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Feds Urged To Investigate Alleged Contributions to Mayor

May 31, 1987

CHICAGO (AP) _ Lawyers for the city have asked the U.S. attorney’s office to look into allegations that Chicago Housing Authority money was used to make illegal contributions to Mayor Harold Washington’s political fund.

The city corporation counsel’s office requested the investigation after Lynne Borrell, the authority’s former deputy executive director for special housing programs, made the allegations in sworn testimony during a deposition, said Deputy Corporation Counsel Matthew Piers.

A spokesman for U.S. Attorney Anton Valukas would not comment on the charges, but Piers said assistant federal prosecutors indicated an interest in the matter. A copy of Ms. Borrell’s testimony was mailed Friday to federal authorities, according to Piers.

The deposition was taken by city and housing authority attorneys in connection with a lawsuit Ms. Borrell filed Feb. 5 against Washington, the city and the authority.

In that lawsuit, Ms. Borrell contended she was fired by interim Executive Director Brenda Gaines because she refused to help Washington’s re-election bid and because she cooperated with an FBI investigation of the authority.

She contended that petty cash and funds from authority accounts were used to buy tickets to various Washington fund-raising events during the past two years, and that employees and contractors doing business with the public housing agency were intimidated into making political contributions to Washington.

Authority officials have denied all of Ms. Borrell’s allegations.

″It’s obvious that this woman is grasping at straws and making all sorts of wild, unsubstantiated allegations,″ said Joseph Gardner, deputy executive director for tenant services.

James Wascher, executive director of the mayor’s chief fund-raising committee, said the committee never knowingly received contributions from authority funds. He said he knew nothing about fund-raising tactics allegedly used by authority employees.

Under Illinois law, public money cannot be used to support a political candidate, and employees and companies doing business with a governmental agency cannot be forced to make political contributions.

When Ms. Borrell filed her lawsuit, she told reporters that she had turned over to federal authorities information about ″at least $2 million in kickbacks.″

Last week, a management review of the authority by the U.S. Department of Housing and Urban Development criticized its accounting procedures, including its use of petty cash funds.

Although the review did not site any specific misuse of money, it found that the authority spent $1.9 million in 1985 and $1.4 million in 1986 from 42 petty cash accounts. HUD urged the authority to reduce the number of accounts and improve controls over the spending of the funds.

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