FBI Raids on Chicago Alderman May Have Comp Connection

Monday, December 3, 2018 | 0

Thursday’s raids by the Federal Bureau of Investigation of longtime Chicago Alderman Ed Burke’s offices caught the city’s political establishment by surprise.

Alderman Ed Burke

A day later, little clarity has been added, giving rise to speculation that the FBI is looking into Burke’s controversial, decades-long hold over the city’s massive workers’ compensation apparatus.

Agents covered the windows of Burke’s City Hall and 14th Ward offices during the raids, and were seen carrying out boxes of records. But other than confirming the raids, the FBI has declined to explain the nature of its investigation.

Stories in the Chicago media have cited a federal lawsuit filed in August against Burke alleging improprieties in the city’s workers’ comp operation, as well as a 2012 federal grand jury probe into the Democratic powerbroker’s grip on the city’s workers’ comp operation as indicators of the possible focus of the investigation.

One report, by Chicago’s ABC7, said “several sources familiar with the investigation said that agents zeroed in on records related to The City of Chicago workers' compensation program."

"As chairman of the City Council Finance Committee, Ald. Burke oversees workers' comp via the $100 million ‘Duty Disability Program,’” the reported added.

Though the 2012 grand jury did not produce charges, Burke’s control over the city’s worker’s compensation operation — exerted through his decades-long status as chairman of the City Council’s Finance Committee — has produced almost unceasing controversy and complaints.

As news of Thursday’s raids spread, some national stories cited legal work by Burke and his law firm on behalf of Trump International Hotel and Tower. That work involved routine claims that tax officials overstated the value of the Trump-owned hotel in seeking property tax refunds.

Michael Rusin, a Chicago attorney who represents several major compensation carriers in Illinois, said the likelihood of Thursday’s raids having a Trump angle were “remote” and a “red herring.” And late Friday, several media reports cited Justice Department sources stating that the investigation was focused on Burke’s role as alderman and was unrelated to his past legal work for President Trump and his family’s business.

Had the FBI been looking at Burke’s work for Trump, it seems likely it would have raided his law office, which didn’t happen.

Rusin said the raids have been a source of much discussion among comp practitioners because of Burke’s notoriously political control over the city’s workers’ comp apparatus. But Burke said he hasn’t spoken to anyone who expected the raids or knows firsthand what the FBI is looking for, such as from being interviewed by agents prior to the raid.

“I haven’t heard anything. I just know the FBI just doesn’t casually do raids," Rusin said. "They’ve got things pretty well sorted out before they take that kind of action.”

Rusin said the city’s workers’ compensation operation is widely known for being “a very political organization” in which Burke wields control over who gets hired.

Rusin did not, though, cite any specific crimes he’s aware of, but the more general concerns of old-time Chicago patronage politics.

“I think for the most part practitioners prefer to see decision-making based on merit rather than politics,” he said. “Everybody prefers to see things based on who does the best job rather than who has political favors.”

Burke issued a statement Thursday afternoon declaring he was confident that no wrongdoing would be found on his part.

His statement read: “As you are aware, there have previously been several other investigations such as this. In every instance we cooperated fully. And in every instance nothing has been found. So once again we will be cooperating fully and I am completely confident that at the end of the day nothing will be found amiss in this instance either.”

Burke is Chicago’s longest serving alderman, holding office since 1969. He oversees the city’s workers’ compensation program by virtue of his position, held for the past 33 years, as chairman of the City Council’s Finance Committee.

In 2012, the year of the grand jury investigation, Chicago Inspector General Joseph Ferguson opened an inquiry into the Burke-controlled Finance Committee and the workers’ comp program.

Ferguson’s office demanded that Burke provide access to certain records of the worker’s comp program, but Burke refused.

The comp program was propelled back into the headlines in August, when a longtime political gadfly joined a city worker and filed suit against Burke and Mayor Rahm Emanuel. The lawsuit seeks to compel the mayor’s office to assume control over the workers’ compensation program, which, according to the plaintiffs, should by law be overseen by the executive branch, not the City Council.

An amended complaint, filed Nov. 20, adds several current and former city workers as plaintiffs, and repeats much of what was in the original complaint, such as that Burke’s hires for workers’ compensation positions had previous experience as “a dog groomer, dog walker, hairstylist (and) waitress.” 

It also adds more description of the alleged wrongdoing.

Neither Burke nor Emanuel have filed replies to the complaint but have received permission for more to time to respond.

Among other things, the lawsuit alleges that political hires, after being employed as “legislative aides,” were given by Burke, or otherwise claimed, titles including “director of workers' compensation,” “executive director of claims management” and "investigative claims adjuster,” despite having no training whatsoever in workers’ compensation.

“Defendant Alderman Burke has no formal workers’ compensation training program, workers’ compensation training manual or workers’ compensation guidelines to ensure all injured city workers are treated equally,” according to the lawsuit.

Jay Stone, the activist plaintiff, said Friday that he was surprised by the raid and was unaware of any specific information connecting the investigation to the city’s workers’ compensation operation.

He said, as does the lawsuit, that Emanuel has refused to assume control over the workers’ compensation system because the mayor needs Burke’s help with the City Council and fears angering the influential alderman.

Burke is running for re-election in February, but Emanuel is not. 

“Our hope is that we will have a new mayor, and the new mayor will settle with us and take over workers’ compensation," Stone said. "It’s for the new mayor’s advantage to settle with us. Burke uses it to tie the mayor’s hands.”

Among the lawsuit’s most direct allegations for personal harm to a plaintiff involve a description of Patrick McDonough’s claimed mistreatment by Monica Somerville, a previously fired city attorney who was re-hired by Burke and claimed on letterhead to be Chicago’s director of workers' compensation.

According to the lawsuit, Somerville was hired as a city attorney soon after her name appeared on the so-called "Chicago clout list," discovered by the FBI during a mid-2000s investigation. Somerville was fired for incompetence and sued the city unsuccessfully.

According to the lawsuit, if workers’ compensation operated under the executive branch, Somerville would have been placed on the "do not hire" list. Burke, with freedom to appoint as he pleases, hired her as a legislative aide, the lawsuit asserts.

According to the lawsuit, Somerville, in that capacity, wrote McDonough, a former water system worker, that she was suspending his disability benefits without cause.

The lawsuit further alleges that certain firefighter and police unions negotiated significant workers’ compensation protection benefits in their contracts, and that as a result, those workers are “provided significantly more protections” than members of the city’s 43 other unions.