Weather Updates

Contractor-turned-’mole’ kept getting paid by city

 Exterior Diamond Coring 11800 s Ewing.

Exterior of Diamond Coring 11800 s Ewing.

storyidforme: 26627299
tmspicid: 9678537
fileheaderid: 4446921

Updated: April 6, 2012 8:03AM

I n 1988, when he was a 23-year-old construction laborer, Anthony Cappello borrowed a drill and started a concrete-cutting company on Chicago’s Southeast Side.

He would go on to build the company — Diamond Coring Co. Inc. — into a major contractor for the city of Chicago, reaping more than $37 million in contracts since 1998, mostly to repair the runways at O’Hare and Midway airports.

Cappello also set up another business — The Stealth Group, Inc., known as SGI — and put it under his wife’s name so it could get some of the work that City Hall sets aside for companies owned and operated by women, according to federal authorities. SGI landed more than $2.3 million from City Hall, mostly for work at the airports as a subcontractor for other companies with city contracts.

Caught up in an investigation by the FBI and Chicago’s inspector general of bogus woman- and minority-owned companies working at O’Hare that began at least three years ago, Cappello was facing fraud charges when he made a deal with prosecutors last year:

While continuing to work on his city jobs, he would also work undercover for them, as a government “mole,” to catch other woman-owned or minority business fronts.

Diamond Coring has been paid more than $3 million for runway repairs and snow removal at O’Hare and Midway since last June.

That’s when Cappello, 48, of Homer Glen, began working on an undercover investigation that led to the arrest of a Willowbrook businesswoman named Elizabeth Perino, records show.

The FBI arrested Perino last July 21, though her case remained under seal until Feb. 14, when federal authorities also filed fraud charges against Cappello and revealed his cooperation.

It’s unclear how long Cappello worked undercover or whether his work will result in charges against other city contractors.

The charges against Perino, 57, accuse her of operating two “sham’’ woman-owned businesses — Accurate Steel Installers Inc. and Perdel Contracting Corporation, both based in Lockport. Those companies have gotten more than $16 million in city business since 2005.

After the charges were announced, City Hall said it will no longer do business with Perino’s companies or with Cappello, whose company received five checks totaling $879,302 from City Hall in February, just days before he was charged with fraud.

In the Perino case, court records show Cappello told her that Diamond Coring was hoping to win what turned out to be a bogus city contract and needed a woman-owned business as a subcontractor. Perino’s company wouldn’t actually do the work, though. Instead, Cappello’s company would provide a street-sweeper and employees to operate it to Perino’s company, which would then claim to do the work so Diamond Coring would fulfill the city requirements for subcontracting work out to a company owned and operated by a woman, the records show. Perino would get $140,000.

According to the criminal complaint against Perino, her companies acted as an illegal “pass-through” for McHugh Construction so the contracting giant could fulfill the requirement for woman- and minority-owned subcontractors on four major Chicago projects: the massive reconstruction of Wacker Drive downtown; a new North Avenue Bridge over the Chicago River, and the rebuilding of two CTA L lines, the Brown Line and the Red Line. Perino’s companies also have been subcontractors on other city projects, primarily at O’Hare, records show:

Kiewit Western Co., out of Omaha, Neb., and its joint-venture partner Reyes Group, in Markham, hired Perino’s Accurate Steel as a subcontractor on four contracts at O’Hare, including a $160 million deal that Kiewit/Reyes got to regrade the south airfield under the “O’Hare Modernization Program.” Altogether, Kiewit has paid Accurate Steel more than $2.8 million since 2005, city records show.

For subcontracting work, Kiewit also used Diamond Coring and Azteca Supply Co., whose owner Aurora Venegas and her husband Thomas Masen have been convicted of running a woman-owned business front. Venegas and Masen await sentencing.

“Kiewit/Reyes’ contract was awarded over five years ago, well before any indictments or charges were levied against those particular subcontractors,” city aviation spokeswoman Tammy Chase says.

Kiewit and Reyes haven’t been charged with any crime. In a written statement in response to questions, Kiewit points out that “various government agencies,” including the city of Chicago, had certified Accurate Steel, Perdel Construction and Azteca Supply as legitimate woman-owned businesses.

“Kiewit/Reyes believes that the certified . . . firms performed as required by their subcontracts,” the company says.

FHP Tectonics Corp., owned by contractor Frank Paschen, paid Perino’s Accurate Steel $928,646 as a subcontractor under a 2005 contract that included building a new canopy for Terminal 1, city records show.

Rausch Construction Co. hired Perino’s Accurate Steel as a subcontractor on the Wacker Drive riverwalk project in 2005. Rausch paid Perino’s company $18,111.

G&V Construction Company, of Bensenville, has hired Perino’s Perdel Contracting as a subcontractor on three city jobs, a sewer project in Norwood Park and viaduct-clearance work at 1000 S. Kedzie and at Irving Park and Ravenswood. G&V has paid Perdel $145,679.

© 2014 Sun-Times Media, LLC. All rights reserved. This material may not be copied or distributed without permission. For more information about reprints and permissions, visit To order a reprint of this article, click here.