Let’s get one thing straight right off the bat: a federal Securities and Exchange Commission investigation is nothing to sneeze at.
That’s what the United Neighborhood Organization, or UNO, is facing these days. The feds are investigating the state’s largest charter school operator for potential securities violations tied to its October 2011 $37 million bond issue, along with potential conflicts of interest in hiring contractors to build state-funded schools.
On Friday, UNO disclosed its longtime chief executive officer, Juan Rangel, has stepped down in the wake of the SEC investigation and a slew of other scandals.
Chicago Sun-Times reporter Dan Mihalopoulos, who’s helped uncover many of the scandals dogging UNO, reports Rangel stepped down “by mutual agreement” with the board of the not-for-profit group, effective Friday.
The truth is, however, that it wasn’t just the organization’s board that lost faith in Rangel. It was the entire political establishment in Chicago, and probably much of the state, who had finally realized Rangel had outgrown his usefulness and cut him loose.
That’s because few political players in town in recent years have been as well connected, or clouted, than UNO and Juan Rangel. As its leader, Rangel used those connections—and bucket loads of state money—to build a network of charter schools in Chicago, despite scandal after scandal after scandal linked to UNO.
His Rolodex of political connections plays like a Chicago politics version of six degrees of separation. He was co-chairman of Mayor Rahm Emanuel’s 2011 campaign. Six UNO schools are in powerful Ald. Ed Burke’s 14th Ward, who in 2008 singlehandedly used his clout to help save UNO from financial ruin.
Last year, Rangle held a fundraiser for Illinois House Speaker and state Democrat Party head Michael Madigan, who helped UNO receive a $98 million, no-bid, taxpayer-funded grant in 2009.
A grant Governor Quinn approved without a fight.
After the Madigan benefit was held, a bill was introduced in Springfield on Jan. 2 that would have provided another $35.2 million in state money to UNO. The author of the bill, state Sen. Heather Steans (D-Chicago), says she didn't know who wrote the provision benefiting UNO into her broader bill.
Move past the direct connections, and political universe gets even bigger. In February, UNO’s vice-president of operations, Miguel d’Escoto, resigned after it was revealed he paid state grant money to companies owned by two of his brothers. d’Escoto was previously a city transportation commissioner under former Mayor Richard M. Daley.
One of the UNO contractors who received grant money was the sister of Victor Reyes, the charter group’s lobbyist. Reyes once ran former Mayor Daley’s political office along with HDO, a powerful political group, and was a protégée of Daley's close political advisor Tim Degnan.
Want more? An investment banker once brought in to oversee reforms at UNO, Martin Cabrera Jr., worked for a firm with billions of dollars in deals as a bond underwriter for city and state agencies and major governments across Illinois. Cabrera got his start from close ties with Ald. Ed Burke who, as chairman of the City Council’s Finance Committee, helps determine who gets those contracts.
Some of that state grant money used to guard a school construction site also went to a security firm run by two brothers of state Rep. Edward Acevedo, a Chicago Democrat who voted to approve the UNO grant.
And that’s not even scratching the surface. All in all, its enough to make your head spin, until you realize the essential nature of what’s on display:
Politically-connected charter school operators using millions in taxpayer money to build a charter school empire that helps enrich friends and family of politicians and politically-connected operators.
Forget for a moment the question of whether charter schools are what’s needed for disadvantaged communities to help better their children’s education.
Instead, just focus on what it takes to lose the backing of so many important, politically-connected friends in this town.
Especially after helping them and their families get richer for so long.