- The Washington Times - Friday, January 14, 2000

The FBI has reopened an investigation into accusations that Commerce Secretary William M. Daley lied to a Senate committee during his 1997 confirmation hearing when he denied knowing about a state probe linking him to a suspected kickback scheme that was never proved.
FBI agents in Chicago concluded in a criminal referral last year that Mr. Daley made false statements to the committee, although the U.S. Attorney's Office in Chicago declined an FBI request for prosecution.
But now, law enforcement sources in Chicago confirmed Thursday, the FBI's Washington headquarters reopened the matter and is reviewing the Chicago findings for possible referral to the Justice Department here for prosecution.
The sources, along with lawyers and others familiar with the case, told The Washington Times the referral was written in July after an investigation into Mr. Daley's January 1997 confirmation before the Senate Commerce, Science and Transportation Committee. Written by agents in the bankruptcy fraud section at the Chicago field office, it later was sent to the white collar section and then the U.S. Attorney's Office.
Prosecutors declined to pursue the case, the sources said, after determining that Mr. Daley's answers to the panel were sufficiently well-worded so as not to present a prosecutable case.
FBI officials in Chicago declined to comment. Authorities at FBI headquarters in Washington confirmed last week that a referral had been written in the case but declined to comment further. The sources, including other federal and state investigators who reviewed the accusations, said FBI agents in Chicago were convinced a formal investigation was warranted.
If the case is reopened, Mr. Daley could face charges of perjury or making false statements.
The referral focused on a 1992 complaint by Chicago contractor Errol C. O'Brien, who told the Illinois Attorney Registration and Disciplinary Commission that Mr. Daley was involved in a 1984 scheme by a Chicago law firm, Daley & George Ltd., to bill him for more than $180,000 in kickbacks disguised as legal fees.
Daley & George's senior partner is Mr. Daley's brother, Michael. William Daley worked at the firm until 1985. Another brother, Richard, now the mayor of Chicago, worked at the firm until 1980.
Mr. O'Brien, who owned J-B Industrial Corp., accused the firm of billing him $184,761 for legal fees that actually were kickbacks for the use of the Daley name in obtaining work orders from power companies, including Commonwealth Edison in Chicago. The Daley firm handled Mr. O'Brien's legal business for 18 years.
In documents submitted to the committee, Mr. Daley said he had never been "the subject of an inquiry or investigation by a federal, state or local agency," had "never been the subject of a proceeding, inquiry or investigation by any professional association" and was "not aware" of any charges filed against him at the Illinois commission.
Mr. Daley, in three interviews with The Times, angrily denied any wrongdoing. He said he had never been the subject of an inquiry by the commission and that no one from the agency had ever questioned him about the O'Brien accusations. He said documents he gave the committee denying any knowledge of a probe were accurate.
"This is absolute [expletive]," he said. "Errol O'Brien has been after my family for 15 years, ever since his business went bankrupt. I have no idea what he's talking about, but there's just nothing there."
John Grogan, the commission's legal counsel, said that under Illinois Supreme Court rules he could neither confirm nor deny any investigation of Mr. Daley. He declined to comment on a March 1997 letter from the commission to Mr. O'Brien saying that after a five-year probe there was "insufficient evidence to warrant the filing of formal charges" in his complaint.
The letter said Mr. O'Brien failed to corroborate his accusations by "clear and convincing evidence."
While declining to comment to the media, Mr. Grogan did send a letter to Mr. Daley denying that he had ever been "the subject of a disciplinary investigation conducted by this office." The Dec. 22 letter, sent the same day Mr. Daley was first interviewed by The Times, was forwarded to The Times by the secretary's office.
But Kenneth R. Schutt Jr., an Arizona attorney who filed the O'Brien complaint, described the commission's letter as "very remarkable." He said there was no question William Daley was included as one of the subjects of the complaint.
"I drafted the complaints and I can assure you William Daley was one of the subjects of those complaints. He was one of the parties formally listed in the documents," Mr. Schutt said. "I find the letter very remarkable with regard to the truth of the matter."
Mr. Schutt said he talked several times with senior officials at the commission about his client's accusations, which included suspected wrongdoing by William Daley, and had been assured that a "full investigation" would be conducted.
"Obviously, I was wrong," he said. "The letter doesn't mean William Daley wasn't included in the complaint, only that he wasn't investigated."
Mr. O'Brien, in interviews last month at his Lockport, Ill., home, said he also discussed William Daley's suspected involvement in the scheme with the commission and later with the FBI. He said he was contacted at least twice for additional information over a four-day period in July when the referral was being written.
"Obviously, someone is lying," he said. "The allegations involving Bill Daley were discussed at great length with the commission. I talked with them personally, and they seemed very interested. Several letters I wrote to the commission contained allegations against William Daley. The documents clearly show he was part and parcel of their inquiry."
Mr. O'Brien also said he turned over 64 boxes of documents to the commission, including billing records he received from Daley & George over several years. He said those records later were obtained by the FBI. The commission acknowledged turning over the documents to the FBI in a receipt signed by commission officials in September 1997.
The contractor, who now paints houses, said his firm, J-B Industrial, won thousands of dollars in contracts from Commonwealth Edison and other power companies in the mid-1980s. His company was one of a few with the necessary equipment for industrial cleaning jobs inside fossil fuel-burning electrical power plants.
"I wanted a fair shot to be able to bid on the work, and the firm said it would look into it," Mr. O'Brien said. "It wasn't too long before the work orders started coming in."
He said when he complained in 1984 that his annual legal bills had jumped from $30,000 to more than $180,000, William Daley told him that "since they were getting me the work, they were entitled to a fair share of the profits."
Later, Mr. O'Brien said, the firm suggested the creation of a separate business partnership known as J-B Precipitators that called for Daley & George to receive 80 percent of any profits the new business received, with 20 percent going to Mr. O'Brien. It was when that partnership dissolved that Mr. O'Brien said he went to the commission and federal authorities.
William Daley said he never had been involved in any business dealings with Mr. O'Brien and had never taken part in any business discussions concerning him or any of his companies. He described the accusations as "totally untrue."
Records show, however, that J-B Precipitators, which did business as J-B Hydroblasters, hired an attorney in 1985 to help it obtain business from Alabama Power Co. That attorney, James H. Quackenbush Jr., wrote in an Oct. 10, 1985, letter to Daley & George:
"This letter will confirm our telephone conversation of today as pertains to J-B Hydroblasters. At that time, I stated to you that I had had breakfast with Julian Smith, Philip Wiedmeyer and your brother, Bill, at which time we discussed whether or not J-B Hydroblasters had been placed on the bid list for Alabama Power."
Four days later, Alabama Power said in a letter to Mr. Quackenbush that the company had been issued "a blanket purchase order."
Michael Daley did not return calls for comment. His attorney, William J. Harte, said he was not aware of a criminal referral in the case, but said he would be "surprised" if there was any interest in the matter by federal agents.
"These allegations first surfaced some years ago, and nothing came of it. I thought the investigation was terminated years ago. I would be very surprised if anyone was looking into it now," he said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide