What happened to the feds' probe of Chicago Public Ed Fund? Where'd everybody go?

Rahm and Griffin.

Back in April, 2015, we heard that the feds were in town, supposedly looking into the Chicago Public Education Fund (CPEF) and its involvement in the Barbara Byrd-Bennett/SUPES no-bid contract scandal. Remember? Subpoenas were flying and the names of some of the biggest players in corporate school reform were being dropped to the press.  Among those names were CPEF's billionaire board members, Bruce Rauner, Penny Pritzker,  Susan Crown, Mellody Hobson (wife of George Lucas), and the state's richest man, Ken Griffin. 

While the Fund wasn't the target of the investigation, and no-bid contracts with kickbacks are usually no big deal in Rahmville, it was reported that its board had given SUPES a $380,000 contract to train area network chiefs and their deputies. But when things started getting hot, they quietly discontinued their funding. 

Ace Catalyst reporter Sarah Karp, now with the BGA, made the point then, that if the Fund had been more transparent about its de-funding of SUPES, "taxpayers might have saved the $12 million of the more than $20 million SUPES was paid before its contract was cancelled".  But transparency is a no-no around CPEF's fancy downtown headquarters (nice view of the lake).  

As Karp puts it:

No one outside The Fund’s staff and board of directors knows how it decides which programs to support, what the results have been and how or whether the results are communicated to CPS.

So since April, there's not been a word in the media about CPEF or the investigation. Where'd everyone go? 

Griffin just sold his condo for $16M.

Rauner, now the governor, was at one time the CPEF board president. He denied any culpability in the SUPES affair, telling the feds that it was his pal Rahm Emanuel and not him, who brought SUPES, Gary Solomon, and Byrd-Bennett into town. 

Pritzker's off playing Obama's Sec. of Commerce, leaving Rahm holding the bag on school closings. She was a member of the school board that approved them along with the SUPES deal. 

And hedge-funder Griffin? (among Rahm/Rauner's largest campaign contributors). He took a bit of a hit when wife Ann divorced him. But he's still in the game, bigger than ever.

His most recent deal... Crain's reports that Griffin just sold his Chicago condo at the Waldorf Astoria for a mere $16M, the same price he bought it for 17 months earlier. The sale was the second-highest home sale in the Chicago area during 2015, after an $18.75M purchase at the Park Tower by an associate of Lucas and Hobson.

I'm sure this is all on the up-and-up, but it turns out that Griffin originally bought the place from ("an entity connected with") himself and then sold it to ("an entity connected with") himself. 

Sounds like a win-win. It always is for these guys. 

Noble -- The Billionaire's Charter School Network

Former Exelon CEO John Rowe at his Rowe-Clark Math & Science Academy. 

It was 2006 and Mr. Manderschied was president of the Noble Network of Charter Schools. He met with Mr. Rauner, then chairman of Chicago private-equity firm GTCR LLC, in a living room-like suite at the firm's Sears Tower office. But he was nervous because he had never asked anyone for such a large sum. After an hour's discussion, Mr. Rauner agreed to the $1 million donation that would make his name the first one emblazoned on a Noble school. -- Crain's

While parents and Bronzeville community activists had to go on an 18-day hunger strike to win an open enrollment high school at Dyett, all charter hustler Mike Milkie had to do was walk into billionaire Bruce Rauner's office with his well-connected pal Manderschied and ask him for a million bucks to open another in his chain of privately-run charter schools. Then it's over to CPS to win easy approval for another charter school to compete with underfunded neighborhood schools for area students.

Already the state's biggest charter network, Noble expects to teach 15% of Chicago public high school students by 2017.

How they call them public schools, I will never know.

The Noble Network of Charter Schools founded by Milkie, a former Chicago high school teacher, looks more like an ego-boosting tax haven for local billionaires than it does public, neighborhood charter schools. For a meager $1M "investment", billionaires like Gov. Bruce Rauner, Sec. of Commerce Penny Pritzker, Allan Muchin (founding partner of Katten Muchin Rosenman LLP), former Exelon CEO John Rowe and former ComEd CEO and CPS school board president Frank Clark, had schools named after themselves.

According to Crain's: 

Mr. Rauner, a Republican from Winnetka, has backed a number of charter schools, including the UNO Charter School Network now dogged by questions of cronyism. But he has given the most to Noble, just over $3.5 million.

It was a nice boost for Rauner, who while locked in a tight race for governor,had hundreds of students moving around the city, wearing required school uniforms with polo shirts, jackets, sweats, and sports team jerseys bearing his name.

Now CEO of the Noble Network, Milkie says he understands how to talk to business executives.

“Their dollars are a great investment in terms of return,” he says, citing low administrative costs and the “tremendous impact on students' lives.” He provides dashboards of data to document progress on everything from student testing to detentions to teacher bonuses.

“Businesspeople like to measure things,” says retired Exelon Corp. Chairman and CEO John Rowe, who estimates he's given $4.5 million to Noble and for college scholarships to its graduates since 2007.

In its latest capital campaign, Noble has raised more than half the $50 million it's targeting for expansion. That includes $15 million last year from Glenview-based Illinois Tool Works Inc.'s foundation for the ITW David Speer Academy for a school built across the street from Prosser High School. ITW has already been contacting Prosser freshman and their families to recruit them away from Prosser.

But lately, Milke and his wealthy patrons have run into trouble when they tried to expand into more upscale north-side white communities. Parents rose up in opposition and local pols responded by putting the kibosh on Noble's expansion plans.

Big money talks, but doesn't always win.

Reason 1001 Why We Need an Elected School Board in Chicago

Quazzo flies Byrd-Bennett out to Arizona for her annual ed investment conference

“It’s my belief I need to invest in companies and philanthropic organizations who improve outcomes for children,” Quazzo says.

Today's Sun-Times Reports:

Companies that Chicago Board of Education member Deborah Quazzo has an interest in have seen the business they get from the city’s schools system triple since Mayor Rahm Emanuel appointed her to the board last year, records obtained by the Chicago Sun-Times show.

Quazzo’s companies have gotten an additional $2.9 million in Chicago Public Schools business in the year and a half since the millionaire venture capitalist joined the board to fill a vacancy left by Penny Pritzker when President Barack Obama named Pritzker commerce secretary.

In all, five companies in which Quazzo has an ownership stake have been paid more than $3.8 million by CPS for ACT prep or online help with reading, writing and math. One of them stands to collect an additional $1.6 million this year from a district contract.

Quazzo says she has recused herself from school board votes on contracts with companies in which she has a stake, including a $6 million, two-year deal with one called Think Through Math. But, of course, nearly every vote of the board in unanimous.

On the website for GSV Advisors, Quazzo lists five companies she has invested in that do business with CPS — Academic Approach, Dreambox Learning, MasteryConnect, Think Through Learning and ThinkCERCA and touts her “dozens of personal investments in dynamic education companies, demonstrating her commitment while deepening her expertise and relationships in this important and fast-growing sector.”

Quazzo also co-hosts an annual education investment conference in April in Arizona with GSV Capital, which is owned by venture capitalist Michael Moe. Barbara Byrd-Bennett, CPS’ chief executive officer, and Quazzo’s fellow school board members Andrea Zopp and Mahalia Hines are among past speakers at the conferences.

Byrd-Bennett’s airfare and hotel bill were paid for by conference organizers, as were Hines’, according to McCaffrey.

Another reason for an elected school board in Chicago.

Maybe Pritzker left it in her other purse...

Obama's pick for Commerce Secretary and former Rahm-appointed Chicago school board member, Penny Pritzker "inadvertently ommitted" more than $80 million in reported income. Hey, mistakes happen. Been there, done that, says Sen. Jay Rockefeller, who was on the receiving end of a Pritzker "courtesy call" this week and who is almost as rich as Pritzker.

Emily Heil writes in the Washington Post:

That might sound like a lot of money, but it’s all relative. Pritzker, whose family founded the Hyatt hotel chain, is worth about $1.5 billion. So it’s easy to see how a few million — or 80 — could go missing. Maybe she left it in the other purse? 

According to Sun-Times columnist, Lynn Sweet:

Pritzker’s biggest hurdle toward confirmation will be Republicans grilling her on the major stain on her record, the 2001 failure of Superior Bank, a Hinsdale Savings and Loan, and tax avoidance strategies employed by her trusts and business empire.

The Pritzker family founded Hyatt Hotels, and have been at odds with UNITE HERE Local 1, the hotel workers union for years. Pritzker is on the board — she will step down if confirmed — and the union, after at first giving Pritzker a pass, in recent days has started a campaign to oppose her; an ad in Politico called her appointment “The President’s mistake.”

Pritzker is also taking some heat for sheltering millions in taxable income in offshore trusts. On financial disclosure forms, Pritzker has revealed that she received $53.6 million in income in 2012 from a trust in the Bahamas. The income is described as being paid for “consulting services.” The offshore issue is sure to bring questions from congressional Republicans, especially on the heels of a Senate hearing into tax avoidance by Apple Inc., whose chief executive defended the company’s actions this week by protesting, “We don’t stash our money on some Caribbean island.”

Pritzker's resignation left the school board with only 6 voting members left to rubber-stamp the mayor's massive school closing plan.

Pritzker nomination causing problems for Obama

The Wall Street Journal reports that the nomination of Penny Pritzker as the next commerce secretary would threaten to divide President Barack Obama's political coalition, pitting women's advocates against labor leaders angry about the treatment of workers at her family's hotel chain.

Last July, a group of labor leaders, including Obama ally and AFL-CIO President Richard Trumka, joined Unite Here at a news conference in Washington, where Unite Here called for a global boycott of Hyatt Hotels.

How can you say you support women while supporting Pritzker too?

What WSJ misses, as do some women's groups (the National Organization of Women is part of the national coalition supporting UNITE and the Hyatt workers), is the fact that Pritzker's Hyatt Hotels are most oppressive to the hotel chain's largely female and immigrant workforce. Female immigrant workers are the backbone of the hotel industry. Not only that, Hyatt chain is a global company and labor opposition to the chain and disdain for the Pritzker name is also global. Her appointment could create even more widespread opposition to the pick than anticipated.

And let's not forget the thousands of women teachers who have to deal with Chicago's anti-teacher, corporate "reform" policies being pushed by Pritzker and the rest of Rahm Emanuel's hand-picked school board.

It's doubtful, says WSJ, that union opposition to the Pritzker pick will sink Obama's choice. More likely,  union leaders will try and use their influence on the selection of the new Labor Secretary who will be replacing the do-nothing Hilda Solis. The good news for Chicagoans is that a Pritzker pick will get her out of Chicago and off of the school board.

More UNO problems for Rahm

The Sun-Times recent expose of UNO's charter school profiteers has Rahm ducking for cover. If there's a major investigation of UNO corruption it's bound to implicate Rahm and his ties with UNO boss Juan Rangel. This becomes a major problem for Rahm especially because City Hall lawyers are currently hard at work trying to get Chicago out from under the Shakman Decree which strictly prohibits politically based hiring, firing, promotions, and other job actions. A perfect description of UNO's MO.

Fran Spielman writes in the Sun-Times:

Emanuel was clearly troubled by the Chicago Sun-Times disclosure that more than one-fifth of the $25 million in taxpayer money spent on the UNO Soccer Academy Elementary Charter School went to four contractors owned by family members of UNO’s political allies and a top executive of the group. The fact that Emanuel is a huge proponent of charter schools and that UNO CEO Juan Rangel is the mayor’s former campaign co-chairman and a mayoral appointee to the Emanuel-chaired Public Building Commission adds to the political embarrassment.

"Who'd we get today?"

Best Rahm quote:

It comes from John Kass' Trubune column on the Obama drone strategy:

"Who'd we get today?" was the famous question asked repeatedly by Chicago Mayor Rahm Emanuel, when he was the pro-drone Obama White House chief of staff, according to Bob Woodward's book "Obama's Wars."Emanuel's was a gleeful question, full of bureaucratic malice, asked by a man with his loafers on safe White House carpets. Those same carpets still caress Obama's shoes.

Foreign aid pouring into my Chicago neighborhood

Workmen put finishing touches on our new neighborhood soccer field built with foreign aid.

Corporations have found a safe tax haven here in Chicago and the State of Illinois. So much so that teacher retirement funds are being threatened, mental health clinics are being shuttered along with a hundred neighborhood schools, due mainly to lack of revenue. Under Rahm Emanuel's regime, Chicago is being turned into a beggar city which now operates on the charity and benevolence of the mayor's wealthy patrons and power philanthropists along with foreign aid. 

The latest example:  Down the street from a closed mental health clinic in my Logan Square neighborhood, a new astro-turf soccer field is under construction thanks to foreign aid from the oil-wealthy United Arab Emirates, the benevolence of British soccer moguls, and the Pritzkers, the billionaire union-busting family that refuses to pay their Hyatt Hotel workers a living wage.

“We have a philosophy of giving back to the community — America is a great, up-and-coming soccer market, but first we want to give back,” said Gary Hopkins, head of Manchester City’s international development team in the United States. He said that Manchester City will be providing three years of soccer programming, including training and bringing in coaches to work with kids interested in the game.

Hopkins is also author of Star Spangled Soccer: Selling, Marketing and Management of Soccer in the USA and says that interest in soccer among Americans took off after Chicago hosted the 1994 World Cup. -- Chicago Sun-Times

Matt Farmer's great speech at CTU rally

Matt Farmer is a lawyer and a Chicago Public School Parent. Watch him cross-examine Hyatt Hotel heiress and CPS board member Penny Pritzker in his May 23rd speech to 4,000 union teachers at the Auditorium Theater.
 

BTW, Pritzker is also national finance chairperson of the Obama campaign. She is one of three cousins who manage their dynasty’s financial empire, which includes the Hyatt hotel chain, casinos and many other ventures.

But according to the New York Times, she was also involved in running and overseeing Superior Bank, an Illinois institution co-owned by her family that was at the forefront of turning subprime loans into securities, the risky practice at the heart of the financial crisis. The bank collapsed in 2001 after regulators discovered accounting irregularities that overstated its assets.

Ah, what a perfect addition to Mayor Emanuel's hand picked school board.

The Griffins -- hedge fund power couple

Ken Griffin and wife Anne, have become two of the most prominent and powerful names associated with Chicago's corporate-style school reform. As the founder and head of the Chicago-based hedge fund Citadel, Griffin is reported to be worth $2.3 billion, making him the fifth-richest Chicagoan and 159th-richest American, according to the 2010 Forbes 400.

He and his wife, Anne Dias Griffin, have been major players in the world of political money: Campaign finance records show that the Griffins have donated more than $3 million to candidates and political action committees—including $450,000 last fall to Republican Bill Brady in the tight 2010 Illinois governor’s race.

The Griffins, along with other Chicago billionaires like Penny Pritzker and Bruce Rauner, also helped underwrite the anti-union lobbying group Stand For Children, headed by Jonah Edelman.  In 2010, Ken gave $500,000 each to two different political action committees—on October 25th to American Crossroads, an organization, according to its website, “dedicated to renewing America’s commitment to individual liberty, limited government, [and] free enterprise” and on December 15th to Stand for Children Illinois.

He also contributed  $150,000 to Mayor Daley in 2006 and $200,000 to Rahm Emanuel's mayoral campaign.

Noted art aficionados, they own works by Monet, Degas, and Cezanne, and paid $80 million for a Jasper Johns painting reportedly worth $2.3 billion, Ken bundled money for both Obama and John McCain during the 2008 election. In the 2012 election cycle, the couple has given $500,000 to the Republican Governors Association, $300,000 to Rove's American Crossroads, and $150,000 to the Wisconsin Club for Growth. Bonus: Charles Koch named them as part of alist of elite donors who have pledged $1 million to his and his brother David's conservative fundraising machine.

Rahm Emanuel's School Team

The lead into the Chicago Sun-Times story says it all: "Charter schools. Turnaround schools. And knowing where the money is." Among those guiding Rahm's hand-picked CEO Jean-Claude Brizard will be:

David Vitale

Vitale gives new meaning to the words top-down. The former bank president was even booted from his position as head of the Chicago Board of Trade for not being able to play well with others.  I wrote about him back in '05 (""Do we need a lot of public decision-making about replacing lug nuts? I don’t think so."--David Vitale") and here last October, remembering the Little Village High School hunger strike. Vitale once told me he thought  the hunger strikers' victory was "one of the greatest disasters in CPS history." Vitale saw the hunger strike tactic as "blackmail" rather than community and parent engagement. 

I'm pretty sure that Vitale is there to ride herd on Brizard. He and the corporate reformers will have the real power, not the new CEO.

Penny Pritzker

A member of the billionaire Pritzker family, Penny Pritzker is a huge charter supporter and a long-time education advocate. She was a contributor to Stand for Children, which led the writing of an Emanuel-backed school reform bill that trims teacher union power while giving CPS enhanced muscle to extend the school day and year. Her Pritzker Traubert Family Foundation contributes to the Academy for Urban School Leadership, the Young Wopmen’s Leadership Charter School and the Nobel Street Charter School network — all of which Emanuel wants to expand. Noble Street’s Pritzker College Prep is named after the Pritzker family. She also is chair of the Chicago Public Education Fund and led President Obama’s 2008 funding drive.