Sunday, July 21, 2013

"Continued abuse of Pension Funds by politically connected individuals tied back to former Mayor Daley"

Municipal Employees' Annuity & Benefit Fund of Chicago refuses to comply with FOIA to provide contracts with Robert Vanecko's company DV Urban claiming it would reveal trade secrets!

As a continuation of Corruption Buster's investigation of politically connected deals to siphon management fees from pension funds, a FOIA was issued to obtain information related to private investment monies handed to former Mayor Daley's nephew, Vanecko.

Interestingly, the FOIA response was provided by MEABF's law firm, Burke Burns & Pinelli, headed up by Alderman Ed Burke. The fund did not respond directly.

The information provided included the Board meeting minutes from April 20, 2006, in which the investment in DV Urban Realty Partners I LP was approved. The date of fiduciary appointment was April 28, 2006.

A one page exhibit shows the commitment amount of $15 Million in 2006.

Annualized performance from 2006 to 3/31/2012 was negative 21.1%

Here are the non-refundable management fees garnered by DV Urban despite gross mismanagement of the investment funds

Losing investment value while garnering management fees has proven to be very lucrative, especially when the investments have been granted via sole source, politically wired deals!

Robert Vanecko was hired by Thomas R. Reedy at Everen Securities in 1998 with no investment banking or municipal bonding experience. Reedy had also hired David Wilhelm after his tenure heading up the Democratic National Committee.  Joe Cari, former head of the Finance Committee for the DNC was also involved. Everen was involved in municipal bonding.

Reedy, Cari, Wilhelm and Vanecko found an opportunity to exploit pension funds private investment monies for the sole purpose of obtaining management fees for personal gain.

Reedy and Cari were investors in Cablesoft, a small software company specializing in infrastructure documentation management (originally established in the UK). Wilhelm was also looking to be an investor in Cablesoft but had not made a capital contribution at that time.

In 2000, Reedy became CEO of Cablesoft and brought Vanecko over as Vice President. Vanecko had no experience with software or technology and very limited business experience. Cablesoft subsequently changed its name to iTRACS.

It is no coincidence that all three corporations established to target pension funds were incorporated in Delaware by the same agent.
Leveraging the relationship between Joe Cari and Stuart Levine (both convicted felons related to wiring deals at the Teacher Retirement System) specific state and city pension funds were targeted. Cari successfully obtained $35 Million of TRS monies for Healthpoint and Wilhelm obtained $10 Million (as previously reported) by setting up brand new corporations immediately before obtaining funding.

Wilhelm then made an "investment" in iTRACS for $2 Million, controlled by Reedy as a payback for masterminding manipulation of the pension funds.

Vanecko was unsuccessful in obtaining state funds but, partnered with Allison Davis, and subsequently were successful in securing city pension funds. DV Urban Realty Partners I LP is not registered in Illinois as a foreign corporation. Here is the only company on file with the Illinois Secretary of State.

An assertion of protecting trade secrets and failing to provide a copy of the investment contract between Vanecko's DV Urban and MEABF is absurd.

Corruption Busters has filed an appeal with the Illinois Attorney General's Office to obtain a full copy of the investment contract.

Updates will be posted here.


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