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Inspector general's report alleges nepotism, political influence in south suburban sanitary district

Saturday, October 14, 2017
Chicago Tribune
by Zak Koeske

A south suburban sanitary district whose board and administrators were admonished in a July inspector general's report for waste, mismanagement and breach of fiduciary duty contends that the report, while instructive for updating district policies, was largely overblown.

The trustees, administrator and attorney for the South Stickney Sanitary District, which delivers water and maintains sanitary sewers for Burbank and unincorporated Nottingham Park, pushed back on the report's findings Thursday, following a public meeting where a board-hired accountant presented a forensic examination that focused on aspects of the district's financial practices the report had criticized.

"It seemed like there was a shotgun approach from the IG," board president Joseph Ford said. "They put every kind of crap they could think of into this charge. And a lot of it has some value, and we've acted on this value, but at the same time, it was like throw all the crap on the wall and see what sticks."

Sanitary district attorney Richard Chisholm, whom the report recommended terminating, was less tempered in his assessment of the investigation, calling it "a real hatchet job" and "a fishing expedition."

The Cook County Office of the Independent Inspector General's report, released in mid-July, cited "serious issues" with the operations of the district, including "excessive" trustee compensation paid as a mileage allowance; unauthorized provision of health benefits to Chisholm, who is an independent contractor; improper use of the district's credit card by administrator Jason Gustafson; and unaccounted for cash from sale of brass water meters, among other things.

The report also alleged that nepotism and political influence "appears to have contributed to lapses of fiduciary responsibility by the District's Trustees," and expressed concerns regarding political contributions made by district vendors to the Stickney Township Regular Democratic Organization, to which district trustees and employees have historically had close ties.

The report concluded by recommending that, in addition to changing a number of district policies, all three trustees and the district's superintendent, attorney and office manager/assistant treasurer should be removed and replaced.

The Cook County Board of Commissioners and its president Toni Preckwinkle supported the inspector general's recommendations, but do not have the authority to enforce them.

As Preckwinkle spokesman Frank Shuftan said in an email, "The County appoints the Board. The Board runs the District."

"Our only 'enforcement' mechanism, so to speak," he said, "is through the Board appointments."

Sanitary district trustees Jay Grider and Raul Aguirre, who served during the dates covered by the inspector general's inquiry, had already left office by the time the report was released. Their successors, Fred Moody and Kathy Bilski, have signed affidavits acknowledging their obligations under the county's ethics code and pledging to cooperate with any future investigations launched by the inspector general or county ethics officer, Shuftan said.

Board president Ford, whose tenure did overlap with the inquiry, is serving an expired term and will be replaced "in the near future," Shuftan said. It was not immediately clear when Ford, whose term expired more than five months ago, would be replaced, and board members said they had not been in communication with the county about the appointment of his successor.

The board has rectified numerous policies cited in the inspector general's report, including removing Chisholm and his wife from the district's health care policy; ceasing Gustafson's practice of making personal purchases on the district's credit card; and ending what had been a decades-long practice of paying trustees nearly $5,000 annually as a "mileage allowance" in excess of their $6,000 salaries.

On Thursday, the board also adopted a policy for documenting its sale of scrap metal, which the inspector general's investigation found was being sold to a local recycler for cash that could not be accounted for.

Despite making these policy modifications, the board and its employees largely downplayed the significance of the inspector general's findings that prompted them.

Ford said the mileage allowance, a $400 monthly payment that trustees received routinely without having to provide documentation, had been in place long before he joined the board more than 45 years ago.

"It was just always there," he said. "[Mileage] could be documented, but nobody ever asked for the documentation."

Chisholm said he began receiving health coverage through the district in 2001, despite being a contracted part-time employee, after requesting it from the then-board president and district superintendent in lieu of a pay increase.

"It was all approved," he said. "I don't have anything in writing because of the time lapse …but that's how it came about."

Gustafson said his use of the district credit card to make personal purchases — all of which he reimbursed the district for on a monthly basis — was a practice he inherited from his predecessor.

"I had no knowledge of any wrongdoing," he said. "I did not try and hide any of my actions. I did not do it mischievously."

Gustafson said he made the purchases out of convenience and never missed a repayment, but still regrets his actions.

"With the backlash of what this caused, I wish I would have never done it," he said.

Gustafson also said there was no nefarious intent behind his decision to sell scrap metal from old water meters for cash that was then kept in a safe as an "emergency fund," but not formally documented.

"When I was going through (the water meter replacement), that was not one of my major priorities," he said of accounting for the sale of brass scraps from the old meters. "My No. 1 goal was to get these (new meters) in so we could read these meters."

The board has no intention of replacing Gustafson or any of the employees the inspector general recommended for termination, Ford said.

"I personally think without our superintendent and without our office manager this place would not flush a toilet tomorrow morning," he said. "I believe that they're essential to the operation of this place."

The district also continues to do business with more than a dozen vendors, some of which were highlighted in the inspector general's report, that have given thousands in campaign contributions to the Stickney Township Regular Democratic Organization.

"Those vendors have been with us since I've started here, almost every single one of them have been here since the year 2000," said Gustafson, when asked if he saw any problem with using vendors who had contributed to the campaign coffers of the Stickney Township political establishment.

"We have annual fundraisers and we have a Democratic Party here, a very vibrant Democratic Party, and they all participate, they come," Ford said of vendors who have made donations.

"Vendors are just local people. This is Mayberry," he added, referencing the fictional community depicted in the "Andy Griffith Show" that is often held up as a model of small-town life.

A forensic examination commissioned by the district and performed by Shaun Murphy, an accountant who specializes in forensic audits and also serves as a Republican committeeman for Worth Township, seemed to corroborate the board and its employees' assertion that they had not engaged in any wrongdoing.

Murphy, who presented the board with a draft version of his findings on Thursday, said the vast majority of the district's transactions were properly documented.

He said he'd confirmed that Gustafson had contemporaneously reimbursed the district for every penny he'd put on the district's credit card for personal purchases and had been able to account for the approximately $5,500 he obtained from scrap metal sales.

By and large, Murphy said, the money from the scrap metal sales was used to buy food for workers. Some also was used to purchase $25 gift cards distributed to workers as Christmas bonuses and to buy used gym equipment — including a treadmill, weight bench and dumbbells — that is housed in the sanitary district's building, he said.

The remaining $2,312 in scrap sales was never spent and remains on hand in a front office safe, Murphy said.

"It would be preferable if there were receipts for all of this stuff," he said, but added that his analysis showed the revenue generated by scrap metal sales went back into the district and ultimately represented a benefit, not a loss, to the district.

Murphy said the inspector general's report had raised serious red flags, but that his analysis, which focused only on Gustafson's credit card purchases and sale of scrap metal, showed the allegations to be without merit.

He did, however, recommend that the board revisit its written policies and procedures, which he described as "lacking."

Fred Moody, who was appointed to the board earlier this year, agreed that the board's policies needed to be updated and was the lone board member who spoke out in support of re-evaluating the district's vendors.

"In my view," he said, "it's probably time that we look at all the vendors, just to make sure that we as a board are still on the same page, and that if there's opportunities to bring in new vendors that provide those services better and cheaper, that's something that we want to move forward with."

Moody said he believed that while the report may have exaggerated some of the district's issues, he considered it a useful tool as a new board member in spelling out specific policies and practices the district should revisit.

"I think at the end of the day when we deal with the specific issues that were mentioned, some more important than others, we will be a better district and the taxpayers will be better served," he said.

Cook County inspector general Patrick Blanchard said Friday he was pleased to hear the sanitary district had made many of his recommended policy changes, but was troubled to learn the employees responsible for the "very clear violations" his investigators uncovered had not been replaced.

"I think this case and others like it reveals that there has to be more attention provided to these districts," he said. "Because it seems like every time we open up a matter, things like this are uncovered."

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