The first evidence of a federal criminal probe into Chicago's red-light camera program is focusing attention on bribery allegations at City Hall just as Mayor Rahm Emanuel is trying to launch his controversial speed camera initiative.
Both the company and a former city official at the center of the red-light scandal were also involved in efforts to legalize speed cameras, which the mayor plans to use to catch speeders near schools and parks around the city.
When Emanuel was first pushing his plan in 2011, the now-beleaguered Redflex Traffic Systems Inc. was positioned as a leading contender after 10 successful years as the city's red-light vendor. But Emanuel scuttled those hopes after Tribune reports last year questioned ties between the company and the former city official who oversaw its contract.
Now federal authorities are probing the personal finances of John Bills, the former managing deputy commissioner of transportation, following an internal Redflex investigation that found evidence that its largest North American program was likely built on a $2 million bribery scheme involving Bills and a longtime friend hired as the company's Chicago consultant.
Both Bills and his friend, Marty O'Malley, have denied any wrongdoing.
A subpoena signed by an assistant U.S. attorney was delivered recently to Bills' ex-wife, his attorney Nishay Sanan said Friday. Sanan said he sent a letter to federal prosecutors asking that all further requests for records come to him.
The U.S. attorney's office declined to comment.
Emanuel moved quickly to separate his administration from the scandal after the first Tribune report in October, banning Redflex from competing for the speed camera contract and calling for an inquiry by city Inspector General Joseph Ferguson. He later barred the company from renewing its red-light contract when it expires in June. But before the scandal broke, the Tribune disclosed that the interests of Redflex, Bills and a key Emanuel political ally had converged around the mayor's speed camera push.
Emanuel political consultant Greg Goldner, working for the Redflex-funded Traffic Safety Coalition, hired Bills just after he left his job overseeing the red-light program in September 2011. Goldner said Bills was hired to bolster the group's efforts to legalize speed cameras statewide.
At that time, Emanuel's proposal for speed camera legislation was already quietly under review in Springfield. Assisting that effort was Redflex's Springfield lobbyist Michael Kasper, a Chicago lawyer who had also represented Emanuel in a residency dispute during his campaign for mayor.
Goldner told the newspaper last year that he did not know about the mayor's own push for speed cameras until it became public and only then joined forces with the administration. He said he probably would not have hired Bills had he known there would be new city business for his client to pursue.
Goldner, who managed Emanuel's 2002 election to Congress, directed a political fund that helped elect pro-Emanuel aldermen to the City Council in 2011. Kasper helped set up the fund.
The Emanuel administration has repeatedly denied Tribune requests for public records related to the speed camera push, which the mayor has pitched as a way to cut down on accidents involving schoolchildren. Critics say it is a money grab for a cash-starved city and note that Emanuel is counting on $30 million in revenue from speed cameras this year.
Now the mayor faces the challenge of finding a new operator for the red-light system while trying to launch his speed camera program.
The allegations are centered on Bills' role overseeing the red-light program from its inception in 2003 under Mayor Richard Daley until Bills' retirement in 2011. The program generated about $100 million for Redflex and more than $300 million for the city.
In October the newspaper disclosed a Redflex whistle-blower letter alleging an inappropriate relationship with Bills. The 2010 letter detailed lavish vacations for Bills and illegal transfer of commissions from Redflex consultant O'Malley, saying "the level of this insider fraud would take down the contract and most likely the company."
Company executives told the Tribune and City Hall last year they discounted the allegations after an internal investigation, but a second company-initiated probe conducted by former federal prosecutor and city Inspector General David Hoffman reached starkly different conclusions.
Hoffman found that the company paid $2.03 million to its Chicago consultant with some of the money intended for Bills, who allegedly proposed the arrangement. The company also plied Bills with 17 company-paid trips from 2003 through 2010, including airfare, hotels, golf outings, rental cars and meals, according to a summary of Hoffman's findings released March 4 on the Australian Securities Exchange.
"The arrangement between the city program manager, the consultant, and Redflex will likely be considered bribery by the authorities," the filing said. It also said company officials misled the Emanuel administration and the newspaper about the extent of the problem.
The evolving scandal has left Redflex reeling. The chairman of the Australian company and the top executives of its Phoenix-based subsidiary have all left, and company stock is trading at less than a dollar a share.Copyright © 2014, Los Angeles Times