Mayor’s Allies Among 7 Charged in FBI Corruption Probe : 2 Chicago Councilmen Indicted in Sting

Two City Council members, two former public officials and three others were indicted Friday by a federal grand jury after an FBI investigation of alleged City Hall corruption.

The charges include bribery, extortion, mail fraud and racketeering in connection with the awarding of city contracts.

The indictments are the first to come out of a controversial 18-month sting operation, during which silver-tongued swindler and ex-convict Michael Raymond worked under cover for the Justice Department, spending tens of thousands of dollars trying to buy influence and win contracts for a New York firm, Systematic Recovery Service Inc.

Investigation Continues

A number of other Chicago City Council members and public officials are still under investigation.

The indictments are believed to be only the first in a series that could mushroom into another Chicago political scandal and possibly affect Mayor Harold Washington’s campaign for reelection.

In announcing the charges, however, Anton R. Valukas, U.S. attorney for the northern district of Illinois, stressed that “the city of Chicago was not charged today, nor was an administration.” Valukas said that Washington “is not a target” of the investigation.

The indicted aldermen, both aligned with the mayor, are Wallace Davis, 35, and Clifford Kelley, 47.

Davis was elected to the council for the first time in 1983. He is charged with nine counts of racketeering, mail fraud, false statements and extortion. Among other charges, he is alleged to have received $5,000 as a down payment on $25,000 from Systematic Recovery Service in exchange for influencing contract awards for the collections firm.

Kelley, a 15-year veteran of Chicago politics, was charged on 19 counts, including racketeering, mail fraud and extortion and failure to file taxes. He allegedly received tens of thousands of dollars in cash, free meals and the use of automobiles in return for steering contracts to Systematic Recovery Service.

Cash From Lobbyist Alleged

In a separate scheme, he is alleged to have received $6,500 in cash from Raymond Akers Jr., a former lobbyist for Waste Management Inc., who also was indicted.

Carmen Aiello, former chief supervisor in the city’s water department, was charged with extortion for allegedly receiving bribes from Michael Raymond totaling $1,000.

Michael Lambesis, 61, the chief investigator for the Office of the Clerk of the Circuit Court of Cook County, was charged, along with Paul Vesper, 44, with allegedly selling illegal weapons to Raymond. Also charged with extortion was Herman Mitchell, a ward precinct captain for Davis.

Those indictments were the result of an elaborate government sting operation patterned after the FBI’s Abscam investigation, which led to the convictions of 17 people, including seven members of Congress.

The Chicago sting, code-named Operation Incubator, was built around Raymond, a portly, bespectacled gourmand with a hearty laugh and a big bankroll. Raymond, a convicted swindler, apparently became a government mole after he was arrested in Tennessee for possession of a machine gun.

Much of the government’s evidence is believed to be on tape, picked up by video cameras and microphones hidden in a luxurious high-rise apartment overlooking Lake Michigan. Raymond was reportedly set up in the apartment by the federal government.

Worked for Systematic

At the same time Raymond was a federal mole, he was working for Systematic Recovery Service, which was seeking to obtain contracts to collect tens of millions of dollars in unpaid Chicago parking tickets and water bills.

The firm’s owner, Bernard Sandow, 50, pleaded guilty last month to providing bribe money to Raymond and has testified in a New York corruption trial that he gave the mole $300,000 to bribe Chicago city officials.

Evidence uncovered during the Chicago investigation led to discovery of a similar scandal in New York City, where four city officials are now awaiting the decision of a jury on corruption charges.

In 1974, Raymond was a key witness in the prosecution of two men convicted of trying to bilk the Los Angeles municipal treasury out of $3.5 million. He received a $45,000 reward for his help.