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Former top aide sues UNO to get back $200,000 job

Miguel d'Escoto

Miguel d'Escoto

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Updated: February 10, 2014 11:59AM

The scandal-tainted United Neighborhood Organization was hit with a lawsuit Wednesday by a former top aide who says he was wrongly forced out by former CEO Juan Rangel and wants his $200,000-a-year job back.

Miguel d’Escoto says in the suit that Rangel demanded he step down last February from his post as senior vice president of the clout-heavy operation, which oversees a major network of charter schools in Chicago that are underwritten by taxpayers in Chicago and statewide.

D’Escoto quit in the wake of a Chicago Sun-Times report last February that UNO’s charter schools gave $8.5 million of business to companies owned by two of d’Escoto’s brothers — money paid out of a $98 million state school-construction grant awarded to UNO in 2009 at the urging of House Speaker Michael Madigan (D-Chicago).

The revelation prompted Gov. Pat Quinn to temporarily suspend grant payments to UNO in April, which delayed construction of a new UNO high school on the Southwest Side.

D’Escoto says in his lawsuit, filed in Cook County circuit court, that he “had no role in the decision-making process” to give contracts to his brother Federico d’Escoto’s company, d’Escoto Inc., and to Reflection Window Co., owned by another brother, Rodrigo d’Escoto. He says Rangel knew of his brothers’ involvement with the contractors before they got the UNO business and that the work they did “was exemplary.”

D’Escoto’s suit says Rangel called him to a meeting after the newspaper report, presented him with a resignation letter that he demanded he sign immediately and told him that if he didn’t, “UNO would lose state funding” for a high school it was building on the Southwest Side and for future projects and that this “would negatively affect the long-term financial viability of . . . UNO and the schools it operates.”

D’Escoto says he trusted Rangel and resigned “based on their past personal friendship” but later learned state officials “never conditioned continued funding of the grant” on his resignation. Rangel “intentionally failed to disclose and . . . concealed” that from d’Escoto, according to the suit.

D’Escoto says Rangel’s statements to him “were not only false but morally reprehensible because they were motivated by the wrongful purpose of attempting to preserve defendant Rangel’s employment with defendant UNO, which included a lucrative salary of approximately $250,000 and other valuable benefits.”

Rangel, who co-chaired Mayor Rahm Emanuel’s 2011 campaign, offered a public apology after the February 2013 report on the d’Escoto brothers’ contracts, saying he had “failed to exercise proper oversight.”

That got Quinn to restart the state funding, allowing the UNO Soccer Academy Charter High School to be completed.

But Rangel stepped down in December, after the federal Securities and Exchange Commission began investigating UNO’s bond dealings “to determine if violations of the federal securities laws have occurred.”

The SEC asked for documents related to $37.5 million the group borrowed from private investors, as well as records involving the state grant.

The governor then ordered that the remaining $15 million in state funding, promised in 2009, be withheld.

Beside asking the courts to reverse his resignation and reinstate him at UNO, d’Escoto is also seeking unspecified compensation for lost pay and benefits.

Reached Wednesday by phone, d’Escoto — who previously was city transportation commissioner under former Mayor Richard M. Daley and started work at UNO in 2007 — woud not comment.

A spokesman for UNO said its lawyers had not yet reviewed d’Escoto’s lawsuit. Rangel did not return calls.

When Quinn first blocked the state funding, state officials said UNO hadn’t told them it hired companies owned by relatives of d’Escoto, despite a grant requirement to disclose any conflicts of interest.

D’Escoto’s suit says his family ties were disclosed to UNO’s bondholders and in its federal tax returns. Those documents did not disclose he was treasurer of d’Escoto Inc.’s board for much of the time he was an UNO executive. D’Escoto Inc. oversaw construction of all of UNO’s state-funded schools.


Twitter: @dmihalopoulos

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