Federal Investigators Subpoena Daley Nephew; Mayor Says It's "All Right"

A federal grand jury subpoenaed files related to four city pension funds that are invested in DV Urban Reality in late May. DV Urban Reality is the real estate invest firm headed by the mayor's nephew, Robert Vanecko. The city's Inspector General, David Hoffman (himself a former federal prosecutor) has been trying to get those records for several months now; the pension funds, which include teachers, municipal employees, laborers and CTA workers, have refused, saying Hoffman lacked the authority to subpoena the records. Hoffman has been investigating how's DV Urban Reality, which is headed by Vanecko and mayoral buddy Allison Davis, got nearly $70 million in funding from municipal pension funds. Hoffman has said that his office is now jointly conducting an investigation into the pension fund investments with federal prosecutors.

The investments that DV Urban has made with the pension fund monies have declined in value recently, in part due to the recession. But Vanecko and Davis are also feuding with developers Michael O'Connor and Jon Zitzman over a deal to build condos and a Dominick's at Wellington and Broadway. Vanecko and Davis had hoped to find someone to buy them out at an auction set for June 5 at the law offices of another mayoral nephew, Patrick Daley Thompson. That plan was derailed, however, when Zitzman's firm filed for bankruptcy last week, requiring the auction to be canceled. When asked about the situation earlier last week, Mayor Daley told the press “that’s all right.”

But all may not be well for the Daleys. A report in this morning's Sun-Times says the family is in "turmoil" over the current investigation. One family member told the S-T:

"It's a terrible situation. Everyone wishes this wasn't going on. In hindsight, it looks bad. And it's obvious this is gonna continue...It's not easy watching your nephew being trashed. We all feel sorry for him. But, he's finding out what we all learned 30 years ago-that if you stay around [government] long enough, you're gonna get burned."

The Sun-Times story also says, "Mayor Daley was described as livid and distraught about the controversy, but dead-set against touching off a bitter family feud by publicly criticizing Vanecko, the eldest of Richard J. Daley's 22 grandchildren." A comparison is made to the Mell-Blagojevich feud as well but we don't think it'll ever get to that point as the Daley family circles the wagons.