Federal agents raided an insurance agency Tuesday as part of a federal investigation of alleged kickbacks to longtime Niles Mayor Nicholas Blase for extorting village businesses to buy insurance from a close friend, court records show.
The records, obtained by the Tribune before they were sealed by a court order, indicate that the FBI was investigating allegations that Blase threatened to withhold liquor and business licenses if restaurant owners didn’t use Ralph Weiner’s insurance agency.
Weiner allegedly disguised kickbacks of “significant amounts of bribes” to Blase as commissions paid to a shell company effectively controlled by the mayor, the FBI alleged in the court documents.
Bank records show that the company, S.M.P Insurance Service, received more than $280,000 in “commissions” from Weiner’s insurance agency in the six years ended in April 2003, according to the FBI sworn statement.
Weiner died last year, and Blase has not been charged with any wrongdoing.
In a telephone interview Tuesday, Blase flatly denied any wrongdoing, saying of the bribery allegation, “It’s crazy.”
Blase said that Weiner had sold him business insurance for years and that he recommended Weiner as an agent to others “because I liked the guy.”
“I’ve never done any money with him or got any commissions,” Blase said. “I’m really surprised.”
An attorney who practices law in Niles, Blase has been a political force in the village for decades. His reign as mayor dates back 45 years, longer than any other mayor in the Chicago area, he believes, other than Rosemont’s Donald Stephens. For years, he also held the powerful post of Democratic committeeman for Maine Township.
He said he turns 78 on Thursday.
A spokesman for U.S. Atty. Patrick Fitzgerald confirmed that FBI and other federal agents searched Ralph Weiner & Associates, an insurance agency located at 9600 Capitol Drive in Wheeling, on Tuesday.
The spokesman, Randall Samborn, declined to discuss the nature of the probe, but said: “The investigation is ongoing.”
Weiner’s son, Steven, the insurance agency’s president and chief operating officer, declined to comment on the federal raid at the business.
“I have nothing to say on anything that occurred,” he said. “There’s not even a probe that I know of.”
The public raid of Ralph Weiner & Associates marks the end of a months-long undercover investigation by federal agents and prosecutors, according to sources.
Agents took several hours Tuesday to copy and remove records from the business.
The court documents obtained by the Tribune indicate that the FBI has been investigating the financial ties between Blase and Ralph Weiner for about 4 1/2 years and that at least one cooperating witness secretly recorded a telephone call with the mayor.
But that call proved fruitless for investigators, the FBI affidavit shows.
The court records show that a cooperating witness who worked with Weiner gave investigators a list of 38 Niles businesses that had accounts with Weiner and the shell company.
In an interview Tuesday at his Mediterranean restaurant on Milwaukee Avenue, Shabeh Lawando said he was advised by a former owner and a second individual that buying insurance from Weiner was required.
“This is how you do it in Niles,” he quoted the former owner as saying. Lawando, whose restaurant is named Our Night, said he kept the insurance with Weiner even though the rates “were high, too much money, but I didn’t want to change.”
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Calling himself a supporter of the mayor, Lawando expressed surprise at the kickback allegations against Blase.
“Of course, he’s a good mayor,” he said. “People like him.”
Federal authorities appear to have been tipped to the scheme by a sister of a restaurateur who was allegedly extorted by Ralph Weiner.
The sister told authorities that Weiner came to the restaurant a number of times before its opening and told the owner that she had to buy insurance from his firm if she wanted to obtain a village license to operate the business, according to the court records.
Saying he was a friend of the mayor’s, Weiner told the restaurateur the insurance would cost $5,000 for three months’ coverage, the FBI affidavit shows.
The restaurateur made two initial payments to Weiner, obtained the necessary licenses and opened for business, according to the court document.
After its opening, Weiner allegedly returned to the restaurant for more money. The owner handed over another check but then stopped payment, causing Weiner to call with a warning that it would be difficult to run a business in Niles if he wasn’t paid for insurance coverage, according to the filing by the FBI.
The owner in 2002 of a Mexican restaurant in Niles told authorities that his landlord advised him that if he bought his insurance through Weiner & Associates “it will take care of any problems” with village inspections.
But after staying with Travelers Insurance instead, the owner quickly encountered trouble with village building inspectors and an expected liquor license was rejected, according to the court document.
After the owner was introduced to Weiner through the landlord, the liquor license won approval, no further building inspection woes surfaced and the restaurant operated without any major problems, the FBI affidavit said.
The owner told authorities that Weiner’s insurance premiums ran as much as $4,000 a year higher than competitors’.
The owner secretly tape-recorded a call with the landlord in which he recounted that he had to get insurance from Weiner.
“You have to get the insurance from him in case you have problems,” the landlord replied.
But in a later recorded call with Blase, the mayor denied liquor licenses could be bought, the FBI’s affidavit said.
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