By Cynthia Dizikes, Chicago Tribune reporter
1:44 AM EST, February 23, 2012
The federal government has launched a criminal investigation into one of the state's largest nonprofits, which spent millions of stimulus dollars on weatherization work in low-income homes.
The investigation into the Community and Economic Development Association of Cook County follows a searing 2010 audit that pointed to shoddy and sometimes dangerous work performed by the group's contractors. A Tribune story in 2011 examined CEDA's continuing struggles and lack of transparency despite its substantial government funding.
The general counsel for CEDA confirmed last week that the agency is under investigation, but declined to discuss details.
"With regard to the federal investigation, I have no comment," attorney Joel Handler said. "It is an ongoing investigation."
John Hamilton, CEDA's weatherization director, told the Tribune that he was still with the agency but "on leave." The organization's website lists Ethel Brown as acting weatherization director.
The U.S. has demanded documents from CEDA pertaining to 10 companies listed on the agency's website as weatherization general contractors, according to a federal grand jury subpoena obtained by the Tribune. In addition to bids, requests for proposals and requests for quotes, the subpoena seeks complaints, grievances, requests for further repair/replacement and related materials received by the weatherization assistance program.
From 2007 through 2009, CEDA took in more than half a billion dollars in grants and contributions, with 99 percent of that money coming from taxpayers. Although about $91 million of those funds came from stimulus money to weatherize homes for the poor, CEDA denied a Tribune request last year for records about its contractors and how it spent those dollars. CEDA said it was not a "public body" as defined by the law.
The Tribune found, however, that several of the contractors had been sued in Cook County and federal court, accused of performing substandard work, defaulting on loans from CEDA, and refusing to pay wages to employees and subcontractors. Further complaints filed with the Illinois attorney general's Consumer Fraud Bureau alleged other problems on specific projects, including that a contractor failed to adequately repair a roof, that another installed the wrong size furnace, and that a subcontractor created a water leak.
Those revelations buttressed an October 2010 audit by theU.S. Department of Energy's Office of Inspector General, which determined the state weatherization program was at risk due to "substandard performance in weatherization workmanship, initial home assessments, and contractor billing."
The report documented several instances of bad work and wasteful spending. In some cases, inspectors found that heating system tuneups were improperly performed, allowing carbon monoxide levels to be higher than acceptable. In another case, an assessor inappropriately called for attic insulation when sizable leaks in the roof would have significantly reduced its effectiveness. Contractors were also found billing for extra labor charges and unreasonable materials costs, the report found.
"This wasteful practice could ultimately reduce the number of homes of low income families that can be weatherized with the limited Recovery Act funds available," according to the report.
When the Tribune reached out to Hamilton last year, he defended CEDA's weatherization efforts, insisting that not one dollar had been misspent and that contractors were required to fix mistakes before being paid. At the time, CEDA, the state and several contractors disputed some of the audit's harsh findings and insisted that state oversight and quality had improved.
This week, however, Hamilton declined to speak about his views of CEDA's weatherization program, citing the ongoing investigation.
"I'm just not in a position to talk about (it) until it is over," Hamilton said.
The Department of Energy's Office of Inspector General and U.S. attorney's office declined to confirm an investigation.
Robert Wharton, CEDA's former chief executive officer fired last month amid allegations that he financially exploited his former secretary, who has dementia, could not be reached. Interim CEO Patricia Doherty-Wildner did not return multiple calls for comment.
CEDA executive committee member Lorraine Morton, formerly the mayor of Evanston, said she learned of the investigation into the weatherization program at a board meeting last year. Morton acknowledged that CEDA's weatherization program had experienced problems, attributing the troubles to the large coverage area, but insisted the issues were straightened out.
"There were many things that were absolutely good (with the weatherization program)," Morton said. "But nevertheless it is under investigation, so we will just have to wait and see."
Tribune reporters Todd Lighty and Julie Wernau contributed.