A day after Chicago’s inspector general said a Daley administration program to boost minority- and women-owned businesses in city contracts is beset with fraud, federal prosecutors laid out for a judge how they think a politically connected firm rigged a $1.7 million contract.
The court filing Friday came in a criminal case against two officials of Urban Services of America, which had won a bid in 2005 over three rivals to repair garbage carts the city gives to residents. The company’s Steven Fenzl and Douglas Ritter have pleaded not guilty to mail and wire fraud and are scheduled to go to trial on June 21.
Prosecutors say more than $434,000 of the contract was supposed to be paid to a woman-owned trucking firm and a minority-owned cleaning company. But the woman-owned business was paid only $15,000 and the cleaning company was never told that Urban Services had been the winning bidder and it received nothing, prosecutors allege.
Elliot Samuels, an attorney for Ritter, who is the president of the firm, said Friday that it “was never Mr. Ritter’s intent to defraud the city.”
“Mr. Ritter and Mr. Fenzl’s company literally repaired tens of thousands of garbage carts, saving the city millions over the years,” Samuels said.
The garbage cart criminal case continues to unfold after the city inspector general on Thursday reported that in 2008 alone minority- and women-owned businesses got paid nearly $20 million less than City Hall reported. The report said the program is badly administered and plagued by numerous cases where companies falsely claimed to be in compliance with the rules.
According to Friday’s filing by prosecutors, Ritter conspired to rig the garbage cart contract bidding process by submitting Urban Services’ bid and creating three other bids that were not legitimate. An unidentified employee of the firm filled out the bid forms and included the prices on all four bids. She is expected to be a government witness.
Federal prosecutors said they have evidence of the alleged conspiracy from e-mails, statements from co-conspirators and documents.
Among the firms bidding on the contract was another company owned by Ritter and Fenzl, Urban’s vice president.
In one e-mail, Ritter pondered whether to submit the bid in the other company’s name. According to the filing, Fenzl replied, “anything to get the business that is due us.”
Urban Services has donated more than $50,000 to local political causes. The firm has been doing business with the city since 1995. In 2000, the city named the company to handle cleanup at Taste of Chicago and other festivals to replace the contract held by James Duff. He’s a member of a mob-connected family with close ties to Daley who was sentenced to 10 years in federal prison for city contract fraud.
In 2004, the Tribune reported that City Hall mailed more than $3 million in checks to Urban Services for work performed by another firm with a similar-sounding name, according to city records. City officials made the payments despite knowing that the other firm’s owner had died.
