Two Charged With Minority Owned Contract Sham - NBC Chicago
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Two Charged With Minority Owned Contract Sham

Cappello was under investigation three years ago as part of a federal probe into women-owned contracts at O'Hare Airport



    A former member of the state's Disadvantaged Business Enterprise taskforce is at the heart of a federal investigation into an alleged plot to undermine the very rules she was tasked to protect.

    Elizabeth Perino is one of two people accused in federal court Tuesday of using sham businesses to win contracts meant for minority and women owned businesses to pass along to contractors who didn't fit that mold.

    Anthony Cappello, 48, of Homer Glen was charged with a similar crime in a separate filing from the U.S. Attorney's office.

    The company with which both individuals allegedly dealt, identified as McHugh Construction by the Sun-Times, won four of the biggest government-backed construction projects in the city because of actions taken by Perino and Cappello, according to a release from the U.S. Attorney's office. The U.S. Attorney refers to the construction company as Prime Contractor A.

    Edward Forte, the chairman of Black Contractors United, didn't want to speak specifically about McHugh but said he welcomed any investigation that helps make people play by the rules.

    "These contracts -- this fronting contracts passed through -- this has been a plague in this contracting industry since the inception of Affirmative Action, and it really hurts the next generation of African Americans coming into the trade and existing companies that barely exist when you have this type of practice," said Forte.

    A release from the Justice Department says: 

    In one case, the owner of two Lockport construction companies certified as woman-owned and/or disadvantaged businesses was charged with fraudulently using her companies as sham pass-through sub-contractors as part of a scheme to help prime contractors meet the City of Chicago and other local governments’ set-aside requirements for construction contracts.  The defendant, Elizabeth Perino, owner of Perdel Contracting Company and Accurate Steel Installers, Inc., allegedly  acted as a sham pass-through on contracts with Prime Contractor A, a construction firm with billions of dollars worth of government and private contracts, as well as with the owner of Prime Contractor B, who was cooperating with law enforcement.

    As far back as 2006, Perdel Contracting, which specializes in concrete and carpentry, and Accurate Steel (ASI) allegedly acted as sham WBE sub-contractors for Prime Contractor A on Chicago’s North Avenue bridge reconstruction project.  In addition, Perino’s companies allegedly acted as fraudulent pass-through WBE sub-contractors for Prime Contractor A on the Red Line and Brown Line projects for the Chicago Transit Authority, and Perdel Contracting is a DBE sub-contractor on Prime Contractor A’s Wacker Drive reconstruction project.

    Perino, 57, of Willowbrook, was charged with mail fraud in a criminal complaint that was unsealed today.  She was released on her own recognizance after appearing this morning before U.S. Magistrate Judge Maria Valdez in U.S. District Court.  Both of her companies have been certified as a WBE and a DBE by government entities, including the City of Chicago and the Illinois Department of Transportation.  Perino has served on IDOT’s Task Force for DBE Regulations.

    In the second case, Anthony Cappello, 48, of Homer Glen, the owner of Diamond Coring, Inc., a Chicago concrete sawing and drilling company, was charged with one count of mail fraud in a criminal information filed today in Federal Court.  Cappello  allegedly obtained contracts worth more than $2.3 million by operating the Stealth Group, Inc., also known as SGI, as a fraudulently certified WBE and DBE.  He will be arraigned at a later date in U.S. District Court.  Cappello allegedly sought millions of dollars of sub-contracts, and fraudulently obtained more than $2.3 million, from the City of Chicago, Cook County, and the State of Illinois between 1999 and 2006.

    U.S. Attorney Pat Fitzgerald announced the charges Tuesday along with other law enforcement and watch dog entities.

    “Illegally using companies to obtain work set-aside for businesses owned by women or minorities cheats not only the governments that provide opportunities to bid on public contracts, but it also prevents legitimate minority- and women-owned businesses from competing to obtain work on such projects,” said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

    In a statement released late Tuesday, McHugh Construction said it has a long history of mentoring and developing minority contractors.

    "It would not be appropriate to comment on today's events or any case pending in court, but our firm will cooperate with any government requests for information," said spokesman Dennis Culloton in an email.

    Perino, who was released on recognizance, is cooperating with authorities.

    Cappello was under investigation three years ago as part of a federal probe into women-owned contracts at O'Hare Airport.