By David Kidwell, Chicago Tribune reporter
12:50 AM CDT, March 16, 2013
Federal authorities have launched a criminal probe of bribery allegations in Chicago's red-light camera program, issuing a subpoena for financial records of the former city official at the center of the escalating international scandal.
The subpoena, confirmed Friday by the former official's attorney, was the first indication that the U.S. attorney's office has opened a case since the Tribune raised questions in October about the city's contract with Redflex Traffic Systems, triggering a series of investigations that now threaten to consume the company.
Redflex Holdings Ltd., the Australian parent company, has said an internal investigation uncovered evidence that its decadelong Chicago program was likely built on a $2 million bribery scheme involving the city manager and a longtime friend who was hired as the company's Chicago consultant. The program is also the subject of an investigation by city Inspector General Joseph Ferguson.
The subpoena was signed by an assistant U.S. attorney and delivered to the ex-wife of retired managing deputy transportation commissioner John Bills, his attorney Nishay Sanan said. Bills has denied any wrongdoing. Sanan said he sent a letter to federal prosecutors asking that all further requests for records come to him.
"I don't know why they didn't just subpoena my client directly, but they delivered a subpoena to his ex-wife," Sanan said.
The U.S. attorney's office declined to comment. Bills' ex-wife did not return a telephone message.
In October, the newspaper raised questions about Bills' ties to Redflex consultant Marty O'Malley and disclosed a 2010 company whistle-blower letter alleging an inappropriate relationship between Bills and Redflex that included lavish hotel accommodations. Bills and O'Malley, longtime friends from the same South Side neighborhood, said they had done nothing improper.
Bills oversaw the red-light program from its beginning in 2003 until he retired in 2011. It became Redflex's largest traffic camera program in North America, raising about $100 million for Redflex and more than $300 million in ticket revenue for the city.
In response to Tribune inquires, the company told the newspaper and City Hall that the whistle-blower allegations had no merit and that an internal investigation found only one instance of an improper hotel reimbursement for Bills, at the Arizona Biltmore. But the company hired a second law firm to take another look.
That investigation, led by former federal prosecutor and city Inspector General David Hoffman, found that the whistle-blower's allegations did have merit.
Redflex said earlier this month that Hoffman found the company paid $2.03 million to its Chicago consultant, with some of the money intended for Bills. The company also acknowledged that it plied Bills with 17 company-paid trips from 2003 through 2010, including airfare, hotels, golf outings, rental cars and meals.
"The arrangement between the city program manager, the consultant, and Redflex will likely be considered bribery by the authorities," said a summary of the Hoffman findings publicly released March 4 by the company to the Australian Securities Exchange. The summary said company officials misled City Hall and the Tribune.
Redflex acknowledged last month that it is sharing Hoffman's work with law enforcement. The chairman of the Australian company and the top executives of its Phoenix-based subsidiary have all left amid the unfolding controversy, and Redflex stock has plummeted.
Emanuel's administration referred the matter to the inspector general and barred Redflex from bidding on the city's speed camera program after the Tribune's initial report. Last month — after the company acknowledged its problems were more widespread and that it was sharing information with law enforcement — the mayor banned Redflex from renewing its contract to run more than 380 red-light cameras when it expires in June.
Tribune reporter Todd Lighty contributed.
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