Company Had Inside Help to Allegedly Scam City

By Prescott Carlson in News on Mar 22, 2010 9:20PM

Chicago's Azteca Supply Company had some inside help securing city contracts worth tens of millions of dollars, according to the Chicago Sun-Times. Gery Chico, a former Daley chief of staff who now chairs the City Colleges of Chicago board, seems to be very friendly with Aztec's owner, Aurora Valadez Venegas:

For the last six years, Chico, a lawyer and lobbyist, has repeatedly -- and successfully -- urged city officials to renew Azteca's certifications as a "minority business enterprise," a "woman-owned business enterprise" and a "disadvantaged business enterprise." That status as an MBE, WBE and DBE has made Azteca a popular government contractor and subcontractor.

So what? Just another day at city hall, right? It would be, if Azteca wasn't recently charged by the feds after a two year investigation as being merely a "front" company middleman that simply passes orders through to actual vendors to take advantage of their preferred minority/woman owned status.

A quick online search of city contracts shows that Azteca's relationship with the city goes back to the early 90s with an order for technical grade urea, which is commonly used as a de-icing agent. Other ongoing contracts include providing de-icer to Streets and Sanitation and a $4.5 million contract to supply liquid aluminum sulfate to the Department of Water Management. But their big moneymaker is as an exclusive distributor for National Concrete Pipe, where Venegas worked in the 70s (her husband is still the comptroller there). This arrangement got somebody curious at IDOT, who looked into it further and whose report seems to have tipped off the feds:

"[Venegas' husband and co-defendant Thomas Masen] explained their transaction process with Azteca: When Azteca phones in an order, NCPC transfers standard items immediately to Azteca's lease space, which is just a few feet away from the [National Concrete Pipe] plant yard,'' [Brian] Su wrote in an IDOT report that also went to City Hall.

"Azteca does not have a necessary and useful role in the transaction," Su wrote. ". . . The firm's role is a superfluous step added in an attempt to obtain credit toward [DBE] goals.

The city purchasing department expressed "shock" over the allegations, and City Hall is seeking to block Azteca from receiving any more contracts with the city. The city most recently paid Azteca over $220,000 in February of this year.