Chicago GOP - May 29, 2009

Keep a close eye on this one - potentially explosive.

Mayor Daley has "lawyered up" on this, and he has never done that before.  Something is up.

by Dan Mihalopoulos and Steve Mills

Federal law-enforcement authorities are probing the controversial investment of city employee pension fund dollars in a real estate firm involving Mayor Richard Daley's nephew Robert Vanecko. A federal grand jury issued a subpoena Wednesday to the police pension fund, according to records obtained today by the Tribune.

Prosecutors with U.S. Atty. Patrick Fitzgerald's office are demanding fund officials turn over documents regarding their dealings with DV Urban Realty, which includes Vanecko and longtime Daley ally Allison Davis. The police fund's board voted in 2006 to invest $15 million in DV Urban, part of a $68 million deal that also involved other local government pension funds.

The federal subpoena is a virtual carbon copy of the subpoenas sent to four pension funds in March by City Hall's inspector general, David Hoffman. But fund officials refused to comply with those requests, arguing that Hoffman's office does not have the authority to investigate them.
Now the DV Urban deal has become the focus of the latest in a growing number of joint investigations involving the feds and Hoffman, a former assistant U.S. attorney in Chicago.

While the pension funds made public many of the documents that Hoffman sought, the police fund's board would not release audio tapes of closed meetings where trustees discussed the deal with Vanecko and Davis's firm.

Besides the police fund, four other pension funds - representing teachers, municipal employees, laborers and CTA workers - invested in DV Urban. 
Hoffman had subpoenaed records from the funds for laborers, police and municipal employees, as well as the firefighters' pension fund, whose leaders declined a chance to invest in DV Urban.