Feds Target Construction Giant McHugh

CHICAGO (CBS) — Federal prosecutors have set their sights on one of the biggest fish ever, a huge and well-known construction firm with plenty of clout.

McHugh Construction – which has headed up projects like the reconstruction of Wacker Drive, a new Lake Michigan marina, replacing the North Avenue bridge over the Chicago River, and rehabs of the CTA Brown Line and Red Line – has been confronted with some serious allegations regarding some of its subcontractors.

CBS 2 Chief Correspondent Jay Levine reports federal investigators spoke to McHugh officials Tuesday, the same day several of its contractors were formally charged with fraud. Those subcontractors have been cooperating with the feds as part of a probe into minority- and women-owned business fraud.

McHugh officials warned against a rush to judgment as it prepares to defend itself against possible charges similar to those which have led to jail terms and millions of dollars in fines for owners and operators of other construction firms.

But all those that have been under the federal microscope before are dwarfed by McHugh, the politically-connected construction giant described in a federal complaint as Prime Contractor A.

McHugh boasts billions of dollars’ worth of government and private contracts.

McHugh spokesman Dennis Culloton said, “McHugh will respond to any requests for information from federal government, or city government, or anyone who wants to look into this matter.”

Tuesday’s criminal complaint charged several contractors that worked on McHugh projects with acting as no more than front companies on McHugh projects so that the construction giant could avoid requirements to provide work for minority- and women-owned businesses.

The feds alleged the subcontractors, owned by Willowbrook businesswoman Elizabeth Perino, did no work on McHugh projects, acting only as a pass-through for the main contractor.

Perino’s firms were listed as subcontractors on the Wacker Drive, North Avenue bridge and CTA projects, but federal authorities allege they did no actual work on those projects.

On Wednesday, a group of minority contractors who were meeting with Cook County Board President Toni Preckwinkle said if the allegations are true, McHugh had to know about it.

Omar Shareef, President of the African American Contractors Association, said something like this can’t happen without the general contractor’s knowledge.
“It cannot; unless they turn a blind eye to it, unless they’re Stevie Wonder or Ray Charles,” Shareef said.

After the federal charges, the city moved to suspend Perino’s firms from its set-aside program for women- and minority-owned businesses.

But McHugh wasn’t suspended along with Perino’s firms.

Mayor Rahm Emanuel said “First of all, it would be inappropriate … for me to comment on that case. Let it be known, and I think you have it, the procurement office cooperated with the federal authorities as they investigate this. So, we took the steps that I think is appropriate.”

But Preckwinkle said she would have gone further.

“I would go back, frankly, to McHugh. While we have focused, historically, on the sham contractors themselves, they do this at the behest of the prime (contractor), so I would focus, frankly, on McHugh.”

The feds themselves are focusing on McHugh, which has said due process should be allowed to play out.

“McHugh is a company that has been in the city of Chicago for more than 100 years and they’ve helped to mentor some really terrific minority- and women-owned businesses over the years,” Culloton said. “The facts will play out in this current case at bar and we can’t comment on the details off it.”

A statement late Wednesday from the Mayor’s office explained that a city ordinance permits the suspension of a contractor that has been charged, convicted, or admits committing a crime. McHugh is merely under investigation, so that provision does not apply.

As for McHugh’s other government contracts, the Illinois Department of Transportation said it will review contracts awarded to McHugh and take “appropriate action.”

More from Jay Levine
  • tom sharp

    See the blog on “Chicago most corrupt in the nation…”

  • Jim

    minority set asides are nothing short of discrimiantion against white people. jesse, sharpton, etc. always cry discrimination , but don’t mind when it happens to whites. Also, a lot of times there is a minority getting money from the company for doing nothing. jesse doesn’t say anything about that. Do the feds prosecute them? Probably not with eric “racist” holder as our attorney general. These companies should sue the government for discrimination allowing these policies to continue. The minorities don’t mind. It’s another handout for them.

  • BG

    A contractor attempted to fire me because I was a so called NON minority……………WHAT EXACTLY is a MINORITY anyway………….Whatever happened to hiring on MERITS and NOT the color of ones skin???

    • Retired

      Blacks were never hired for merit by contractors until the government told them they had to……or given fair housing, or education…. shall I continue?

  • Afro

    And I thought Rahm was bringing in the Feds to get Englewood under control lmfao

  • Afro

    “It cannot; unless they turn a blind eye to it, unless they’re Stevie Wonder or Ray Charles,” Shareef said.

    The racist B a s t a r d could have thrown some Ronnie Milsap in there

  • Lou

    Very happy to read your post its so interesting among many other posts that i have read from since morning.

    EPDM Liners

  • My opinion

    McHugh went with a woman owned company they had to choose from. The woman owned co they went through was approved by many groups with titles as well (designated by the city and state I believe).. Why is it their fault if the company they went with was doing something bad.. Maybe the people who gave the “woman owned” company the status of that should be looked into… Reminds me of tha banks that got in trouble for giving loans to people they were forced to… Hmmmmm….But-that’s just my opinion… And I have posted 2 others things things here that never went up… Hmmmmm..

    • tom sharp

      Hey, My opinion, Not quite right. What do you mean “…had to choose from…”? They either are or they aren’t owned by women. “Subcontracting” all the work to or from “minority firms” is forbidden!

  • My opinion

    There are probably only so many women owned co in this field.
    The sub contracting co was approved to be one.
    If you have to have a woman owned business as some of your suppliers/workers/etc..then you see who is approved and your pool to choose from.. This company was approved to be a woman owned business (not McHugh) but subcontractor…
    Here is a link to show all their “titles”…. (Perdel) so I wouldn’t blame a company for using someone on a list of people to use..
    But maybe I see it different than you.. Don’t the large companies that get the jobs sub some stuff out to smaller disadvantged one’s/Woman owned?

    Here’s part of the link above copied and pasted below: Obviously she was known for years by MANY and given titles…
    Maybe I don’t have it correct-but if you have to hire union-woman owned or minority….you have to go to who is approved!
    “About PERDEL’s owner
    Elizabeth Perino is the President, Secretary, Treasurer and Chief Executive Officer. Before founding Perdel, she spent over three years as Director of Materials Management for the University of Chicago Hospitals, where she assisted clients with design development of the new $140 million Duchossois Center for Advanced Medicine. She is a Registered Nurse with experience in all areas of nursing. She is also well experienced in Materials Management and Hospital Construction. She has done design development of Central Sterile Processing, Operating Rooms and Clinic Areas. She personally supervised the construction of Central Sterile Processing areas as well as Operating Rooms. Her vast experience in all aspects of Hospital Construction is an asset to any construction project, especially in Health care.

    Elizabeth is a member of the Federation of Woman Contractors (FWC) where she also serves on the Board of Directors, National Association of Women in Construction (NAWIC) where she also serves on the Board of Directors for the Chicago Metro Chapter; Illinois Road Builders Association (IRBA) where she serves on the EEOC Committee; and the Underground Contractors Association (UCA) where she chairs the Legislative Affairs Committee. Elizabeth was appointed by Governor Ryan to serve on the Illinois Infrastructure Taskforce in 1999, and the Business Enterprise Advisory Council Board for the State of Illinois.

    She has successfully completed and holds a certificate for the CONSTRUCTION MANAGEMENT TRAINING PROGRAM, sponsored by the City of Chicago, Cook County, Turner Construction and U.S. Equities Development, Inc. at the University of Illinois at Chicago; She holds a MASTER CERTIFICATE IN BASIC CONCRETE, sponsored by the World of Concrete 1997; MASTER CERTIFICATE IN MANAGEMENT, sponsored by the World of Concrete 1998, as well as the designation of CONSTRUCTION INDUSTRY TECHNICIAN from the NAWIC Education Foundation, the exam for which was issued and scored through Clemson University, Clemson, SC.. Elizabeth received the Bronze Hard Hat Award from the Cosmopolitan Chamber of Commerce for “Outstanding work in the Construction Industry & Community”, May 2001.”

    • tom sharp

      You seem to know more than the Feds. Go testify for the company! As for me, I don’t believe anything, especially anything big, in this town gets down with out cheating, bribes and clout. We’ll see what the Feds uncover.

      Example 456: Every political and their family businesses buy insurance from the Daleys (and before them the Dunns) only because they have the best deal, right?

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