For years, City Hall maintained that Mayor Richard M. Daley’s son, Patrick Daley, had no financial stake in the deal that brought wireless Internet service to city-owned O’Hare Airport and Midway Airport.
But it turns out that the younger Daley still reaped a windfall of $708,999 when Concourse Communications was sold in 2006, less than a year after the Chicago company signed the multimillion-dollar Wi-Fi contract with his father’s administration, company documents obtained by the Chicago Sun-Times show.
Concourse disclosed its investors to the city, as required. Patrick Daley wasn’t one of them.
But he still had a stake in Concourse’s success, the company documents show, and profited as a result when the company was sold after winning the city contract.
Daley’s role was as a middleman who lined up investors for Concourse. Among them: M. Blair Hull, the millionaire commodities trader who mounted an unsuccessful campaign for the Democratic Party’s nomination for U.S. Senate in 2004.
On June 27, 2006, nine months after it signed the potentially lucrative city contract for airport Wi-Fi service in Chicago, Concourse was sold — at a 33 percent profit — to Boingo Wireless Inc. for $45 million.
Three days later, Patrick Daley got his first payment as a result of the sale, the documents show — for $164,789.
Over the next 17 months, with Daley now serving in the U.S. Army, he got four more payments resulting from the sale, totaling $544,210, the documents show, for a total of $708,999.
Shortly after Patrick Daley received the last of those payments, his father’s City Hall press secretary, Jacquelyn Heard, told a Sun-Times reporter in a Dec. 3, 2007, interview, that Patrick Daley “has no financial interest with the Wi-Fi contract at O’Hare.”
Exactly how the deal was structured isn’t clear. Neither Patrick Daley nor his father replied to interview requests. But the amount that Patrick Daley was paid was linked to the sale price of the company, a source with knowledge of the arrangement said: The more the company was sold for, the more Patrick Daley would be paid.
The elder Daley — who left office May 16 after deciding not to seek re-election — is now in business with his son. The two Daleys are working out of offices on Michigan Avenue on international business deals.
Patrick Daley’s Wi-Fi windfall was part of $1.2 million he was paid as a result of deals he had with Cardinal Growth, a Chicago venture-capital firm that invested in Concourse and other businesses. Among those businesses was a sewer-inspection company that got millions of dollars in no-bid city-contract extensions.
In addition to Patrick Daley, Cardinal Growth also has had business dealings in which it made payments to two of his cousins, Robert G. Vanecko and Richard J. “R.J.” Vanecko.According to the Sun-Times, Cardinal Growth borrowed $50 million from the federal government that it used to buy businesses, and it stopped making payments to Daley's son four months after Cardinal Growth received a subpoena from a federal grand jury investigating payments made to Daley relatives that might be related to companies that won city contracts:
Patrick Daley’s payments from the sale of Concourse Communications ended in March 2009 — four months before Cardinal Growth received a subpoena from a federal grand jury investigating his and Robert Vanecko’s roles in the sewer-inspection business.
The sewer company’s president has since been indicted on federal charges that accuse him of minority-contracting fraud. Patrick Daley and Robert Vanecko haven’t been charged with any crime. Nor have Cardinal Growth or its owners been charged with any wrongdoing.
Cardinal Growth is owned by Robert Bobb, who’s a lawyer and former federal prosecutor, and Joseph McInerney, an accountant. The firm has raised millions of dollars from private investors and, with those investments in hand, has been able to borrow $50 million from the U.S. government to use in its projects.
Among the businesses that Bobb and McInerney acquired with that money: Concourse and the sewer company, Municipal Sewer Services.What's the current tie-in with Wallace? The Sun-Times reports his TWG Capital is among the businesses in which Patrick Daley still has business ties and is among six companies the Small Business Administration is seeking to liquidate to recover $20 million of the $50 million the SBA loaned to Cardinal Growth:
Six of the businesses now are facing forced liquidation by the U.S. Small Business Administration, which is trying to recover $20 million it’s still owed from the $50 million in loans it made to Cardinal Growth . . .
Patrick Daley still has business ties with two companies that have received private and government funding through Cardinal Growth: Certi-Fresh Foods LLC, a shrimp-distribution company in Los Angeles, and TWG Capital, an insurance-services company in Indianapolis. They are among the six Cardinal Growth companies facing forced liquidation by the SBA.Robert Bobb and Joseph McInerney are listed as the only two members of TWG Capital's board of directors according to the company's website in their roles with Cardinal Growth. Wallace founded TWG Capital in 2000. It received its first funding from Cardinal Growth in June, 2003 according to the company's website. The Sun-Times reports that Patrick Daley began working for Cardinal Growth one year earlier in 2002. I'm guessing Wallace's ties to the Daley family won't be helpful to his gubernatorial campaign.