Chicago seeks to ban contractor for fraudulently claiming it is based in the city and more than half of its workers live in Chicago
Chicago municipal officials want to ban a contractor they say is based in Waukegan, for fraudulently claiming it is a Chicago-based business to win $295 million in municipal works contracts.
Overall, the city claims the family-owned contractor obtained 32 contracts from the city to repair sewers and install water mains at a cost to taxpayers of more than $295 million.
The Chicago Sun-Times reports that, in a federal lawsuit against the company that was initiated by a whistleblower, “City Hall accuses Joel Kennedy Constructing Corp. of lying and cheating to get six contracts since 2013, including falsely claiming to be a Chicago company when it’s actually headquartered in Waukegan.”
According to the lawsuit, the company also submitted inaccurate paperwork showing 50% of the work was done by Chicago residents, as required by a city ordinance.
The City Hall’s inspector general’s office discovered that Kennedy’s company submitted its weekly payroll records only after first deleting the names of its suburban employees, making it wrongly appear Chicago residents had done more than half of the work, according to the letter, the Sun-Times reported.
The inspector general’s office also determined that the company gave city officials phonied-up records showing employees were city residents who actually lived outside Chicago, providing bogus addresses for workers, the published report says.
“The contractor’s fraudulent scheme misrepresented over 70,000 labor hours across four contracts,” Inspector General Joseph Ferguson wrote in a report. “The contractor encouraged and, in some cases, mandated that employees who lived outside of Chicago nonetheless acquire government documents with Chicago addresses so that they could count toward compliance. In other cases, workers were unknowingly assigned Chicago addresses, including the address of the company’s general counsel, on certified payroll submitted to the city.”
Kennedy’s company “engaged in multiple fraudulent schemes to evade the city’s (Chicago residency ordinance) requirement and to avoid the assessment of damages for failure to comply with the CRO requirements,” Shannon Andrews, Mayor Lori Lightfoot’s chief procurement officer, said in a letter sent Kennedy on Feb. 10.
Kennedy’s website, confirmed by Google Street View, gives the company’s Chicago address as 2830 N. Lincoln Ave. There was a sale transaction on the site in 2012 for $360,000 and the current structure was built in 2013, according to Trulia.
The company’s address at 40 Noll St. in Waukegan appears on satellite images as a substantial office/yard.
The contractor has asked a federal government to dismiss City Hall’s lawsuit, observing that the residency ordinance is unconstitutional, the Sun-Times reports. The contractor location and employment rules date to the 1980s administration of Mayor Harold Washington.
In its communication with Kennedy, City Hall cites what it describes as four questionable contracts:
- $79.5 million for water-main construction between Addison Street and North Avenue, awarded in January 2013.
- $76.9 million for water-main construction north of Addison, awarded in January 2013.
- $4 million for sewer improvements at Damen and Albion avenues in West Ridge, awarded in July 2013.
- $1.9 million for sewer improvements along Augusta Boulevard in Humboldt Park, in October 2016.
