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State senator tied to target of ‘large-scale fraud’ investigation

The Bronzeville condo building vacant lot thstate Sen. Mattie Hunter once owned. |  John H. White~Sun-Times

The Bronzeville condo building and vacant lot that state Sen. Mattie Hunter once owned. | John H. White~Sun-Times

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Updated: January 23, 2012 3:08AM



In 2005, George E. Smith, a South Side health-care and social-services provider, bought two unfinished condominiums and a vacant lot from Illinois state Sen. Mattie Hunter for $240,000.

Three years later, Smith’s not-for-profit mental-health group got $500,000 in state funding that Hunter — a Chicago Democrat and head of the Senate Human Services committee — helped arrange.

That “disability behavioral health services” grant is now among more than $18.5 million worth of government deals that state inspectors say Smith used to commit “large-scale fraud” on Illinois taxpayers.

The land deals aren’t Hunter’s only involvement with Smith, whom the senator says she has known since the 1980s.

The executive director of Smith’s not-for-profit organization circulated nominating petitions for Hunter’s campaign, to which Smith and one of his businesses made $3,700 in contributions between 2005 and 2010.

Additionally, one of Hunter’s sisters worked as a receptionist for Smith until she died last year at age 52.

Hunter says her financial, personal and political ties to Smith are “unrelated” to her steering him the $500,000 grant.

“I don’t give anybody any money, you guys, unless I know they have the capacity to provide the services,” says Hunter, a former Chicago Housing Authority and city Department of Human Services administrator.

“I’ve known Dr. Smith for a long time when I worked in the not-for-profit community. He has always had a good reputation . . . carried himself professionally and always has run a top-notch organization, as far as I’ve known.

“I was really surprised to see the things you wrote in the paper” after state Executive Inspector General Ricardo Meza released a 201-page report last week about Smith’s alleged wrongdoing.

Smith has not been charged with any crimes.

But Meza, who doesn’t have the authority to file criminal charges, is recommending that the state seek “criminal prosecution” for Smith’s “fraudulent billing practices,” which involved “forged signatures,” “ghost employees” and “excessive administrative expenses.”

According to Meza’s report, the full extent of Smith’s alleged fraud couldn’t be determined in part because of Smith’s close relationship with former Illinois Department of Children and Family Services Director Erwin McEwen, who left that post in September.

“The course of the investigation was cut short by Dr. Smith’s and Director McEwen’s refusal to cooperate with investigators,” Meza’s report says. “Investigators were unable to ascertain the full extent of Dr. Smith’s misconduct.”

The report does allege that Smith’s companies were awarded “millions of dollars of grant funds,” including DCFS money, “for services that cannot be substantiated.”

Investigators also questioned Smith’s purchase of $95,847 worth of tickets to Bulls, White Sox, Cubs and other sporting events and say he “falsely represented” himself as a psychiatrist in official government forms, when, in fact, he isn’t a medical doctor or psychologist.

Both Smith, whose doctorate is in education, and McEwen haven’t responded to calls seeking comment.

McEwen — who was hired by then-Gov. Rod Blagojevich after Hunter says she provided what she calls “a very strong recommendation” for him — has described Smith as a “personal friend and mentor,” according to the inspector general’s report, which accuses McEwen of lax oversight of “Dr. Smith and his business entities.”

Hunter — who says she grew up with McEwen in the Robert Taylor Homes public-housing project — was appointed to fill a senate seat vacancy in late 2002 with backing from then-Ald. Dorothy Tillman (3rd).

Hunter was a state senator and also an administrator for Chicago’s human services department when she sold the two Bronzeville condos and vacant lot to Smith in 2005.

She acquired the parcels after buying delinquent property taxes on the then-uninhabitable building at 4420-22 S. Vincennes and its 5,400-square-foot adjoining lot in the late 1990s.

In 2000 and 2001, she borrowed $1.1 million to turn the building into eight condominiums, including two basement/garden units she says she left unfinished.

Smith paid Hunter $130,000 for those two units on June 22, 2005, records show. About a month earlier, he paid Hunter and another sister of hers, Bonita Ersery, $110,000 for the vacant lot to the north.

Hunter says that Smith found the properties, which records show he still owns, without her involvement.

“I went through a Realtor, and the Realtor found a buyer,” she recalls. “It happened to be him [Smith], and I sold the property.”

Hunter says she can’t remember the Realtor’s name.

Besides the property deals, the executive director of Smith’s not-for-profit, Pleshette M. Hamb, helped circulate nominating petitions for Hunter in October 2007 — seven months before Smith’s organization, Diversified Behavioral Comprehensive Care, got the $500,000 grant Hunter had sought for the group from Blagojevich’s administration.

Asked about Hamb’s political work, Hunter says, “I’ve made a lot of friends over the years since I’ve been in the not-for-profit business, and my friends want me to do a good job, want me to stay in office as long as I can.”

Meza’s report says that Hamb and another Smith employee, Diane Grant, refused to cooperate with his investigation on the advice of their attorney, Sam Adam Jr.

Adam — known for his courtroom theatrics when he represented Blagojevich in his first criminal trial — says he didn’t want to send his clients in for questioning without knowing the scope of what they’d be asked. He also says he sent a letter communicating this and that investigators never replied.

Hunter says she is “shocked and confused” by the allegations against Smith.

“He’s always had a good reputation in the community for providing quality services,” the senator says. “I don’t know what happened.

“It’s going to have to definitely be investigated further, and he’s going to have to explain it.”



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