I-Team Report: Minority Interest

December 14, 2011 (CHICAGO) (WLS) -- The ABC7 I-team has learned that a Cook County grand jury is looking at new allegations of minority contract fraud in Chicago. It's a case that involves millions of dollars in taxpayer funds.

According to county officials, the grand jury investigation is focused on a firm that was once banned by the city of Chicago amidst allegations that the company merely posed as a minority front for unqualified businesses. Chicago United Industries is the name of the company and it continues to receive millions of dollars in city contracts.

When the I-Team recently looked into whether Chicago Public School officials had been duped by a long-time classroom furniture supplier, questions arose about the company's compliance with Chicago affirmative action rules.

CPS' furniture contractor is the Frank Cooney Company located in suburban Wood Dale. The current president is Kevin Cooney. According to official contract records, Cooney claims to meet the Chicago Public Schools' minority business requirements by using Chicago United Industries to supply 30 percent of classroom furniture, something one competing city contractor calls "a double mark-up."

"There is a minority compliance issue with this contract, and it is very unusual that one dealer of furniture would purchase furniture from another dealer," said contractor Scott Mills, Lowery Mcdonnell Company.

Mills filed complaints about that with CPS and Cook County State's Attorney Anita Alvarez.

The grand jury subpoena obtained by the I-Team confirms that in September county prosecutors opened an investigation of Cooney's minority business compliance. The subpoena served on school officials demands copies of Cooney's contract and minority business paperwork from 2009 through this year.

Cooney's attorney did not offer comment but the state's attorney's office says investigators are examining Cooney's relationship with downtown firm Chicago United Industries, owned and operated by George Loera, one time president of the Mexican-American Chamber of Commerce.

CUI operates out of a small office in the Loop and appears to have just a few employees. Besides the Cooney school contract, according to City Hall records, CUI currently has millions of dollars in government deals-supplying Chicago with a wide array of products from concrete blocks to wooden blocks; water meters to forensic supplies; chemicals and garbage cans - even "bomb suits and accessories."

Six years ago, CUI was banished by city officials who announced at the time that the company wasn't fulfilling a "commercially useful function."

Oowner George Loera called it a witch hunt and filed a federal lawsuit. The city lifted the ban in less than a month and suspicions that Loera's company was merely a "pass through" were never proved.

Chicago United Industries is once again the focus of an investigation -- this time as part of a county grand jury look at a major public school contract.

In 2005 Chicago United sued the city in federal court alleging that the ban on government contracts resulted in lost business and a damaged reputation. The company lost that suit and it's first appeal.

CUI is currently awaiting a ruling on its latest appeal from a three-judge federal panel in Chicago. Representatives of CUI declined to be interviewed for this story.

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