The U.S. Attorney’s Office in Chicago has issued the following press release. Below it, I have posted the details of the investigation.
I don’t know about you, but I don’t think this case deserves a blue ribbon at the Crook County Fair. It’s just too ordinary.
But the case does have a crooked city inspector and a bagman.
The video recorded conversations down toward the bottom of the postal inspector’s affidavit are classic Chicago, at least from this jaded suburbanite’s viewpoint.
CITY INSPECTOR CHARGED WITH BRIBERY IN PROBE OF CROOKED PERMITS
CHICAGO – A city of Chicago building inspector was arrested today on federal charges for allegedly accepting a $1,000 cash bribe from a cooperating contractor to approve an inspection at a residential construction site, federal law enforcement officials and the city’s Inspector General announced today.
The defendant, Jose Hernandez, allegedly solicited cash bribes totaling tens of thousands of dollars from contractors, developers and homeowners since at least 2005, according to a criminal complaint unsealed this afternoon.
The case is part of an ongoing federal corruption investigation, code-named Operation Crooked Code, which became public in 2007 and has resulted in previous charges against two dozen defendants, including 12 city inspectors.
Hernandez, 46, of Chicago, a building inspector in Chicago’s Department of Buildings since 1988 and currently assigned to the bureau of new construction, was released on his own recognizance after appearing before Magistrate Judge Michael Mason in U.S. District Court. A status hearing was set for 2 p.m. on Aug. 20.
According to the complaint affidavit, Hernandez has had an allegedly corrupt relationship with a permit “expediter” since approximately late 2005, and with a contractor since 2007, both of whom are now cooperating in the ongoing investigation.
The complaint charges Hernandez with accepting one specific $1,000 bribe from the cooperating contractor on Aug. 21, 2008, when Hernandez performed what’s known as a “rough inspection” — an inspection of the framing, electrical wiring, plumbing and ventilation ducts before the interior walls are sealed — at a single-family residence on South Throop in Chicago. At the time of the inspection, the interior walls were covered with drywall, rendering a legitimate inspection impossible, but Hernandez signed the building permit, saying “rough frame approved,” the charges allege.
During their conversation just after exchanging the bribe payment, Hernandez asked if the cooperating contractor had heard about the trouble that had befallen others, including the cooperating expediter, relating to charges that were brought earlier last year against other inspectors, contractors and expediters, according to the complaint.
The arrest and charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Thomas P. Brady, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and David Hoffman, Inspector General for the City of Chicago.
Anyone with information about alleged corruption in the city permit process is encouraged to contact the City Inspector General’s Office either through their hotline – (866) 448-4754, or through their web site at www.chicagoinspectorgeneral.org
The government is being represented by Assistant U.S. Attorneys April Perry, Juliet Sorensen and Christopher Hotaling.
If convicted, Hernandez faces a maximum penalty of 10 years in prison and a $250,000 fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Here’s part of the nuts and bolts work by U.S. Postal Inspector David Hodapp that led to the arrest, plus information gathered by Chicago’s Inspector General David Hoffman:
IV. THE INVESTIGATION
A. Information from Cooperating Witness 1
11. In approximately May 2007, an expediter (“CW1”) agreed to cooperate with law enforcement. [Footnote 1] CW1 advised law enforcement that it was the practice of many developers and contractors with whom CW worked to express a willingness to bribe City officials. CW1 further advised that City officials sometimes solicited bribe payments from CW1, and CW1 would then communicate this to the developer or contractor. The developer or contractor would then pay CW1 for expediting services, and the payment would include the amount of any bribes that CW1 paid to City officials.
CW1 admitted to paying bribes to inspectors in the Zoning Department, employees in the Department of Construction and Permits, employees in the Department of Administrative Hearings, and inspectors in the Department of Buildings. Since agreeing to cooperate with law enforcement, CW1’s cooperation has included conducting consensually recorded calls and meetings and playing the role of “bagman” at the direction of law enforcement (collecting bribe money from developers and contractors seeking some official act from a City employee or a “priority” handling of a project and paying the bribes to City of Chicago employees).
= = = = = = = = = =
Footnote 1. CW1 has been charged and has pleaded guilty to bribery pursuant to a written plea agreement with the government. CW1 has agreed to cooperate with the government, and the government has agreed to recommend a sentence of 50% of the low-end of the applicable sentencing guidelines range. Under the terms of the plea agreement, CW1 is free to recommend any sentence to the judge. CW1 has no previous arrests or convictions. Although CW1 lied to agents during the initial interview about the nature and scope of CW1’s relationship with City of Chicago employees, CW1 has subsequently spoken with investigators numerous times under proffer protection, and is believed to have provided truthful information. CW1 has provided information about bribe activities by more than thirty individuals. This information has been corroborated for a number of those role of “bagman” at the direction of law enforcement (collecting bribe money from developers and contractors seeking some official act from a City employee or a “priority” handling of a project and paying the bribes to City of Chicago employees).
= = = = = = = = = = =
12. CW1 told investigators that CW1 met JOSE HERNANDEZ several years ago when HERNANDEZ showed up to perform an inspection for a Certificate of Occupancy.
According to CW1, in approximately late 2005, HERNANDEZ started contacting CW1 with “referrals.” The referrals worked like this:
HERNANDEZ would perform an inspection and threaten the homeowner or contractor with a stop work order. HERNANDEZ would tell the homeowner or contractor to contact CW1 so CW1 could help them with their situation. In exchange for calling CW1, HERNANDEZ would allow the homeowner or contractor to continue working, either by signing a permit or some other means. Often the homeowner or contractor needed a permit that required architectural plans; however, with HERNANDEZ’s assistance, CW1 would be able to secure an Easy Permit (a permit for minor repairs and alterations for which no architectural plans are required). CW1 would charge the homeowner or contractor an expediting fee for CW1’s work. Typically, CW1 would keep a portion of this money, and would pay HERNANDEZ $1,000 for the “referral.” Indeed, after HERNANDEZ told a homeowner or contractor to call CW1, HERNANDEZ would call CW1 with the property address and ask CW1 to “add one” to CW1’s expediting fee. CW1 understood that HERNANDEZ was expecting a payment of $1,000 from CW1 for the “referral.”
According to CW1, CW1 received approximately 40 to 50 of these referrals from HERNANDEZ over the next year and a half. In addition, CW1 passed bribes on to HERNANDEZ from other contractors and developers. According to CW1, one of CW1’s clients included a building contractor (“CW2”) who passed bribes to HERNANDEZ with the help of CW1.
B. Information from Cooperating Witness 2
In June 2008, law enforcement agents interviewed CW2. CW2 began actively cooperating with the government in July 2008. [Footnote 2] According to CW2, in approximately 2005, CW2 was constructing three houses on Garfield Blvd. in Chicago. A city building inspector performed an inspection of the jobs and CW2’s buildings failed to pass the inspection. Another contractor suggested to CW2 that CW1 might be able to help CW2 get the building inspections passed because CW1 knew many city inspectors. CW2 contacted CW1, and CW1 suggested that CW2 contact HERNANDEZ. HERNANDEZ met CW2 at CW2’s buildings and advised CW2 what CW2 needed to do in order to pass the inspection. HERNANDEZ then signed CW2’s building permits, in effect, approving the work. According to CW2, CW1 later contacted CW2 and told CW2 that HERNANDEZ wanted a bribe of $15,000 ($5,000 for each building) for passing the inspections. CW2 stated that he/she paid the $15,000 bribe to HERNANDEZ through CW1.
= = = = = = = = = =
Footnote 2. CW2 has not yet been charged with any crime. CW2 has agreed to cooperate with the government, in hope that the government will consider this cooperation when deciding what charges to file or what sentence to recommend. No promises have been made to CW2 regarding what benefits CW2 will receive, if any. As set forth herein, much of CW2’s information has been corroborated by recorded conversations, controlled bribe payments, and information from CW1.
= = = = = = = =
14. Also according to CW2, in approximately 2006, CW2 was working as a project manager for a developer who was constructing ten houses on 64th Place in Chicago. After the buildings failed to pass a city inspection conducted by a city inspector, CW2 contacted CW1 for assistance. CW1 again referred CW2 to HERNANDEZ. According to CW2, HERNANDEZ met CW2 at the construction site and advised CW2 that he wanted $10,000 ($1,000 per building) to pass the inspections. According to CW2, CW2 obtained $10,000 from the developer and paid the money directly to HERNANDEZ to pass the inspections.
15. CW2 further told investigators that around the same time as the 64th Place projects, CW2 was working on another project involving the construction of four houses on 63rd Place.
The same building inspector who failed the buildings on 64th Place did an inspection of the buildings on 63rd Place and cited the buildings for several violations. CW2 began correcting the violations and in the meantime also contacted CW1.
CW1 again referred CW2 to HERNANDEZ. HERNANDEZ met CW2 at the job site. According to CW2, HERNANDEZ requested $4,000 ($1,000 per building) from CW2 to sign the back of the building permits, even though CW2 had corrected the violations cited by the previous building inspector.
16. CW2 told investigators that in approximately August 2007, HERNANDEZ showed up to perform an inspection of a building being constructed by CW2 on Congress Parkway.
HERNANDEZ was actually the second new construction inspector that had shown up at CW2’s building to perform an inspection. The building had already passed the inspection performed by the first new construction inspector at the building, yet according to CW2, CW2 paid a $1,000 bribe to HERNANDEZ because HERNANDEZ acted as if he expected a payment and CW2 felt intimidated by HERNANDEZ.
17. CW2 further related that in approximately January 2008, CW2 was constructing another house on 63rd Place.
CW2 was concerned that the inspector who previously had failed CW2’s properties on 63rd Place and 64th Place would be assigned to perform the inspection. CW2 contacted HERNANDEZ and asked if HERNANDEZ would perform the inspection so that CW2 could avoid the other building inspector.
According to CW2, HERNANDEZ did not come to the job site; instead, HERNANDEZ met with CW2 on the street, and HERNANDEZ signed the name of another inspector on the back of CW2’s building permit. CW2 paid a bribe of $1,000 in return for the signature on the permit.
C. City of Chicago Inspector General Complaints
18. In May 2006, Individual A reported to the City of Chicago Inspector General’s Office that HERNANDEZ had solicited a bribe payment from him/her for a construction project on the south side of Chicago.
HERNANDEZ told Individual A that the building he/she was rehabbing did not have the proper permits.
In a telephone conversation with Individual A, HERNANDEZ told Individual A not to worry about it because “they” would fix it and get Individual A another permit.
Five minutes later, Individual A received a phone call from an expediter, later identified as CW1. CW1 told Individual A that the “permit” would cost him/her $2,000. Individual A told CW1 that the price seemed unreasonable. CW1 responded by saying words to the effect of:
“Joe [HERNANDEZ] didn’t explain it to you?”
Individual A received another call from HERNANDEZ and HERNANDEZ told Individual A words to the effect of:
“I’m trying to keep the alderman off your ass.”
Individual A told HERNANDEZ that Individual A was not going to pay for the “permit” after which HERNANDEZ became angry with Individual A.
HERNANDEZ then told Individual A it was too late to pay and that Individual A would be written a ticket and issued a stop work order.
In fact, City of Chicago records show that HERNANDEZ did issue a stop work order at Individual A’s property on April 10, 2006.
19. In the summer of 2006, the City of Chicago Inspector General received a complaint indicating that a certain individual was having problems with his/her inspection.
Based upon this complaint, agents interviewed Individual B, a property owner, in November 2006.
According to Individual B, in approximately June 2006, HERNANDEZ performed an inspection of a property owned by Individual B and Individual C. Individual B was present when HERNANDEZ performed his inspection.
HERNANDEZ advised Individual B about some minor problems that he found that would require Individual B to revise the plans. HERNANDEZ told Individual B that he knew of someone that could help Individual B with Individual B’s problem. HERNANDEZ gave CW1’s name to Individual B and said that CW1 would contact Individual B.
Shortly thereafter, HERNANDEZ called Individual B and asked Individual B if Individual B was going to use the services of CW1. Individual B informed HERNANDEZ that Individual B was not going to use the services of CW1.
After the conversation with HERNANDEZ, Individual B received a letter from the Department of Administrative Hearings because HERNANDEZ stated that Individual B had failed the inspection.
20. In August 2006, the Department of Buildings Commissioner referred a case to the City of Chicago Inspector General.
Based upon this referral, agents contacted Individual D, a property owner.
According to Individual D, in approximately July 2006, HERNANDEZ conducted an inspection of a project at a property in the Pilsen neighborhood.
The property owner, Individual D, arrived at the property a short time later and discovered an orange Stop Work Order sticker on the property with HERNANDEZ’s name and phone number handwritten on the sticker.
The next day, Individual D called HERNANDEZ, and HERNANDEZ met with Individual D later that evening. HERNANDEZ told Individual D that he would meet Individual D at the building and they would discuss what Individual D needed to do.
On August 2, 2006, Individual D met HERNANDEZ at the building. Outside of the building, HERNANDEZ explained to Individual D that the building had many violations which were already entered into the City of Chicago’s computer system. HERNANDEZ told Individual D words to the effect of:
“It’ll cost you five big ones to resolve all the problems.”
Individual D thought that HERNANDEZ meant $500, but HERNANDEZ went on to explain that because he had to involve other people it would be $5,000. HERNANDEZ and Individual D entered the building and HERNANDEZ began performing an inspection.
A few minutes later, Individual D’s alderman entered the building.
HERNANDEZ abruptly terminated the inspection and left the building.
Later that day, HERNANDEZ called Individual D and was very upset, asking Individual D why Individual D had set him up. Individual D explained why the alderman was there and HERNANDEZ hung up the phone.
21. In April 2007, a property owner complained to the City of Chicago Inspector General.
Based upon this complaint, agents interviewed Individual E, the general contractor for the property owner’s project.
According to Individual E, in approximately October 2006, HERNANDEZ showed up unannounced at a rehab project that was being conducted by Individual E.
HERNANDEZ shut down the job because he did not observe any permits or drawings at the location. Individual E was not present when HERNANDEZ performed the inspection but obtained HERNANDEZ’s phone number from one of Individual E’s workers. Individual E
contacted HERNANDEZ and made arrangements to meet HERNANDEZ at the job site.
When HERNANDEZ arrived, Individual E showed him the architectural drawings and permits. HERNANDEZ told Individual E that the plans and permits must remain at the job site and went on to perform a complete inspection.
HERNANDEZ placed a stop work order on the job because Individual E had replaced the second floor joists with new joists and the joist replacement was not reflected in the plans. Individual E obtained another permit for the joist replacement and began working again.
On November 7, 2006, HERNANDEZ appeared again at the job site and ordered Individual E to stop working. HERNANDEZ did not explain to Individual E why Individual E needed to stop working.
HERNANDEZ gave CW1’s phone number to Individual E and instructed Individual E to call CW1 because CW1 could help Individual E.
On November 8, 2006, Individual E called CW1 and explained what Individual E was doing and the problems Individual E was experiencing. CW1 said to Individual E words to the effect of:
“Do you want me to make things right? Do you want me to take care of this?”
Individual E told CW1 that Individual E didn’t know who CW1 was. CW1 explained to Individual E that CW1 was an expediter. Individual E told CW1 that Individual E didn’t need an expediter because the building owner already had an expediter.
Individual E called HERNANDEZ and told him Individual E had talked to CW1 and informed CW1 that Individual E already had an expediter.
HERNANDEZ showed up at the building approximately two months later and issued another stop work order.
In June 2007, the City of Chicago Inspector General received a complaint from Individual F.
According to Individual F, on June 15, 2007, Hernandez performed an inspection of a building being renovated by Individual F. Individual G, an employee of Individual F, was present when HERNANDEZ performed the inspection.
After reviewing the plans and walking around the building, HERNANDEZ informed Individual G that work was being done that was beyond the scope of the permit and said that the walls were not properly fire rated. After explaining this to Individual G, HERNANDEZ took a piece of blue painter’s tape and wrote the figure “2000” on the tape. HERNANDEZ said to Individual G words to the effect of:
“does this look alright to you.”
HERNANDEZ then crumbled up the painter’s tape and stuck it in his pocket. Individual G told HERNANDEZ that Individual G would have to call his boss and discuss the matter. HERNANDEZ provided his cell number to Individual G and told Individual G to have Individual F call him.
Individual G informed Individual F about HERNANDEZ’s demand and Individual F then placed a three-way call between HERNANDEZ, Individual F and Individual G. HERNANDEZ told Individual F that Individual F was working beyond the scope of the plans and then said to Individual F words to the effect of:
“did [Individual G] tell you the deal.”
Individual F told HERNANDEZ that Individual F was out of town until the following week. HERNANDEZ said to Individual F words to the effect of:
“keep this under your hat.”
The following Tuesday, Individual G received a call from HERNANDEZ. Individual G told HERNANDEZ that Individual G could not make any decisions and Individual G would call Individual F. HERNANDEZ told Individual G words to the effect of:
“I usually don’t have to chase people around.”
When Individual F arrived at the building the following morning, Individual F discovered that HERNANDEZ had placed an orange Stop Work Order sticker on the front door.
D. Controlled Bribe Payment Pertaining to South Throop Address
23. On August 21, 2008, HERNANDEZ was assigned a rough inspection at an address on South Throop, Chicago, Illinois. A rough inspection is an inspection performed prior to the installation of the drywall so that the inspectors can visually inspect the framing, electrical wiring, plumbing, and ventilation ductwork.
According to the information received by HERNANDEZ, the contact person for South Throop was CW2. Prior to August 21, 2008, the interior walls of South Throop had been covered with drywall, thus rendering a legitimate rough inspection impossible.
24. On August 21, 2008 at approximately 9:19 am, HERNANDEZ called CW2. The call was consensually recorded and I have reviewed the recording of this conversation. [Footnote 3] During the conversation, HERNANDEZ informed CW2 that he would be conducting a rough inspection at South Throop between 10:00 am and 3:00 pm that day.
= = = = = = = = = =
Footnote 3. Throughout this Affidavit, I describe various conversations that were consensually recorded. These descriptions often include my understanding of what is being said during such conversations. This understanding and interpretation of the conversations is based on (i) the contents and context of the conversations, (ii) my experience as a law enforcement officer and the experience of other law enforcement officers in this investigation, including our experience listening to the conversations as a whole, and (iii) the investigation to date, including information obtained from CW1 and others. All times listed are approximate. The summaries of the recorded conversations set forth in this Affidavit are based on draft, not final, transcriptions. Finally, the summaries below do not include all potentially criminal consensually recorded conversations, or all statements or topics covered during the course of the conversations.
= = = = = = = = = =
25. On the morning of August 21, 2008, CW2 met with agents at a briefing location.
Agents searched CW2’s person and vehicle and temporarily confiscated the currency in CW2’s possession.
Agents gave $2,000 cash to CW2 to pay a bribe to HERNANDEZ. The money had been previously photocopied by agents.
CW2 divided the money in half and placed $1,000 each into two small white envelopes in the presence of agents.
Audio recording and transmitting devices were placed on CW2.
At approximately 10:04 am, CW2 drove alone in CW2’s vehicle to South Throop followed by agents. Agents set up surveillance of CW2’s vehicle in the vicinity of the Throop property.
26. At approximately 1:29 pm, a vehicle entered the lot and parked next to CW2’s vehicle.
HERNANDEZ exited the vehicle and met with CW2.
The meeting was video recorded by surveillance agents. The agents later discovered that the audio recording devices on CW2 were not functioning; however, the video camera used by surveillance agents captured the audio of the meeting from CW2’s transmitter when the video was activated, and agents were able to listen to the entirety of the conversation and took contemporaneous notes of what was said.
At approximately 1:31 pm, CW2 and HERNANDEZ entered the building at South Throop. When CW2 and HERNANDEZ entered the building, the video recording device was turned off. While inside the building, CW2 said:
“I applied for the inspection three or four weeks ago, and I had to start the drywall.”
“You’re lucky I came out.”
CW2 then said to HERNANDEZ:
“Do you want to do the usual or whatever?”
Based on my experience in this investigation, I understand that when HERNANDEZ advised CW2 that he was lucky he came out, he was referring to the fact that another inspector would have failed the inspection and required CW2 to remove the drywall before the inspection could be performed. When CW2 asked HERNANDEZ if they could
“do the usual,”
CW2 was asking HERNANDEZ to pass the inspection without requiring CW2 to remove the drywall in exchange for a bribe. By replying
HERNANDEZ was agreeing to approve the inspection in exchange for payment.
27. At approximately 1:35 pm, HERNANDEZ and CW2 re-emerged from the building and surveillance agents resumed videotaping the meeting. The video camera again captured the audio recording of the meeting from the transmitter.
HERNANDEZ and CW2 then entered HERNANDEZ’s van. CW2 said:
“Here’s some. I’ll put this one down here. Is one okay for this one, Joe, yeah?”
HERNANDEZ did not say anything in response to CW2’s question. Based upon my training and experience, I understood CW2 to be asking if $1,000 was acceptable payment for the bribe.
28. Following this discussion, HERNANDEZ and CW2 discussed CW2’s request for HERNANDEZ to perform a final inspection for another one of CW2’s building’s.
HERNANDEZ explained to CW2 how HERNANDEZ could be assigned to the inspection. Specifically, HERNANDEZ said,
“Call 311 and say, yeah, I want a complaint filed. It’s a building complaint. They’re doing work on this building with no permits. They’re remodeling.”
HERNANDEZ asked CW2 for the address and CW2 replied that it was on West 63rd Place. HERNANDEZ said:
“Yeah, I’ll look for it tomorrow…Yeah, if I go out there and there is a 311 complaint, I can do a final on the property.”
29. HERNANDEZ then asked CW2 if CW2 heard about what happened to CW1.
HERNANDEZ: Hey, did you read about [CW1] over here.
HERNANDEZ: You never dealt with [CW1] did you?
CW2: No, I haven’t dealt with [CW1] in ages.
HERNANDEZ: Yeah, [CW1] was the one that was a witness, the same
witness on that thing and [CW1] got all those people in
CW2: Oh, are you serious?
HERNANDEZ: Yeah…I guess they caught [CW1], and I guess [CW1]
was wearing a wire or something.
CW2: No way.
HERNANDEZ: [CW1] got a shit load of people in trouble. Yeah, when [CW1] called me, I didn’t call [CW1] back.
Based on my knowledge of the investigation, HERNANDEZ was discussing CW1’s cooperation with the government’s investigation. At approximately 1:42 pm, CW2 exited HERNANDEZ’s vehicle, entered his/her own vehicle and drove away.
30. At approximately 1:50 pm, agents met with CW2 at the debriefing location.
Agents searched CW2’s vehicle, which yielded negative results for cash.
Agents search of CW2’s person yielded no cash except for one envelope containing $1,000 in U.S. Currency.
CW2 returned the $1,000 to agents who confirmed that the $1,000 matched the serial numbers of the currency previously provided to CW2.
CW2 informed agents that CW2 placed the other envelope containing $1,000 on the floor of HERNANDEZ’s vehicle between the passenger’s and driver’s seats during CW2’s meeting with HERNANDEZ, after asking HERNADEZ if “one” was okay, and that HERNANDEZ nodded when CW2 set the envelope down.
Operation Crooked Code Update: Petru Cladovan
The feds, prosecutors, and judge finally admit and conclude amid all set forth charges that Petru Cladovan is and was innocent AND ALL CHARGES WERE DROPPED today 3/30/2010. Petru Cladovan was found that he never had intent and/or knowledge of any bribes and all accusation were misinterpretation of twisted perfected lies by so called “expeditor”, who was forced to start operating, as a mole with the feds, and with whom orchestrated this entrapment only to reduce her possible charges sentence of 130yrs if convicted. This same “expeditor” ironically under oath admitted and testified that Petru Cladovan had no implication nor knowledge of her illegal business transactions and that all business between her and Petru Cladovan were 100% LEGAL and legit!!! It is only fair to say that after two long years of false accusations, wrongfully indicted, and defamation not limited to by the government and by media to Petru Cladovan and his family, the truth and innocent prevails.