The former head of Chicago's red light camera program was arrested Wednesday in a $2 million bribery scandal and charged by federal prosecutors with plotting to steer the contract to Redflex Traffic Systems before the first ticket was ever issued in 2003.
John Bills, the former transportation official who managed the red light contract until 2011, coached Redflex officials in a series of clandestine meetings and helped them grow their program into the largest in the country, authorities alleged. In return, they said, Bills received hundreds of thousands of dollars in cash spent on a vacation home, a boat and a Mercedes convertible, along with dozens of trips and a condominium near the company's Arizona headquarters.
The single bribery charge against Bills puts him at the center of sweeping allegations in a scandal that by size alone ranks among the largest in Chicago's notorious history of corruption. The Tribune first disclosed the questionable relationship between Bills and Redflex in the fall of 2012, revealing a scandal that has shaken the foundation of the company and its Australian parent, Redflex Holdings Ltd.
Bills' attorney said his client did nothing wrong and is being squeezed by federal authorities to cooperate against Redflex and others.
“John Bills has nothing to cooperate about because he did absolutely nothing wrong,” attorney Nishay Sanan said.
“John denies ever taking a bribe from anybody. He's a hardworking individual, and the one thing that everybody should realize is he didn't have the power in the city of Chicago to direct any contract to anybody,” Sanan said.
The bribery count carries a maximum penalty of 10 years in prison and a $250,000 fine. Bills was escorted in handcuffs into a federal courtroom in Chicago by U.S. marshals and said, “I do” when asked if he understood the charges. He was released without posting bond.
Authorities allege that Bills worked behind the scenes to help the then-fledgling Redflex almost as soon as he was approached with an unsolicited proposal by a company official identified in the complaint as Confidential Source 1.
The Tribune reported earlier this year that the cooperating source is fired Redflex Executive Vice President Aaron Rosenberg, who acknowledged he was cooperating with authorities in a civil defamation lawsuit against the company. Rosenberg accused Redflex of doling out bribes and gifts at “dozens of municipalities” in 14 states and said he was made a “scapegoat” to cover up the long-standing practice after the Tribune began asking questions about the Chicago contract.
Rosenberg said that after he approached Bills in 2002, Bills threw him a hint by saying one of his bosses at City Hall “had been paid money from an engineering firm related to another city of Chicago contract that the superior oversaw,” the complaint alleges.
Rosenberg, who has been granted immunity, told authorities he saw this as an effort by Bills “to determine whether Bills would be able to get money from Redflex in return for getting Redflex the red light camera contract,” the complaint said.
The complaint also details several meetings in 2003 of Bills, Rosenberg and other Redflex officials to make Bills a “Redflex expert” and plan strategy on how to steer the business to the company.
The Tribune in February detailed one such meeting in the swanky Signature Room atop the John Hancock Center.
“Essentially, he spent two hours coaching us on how to win the contract, telling us how to behave, what things were going to work and what wouldn't,” former Redflex software designer Mike Schmidt told the Tribune. “At the time, though, it was hear no evil, see no evil. I needed my job. …”
The federal complaint also alleges that while Redflex was still competing for the contract, Bills called Rosenberg to ask that Redflex pick up the tab for a Los Angeles trip for Bills and his friends, which Rosenberg did with the approval of his supervisor.
At the time, Rosenberg's supervisor was Karen Finley, the CEO of Redflex Traffic Systems. She and two other Redflex executives — including the general counsel — resigned last year amid the scandal.
The complaint said Bills met with Rosenberg to review red light photographs of both competitors for the contract, choosing photographs that made Redflex appear to be the better candidate. Bills even arranged the seating for the City Hall selection committee in an attempt to influence the vote for Redflex, lining it up so that members supporting Redflex voted first to create momentum, the complaint alleges.
The complaint alleges the cash bribes to Bills were funneled through a longtime friend of his who was hired as a Chicago consultant on the Redflex contract in 2003.
Martin O'Malley, identified only as Individual A in the complaint, served “as a conduit to get money to Bills in return for Bills' help in getting Redflex the city of Chicago contract, and for Bills' help in ensuring that Redflex's contract would potentially be expanded and renewed in the future,” authorities alleged. Had O'Malley been on the Redflex payroll instead of a commission contract, the complaint said, he “would have been one of the highest paid employees in the entire company.”
The complaint said federal authorities tracked more than $643,000 in cash withdrawals O'Malley made from 2006 to 2011, with Bills and his wife making cash deposits of $103,000 in their own bank accounts — many of them around the same time. In addition, the complaint alleged that O'Malley bought a Gilbert, Ariz., condominium for $177,000 on Bills' behalf. Bills' attorney Sanan denied both allegations. O'Malley could not be reached for comment, and his attorney did not return phone calls.
The complaint alleged that Redflex worked to support Bills even after he left the city, when Bills “made it known” to Rosenberg and other Redflex employees “that he wanted a job with Redflex.”
“It was decided that Redflex could not directly hire Bills due to a city of Chicago ordinance” that prohibits contractors from hiring city employees until one year after they leave the city, the complaint said.
Instead, Bills landed a job as a consultant with longtime Chicago political adviser Greg Goldner, who owns Resolute Consulting. Goldner was paid by Redflex to establish the Traffic Safety Coalition, which campaigns for automated traffic camera programs around the country.
The Tribune reported in 2011 that Goldner, Emanuel's onetime congressional campaign manager, was working with the coalition to legalize speed cameras in Illinois at the same time Emanuel was pushing to start his program in Chicago. Redflex was a leading contender for the speed camera program before the scandal broke and Emanuel disqualified the company.
Goldner, contacted Wednesday, acknowledged that Bills was recommended by Redflex, “but I was never ordered nor told to hire him,” he said. “Whatever these individuals have done, whatever Redflex's intentions were, they are not mine to live with.”
Goldner said he had no knowledge that Bills or his bosses at Redflex were involved in a bribery scheme.
The complaint alleges that Redflex increased its monthly payments to the Traffic Safety Coalition to help cover Bills' salary, an allegation Goldner denies.
“It is true that they changed how much we were paid from time to time, but there was no correlation,” Goldner said. He said he has never been contacted by federal authorities.
Redflex Traffic Systems officials declined to answer questions about the case.
“Last year we publicly released the findings of our internal investigation into the conduct of several former employees and announced new leadership, new policies and a line between our past and today's Redflex,” the company said in a statement. “As promised, we also fully cooperated with the authorities. We did what a responsible company should do, and we are pleased that our internal investigation contributed to the government's legal action.”
The Redflex scandal erupted in October 2012, after the Tribune obtained a 2-year-old internal Redflex whistleblower memo by an ousted vice president that detailed the alleged bribery scheme and lavish company-paid vacations for Bills and suggested “the level of this insider fraud would take down the contract and most likely the company.”
At first Redflex disputed much of the memo, saying it thoroughly investigated the allegations internally and found them without merit except for one hotel stay for Bills at the Arizona Biltmore in 2010 that was inadvertently paid by Redflex. Company officials said their failure to notify City Hall at the time was an “oversight and a lapse.”
But fallout from the news reports prompted Redflex to commission a second internal investigation, this time by former Chicago Inspector General David Hoffman. Hoffman's probe, completed in March 2013, confirmed the allegations in the 2010 whistleblower memo and expanded upon them, the company said in its summary of Hoffman's investigation filed with the Australian Securities Exchange.
Hoffman identified 17 company-paid trips for Bills — including airfare, hotels, rental cars, golf outings and meals, according to the filing.
Hoffman also found that Redflex paid its Chicago consultant, who has personal ties to Bills, more than $2 million, the company said. The “highly suspicious” arrangement between Redflex, the consultant and Bills “will likely be considered bribery by the authorities,” the company said.
Bills retired in 2011 after a 30-year city career that saw him rise from a streetlight maintenance worker to the deputy managing commissioner of the Transportation Department under former Mayor Richard M. Daley. He was a longtime top precinct captain in the political operation of House Speaker Michael Madigan.
The Redflex contract was awarded and grew to be the largest red light program in the country during the tenure of Daley. Redflex was hoping to win the potentially more lucrative contract to launch Emanuel's speed camera program when the Tribune stories first broke in 2012.
Emanuel disqualified Redflex, then a leading contender, from the speed-camera competition and subsequently banned it from holding the red light contract. Redflex was recently replaced by Xerox State & Local Solutions Inc., based in Maryland.
“As soon as we found out they were under investigation, we put the whole contract that we had inherited out to bid, and they're no longer working there,” Emanuel said at an unrelated news conference Wednesday. “Second, as you know, that when questions were raised, we cooperated with the IG (Chicago inspector general) and gave him information. He (Bills) worked there when I got there, but Redflex no longer works, services the city of Chicago, and he no longer works for the city of Chicago. And we were in a cooperative effort with the IG.”
In addition to some 22 trips, including to the Super Bowl, hotels, meals, car rentals and other expenses paid to Bills directly by Redflex, the complaint alleges that proceeds of the bribery scheme were used to buy the Arizona condominium and a Mercedes convertible.
The complaint alleges that Bills made large cash payments for various expenses, including a $10,000 boat, an addition to his Michigan cabin, a $12,500 car purchase, $16,000 in mortgage payments for his girlfriend, $28,280 in rent payments, even $1,200 in cash that went to his divorce attorney.
Bills' attorney, Sanan, said Bills took Redflex officials “to games too.”
“They weren't bribery gifts,” he said. “He thought he was a friend. It was a reciprocal gift back and forth.”
Asked if federal authorities were probing Bills' political connections, including his Madigan ties, Sanan said the government is going to “want to know about anything and everything. But he has nothing to say.”
Madigan spokesman Steve Brown said there is “nothing to cooperate about.” He said Madigan returned Redflex contributions two years ago. State records show two donations totaling $1,800 were returned in early October 2012, after the Tribune started asking questions but before the scandal broke.
Tribune reporters Jason Meisner and Bill Ruthhart contributed.
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