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State investigating $98 million grant for UNO charter schools

Juan Rangel

Juan Rangel

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Updated: May 1, 2013 3:27PM

Gov. Pat Quinn’s executive inspector general has opened an investigation into the politically influential United Neighborhood Organization’s use of a $98 million state grant for new charter schools, after a report in the Chicago Sun-Times that UNO gave millions of dollars in contracts for the schools to companies with ties to the organization’s top officials.

Executive Inspector General Ricardo Meza’s office asked the state Department of Commerce and Economic Opportunity in a letter Feb. 14 to turn over all records regarding the grant, state officials disclosed Friday.

Meza’s office has opened “an official investigation” into the UNO grant, according to a copy of the one-page letter that the Quinn administration released Friday.

The inspector general asked to get copies of UNO’s state grant contracts and “any and all corresponding documentation,” including anything involving subcontractors, by Feb. 28.

Meza sent a similar request to Juan Rangel, UNO’s chief executive officer, sources said.

A top aide to Meza would not comment Friday. Nor would a Quinn spokeswoman.

UNO put out a written statement Friday saying: “UNO recognizes the need to update and improve its internal procurement process to match our rapid growth within the last few years. We have said we can do better, which is why former [federal] Judge Wayne Andersen is conducting an independent analysis of UNO’s current policies which will outline a comprehensive set of policies that will modernize our procedures. UNO will announce our new policies in the near future.”

Rangel­ — who co-chaired Rahm Emanuel’s mayoral campaign — did not return calls Friday. Rangel has said there was nothing wrong with hiring companies with ties to UNO insiders and that the 2009 grant, believed to be the nation’s largest public subsidy for charter schools, was handled properly.

But UNO’s second-ranking official, Miguel d’Escoto, quit his $200,000-a-year post as chief of staff and senior vice president for operations after the Sun-Times reported Feb. 4 that UNO was paying millions of dollars to companies owned by his brothersFederico “Fred” d’Escoto and Rodrigo d’Escoto.

D’Escoto Inc., owned by Federico d’Escoto, has been paid more than $1.5 million by UNO, primarily for overseeing construction management on its state-funded schools. Miguel T. d’Escoto — Miguel d’Escoto’s son — works for d’Escoto Inc., which Rangel suspended from doing business with UNO after the Sun-Times report.

Reflection Window Co., owned by Rodrigo d’Escoto, stands to make nearly $10 million for work on UNO schools.

Other UNO contractors paid with the state funds included the sister of the organization’s lobbyist Victor Reyes and the brothers of state Rep. Edward Acevedo, a Chicago Democrat who voted to approve the grant.

In a letter last month to the commerce agency, Rangel said Miguel d’Escoto had no role in his brothers’ deals with UNO other than signing off on payments to their companies.

UNO landed the grant with the support of the governor and Illinois House Speaker Michael Madigan (D-Chicago). Both attended a groundbreaking last summer for a South Side charter high school that UNO is building with the state money.

UNO has used the grant to expand its charter network, which now includes 13 schools across the city serving 6,500 students.

Unlike some school construction grants, the deal with UNO did not require it to use the sealed-bid contracting rules that would be required for the construction of other schools or public buildings. But

UNO’s agreement requires it to “immediately notify the department in writing of any actual or potential conflicts of interest, as well as any actions that create or which appear to create a conflict of interest.

“A conflict of interest exists if a grantee’s officers, directors, agents, employees and family members use their position for a purpose that is, or gives the appearance of, being motivated by a desire for a private gain, financial or nonfinancial, for themselves or others, particularly those with whom they have family, business or other ties.”

S andra M. Jones, a spokeswoman for the commerce agency, which administers the grant, has said that UNO did not inform her office of the insider contract deals. She would not comment on Meza’s probe Friday but added, “We are also currently reviewing the matter.”

According to the website of the inspector general, the office has the authority to issue reports that “may include a recommendation of administrative action . . . . An investigative report may also be provided to an appropriate prosecutor for review.”Meza, a former head of the Mexican American Legal Defense Fund, was one of eight people interviewed for the post of U.S. attorney in Chicago. The White House is expected to announce next month that that job will go to former federal prosecutor Zachary Fardon.

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