ILLINOIS (WCIA) — A scathing 110-page audit of a pair of above-market warehouse lease deals paints a vivid picture of exactly how state documents were drafted and doctored to survive what was supposed to be an open, transparent process. But the audit says watchdogs at the procurement policy board got hoodwinked.
“The entire process broke down at multiple points,” Auditor General Frank Mautino explained.
According to the 11-month long review from his office, someone in the Rauner administration altered the very documents that might have set off alarm bells and prevented an above-market, $2.4 million warehouse deal from going to the family of a clout heavy ex-con. The building sold for a total price of $575,000 before the state leased it out at a much higher rate.
“This audit is riddled with examples of mismanagement, corruption,” Senator Andy Manar (D-Bunker Hill) said. “This audit document is a first step in what is going to be a series of questions coming from the legislature about who made these decisions, who redacted information, and who manipulated the parameters of a lease to purposefully drive a contract to one vendor.”
The initial draft, called a lease rationalization form, spelled out in plain terms how Central Management Services had swapped leases and buildings after privately arranging the deal with the bidders. But that document never reached the review board. Instead, the final version that CMS submitted was sanitized to cover up how the deal came together. Board chairmen told state auditors the missing language would have set off alarm bells, but they never saw the deleted portions.
“The Procurement Policy Board, which takes a look at these and approves or denies leases, did not have proper information,” Mautino said. “As a matter of fact, the information itself was misleading.”
The governor’s office would not say if anyone had been disciplined internally, instead referring the question to CMS. A spokesman for CMS would not answer questions about who was responsible for the misleading documents.
The audit also renews old questions about why the Rauner administration pursued the lease deals at all. Emails show staff working at the soon-to-be Department of Innovation and Technology were moved out of perfectly functional space at the fairgrounds against their wishes. The Chief Customer Officer wrote in a May 2016 email “I don’t believe [the move] is prudent at this point” and “I would like to postpone any moves or plans until further down the road…I see no need to rush until someone gives us a compelling reason.”
One month later, a lease document was drafted and the moving process had begun. At the time, DoIT staff expected they might be moving into the former Barney’s Furniture warehouse at 2410 South Grand Avenue East in Springfield. Instead, they wound up in separate building at 719 W. Jefferson Street in Springfield. Their would-be home had found new tenants: filing cabinets loaded with paper records from the Department of Human Services.
In 2014, the state paid $265,457 to move those same papers into a vacated prison facility in Dwight, Illinois. Two years later, the papers were reshuffled to sit under a far more expensive roof. CMS argued the prison facility was moldy, leaking and needed costly repairs. The audit found “CMS did not consider renovating space at the Dwight Correctional Center” and that the agency failed to conduct a cost-benefit analysis for completing the move — or for digitizing the records.
“This is a complete waste of taxpayer money,” said Representative David McSweeney, a fiscal hawk from Barrington Hills. “This is money that is actually not only wasted, but it is an absolute disgrace. Every page you turn, you see violations of the procurement code, you see insider dealings, you see no cost-benefit analysis, you see unnecessary spending. This is why taxpayers are very upset in this state. This kind of wasteful spending.”
McSweeney sponsored the House resolution to initiate the audit, along with state senators Tom Cullerton (D-Villa Park) and Manar.
Comptroller Susana Mendoza moved to freeze the payments to the vendors during the investigation, although it remains unclear how long she can block a legally signed contract with vendors who delivered on the terms of the deal.
“We are studying the Auditor General’s disturbing findings about the Rauner Administration manipulating leases to reward insiders,” Mendoza’s office said in a statement. “The stinging audit finding that the Rauner Administration violated state procurement code vindicates our decision to put a hold on the payments of these leases.”
State law gives the Comptroller discretion over timing of payments to vendors. The Chief Procurement Officer Ellen Daley has the power to nix contracts, but her office has defended the leases flagged in the audit.
“A decision about whether or when we release the hold on these payments will come after further review of these alarming audit findings,” Mendoza spokeswoman Jamey Dunn said in an email.
When the lease got to the Procurement Policy Board, Chairman Frank Vala opted not to vote up or down, allowing it to pass. Vala is next door neighbors and life long friends with Bill Cellini, a convicted felon who is barred from doing business with the state. Cellini’s son-in-law owns one of three shell companies who won the lease. Last year, Vala confessed that he knew it was Cellini’s son-in-law who had signed onto the lease before it came to his desk, but still did not recuse himself from the panel. The audit scolded him for the ethical lapse, warning the board that it did not have proper conflict of interest policies in place. In a written response, the board agreed, and said they would fix it in the future.
In an interview with Capitol Connection last spring, Rauner said “Certainly, if ever we saw any evidence at all of any unethical or inappropriate behavior or action, we would take very aggressive action and remove those people involved.” Vala — appointed by the governor — still has his job.
“These were illegal deals,” Senator Cullerton said in response to the audit. “He gave it to one of his buddies. They did not follow procedures and it was a corrupt inside deal.”
Vala and Cellini had a third friend, Art Smith, the former chair of the Sangamon County Republican Party. His son, Chip Smith, signed the lease. The audit says Smith violated the procurement code when he shared confidential bid information with the two vendors, helping them adjust their rates.
According to a management source who asked not to be named in this story, Smith also had significant input on the doctored document that hid the lease swap. CMS would not respond to repeated questions about who may have made the changes, but sources at the Auditor General’s office said the Rauner administration pinned the blame on a former CMS employee who retired in 2016. In a visit to his home, that retired employee reviewed the document listed in the audit and said he did not recall drafting it.
“Of course the governor blames people who are no longer here,” Cullerton said. “If you’ve noticed, Erica Jeffries is now resigning during the Quincy Veterans’ Home stuff. All the people who were involved in all these scandals throughout his administration, he either lets them go or they either resign and walk away. Darlene Senger. She won’t answer questions about her email she sent on Tammy Duckworth. Chip Smith. He won’t be here to answer questions on this. The Attorney General should look into all of this.”
“Heads should roll,” McSweeney added. “I believe the Governor should set an example and fire anyone who was remotely responsible for this situation.”
For the most part, the Rauner administration agreed with the audit and vowed to make the necessary improvements. CMS, the Department of Human Services and the Procurement Policy Board each concurred with the Auditor General’s findings.
The lone holdout was the Chief Procurement Office, which argued it did not violate the procurement code at all. Not only did the agency dodge blame in the audit, the person responsible for approving both leases got a coveted promotion last summer. Art Moore, the agency’s former Chief Purchasing Officer, was rewarded with a $1,600 per month pay increase as the new Chief Procurement Officer at the Capital Development Board, boosting his annual salary up to $102,300, according to state records.