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Daley’s son also invested in city sewer deal

Mayor Daley's nephew Robert Vanecko has agreed be photographed for story we're doing him. (Phoby Richard A. Chapman/Sun-Times)

Mayor Daley's nephew, Robert Vanecko, has agreed to be photographed for a story we're doing on him. (Photo by Richard A. Chapman/Sun-Times)

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Updated: July 8, 2011 3:07PM

Patrick Daley’s business dealings with the city of Chicago first surfaced in December 2007, when the Chicago Sun-Times reported that he and his cousin Robert G. Vanecko had secretly invested in Municipal Sewer Services, which subsequently was given more than $4 million in no-bid contract extensions from City Hall to inspect city sewers.

The news sparked an investigation by then-city Inspector General David Hoffman and a federal grand jury that resulted in a criminal indictment in January that accuses the sewer company’s president, Anthony Duffy, and a subcontractor, Jesse Brunt, of engaging in a minority-contracting fraud scheme.

The city had set aside a sewer-cleaning contract to go to a minority-owned business and awarded it to Brunt, an African-American trucking magnate. Brunt, though, subcontracted most of the work to Municipal Sewer Services for a period that included the time Patrick Daley and Vanecko held an ownership stake in the company.

Neither Patrick Daley nor Vanecko was accused of any crime.

Municipal Sewer Services was created in April 2003 by Cardinal Growth, a Chicago venture-capital firm run by Robert Bobb, a former federal prosecutor, and Joseph McInerney, an accountant who once worked for Arthur Andersen & Co. With money from private investors and loans from the U.S. Small Business Administration, they bought the assets of a bankrupt sewer company and took over its multimillion-dollar city contracts to inspect sewers.

Patrick Daley was an unpaid intern at Cardinal Growth when he and his cousin invested a total of $65,000 in Municipal Sewer Services, giving them a 5 percent stake in the sewer company. Their ownership stake wasn’t disclosed on documents filed with the city — a violation of city rules.

Patrick Daley and Vanecko cashed out their investment by the end of 2004, when Daley enlisted in the Army and Vanecko formed a new company to handle city pension fund investments.

The sewer company is no longer in business.

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