Kitchen Cabinets

Donald Beal, owner of Arrow Lumber Co., was granted immunity more than three years ago to testify against former city trades supervisor Kevin O’Gorman about an alleged billing scheme to divert taxpayer-bought materials — including kitchen cabinets (Kitchen cabinets are the built-in furniture installed in many kitchens for storage of food, cooking equipment, and often silverware and dishes for table service. Appliances such as refrigerators, dishwashers, and ovens are often integra, countertops, American flags and carpentry supplies — to O’Gorman for his personal use.

Cook County Judge Steven Goebel acquitted O’Gorman on Jan. 19 and, in his ruling, chastised Beal.

“Mr. Beal did get on the stand, admitted to defrauding the city, but obviously blamed (O’Gorman),” Goebel wrote in his verdict. “I find parts of Mr. Beal’s testimony absolutely dishonest and unbelievable.”

City officials say they are in the process of debarring, or formally blacklisting, Arrow, an action that began Sept. 24 — four days after the Tribune filed a Freedom of Information request for Arrow Lumber contracts.

That action would bar Arrow from doing further business with the city of Chicago, but the company also would stand to lose contracts with the Park District and the schools, which have paid millions of dollars to the lumber firm.

Beal’s attorney James Marcus, who helped hammer out the immunity deal, questioned the timing of the city’s move to debar Arrow. The inspector general — after launching an investigation based on a tip from a whistle-blower, an Arrow employee — accused O’Gorman and the lumber company of defrauding the city more than three years ago.

Given the time that has passed, Marcus said it seems strange that officials would just now decide to ban Arrow.

“Something else must have caused this because they’ve known about it years before this,” Marcus said. “It’s taken them three years to figure this out?”

So far this year, Arrow Lumber has billed the city for more than $300,000 as part of a five-year contract worth up to $50 million.

Contracting fraud long has plagued the Daley administration and led to fumbled attempts at reform. One of the more notorious cases involved the mob-connected Duff family, which garnered more then $100 million in city work after creating phony minority-owned and women-owned businesses. After initially ignoring a recommendation to permanently bar the family from doing business with the city, officials caved to an outcry from aldermen and imposed a lifetime ban.

The city’s Department of General Services recommended that Arrow be barred from doing business with the city in July, six months after O’Gorman’s acquittal. A spokeswoman for the Department of Procurement Services said officials needed time to wade through paperwork and still must clear legal hurdles before the city can nullify contracts with Arrow. Arrow is fighting the debarment.

“There were roughly 155 pages of transcript to review and, after reviewing the transcript, DPS worked with the Law Department to determine the best course of action,” spokeswoman Shannon Andrews wrote in an e-mail. “The Department of Procurement Services takes the debarment of vendors very seriously and makes a careful review of the document in any debarment matter, especially in cases where the city’s inspector general has not made a recommendation to DPS to debar a vendor.”

Although the city has been backing the purported whistle-blower in a case to recover penalties from O’Gorman and Beal since 2007, a spokeswoman for the Law Department said the city was powerless to “explore the validity of the allegations” while the criminal trial proceeded.

“When the criminal case was concluded, we worked with Procurement to review the transcripts of the criminal trial and determine what action should be taken,” spokeswoman Jennifer Hoyle said.

Meanwhile, in November, the Chicago Park District awarded Arrow Lumber $500,000 for roofing tools and materials — a substantial bump in business considering Arrow Lumber has been paid about $1.1 million for Park District work since 2002. District officials were to consider the company’s “integrity” and “past performance,” among other factors, in awarding the contract, according to Park District code.

“At the point of that award, we had no reason to preclude that company from doing business with the Chicago Park District,” spokeswoman Jessica Maxey-Faulkner said. “If they are debarred, we would certainly re-evaluate the contract.”

Arrow Lumber also has earned millions of dollars over the years as a minority-owned subcontractor from Chicago Public Schools contracts, including a portion of a $1 million kitchenwares contract signed by a restaurant supplier in February, a month after the judge’s ruling.

“We expect all of our contractors and subcontractors to meet the guidelines under our contracting policies,” spokeswoman Monique Bond wrote in an e-mail. “At this time, we are unaware of any inconsistencies and will take the appropriate action, should that be required.”

Officials first accused the lumber company in 2007 of scheming with O’Gorman to divert more than $50,000 in supplies to his personal use. O’Gorman was charged with theft, and Beal was granted immunity by prosecutors to testify against him “based on the fact that he was acting at O’Gorman’s direction in filling the orders,” said state’s attorney’s spokesman Andy Conklin.

In exchange for his immunity, Beal paid the city $12,176.65 for the diverted materials, which he spoke of in his testimony.

“That money was for items, more specifically the countertops and kitchen cabinets (Kitchen cabinets are the built-in furniture installed in many kitchens for storage of food, cooking equipment, and often silverware and dishes for table service. Appliances such as refrigerators, dishwashers, and ovens are often integra,” he testified Jan. 13. “Those were specific items. I don’t know all the other items.”

In his ruling, Goebel said he believed that Arrow Lumber was double-billing the city and may have shredded documents and engaged in extortion.

However, Marcus described Beal as a respected businessman who felt pressure to scheme with O’Gorman in order to keep the city’s business. He said authorities investigated his other dealings with the city and did not find wrongdoing.

“Don has been an honest city contractor for many years and never had a problem,” Marcus said. “This is one isolated incident.”

O’Gorman, a local union president and former precinct captain in House Speaker Michael Madigan’s 13th Ward Democratic Organization, quit shortly after his indictment to avoid being fired and losing his benefits. Since his acquittal, he has tried unsuccessfully to get his job back.

“It’s been horrendous. It’s been a nightmare,” O’Gorman said. “We just don’t know what the whole reasoning was behind this because, as the judge said, it’s very clear what’s been going on.”

O’Gorman’s attorney, Collins Whitfield, questions why city officials refuse to rehire O’Gorman but remain willing to do business with Beal.

“It doesn’t pass the stink test,” he said.

– Erika Slife and Stacy St. Clair

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