Whites Cashing In On Minority Contracts
Tim Novak and Steve Warmbir, suntimes.com, Jun. 20
On paper, Benchmark Construction Co. is run by Michael Smith, an African-American man.
That’s what helped the company get more than $25 million in city of Chicago contracts, many available only to firms owned and operated by minorities.
Out on work sites, it’s a different story.
Smith readily acknowledged in a court deposition that his partner, a white man, oversees the day-to-day operations at Benchmark’s construction jobs.
In the same deposition, Smith appeared to be unclear about some basic matters involving Benchmark, including what union some of his employees belonged to. Smith also seemed confused about the construction term “below grade.”
City rules prohibit white men from having primary responsibility of day-to-day operations at companies that get city work because the businesses are minority-owned and operated.
Last week, the Daley administration had refused repeated requests to comment on Benchmark, a major sewer contractor that gets more than half its business from the city.
But on Saturday, Daley supported Smith.
“This man is African American, he runs the company,” Daley said at the Puerto Rican Day Parade. “I don’t know why you don’t believe him.”
Daley’s statement is at odds with his own campaign finance report. It lists a contribution from a white man and lists him as president of Benchmark, not Smith — five years after Smith bought the company and became its president.
In recent months, city officials have stripped three companies of their special minority- or female-owned status over questions about who ran them.
Smith and his white partner bought Benchmark from another white man, Michael P. Vondra, and his three Asian partners six years ago.
But Vondra still reaps money from Benchmark.
Vondra, 53, runs a multimillion-dollar construction empire that does business with the city. He is a major political player, giving at least $145,000 to city and suburban politicians in the past six years.
There are many ties between Vondra’s companies and Benchmark.
But Smith insists Vondra has nothing to do with his company.
“It’s my company. It’s my partner’s company. Mike Vondra has zero involvement. And anything we do with his companies is low bid,” Smith said.
Benchmark and some Vondra companies, for instance, have thrown each other work on city jobs.
A company co-owned by Vondra is the landlord for Benchmark.
And then there was Becan Construction, owned by Vondra’s wife and sister until it was sold June 1.
Benchmark used Becan on city jobs, and the two firms worked out of the same suburban building.
Still more white people have profited from Benchmark.
The company owns no dump trucks, so it leases them from the same companies Benchmark was doing business with long before Smith became president.
Trucking magnate Michael Tadin, a longtime supporter of Mayor Daley, leases dump trucks to Benchmark.
So has the firm of James Inendino, a reputed mob loan shark and enforcer.
He’s in prison now.
And there’s Carmen Schadt Gurgone.
Her trucking firm, Schadt’s Inc., is a phony female-owned front because it’s run by her husband, James Gurgone, the city’s inspector general found.
Smith says they no longer use Inendino or Schadt’s.
Links to Hired Truck
Tadin, Inendino and the Gurgones are no stranger to controversy. Their firms played major roles in the city’s scandal-ridden Hired Truck Program. All of their firms have been sidelined from the program for various violations.
As for Benchmark, the Daley administration has certified for six years that it is owned and operated by a black man, Michael Smith, 44, of Naperville.
It’s a stamp of approval giving Benchmark an inside track on some contracts the city makes available only to minorities or women.
But the Daley administration apparently hasn’t told Daley’s political machine about Smith’s running Benchmark.
Daley’s political machine lists Michael P. Vondra as president of Benchmark Construction Co. on a $1,500 donation he gave the mayor just last year.
Ald. Dick Mell (33rd) and State Rep. John Millner (R-Carol Stream) listed Vondra the same way on contributions.
Mell’s office didn’t return calls. Daley’s campaign and Millner said the information must have been provided to them.
“Someone would have told us that,” Millner said. “We wouldn’t have made that up.”
A Daley campaign official said: “Any personal check they gave us, they have to fill out a form. They have to put their name and address, their position and their business.”
All those donations came after Smith became Benchmark’s president in 1998.
Vondra declined to be interviewed. Through a spokesman, he had no explanation for the donations, nor did Smith.
Who’s running what?
The question of who runs Benchmark comes as city officials have been forced to focus on the problem of white men running companies supposedly owned by women or minorities.
In 2000, the city stripped Windy City Maintenance of its status as a female-run business. The city determined Patricia Duff owned the company, but her son, a white man, was running it. Both were charged last year with illegally getting $100 million in city contracts meant for companies owned and operated by women or minorities. They go on trial Oct. 4.
So far this year, two female-owned firms lost their status after the city determined men really ran the companies, which took part in the city’s Hired Truck Program. Daley’s inspector general wants four more kicked out of the program for the same reason.
The discipline came after the Chicago Sun-Times exposed corruption and waste in the city’s $40-million-a-year Hired Truck Program.
And just last week, officials at an Alsip window company were charged with setting up a fake minority company to get a $6 million contract from Chicago Public Schools.
City regulations make clear what it takes for the city to certify a firm as owned and operated by a woman or a minority.
Companies can’t simply have a woman or minority listed as president, leaving the day-to-day management to a white man. But that’s what the city is often finding.
For instance, the city stripped Fresno Transport of its special female-business enterprise status because the husband of one of the owners had too much control. He decided which drivers to use and what equipment needed to be repaired, “essential day-to-day activities of a trucking company,” the city found.
Regarding Benchmark, Smith said in a 2002 court deposition that the company’s day-to-day field work is overseen by his vice president, Mark Atkins, who is white. Smith reiterated that in interviews with the Sun-Times.
“As far as day-to-day operations,” Smith said, “my partner Mark Atkins handles most of the field operations. That’s correct.”
“Am I out in the field with these guys? No, I am not. But I know everything that’s going on in the field.”
Smith told the Sun-Times that Atkins makes such decisions as “setting up our jobs, working with our superintendent and foreman, making sure that they’re set up with the equipment, whatever equipment and supplies they might need . . . and the actual labor they need.”
Smith says he takes care of “day-to-day administration, setting up projects, bill collecting” and public relations.
City records tell different story
This runs counter to documents Smith filed with the city two months after he bought the company and was applying to be certified as a minority-owned and -operated company.
When the city asked who hired and fired employees, Smith said he did.
When the city asked who supervised in the field, Smith said he did.
Smith insists that’s still true because he has the ultimate say.
“Ultimately any decision that is made, the final decision is my decision,” Smith said.
What’s grade level?
In the past, Smith has appeared unclear on some basics about Benchmark.
Smith talked about Benchmark during a 2002 deposition concerning an accident involving Benchmark and other firms working on a city sewer project.
During questioning, four years after Smith said he bought the company, he didn’t know what union his laborers belong to.
He didn’t know whether his company investigated the fatal accident.
He didn’t know how much can legally be put in a dump truck.
Or who at Benchmark would know.
And he appeared confused over the term “below grade.”
“What was going on at the site at 95th and Commercial, what work was Benchmark doing there?” asked an attorney in the case.
“We were putting in a sewer, installing sewers,” Smith said.
“Does that mean the activities would have been below grade?” the attorney asked later.
“Grade being what?” Smith asked.
“Level ground,” the attorney explained.
“Yes,” Smith said.
In an interview with the Sun-Times, Smith was also unclear on political contributions but said he and Atkins make those decisions.
Five days after Smith and Atkins bought Benchmark, it contributed $1,500 to state Sen. James DeLeo, records show.
“A contribution to who?” Smith said. “James DeLeo . . . it’s not ringing a bell. Do not know him.”
Since Smith and Atkins bought Benchmark, the company has donated more than $86,000 to politicians.
When Benchmark hired Smith in 1997, he was working for an engineering company and running a janitorial service, certified by the city as minority-owned. Smith still owns the janitorial company.
The following year, Smith bought Benchmark with Atkins, a longtime Vondra employee.
The two men paid $654,778, according to filings they made to get special status with the Metropolitan Water Reclamation District.
Smith wound up paying 75 percent of the purchase price, but got only 60 percent of the company, he acknowledges. Atkins got 40 percent. Smith said a Benchmark bonus Atkins had set aside went toward the purchase too.
Before the sale, Vondra owned 25 percent of the firm’s stock, and three Asian men owned the rest. Smith wound up replacing one of the Asian owners as president.
Vondra did quite well from the sale, getting 60 percent of the proceeds from the company he created when he was 23 years old, records show.
Status has been lucrative
During Vondra’s ownership, its president was often a minority or a woman, and the firm operated with special status as a minority-owned firm.
The status helped another Vondra construction company that used Benchmark on ComEd jobs, so the utility could meet its affirmative action goals. Vondra noted this benefit in a deposition just before he sold Benchmark.
Yet another company benefitting from Benchmark’s minority status is MAT Leasing, owned by mayoral supporter Michael Tadin.
MAT leases heavy equipment to Benchmark, which then leases the same equipment to the city as a minority-owned firm.
Atkins explained in a deposition last year how the process worked.
“MAT Leasing has equipment that [Tadin] leases to the city of Chicago through me,” Atkins said.
When Smith bought Benchmark in 1998, it had gross revenues of $14 million. Two years later, it was $24 million, as Benchmark won more city contracts.
Smith said he got no bargain when he bought the company.
“It wasn’t a good deal,” Smith said. “Not at the time. It was somewhat of a break-even company.
“But it had potential.”
Contributing: Art Golab
Pucillo a consultant for Vondra firm
Anthony Pucillo, the former high-ranking Chicago official accused of taking bribes from city contractors, is a consultant to Reliable Asphalt, a major player in patching city streets.
Reliable is one of the many businesses owned by Michael P. Vondra, a multimillionaire construction czar.
Vondra refused to comment, but his attorney, George Maurides, said Pucillo has worked at Reliable for 12 to 18 months.
“He’s done some consulting on them for recycling,” Maurides said. “I think it’s safe to say given all the publicity, that’s probably under review.”
Corrupt Chicago contractor Marco Morales, who fled to Mexico in 1997 to avoid prison, made headlines two weeks ago when he named Pucillo as one city official he bribed to get city contracts.
Maurides said he didn’t know how much Reliable paid Pucillo. Pucillo sought out the consulting work and has expertise in recycling concrete and asphalt, which Reliable does, Maurides said.
Pucillo has denied through his attorney taking any bribes.
A former mistress of Morales told the Chicago Sun-Times that Pucillo was just one of several city officials Morales bribed to get city business.
Pucillo worked as first deputy commissioner in the city’s transportation department.
Pucillo quit his city job in 1998 and moved into the private sector.
Steve Warmbir and Tim Novak
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