Both sides file lawsuits in flap over city pension fund investments
BY TIM NOVAK Staff Reporter firstname.lastname@example.org February 3, 2012 6:41PM
Allison Davis. File photo.
Updated: March 5, 2012 8:06AM
Five Chicago public pension funds have filed suit in Delaware to fire a controversial money management company created by a friend of President Barack Obama and a nephew of former Mayor Richard M. Daley to manage $68 million in government pension funds.
The money manager, DV Urban Realty Partners, has responded with its own lawsuit in Cook County, hoping it can keep managing $68 million in pension funds for Chicago police officers, teachers, transit workers and city employees.
Officials of the pension funds, including Mayor Rham Emanuel’s two top financial advisors, say their investments have been poorly managed by DV Urban. The company disagrees, saying the pension officials are upset with “bad publicity’’ they have received since the Chicago Sun-Times first disclosed in September 2007 that the pension funds decided to invest in a risky real estate venture formed by Daley’s nephew Robert G. Vanecko and Allison Davis, a former employer and friend of Obama.
A series of stories in the Sun-Times led to a federal grand jury investigation in 2009 when Vanecko decided to leave DV Urban. He has said he sold his investment in DV Urban, but pension officials say they don’t know how much Vanecko got when he cashed out.
Since the pension funds struck the deal in 2006, they have paid DV Urban more than $4.7 million in management fees to manage $68 million that was invested in several real estate projects, many of which have lost value during the recession.
After Daley left office earlier this year, the pension funds began planning to fire DV Urban. They took action Monday, demanding that DV Urban “turn over all documents.’’ But the company has refused, prompting the pension funds to file suit Wednesday in Delaware where DV Urban was created.
DV responded with a lawsuit Thursday, asking a Cook County judge to stop the pension funds from dumping the company now run by Davis and his son Jared.
They claim the pension officials decided to dump DV Urban because “they did not like the bad publicity’’ and they were “also upset about the multiple [Freedom of Information] requests they were receiving’’ from reporters.