, however, permits a contractor to be banned for numerous reasons, including suspension or debarment “by any governmental entity or agency.”
Why didn’t that happen in this instance?
CPS spokesman Bill McCaffrey declined to answer the question because he says the matter is under investigation by CPS’ in-house watchdog, interim inspector general Nicholas Schuler.
However, following questions from the BGA, McCaffrey says the agency is now “taking action to end its relationship with Windy City Electric.”
“We don’t plan to renew their contract [that expires Dec. 31, 2014], and we do not anticipate awarding any more work to Windy City Electric,” McCaffrey says.
At CPS, Windy City has been repairing and installing security cameras, light fixtures and other electrical equipment, records show.
The Chicago Sun-Times and Better Government Association reported in 2012 that the McMahon brothers were part of an extended family that has been paid tens of millions of dollars for work on local government contracts that include electrical maintenance at O’Hare Airport, and delivering milk to Cook County Jail and CPS. The investigation found that Chicago schools paid more for milk than many suburban schools, and in the aftermath CPS renegotiated the contract, expected to save taxpayers $750,000.
Chicago runs the biggest public school system in Illinois and buys more milk for low-income students than anyone else – yet, curiously, pays much more.
Turns out one of the prime beneficiaries is a dairy owned by the McMahon family, which has deep ties to Ald. Ed Burke and other political figures.
Records show Anthony McMahon’s wife, Kathleen, and John McMahon’s wife, Nancy, incorporated Windy City Electric in 1989.
Shortly thereafter, the city certified the Chicago-based company as a woman-owned business, making it easier to win certain government contracts. In 2005, the company withdrew that certification amid questions from then-Mayor Richard M. Daley’s administration about the legitimacy of Windy City Electric’s purported female ownership.
The company, however, was permitted to keep working on city contracts.
Chicago Inspector General Joe Ferguson reinvestigated the company in 2009, concluding that the sisters-in-law didn’t actually own Windy City Electric and had submitted false documents to the city in 2004. At Ferguson’s recommendation – and only after the Sun-Times and BGA started asking questions – the Emanuel administration initiated debarment proceedings in 2012.
Windy City Electric officials didn’t return messages. A man who answered the door at the company’s Far Northwest Side office said the McMahon brothers and their wives were unavailable.
Following the city’s 2012 debarment decision, the Illinois Capital Development Board, the state’s construction- management agency, suspended Windy City Electric until Jan. 31, 2015, because the company didn’t notify state officials of its debarment, records show.
The suspension means Windy City Electric “can’t bid on state construction projects,” says capital development board spokesman Dave Blanchette.
But Windy City Electric kept working at city schools.
CPS paid Windy City Electric more than $3.1 million since August 2012, when the city ban took effect.
In addition, a separate company controlled by the McMahon brothers, Plumbing Systems Inc., continued to work for CPS – records show that company was paid $25,682 from October 2012 to March 2013, and a total of $508,853 since July 2009.
Windy City Electric has worked for CPS since at least 2008, McCaffrey says. Since then it has been paid more than $10.5 million, records show. Its most recent agreement, a two-year deal, commenced Jan. 1, 2012, and has two, one-year renewal options.
The Board of Education exercised the first option October 2013. The 12-month agreement expires Dec. 31, 2014.
McCaffrey says the board will decline the second option. And when the CPS IG concludes his investigation, McCaffrey says the board may initiate CPS debarment proceedings against Windy City.
Schuler confirms there’s an ongoing probe but declined further comment. Board of Education President David Vitale didn’t return messages.
A City Hall spokeswoman says Emanuel was, until a reporter brought it to his office’s attention, unaware that Windy City Electric had continued to work at CPS.
“The Mayor has asked CPS to look into this matter immediately,” the spokeswoman says in an email.
The McMahon brothers, their wives and their companies have donated more than $54,000 to campaign funds led by or otherwise benefiting Burke, plus more than $138,000 to other local elected officials, according to the Illinois State Board of Elections. A Burke spokesman had no comment.
This story was written and reported by the Better Government Association’s Andrew Schroedter, who can be reached at aschroedter@bettergov.org or (312) 821-9035.
