Chicago's red light camera scandal deepened Wednesday with the federal indictment of a former Redflex Traffic Systems CEO on charges she and a top City Hall manager conspired to rig the camera business for a decade.
Karen Finley, one of several Redflex executives dumped amid the scandal, was indicted along with former city official John Bills and a longtime Bills friend accused of being the bagman in a $2 million bribery scheme that ran from 2002 until 2012, when the Tribune first disclosed Bills' ties to the company.
The Chicago program grew into a marquee system for Redflex — the largest in the United States — and generated nearly $500 million in $100 tickets for the cash-starved city. But now it is the subject of multiple probes and political attacks after the Tribune's reports and more recent revelations that thousands of drivers were fined during suspicious spikes in tickets.
Mayor Rahm Emanuel moved to fire Redflex in 2013, but the company ran the program until March. Emanuel's administration has acknowledged that oversight of the program was lacking and has started a review of up to 16,000 citations from intersections where the Tribune documented wild swings in ticketing.
City Inspector General Joseph Ferguson, who has launched an investigation of the spikes, is also working closely with federal authorities to investigate the corruption allegations.
“The alleged confluence of corrupt local officials and corrupt corporate officers demands a counterweight of local and federal authorities working to redeem the frayed confidence of the public,” Ferguson said in a joint news release with U.S. Attorney Zachary Fardon.
Finley, 54, of Cave Creek, Ariz., was indicted on nine counts of mail fraud, three counts of wire fraud, three counts of bribery and one count of conspiracy to commit bribery.
Bills, 53, of Chicago, who was first charged with bribery in May, was indicted on nine counts of mail fraud, three counts of wire fraud, three counts of bribery, three counts of filing a false income tax return, one count of conspiracy to commit extortion and one count of conspiracy to commit bribery.
Bills' longtime friend Martin O'Malley, 73, who was hired by Redflex as a Chicago consultant, was also indicted on one count of conspiracy to commit bribery. Prosecutors said he served as the conduit for about $2 million in Redflex payments, much of it intended for Bills.
Bills and O'Malley have repeatedly denied any wrongdoing. Finley's attorney, Mike Kimerer, said Wednesday that his client intends to plead not guilty to all charges when she appears in Chicago for her arraignment. The date has not been set.
Bills' attorney, Nishay Sanan, called the federal indictment “weak” and said his client expects to be “fully vindicated at trial.”
O'Malley's attorney did not return telephone messages.
In their news release announcing the indictment, federal prosecutors said the investigation was continuing.
“When public officials peddle influence for profit, the consequences are severe, and when corporate executives enable that corruption, the same rule applies. We will attack alleged public corruption from every angle,” Fardon said.
The Tribune first disclosed the questionable relationship between Bills and Redflex in October 2012, revealing a scandal that has shaken the foundation of the company and its Australian parent, Redflex Holdings Ltd.
The indictment represents the first charges against Finley and O'Malley in what prosecutors describe as a conspiracy that began when Redflex officials came to City Hall in 2002 seeking to win a fledgling contract to install automated traffic cameras.
Prosecutors have alleged that Bills, a former managing deputy commissioner for transportation who oversaw the red light program, coached Redflex officials in a series of clandestine meetings and helped arrange the company's selection. In return, prosecutors allege, 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.
According to the indictment, O'Malley was hired by Redflex after Bills told him to answer an advertisement placed by Finley looking for a Chicago consultant. Prosecutors say that in addition to paying for personal debts incurred by Bills, O'Malley also paid him $570,000 in cash between 2004 and 2012.
Those payments were in addition to the hotel rooms, car rentals, meals, golf games, computers and other personal items bought for Bills on Redflex's dime, the indictment says.
“Most of the expenses were the result of requests made directly by Bills,” the indictment says.
The indictment alleges that Bills helped rig the city's selection process by picking test photographs that cast Redflex in a favorable light and that he worked to change the city's contract to favor Redflex, over the objections of city lawyers.
The Tribune reported earlier this year that federal authorities have the help of fired Redflex Executive Vice President Aaron Rosenberg, who acknowledged he was cooperating with authorities in a 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 has alleged that Bills hinted he was open to bribes soon after Rosenberg approached him about Redflex being considered for Chicago's trial program.
Prosecutors allege that Finley and Rosenberg, who is identified only as “Individual A” in the indictment, met with Bills in 2003 at the John Hancock Center to plan strategy on how to steer business to the company. The Tribune described that meeting, held at the Signature Room restaurant, in a February story.
Years later, Bills, working through O'Malley, gave Finley and Rosenberg “the opportunity to draft documents that Bills was to use to advantage Redflex in obtaining” subsequent contracts, the indictment alleges.
Prosecutors also allege that Finley cautioned Rosenberg to avoid putting his discussions with Bills' friend O'Malley in writing. She also indicated she was deleting emails about the conspiracy to obtain Chicago business, according to the indictment.
Prosecutors allege that Redflex worked to support Bills even after he retired from the city in 2011, when Bills “made it known” to Rosenberg and other Redflex employees that he wanted a job with Redflex.
According to the indictment, Finley and others from Redflex arranged for Bills to get a job with “Non-profit Corporation A, which was funded by Redflex.”
The Tribune has previously reported that upon retiring, 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, a nonprofit that campaigns for automated traffic camera programs around the country.
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 program before the scandal broke and the mayor disqualified the company.
Goldner told the Tribune in May that Bills was recommended by Redflex, “but I was never ordered nor told to hire him. Whatever these individuals have done, whatever Redflex's intentions were, they are not mine to live with.”
Prosecutors allege that Redflex increased its monthly payments to the Traffic Safety Coalition to help cover Bills' salary, an allegation Goldner has denied. “It is true that they changed how much we were paid from time to time, but there was no correlation,” Goldner said.
Jody Ryan, a spokeswoman for Redflex Traffic Systems, declined to answer questions about the new charges but released the following statement:
“Last year we announced aggressive leadership changes, industry leading compliance policies and procedures and a distinction between our past and present. Redflex Traffic Systems is moving forward. Since we announced these changes we have signed, renewed or executed over 100 contracts. Redflex has cooperated fully with the investigative authorities while maintaining the integrity of our customer programs.”
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.
At first Redflex disputed much of the memo, saying its own thorough investigation found only 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. That probe confirmed the allegations in the 2010 whistleblower memo and expanded upon them.
When the scandal broke, Redflex was a front-runner to win the potentially more lucrative contract to launch Emanuel's speed camera program.
Emanuel immediately disqualified Redflex from that competition and subsequently banned it from holding the red light contract. Redflex was recently replaced by Xerox State & Local Solutions Inc., based in Maryland.
This post has been updated to correct that Karen Finley was indicted on one count of conspiracy to commit bribery, not three.
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