3 city workers accused of bribery
Plumbing inspector allegedly caught in sting
March 30, 2007, Chicago Sun Times
BY STEVE WARMBIR AND ERIC HERMAN Staff Reporters
It was a shakedown by sign language. When a contractor needed a city plumbing inspector to sign off on questionable work at a West Side home, the inspector shot up five fingers, authorities say.
A bribe was in the air, but the contractor needed clarification. Fifty dollars? he asked the inspector. No, $500, came the reply, authorities say.
City inspector John Chamberlain, 58, and two former city employees were charged with bribery Thursday as the investigation of corruption in the city’s Building Department continues under the city’s inspector general, David Hoffman. It brings the total charged so far to nine people, seven of them onetime city employees.
» Click to enlarge image
Plumbing inspector John Chamberlain.
“There is no place in city government for this kind of corrupt activity,” Hoffman said, adding that portions of the bribe discussions were secretly recorded.
Chamberlain, who made more than $85,000 a year, allegedly took $1,500 in bribes in December and January — $500 to sign off on work that allegedly exceeded the scope of a city permit and $1,000 to provide a fraudulent letter.
On Dec. 12, the contractor got shaken down, allegedly by Chamberlain, but the contractor told him he would have to call his son for the money.
The contractor reported the shakedown to the inspector general’s office, which sent an investigator to pose as the son. The investigator allegedly paid $200 in one meeting, then $300 in another.
The investigator also pretended he wanted to hire an unlicensed plumber for another rehab project but needed a letter from a licensed contractor saying he was going to do the work, to get city permits. Chamberlain got a fake letter from a real contractor and charged the inspector $1,000 for it, the allegations state.
Others charged
Chamberlain, who worked for the city for more than 18 years, has confessed to what he did, Cook County authorities said. He is on paid administrative leave from the city pending investigation. The unnamed contractor is expected to be investigated, too.
A former Buildings Department employee, Tjuana Freeman, 39, was charged Thursday with taking a $1,500 bribe from a contractor when she worked for the city to get him a masonry contractor’s certificate when she knew he wasn’t qualified, authorities said. A warrant has been issued for her arrest.
A former administrative assistant in the Department of Construction and Permits, VerGina Harris, 51, was charged Thursday with taking a $300 bribe on two occasions to provide stair repair permits to an investigator posing as an unlicensed contractor.
Judge Thomas Hennelly on Thursday set bond for Chamberlain and Harris at $10,000 each.
March 30 2007 | Bribes | No Comments »
Issue Date: RealLawCentral.com - January 2007, Posted On: 1/24/2007
Regulatory Update
Agents received royal treatment from First American, regulators allege Real estate professionals were allegedly bribed by the title insurance giant with extravagant gifts of chartered fishing trips, riverboat dinner cruises and even tickets to the Teen Choice Awards and concerts hosted by U2, Elton John and the Eagles. As HUD cracks down on kickback receivers, will this settlement put Realtors next in line for a slap on the wrist?
Outgoing California Department of Insurance (CDI) Commissioner John Garamendi had one last parting gift for the title industry before taking office as lieutenant governor: A $10 million settlement with First American for alleged illegal rebating activities.
In an agreement signed Jan. 3, First American agreed to pay $10 million to the CDI to settle accusations that the company paid the accommodations and entertainment expenses of settlement service providers in an inducement to refer business in violation of state anti-rebate laws and RESPA Section 8(a).
The settlement does not constitute an admission of liability or wrongdoing by First American. However, according to the stipulation and waiver agreement reached between First American and the CDI, the CDI could take future action to enforce the stipulation and waiver if it believes First American is not in compliance with the agreement.
RESPA attorney Jeffrey Arouh, partner with Holland & Knight LLP, said he found the settlement interesting “on a variety of levels.” In particular, the CDI’s accusations were indicative of the very keen interest state regulators have taken in the rebating activities of title insurers, he said.
“As far as I am concerned, this is a continuation of the effort we have seen for the last year of state regulators taking enforcement actions against companies they perceive to be commiting more egregious and identifiable violations of state anti-rebate and inducement laws,” Arouh said. “They have a focus now that before, hadn’t been quite as apparent.”
But while industry leaders debate how damaging the settlement may be to the entire California title insurance community, the long-running debate over ambiguity in California’s rebating laws doesn’t seem to apply here, Arouh said.
“There certainly are ambiguities in state laws that relate to rebating, but I think the kinds of allegations that are being made in this accusation are not the kind that I think result from potential ambiguities,” Arouh said.
The CDI’s allegations
According to an accusation dated Nov. 6, the CDI began examining First American’s operations after it received 72 written complaints alleging illegal rebating activities by the company from February 2005 to February 2006. The examination occurred in First American’s San Bernadino County office, according to the accusation.
Following a series of interviews with First American employees and an examination of the company’s books and records, the CDI in November filed an accusation against First American, alleging that between February 2005 and November 2005, the company made cash payments to settlement service providers for the referral of title insurance business. The company also paid the business support expenses of other providers which were unrelated to the business of title insurance, the accusation alleged.
Specifically, the accusation alleged that First American paid the accommodations and entertainment expenses of other settlement service providers, including food and beverages, transportation expenses, gifts, gift certificates, gift cards and other miscellaneous gifts and merchandise — all in an inducement to refer business.
According to the accusation, in one instance, First American entered into a Selected Service Provider Agreement with Frontier Homes LLC, whereby First American agreed to “pay Frontier $100 for each closed First American title insurance order” if Frontier “provide[d] … Transaction Coordination services to First American in the counties of Riverside, San Bernadino and Los Angeles, Calif.
First American tendered 15 payments to Frontier Homes totaling $106,000 as part of this agreement, according to the CDI.
“First American’s Selected Service Provider Agreement constitutes a per se inducement for the placement or referral of title insurance business in that the Transaction Coordination services provided by Frontier are unrelated to the business of title insurance,” the CDI said.
First American also submitted receipts, invoices and expense reports totaling $477,690.13 for business report expenses, the CDI alleged. In addition, First American county managers, sales managers and sales representatives submitted 33 receipts and invoices documenting expenditures for the business support expenses of 12,404 people which were unrelated to the business of title insurance.
Examples from those receipts and invoices, according to the CDI, were consulting, license and training fees paid to Farbod McCubbin of WebRealtySolutions.com related to its Realty DataLink software program and to Eudicor Consultants related to its DailyContact.com online Direct Mail Solution Program. First American also printed raffle prize tickets for Realtor association events and underwrote the costs for real estate agents and brokers to attend annual award meetings, the CDI alleged.
The CDI also alleged that First American employees submitted 66 receipts totaling $41,117.74 for accommodations and entertainment expenses, including accommodations at the Marriot Hotel in Palm Desert prior to a golf tournament; tickets for a college football game in Texas; tickets to an NFL football game in Minnesota; chartered fishing trips; riverboat dinner cruises; Del Mar racetrack trips; and tickets to football, baseball and soccer games, musicals, comedy clubs, the Teen Choice Awards and concerts hosted by Gwen Stefani, U2, Elton John, Velvet Revolver, the Eagles and Paul McCartney.
First American employees also submitted 179 receipts, invoices and expense reports totaling $17,694.93 for gifts, gift certificates, gift cards, miscellaneous gifts and other merchandise including Starbucks gift cards; theater gift cards; movie ticket gift cards; Blockbuster gift cards; restaurant gift certificates; amusement park certificates; department store gift certificates; flowers; books; Thomas Guides; gift baskets; computer monitors; cigars; and wine, the CDI alleged.
According to the CDI, First American employees also submitted 732 receipts totaling $113,375.99 for food and beverages for training meetings; open houses; grand openings; holiday and birthday parties; broker caravans; concerts; MLS tours; cocktail parties; Monday Night Football events; a chocolate fountain for the RE/MAX grand opening; Broker of the Year ceremonies; and sporting events.
Finally, First American employees submitted 17 receipts, invoices and expensed reports totaling $15,612.04 for transportation expenses, including limousine rides and chartered bus trips to Realtor award dinners’ baseball games; casinos; and racetracks, the CDI alleged.
Discretionary violations
According to the CDI, these activities violated several provisions of the California Insurance Code, one of which, Section 790.035 states, “any person who engages in any unfair method of competition or any unfair or deceptive act or practice … is liable to the state for a civil penalty to be fixed by the commissioner, not to exceed $5,000 for each act, or if the practice was willful, a civil penalty not to exceed $10,000 for each act. The commissioner shall have the discretion to establish what constitutes an act.”
The CDI’s “discretion to establish what constitutes an act” has long been considered by California title insurance professionals to be ambiguous guidance on which business practices are legal and permissible.
However, in this case, the law was pretty plain, Arouh said.
“One of the things we’ve pretty much come to understand is that workshare arrangements are permissible if they are structured properly and if the services in question were actual and necessary and compensated for at a reasonable level,” Arouh said. “One of the accusations here included a workshare agreement that was unrelated to the title insurance business — which means the services were not actual and necessary in order to provide the title insurance services being rendered. It’s hard to judge the extent to which this may be true, but it tends to fit back into the category of a business decision having been made to take these events and hopefully put them behind First American for the time being.”
The CDI also alleged that the activities violated Section 8(a) of RESPA, which states that “no person shall give and no person shall accept any fee, kickback or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a real estate settlement service involving a federally related mortgage loan shall be transferred to any person.”
RESPA Section 8(d) gives state insurance commissioners the concurrent authority to enforce the federal statute by fining violators up to $10,000 per act and/or prison time as well as an amount equal to three times the amount of any charge paid for settlement services.
Terms of the agreement
According to a stipulation and waiver dated Jan. 3, First American waived its right to a hearing and agreed to pay $9,949,500 to the CDI as a monetary penalty. In addition, First American agreed to pay $45,500 to reimburse the CDI for the costs of its investigation and an additional $5,000 for the CDI’s determination that it failed to comply with a November 2005 order concerning its activities.
First American also agreed to cease and desist the activities outlined in the CDI’s accusations and to appoint a company officer to review and monitor its compliance with state anti-rebate laws.
By electing to settle the allegations, First American saved itself over $7 million, as the CDI’s fine totaled $17,243,853.28. The CDI also could have suspended or revoked the company’s license to operate in California.
The agreement was signed by First American Chairman and CEO Parker Kennedy Dec. 27.
First American could not be immediately reached for comment.
Arouh said that while the settlement was meaningful in terms of the amount, it’s difficult to judge whether the claims were valid or accurate.
“Any time a company finds itself facing claims of this magnitude, using up internal resources to defend them, it may be better to just take care of it and move on,” Arouh said. “If I am sitting in First American’s position, I may just have made a business decision as to the resolution of these issues, paid the amount and moved on.”
January 25 2007 | Bribes | No Comments »
The New York Sun
By JACOB GERSHMAN
Staff Reporter of the Sun
November 17, 2005
Six current and former employees of the city agency responsible for public school construction were arrested yesterday for accepting tens of thousands of dollars in bribes from contractors between 2000 and 2004, authorities said.
The indictments unsealed in federal district court in Manhattan sent a message to Mayor Bloomberg that the anticorruption safeguards he instituted after taking over the troubled School Construction Authority in 2002 may have fallen short.
While calling the alleged bribery “deplorable,” a senior education department official, Deputy Chancellor Kathleen Grimm, said the construction authority has boosted its anti-corruption effort since the alleged incidents took place, making it significantly more difficult for employees to commit such crimes.
Authorities said the indictments were the result of an investigation that had lasted more than two years. The city’s Department of Investigation, the state attorney general’s office, and FBI officials in New York conducted the probe.
Many of the allegations against the employees stem from the June 2004 arrest of a construction authority contractor who was charged with wire fraud and income tax evasion. In a plea deal, the contractor, unnamed in the indictments, told officials of numerous cases of project officers demanding cash for processing payments. The contractor then tape-recorded meetings with the defendants, during which they are heard offering their services, discussing previous bribes, and accepting cash.
November 24 2005 | Bribes | No Comments »
Florida Department of Agriculture and Consumer Services
Department Press Release
07-28-2004
Liz Compton
(850) 251-5693
comptol@doacs.state.fl.us
TALLAHASSEE — Florida Agriculture and Consumer Services Commissioner Charles Bronson has charged a Broward County pest control operator with a second degree felony for trying to bribe a department inspector.
Larry Kravitsky has been charged with Unlawful Compensation or Reward to a Public Official, a second degree felony. He is accused of offering money to an inspector with the Department’s Division of Agricultural Environmental Services (AES) on three separate occasions between April 20, 2004 and June 16, 2004.
The Department’s Office of Agricultural Law Enforcement launched the investigation when the department employee reported the attempted bribe. Investigators say Kravitsky tried to bribe the inspector who was performing routine fumigation inspections of the Broward County based Ship Shape Pest Control company. The company was in the process of attempting to be sold and investigators say Kravitsky did not want any potential violations to impede the possible sale. He offered the inspector money to try and persuade him to delay filing reports which reflected violations against the company.
The Department’s inspector went to the program supervisors with the information and an undercover investigation was conducted. Kravitsky delivered an envelope with $700 to the inspector. He later offered additional money if the inspector would continue to withhold the reports. The case was presented to the Broward State Attorneys Office and arrest warrants were issued. Investigators with Agricultural Law Enforcement and with the assistance of the Broward Sheriff’s Office arrested Kravitsky.
“This Department is in the business of protecting consumers from improper business practices and I think this case sends a message that our Department employees take their responsibilities very seriously,” Bronson said. “I am pleased that the Office of Agricultural Law Enforcement with the help of our employee was able to take decisive action.”
The violation is punishable by a term of imprisonment not exceeding 15 years and/or a fine not exceeding $10,000.
July 30 2004 | Bribes | No Comments »