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Nine Named in Second Round of Indictments in ‘Operation Incubator’

May 15, 1987

CHICAGO (AP) _ A grand jury on Thursday named nine people, including the powerful clerk of the Circuit Court, a former mayoral adviser and two former aldermen, in a second round of indictments in a federal investigation of influence peddling in city and county government.

The 67-count federal indictment charged ″a wide-ranging conspiracy and scheme among the nine defendants to corruptly assist Systematic Recovery Services Inc. in its effort to obtain City of Chicago contracts,″ U.S. Attorney Anton Valukas said at a news conference.

″In exchange for their secret assistance ... their promised use of influence and the misuse of their public offices, the defendants sought and received substantial cash payoffs and a variety of other tangible benefits,″ Valukas said.

Among those indicted were Morgan Finley, 61, clerk of the Cook County Courts since 1974; Clarence McClain, 45, a former top aide to Mayor Harold Washington; and former aldermen Perry Hutchinson, 43, and Marian Humes, 52 - both voted out of office earlier this year.

Valukas stressed that the mayor ″is not now, nor has he been, a suspect in this investigation,″ although Hutchinson, Ms. Humes and two other former aldermen allied with Washington have been indicted so far.

Asked about the indictments, Washington said, ″The law will follow its course.″

At the center of the 18-month undercover FBI investigation, which led to both rounds of indictments as well as indictments in New York City, was a convicted con-man and swindler who posed as the high-rolling Chicago representative of the New York City-based Systematic Recovery.

Michael Raymond, who used the alias Michael Burnett, became an FBI informant after being arrested in July 1984 on weapons charges and entering into a plea agreement with the government.

In New York City, the investigation has resulted in 11 convictions so far, Valukas said. One of the highest-ranked targets of the investigation, Queens Borough President Donald Manes, committed suicide last year as he was about to be charged.

Thursday’s indictments charged the nine Chicago defendants with multiple acts of conspiracy, mail and wire fraud, extortion and tax violations.

The indictments outlined a scheme extending over two years and occupying ″many of the defendants on a nearly daily basis,″ Valukas said.

Finley, who serves as chief administrator of the nation’s largest court system and is the highest-ranking official indicted in the investigation, is alleged to have received $25,000; McClain, $35,000; Ms. Humes, $10,000; and Hutchinson and Michael Lambesis, chief investigator in Finley’s office, more than $40,000 each.

The defendants allegedly assisted Systematic Recovery in gaining multimillion-dollar bill-collection contracts by such things as sharing private information about other companies seeking the contracts and seeking to influence officials.

Also indicted Thursday were John Adams, 32, a former city Revenue Department deputy; Melvin DuBrock, 53, a former assistant commissioner in the city’s Streets and Sanitation Department; and Charles Knox, 42, and David Hammond, 44, top officials of an unaccredited Chicago law school.

Lambesis also was charged in a wave of indictments announced six months earlier. Both rounds of indictments stem from the FBI’s Operation Incubator probe.

Five of the seven people indicted last November, including former Alderman Clifford Kelley, have pleaded guilty or been convicted on charges ranging from extortion and mail fraud to income-tax and firearm violations.

Kelley and Wallace Davis lost their aldermanic seats in the April 7 election. Davis, awaiting trial, also faces state charges of pistol-whipping his secretary after she testified before a grand jury hearing evidence in the corruption probe.

Three of those charged in the first round of indictments - Kelley, Davis and Raymond Akers Jr., a former lobbyist for Waste Management Inc. - were named as unindicted co-conspirators Thursday.

Bernard Sandow, who was president of Systematic Recovery Services and pleaded guilty to charges stemming from a separate indictment, also was named as an unindicted co-conspirator.

Valukas estimated there was $100 million in collections at stake, and that a collections company would have received as much as 35 percent of the accounts it collected in commission fees.