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Feds going after investors in firm tied to Daley son

Patrick Daley  | Brian Jackson~Sun-Times 2011 file photo

Patrick Daley | Brian Jackson~Sun-Times 2011 file photo

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Updated: June 29, 2012 9:08AM

Hoping to recover $24.1 million in taxpayers’ money that was invested with a troubled venture capital firm involving former Mayor Richard M. Daley’s son, federal authorities have given 34 private investors a choice: Pay up, or end up in court.

“This is money down a rat hole,” says one investor, who has to come up with the remaining $60,000 he originally promised to invest in Cardinal Growth, which the U.S. Small Business Administration seized last June.

Cardinal Growth — founded and operated by Chicago businessmen Robert J. Bobb and Joseph McInerney — raised money from private investors and obtained another $24.1 million in SBA loans to buy up businesses.

One of the companies it invested in — Municipal Sewer Services — got multimillion-dollar, no-bid contract extensions from City Hall during a period in which Daley’s son, Patrick Daley, held a secret ownership stake in the company. MSS is out of business. Anthony Duffy — who ran MSS — has pleaded guilty in federal court to minority-contracting fraud.

In all, Patrick Daley made more than $1.2 million on his deals with Cardinal Growth, including $708,999 from a City Hall deal to install wireless Internet service at O’Hare and Midway airports.

“Patrick gets paid, and the investors don’t? That’s a big disconnect,” says one investor who says the SBA is after him to come up with nearly $100,000, which he agreed to invest but never did.

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