A second company that won a city bill-collection contract has come under scrutiny in the federal investigation of alleged corruption in Chicago government, an executive of the firm acknowledged Thursday.
Steven Lipsitz, executive vice president and general counsel of Datacom Systems Corp., said federal officials have told him that company records will be subpoenaed soon by a federal grand jury in Chicago.
The impending subpoena marks an expansion of the investigation into alleged payoffs to aldermen, city officials and others by an FBI undercover informant, Michael Raymond, in 1984 and 1985.
At the time of the alleged payments, Raymond was working for Systematic Recovery Service Inc., a New York firm that was competing with Datacom to win public contracts in Chicago.
Systematic Recovery eventually received a contract to collect overdue water bills, but Datacom won a much more lucrative contract to collect unpaid parking fines.
Sources close to the inquiry said federal investigators want to examine Datacom`s dealings with city officials in winning the contract to collect parking fines for the city last February. The sources did not offer specific detail.
Federal law enforcement officials have declined to discuss details of the investigation.
One source said the investigators want to review any work done here for Datacom by Ivanhoe Donaldson, a former deputy mayor of Washington, D.C., who has pleaded guilty to misuse of public funds. Donaldson is a former member of Datacom`s board of directors and worked as a part-time consultant for the firm at the time it won the Chicago contract.
Lipsitz said he did not know what prompted the federal inquiry into Datacom. He said lawyers for the company have met with federal prosecutors in recent days and have been told to expect the grand jury subpoena.
”They have said that it is a formality, so that no records are destroyed,” Lipsitz said in a telephone interview from Datacom`s New Jersey headquarters.
”We are cooperating fully with the federal government and we hope to meet with the U.S. Attorney soon and have a statement saying Datacom has been cleared of any wrongdoing.”
Datacom, a subsidiary of Lockheed Corp., is a major national competitor in the lucrative arena of city collection contracts. The company has contracts with government agencies in many cities, including Boston, Philadelphia, New York, New Orleans and Washington.
In addition to the parking contract here, Datacom is in line to receive a second contract to collect bills for rides in Chicago Fire Department ambulances. The second contract has been approved by the city purchasing department and the Chicao City Council`s Finance Committee and is awaiting Mayor Harold Washington`s signature.
For more than a year, Raymond, a convicted con man, met with Chicago politicians who could help him win contracts for Systematic Recovery, sources familiar with the case have said. The water bill contract is the only one received by the company and is being canceled by the Washington
administration, which has charged that the contract was obtained as a result of bribery.
One city official, Deputy Revenue Director John E. Adams, has been fired for allegedly taking what the Washington administration has called a bribe from Raymond. Another official, Charles E. Sawyer, Adams` boss, has been suspended.
J. Michael Peck, mayor of south suburban Dolton, said that he met Adams at a village meeting in August and exchanged business cards. Adams called several months later as president of the Dycor Group, and Peck said he asked Adams to conduct any business by mail.
Peck received a letter dated Dec. 4, 1985, written by Adams in the name of the Dycor Group and addressed to a Mark Shekerjian of Parkway Bank and Trust Co. of Harwood Heights. The letter, Peck said, outlined his village`s
”substantial demand” for minority business enterprise contractors able to fabricate structural and miscellaneous steel, and said that the South Side Iron Works Inc. stood an ”excellent chance” of being awarded a subcontract on a village construction project. Peck added that the letter contained a space for his signature.
A five-page brochure on South Side Iron Works accompanied the letter and listed a Charlene M. Adams as president, Peck said.
”He (Adams) sent me a letter to a bank president. He wanted me to sign this letter to get a loan,” Peck said. ”I just left it sitting on the desk and never returned it to him.”
Administration officials also have said that two other officials–Mel Dubrock, assistant commissioner of the Chicago Streets and Sanitation Department, and Carmine Aiello, a deputy commissioner in the Water Department –have been linked to the Raymond investigation, though the officials would not provide details.
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Clarence McClain, who has described himself as a close friend of Mayor Washington, also is a subject of the inquiry. McClain, a business consultant, told Saywer that he accepted $40,000 from Raymond, a source familiar with Sawyer`s account said.
Datacom officials met with McClain on several occasions, but the company never hired McClain or paid him any money, Lipsitz said.
McClain has refused to discuss the investigation.
Donaldson, who pleaded guilty last month to stealing $190,000 from Washington, D.C., city government and orchestrating a cover-up of his misuse of city funds, was one of Washington Mayor Marion Barry`s chief politicial strategists. He also provided advice to Harold Washington in his successful run for mayor of Chicago in 1983 and has had widespread contacts in the city`s black community since the 1960s.
Donaldson was hired as a part-time consultant and elected to the board of directors of Datacom shortly after he left the mayor`s office in Washington in 1983. At the same time, Donaldson worked full-time as a vice president of E.F. Hutton & Co.
According to Lipsitz, Donaldson was a political adviser and goodwill emissary for Datacom.
Lipsitz said he was unaware of any specific work done in Chicago by Donaldson for Datacom, but added: ”Either directly or indirectly, I`m sure he said kind words to the mayor about us.”
Donaldson is scheduled to be sentenced on Jan. 27 in Washington on federal charges stemming from his misuse of Washington city funds. He left Datacom and the company`s board last summer and resigned from Hutton in September.
In his efforts to win the ticket collection contract for Systematic Recovery, Raymond gave reporters and politicians copies of a study that purported to show the city could reap substantial financial benefits if it revamped its collection system.
The study was done by an obscure South Side law school, the National Conference of Black Lawyers Community College of Law and International Diplomacy. McClain told Sawyer that Raymond helped finance the study, according to a source close to Sawyer.
State police investigators say an investigation has determined that the school is a hangout for the El Rukn street gang. The investigators, who asked not to be identified, said they were asked to look into the school last fall after State Rep. Larry Bullock (D., Chicago) introduced a bill to sell a South Side mansion to the school for $1. Gov. James Thompson vetoed the bill and ordered an investigation.