July 23, 2014
A former Mississippi sharecropper who landed millions of dollars in contracts from the city of Chicago was sentenced Thursday to 17 months in prison for his role in a minority-contracting scandal that involved sewer deals held by a company whose investors secretly included then-Mayor Richard M. Daley’s son and nephew.
Jesse Brunt, 77, the owner of Brunt Bros. Transfer, had pleaded guilty more than a year ago to mail fraud, admitting the trucking company’s role in the city deals was a sham.
The black Chicago businessman admitted Brunt Bros. acted as a minority front in sewer deals with City Hall beginning with Kenny Industrial Services, owned by the clout-heavy Kenny family, and continued when their business was taken over in 2003 by a company owned in part by Daley’s son Patrick Daley and nephew Robert G. Vanecko.
Daley’s son and nephew weren’t charged in the scheme and were never interviewed by investigators, Brunt’s attorney Jeffrey Steinback said in court Thursday.
Daley and Vanecko had secret ownership stakes in Municipal Sewer Services, created by Anthony Duffy to take over the city contracts from Kenny’s company.
Duffy, 49, pleaded guilty in October. He is serving a 17-month prison term in Ohio and faces possible deportation to his native Scotland.
Brunt’s cooperation with the federal investigation led to a guilty plea from Duffy, who had been cooperating with the federal investigation but suddenly stopped, according to Steinback.
Brunt admitted his fraud cost the city nearly $8.8 million.
“I am ashamed and feel guilty for my conduct,” Brunt told U.S. District Judge Milton Shadur. “I have worked hard all my life, and to end up here . . . is inexcusable. I apologize to the city of Chicago, the court and my family for the harm I have caused by my conduct.”
Brunt gave up picking cotton in Mississippi and moved to Chicago at 16. He became a business partner of Howard Medley, a top campaign fund-raiser for the late Mayor Harold Washington. Brunt eventually bought Medley’s equipment and began landing work as a subcontractor for other trucking companies after getting City Hall’s certification as a minority-owned and operated business.
Brunt eventually teamed with Kenny, which needed a minority business partner to land city contracts to clean and inspect sewers under the Daley administration.
Explaining the arrangement to the judge, Steinback said: “Two big shots” from Kenny “thought of it. They helped him fill out the certification . . . and basically they ran the show.
“These two guys” — whom Steinback did not identify — “. . . made millions, and they walked because the statute of limitations passed and they went bankrupt.”
Duffy ran Kenny’s sewer-cleaning business. When the company went bankrupt in 2003, Duffy got financing from Cardinal Growth, a Chicago venture capital firm, to buy the assets and take over the city contracts, with Brunt continuing to work as a minority-owned front.
Cardinal Growth was headed by Robert Bobb and Joseph McInerney, businessmen with close ties to the Daley family.
The mayor’s son and nephew were investors in Duffy’s sewer company, but he never disclosed their ownership stake in filings with City Hall, then lied about it when questioned by the FBI.
The Daley family ties to the sewer company were exposed by the Chicago Sun-Times in December 2007, sparking an investigation of the sewer contracts by the city inspector general’s office and federal authorities that led to the charges against Brunt and Duffy.
Daley’s son and nephew said at the time they already had sold their stakes in Municipal Sewer Services.
Cardinal Growth has since been taken over by the U.S. Small Business Administration, which is seeking to recover millions of dollars in unpaid loans that were used to finance several companies, including Municipal Sewer Services.
Kenny and then MSS hired Brunt to haul debris from the sewers in the northern two-thirds of the city. Brunt landed a separate deal with City Hall to clean and inspect sewers south of 63rd Street. But Brunt didn’t have the cameras needed for the work. So it was all done by Kenny and later MSS.
“Was he responsible for his misconduct? Absolutely,” Steinback said. “He understood there was always a possibility he could get in trouble.”
Brunt’s company began working for City Hall during the Washington administration. He was a minority subcontractor to Fred Barbara Trucking, a garbage-hauling company owned by the nephew of then-Ald. Fred B. Roti. After his death, Roti was identified by the FBI as a “made member” of the Chicago mob. After Barbara sold his company to Allied Waste, Brunt continued working as a waste-hauler.
In January 2012, Allied paid the city $11 million to settle claims it failed to meet minority-subcontracting requirements because some companies it hired — including Brunt Bros. — were shams.
Brunt was involved in the sewer-fraud scheme with MSS in January 2004 when the Sun-Times published an investigation of Daley’s Hired Truck Program, which cost City Hall $40 million a year to hire private trucking companies that did little or no work. Brunt said in an interview for those stories that his trucking business was often “paid to do nothing.”
Brunt wasn’t charged in the Hired Truck scandal, which resulted in 48 federal bribery and corruption convictions against other trucking company owners and city officials.
Brunt and Duffy were indicted in the sewer scam in January 2011. Their companies — Brunt Bros. Transfer and MSS — are no longer in business.
Duffy — whose pregnant wife attended Brunt’s sentencing — is due to get out of prison next March. Brunt agreed to start serving his sentence on June 3.
Brunt must pay $533,749 in restitution to the city. Duffy owes the city $428,438.74.