John Bills, Martin O'Malley plead not guilty

Former Chicago transportation manager John Bills and his longtime friend Martin O'Malley outside court. (Antonio Perez, Chicago Tribune / September 2, 2014)

A former Chicago transportation manager and his longtime friend both pleaded not guilty Tuesday to federal bribery charges in an alleged $2 million scheme to rig the contract for the city's red light camera program.

John Bills is accused of conspiring with top officials at Redflex Traffic Systems Inc. to help them win the contract and grow the camera system into the largest in North America. His friend, Martin O'Malley, is accused of funneling bribe money from Redflex to Bills.

The Tribune has reported that O'Malley is cooperating with the ongoing federal investigation and will eventually enter a guilty plea. That cooperation did not come up Tuesday in court.

O'Malley, the Chicago-based consultant for Redflex since its city contract began in 2003, has admitted that much of the $2 million he was paid by the company was used as payoffs to Bills, who oversaw the traffic camera program from the beginning, according to sources familiar with the investigation and O'Malley's attorney.

Former Redflex CEO Karen Finley, who was indicted last month along with Bills and O'Malley, is expected to plead not guilty at her own arraignment on bribery charges next week.

Before the case was called Tuesday, Bills and O’Malley sat quietly in Kendall’s courtroom without looking at each other, separated by several rows of benches.

Bills spoke in court only when Kendall asked whether he understood the conditions of his previously set bond. “Yes I do, your honor,” he said. Bills is currently working for a golf course.

O’Malley, 73, of Worth, was also given a recognizance bond on Tuesday.

Following court, Bills immediately left the Dirksen U.S. Courthouse without comment, while O’Malley stayed to be processed by the U.S. Marshals Service.

U.S. District Judge Virginia Kendall set the next status hearing for Oct. 23. Bills and O'Malley are not required to appear for that hearing.

Bills, a former managing deputy commissioner of transportation at City Hall, is accused of accepting cash, vacation trips and an Arizona condominium in exchange for steering city contracts to Redflex.

According to the indictment, O'Malley was hired by Redflex after Bills told him to answer an advertisement placed by Finley in 2003 looking for a Chicago consultant. Prosecutors have said the arrangement was intended as a conduit to funnel bribe payments to Bills.

O'Malley gave Bills $570,000 in cash between 2004 and 2012, in addition to paying for some of Bills' personal debts and even buying a Gilbert, Ariz., condominium for Bills' use, prosecutors allege. In addition, Redflex paid for hotel rooms, car rentals, meals, golf games, computers and other personal items for Bills, the indictment alleged.

Redflex's troubles in Chicago first erupted in October 2012, after the Tribune obtained a 2-year-old internal whistleblower memo written by an ousted Redflex vice president that detailed the alleged bribery scheme.

Mayor Rahm Emanuel fired Redflex amid the scandal, but it has only recently been replaced by another vendor.

jmeisner@tribune.com

Twitter: @jmetr22b