Duff pleads guilty--for 3 hours
Judge walks executive through fraud, racketeering chargesBy Matt O'Connor and Ray Gibson
Tribune staff reporters
January 11, 2005
Politically connected businessman James M. Duff pleaded guilty Monday to racketeering, fraud and other charges, admitting he got city contracts by falsely portraying his companies as being women- and minority-controlled.
Duff had attempted to plead guilty Thursday, but the bid fizzled when federal prosecutors vehemently objected, saying he wasn't admitting to the specific charges of wrongdoing.
On Monday, U.S. District Judge Elaine Bucklo had prosecutors read key portions of the indictment aloud in the courtroom and then asked Duff, "Is that true?"
Duff sometimes conferred with his lawyers but usually simply answered yes.
The hearing lasted three hours--extraordinarily long for a guilty plea--as Duff pleaded guilty to all 33 counts he faced in the scheme to game the city's set-aside program.
The federal probe of the Duff family businesses was launched after a 1999 Tribune article revealed that one of the firms was fraudulently posing as a female-owned company. The Tribune articles also questioned whether an African-American associate of Duff's really ran another company purporting to be minority-owned.
The four-year federal investigation led to the 2003 indictment of Duff, his mother and five others on charges of obtaining more than $100 million in contracts through the city's set-aside program. The case has garnered particular interest because of the Duff family's fundraising on behalf of Mayor Richard Daley.
Monday's change in plea came just 10 days before Duff's co-defendants are scheduled to go to trial in the case. Duff's mother, Patricia, 76, is charged with falsely claiming to run the family janitorial firm, Windy City Maintenance Inc.
As James Duff left the Dirksen U.S. Courthouse following his guilty plea, he deflected questions from reporters by pretending as if he was being queried about the Cubs.
"I hope the Cubs win," he said.
In court, though, Duff admitted concealing his role as the key financial authority in the family-run businesses.
Several key disputes remain, most importantly the extent of the losses from the fraud. Duff's lawyers, Terence Campbell and Mark Rotert, contend the city didn't lose any money because the work was completed to its satisfaction.
However, the prosecution team--Assistant U.S. Attorneys David Buvinger, Charles Ex and Stephen Andersson--has put the losses at more than $100 million, the gross value of the contracts obtained by the Duff family businesses.
How Bucklo decides that issue will have a dramatic impact on Duff's sentence.
If prosecutors get their way, Duff could be facing as much as 10 to 15 years in prison, but federal sentencing guidelines are in flux with a critical U.S. Supreme Court decision expected on the issue soon.
Duff's lawyers have expressed interest in selecting a jury to decide the sentence. Prosecutors have objected, saying that it could take as long as two weeks to present all the necessary evidence to a jury.
Fraud harmed city program
In a statement, Mayor Richard Daley said Duff's fraud had harmed the credibility of the city's minority and women business enterprise program, but he insisted that the city has since tightened procedures so that only legitimate companies are certified.
The mayor advocated that Duff's sentence "deter others from abusing the program."
In pleading guilty, Duff, 46, of Burr Ridge was careful not to implicate his mother or other co-defendants in wrongdoing.
Prosecutors could subpoena Duff to testify at his mother's trial, but despite his guilty plea, Duff would still have the right to assert his 5th Amendment right against incriminating himself, lawyers said.
Duff pleaded guilty "blind," without reaching an agreement with prosecutors and without agreeing to cooperate with them.
Facing a trial of as long as two to three months, Duff decided to plead guilty to cut his legal expenses and to win a reduction in his sentence by accepting responsibility, his lawyers said last week.
But prosecutors disputed that Duff truly accepted responsibility with his plea of guilty to 22 counts of mail or wire fraud, six counts of money laundering, three counts of tax fraud and one count each of racketeering and conspiracy, which would have a bearing on his sentencing.
Duff's mother and the other co-defendants are scheduled to go to trial on Jan. 20.
In addition to Duff's mother, William E. Stratton, a Duff confidant and an African-American, is charged with posing as boss of Remedial Environmental Manpower Inc. (R.E.M.), a Duff-run business that won a lucrative minority subcontract from Waste Management of Illinois to operate the city's blue bag recycling program.
Following Duff's guilty plea, a couple of lawyers for co-defendants asked the judge to postpone the trial for a week or so, but she declined
"It looks like we are going to trial," said attorney Joseph Duffy, who is representing Duff's mother. "We'll have to see what happens in the next few days."
With Duff's guilty plea removing him from the trial, his mother and other defendants could choose to make him the bad guy, blaming the fraud on him alone.
Duff is indisputably the central figure in the case--the only defendant charged in all the misconduct.
In addition to setting up the phony women- and minority-business fronts, Duff also pleaded guilty to an insurance-fraud scheme by R.E.M. and another Duff-owned business, Windy City Labor Service Inc., which prosecutors allege cost insurers more than $3 million.
The government alleged that those two Duff businesses misrepresented that the vast majority of their employees were clerical workers to reap huge savings in premiums paid for worker's compensation insurance.
Monday's hearing appeared to get off to a shaky start when Duff hesitated to answer a question from Bucklo about what work he had been doing for the last three years. When he conferred with his lawyers, the judge asked Duff: "You need to ask your counsel about that?"
At times the hearing crawled at a snail's pace, including when prosecutors pressed Duff to be more specific in his admissions about his insider role in the companies.
"They won't take `yes' for an answer," complained Rotert, a Duff lawyer, at one point.
"We keep going in circles here," prosecutor Buvinger said a bit later.
But after three hours, prosecutors had gone count-by-count through the indictment and appeared satisfied that Duff had admitted guilt to each of the 33 counts.
The Duff family has hosted parties attended by Daley and raised campaign funds for the mayor and political allies.
In Daley's years in office, Windy City Maintenance has been hired to clean up city festivals such as Taste of Chicago and to provide janitorial services at the Harold Washington Library, the International Terminal at O'Hare International Airport, Navy Pier, McCormick Place and several police stations.
Patricia Duff's husband, John Duff Jr., once testified on behalf of mob boss Anthony "Big Tuna" Accardo, who faced income-tax fraud charges. The elder Duff later pleaded guilty to embezzling union funds in Chicago and Detroit and spent 17 months in prison. John Duff III, one of James Duff's three brothers, has also been associated with organized crime, according to court records.
Copyright © 2005, Chicago Tribune
IPSN © 1997-2006 All Rights reserved. Not for republication on the
internet without permission.